Learning and Noisy Equilibrium Behavior in an Experimental Study of Imperfect Price Competition*

We consider a duopoly pricing game with a unique Bertrand–Nashequilibrium. The high‐price firm has a nonvanishing market share, however, and intuition suggests that observed prices may be positively related to this market share. This relationship is implied by a model in which players make noisy (logit) best responses to expected payoff differences. The resulting logit equilibrium model was used to design an experiment in which the high‐price firm's market share varies. The model accurately predicts the final‐period price averages. A naive learning model predicts the observed differences in the time paths of average prices.     

Does risk disclosure in prospectus matter in ChiNext IPOs’ initial underpricing?

Review of Quantitative Finance and Accounting - Using a unique and hand-collected dataset, we investigate the impact of the risk factors disclosed in the prospectuses on the initial returns for...     

Do closed survey questions overestimate public perceptions of food risks?

In this paper, we show that the widely accepted methodology for the assessment of risk perception – Likert-type survey questions featuring a set of risks with fixed response alternatives measuring the extent of worry or concern – may overestimate food risk perception. Using a European representative sample survey (n = 26,961) that included an open-ended question asking about problems and risks with food and eating, followed by a battery of closed questions (CQs) assessing food risk perception, we find a similar ranking of perceived food risks across the two methods. Across Europe, the five priority concerns are chronic food-related illness; food origins and quality; acute food-related illness; chemical contamination; and adulteration of food. However, the discrepancies between mentioning a risk in the open-ended question and the expression of worry about risks in the CQ are substantial. Of those who did not mention a specific risk category in the open question, between 60 and 83% (depending on risk category) expressed worry in the CQ. This parallels previous research on the fear of crime, showing that survey responses lead to greatly inflated estimates of the public’s fear of crime than is evidenced by qualitative questioning. It is also consistent with evidence from research on cognitive aspects of survey methodology, suggesting that survey questions may frame the respondent’s thinking about an issue. We conclude with recommendations for the use of branched questions in the quantitative elicitation of public perceptions of risk.     

Value-at-Risk: a multivariate switching regime approach

This paper analyses the application of a switching volatility model to forecast the distribution of returns and to estimate the Value-at-Risk (VaR) of both single assets and portfolios. We calculate the VaR value for 10 Italian stocks and a number of portfolios based on these stocks. The calculated VaR values are also compared with the variance–covariance approach used by JP Morgan in RiskMetrics™ and GARCH(1,1) models. Under backtesting, the VaR values calculated using the switching regime beta model are preferred to both other methods. The Proportion of Failure and Time Until First Failure tests [The Journal of Derivatives (1995) 73–84] confirm this result.     

Awareness and adoption of conservation agriculture in Malawi: what difference can farmer-to-farmer extension make?

Despite the potential of conservation agriculture (CA) for increased crop yields, energy savings, soil erosion control, and water-use efficiency, smallholder farmers in sub-Saharan Africa have been slow to adopt. Farmer-to-farmer extension (F2FE) may have a role to play in overcoming the information access problems and lack of knowledge that may preclude widespread adoption. This study uses data for 180 lead farmers linked to their 455 followers to investigate how F2FE influences awareness and adoption of CA technologies in Malawi. Results from a bivariate probit model for follower farmer awareness and adoption of the three CA principles (minimum soil disturbance, crop residue retention, and crop diversification) reveal four main findings: First, lead farmer motivation increases their effectiveness at diffusing CA practices to their followers. Second, lead farmer familiarity with and adoption of CA both matter to the spread of CA practices, but familiarity appears more important. Third, lead farmers play a more critical role in increasing awareness than adoption of the CA practices. Finally, F2FE is a complement rather than a substitute for other sources of agricultural extension in Malawi's pluralistic extension system and should support but not replace current systems. Research and policy implications are discussed.     

Cross‐Border M&As by Chinese Companies in Advanced Countries: Antecedents and Implications

Theoretically grounded in the ownership, location, and internalization (OLI) paradigm and institutional theory, this article investigates major macro‐level factors that determine cross‐border mergers and acquisitions (CBMAs) by Chinese firms in developed markets. Using panel data of Chinese CBMA deals in developed markets from 1996 to 2012, we found that market size, natural resources, and strategic assets of host advanced economies positively affected the number of Chinese CBMAs in the developed markets. With regard to institutional variables, the overall economic freedom of host countries positively affected Chinese CBMAs, whereas the host government effectiveness negatively influenced the number of Chinese CBMAs. Furthermore, the above hypothesized effects were significantly strengthened by the home country's government involvement mainly through ownership. Finally, we found that significant factors to explain Chinese overall outward foreign direct investment (OFDI) are not necessarily applicable to explain Chinese CBMAs. © 2015 Wiley Periodicals, Inc.     

