Spam and Beyond: An Information-Economic Analysis of Unwanted Commercial Messages

The phenomenon of unwanted commercial messages (UCM), including e-mail spam and emerging forms that target other Internet communications facilities, is analyzed from an information-economics perspective. UCM traffic pays off for its senders when it is noticed and consumed by Internet users; the industry is, therefore, dependent on a common-pool resource that is accessed through an information asset. An analytical model of the industry is derived and solved computationally, and two dimensions of information quality held by the senders of UCM traffic are manipulated in the model. It is shown that such manipulations can moderate over time both the number of UCM campaigns undertaken and the amount of Internet bandwidth consumed by UCM. Manipulations of the information-quality dimensions affected by e-mail filtering reduce the amount of traffic that penetrates an Internet user's attention space but increase the amount of Internet bandwidth consumed. This is consistent with data reported by e-mail security providers as filters have been deployed. It is also shown that both public and private entities have adopted policies and practices with unintentional informational side effects. These effects may have led to more rather than less, spam e-mail traffic. It is concluded that the lessons learned from the case of e-mail spam can be applied to the development of policies and practices for mitigating newer, emerging forms of UCM, including versions targeting instant-messaging systems and Web logs.     

Polarization of the worldwide distribution of productivity

We employ data envelopment analysis (DEA) methods to construct the world production frontier, which is in turn used to decompose (labor) productivity growth into components attributable to technological change (shift of the production frontier), efficiency change (movements toward or away from the frontier), physical capital deepening, and human capital accumulation over the 1965–2007 period. Using this decomposition, we provide new findings on the causes of polarization (the emergence of bimodality) and divergence (increased variance) of the world productivity distribution. First, unlike earlier studies, we find that efficiency change is the unique driver of the emergence of a second (higher) mode. Second, while earlier studies attributed the overall change in the distribution exclusively to physical capital accumulation, we find that technological change and human capital accumulation are also significant factors explaining this change in the distribution (most notably the emergence of a long right-hand tail). Robustness exercises indicate that these revisions of earlier findings are attributable to the addition of (more recent) years and a much greater number of countries included in our sample. We also check to see whether our results are changed by a correction for the downward bias in the DEA construction of the frontier, concluding that these corrections affect none of our major findings (essentially because the level correction roughly washes out in changes.)     

Choice and self: how synchronic and diachronic identity shape choices and decision making

Research on the role of identity in choice varies widely across fields like psychology, philosophy, consumer behavior, and economics, in both the key questions addressed and the methods of investigation. Although a large literature has established how salient aspects of identity affect attitudes and norms, less is known about how beliefs concerning identity are shaped and how these beliefs affect decision making. In this review, we cover recent insights into these issues and summarize some newer, developing approaches to understanding (i) how people judge the persistence of identity, (ii) how beliefs about future changes in identity are formed and how they affect choices, (iii) the formation of beliefs about future changes in identity and