Short Sea Shipping, intermodality and parameters influencing pricing policies: the Mediterranean case

The Short Sea Shipping (SSS) market is strongly diversified, due to the variety of cargoes, vessel types and capacity, and segmented due to the existence of many national and peripheral submarkets. It is observed that prices differ considerably among transport services of similar distance routes and/or similar demand characteristics. The aim of this study is to identify factors influencing SSS operators pricing policies for both the sea and the inland part of intermodal chains, in an integrated framework. The analysis is based on the comparison of parameters influencing the cost structure and the pricing policy. The analysis of data collected through telephone and face-to-face interviews reveals that fuel, port cost, and market drivers with fuel cost being the most important elements influencing the variation in both the cost function and the pricing policy. Cost variations are also influenced by the cost of hinterland transport and the size of shipments, while pricing policy varies according to destination and type of goods transported. These findings contribute in understanding the SSS market and its operation. However, due to the complexity of self-organised systems, validating the presented cost and pricing structures remains a challenge.     

Technical change in Senegal's irrigated rice sector: impact assessment under uncertainty

This paper addresses the prospects for technical change in the irrigated rice sector of Senegal, and measures ex‐ante the economic returns to recent research efforts. In 1994, three new rice varieties were released to farmers in the Senegal River Valley (SRV), the major irrigated rice region in Senegal. The productivity advantage of the new varieties is based primarily on early maturity, which permits double‐cropping. (The seeds are also higher yielding than existing cultivars.) We use a conventional [Akino and Hayami (1975), Am. J. Agric. Econ. 57, 1–10] partial‐equilibrium model adapted to the Senegalese situation, to assess the social benefits of research and compare those to its costs in calculating the internal rate of return (IRR). To account for uncertainty regarding the future values of model variables we use simulation which allows us to generate a distribution of all possible outcomes of the IRR. We find that rice research is almost certain to have a very high payoff over the 1995–2004 period. The expected value of the IRR is calculated to be 121% per year, with a 97.5% probability that it lies above annual capital costs of 18%. ©2001 Elsevier Science B.V. All rights reserved.     

Pastoralism within land administration in Kenya—The missing link

In land administration (LA), the right to exercising property/ownership rights on land is based on cadastral processes of adjudication, survey and rights registration. Private ownership rights are now being taken up in pastoral areas, where they must contend with pastoralists’ land rights. Pastoral land use requires seasonal migrations determined by climatic conditions. This study aimed to find out how well the existing land laws and property rights in LA are able to serve the requirements of pastoralists land use, identify mismatches and put forward possible solutions. A case study was carried out in the Samburu–Laikipia–Isiolo–Meru landscape in Kenya. Data on the degree of livestock dependency among pastoralist communities, the spatial extent and patterns of dry season migrations, the resulting encounters between herders’ and non-pastoralist land use actors, and the perceptions of land rights held by actors were collected through a variety of methods and analysed. The results show that pastoralism is still active. The migration corridors reveal that herders maintain extensive dry season mobility, even though some of the corridors currently overlap with areas where land is privately owned by non-pastoralist land use actors. Moreover, the results show that most non-pastoralist land use actors have their land rights registered, but seasonal encounters with migrating pastoralists persist as pastoralists continue to exercise customary rights of communal use. We conclude that existing land laws and property rights in LA are suitable for sedentary land use, but do not address how to serve pastoralists land rights in time and space. The pastoralist's migration routes and patterns obtained indicated that it is possible to predict where pastoralists will be at a given time/drought period. This information could be used by decision makers and land administrators to identify where and when pastoralists’ land rights apply. This could provide the foundation for including pastoralists’ spatiotemporal land rights in LA. Arguments emphasize that adjudication, surveys and registration of rights should focus not only on ownership and full control of land, but also on defined periods when spatiotemporal mobility and access rights could be granted to pastoralists.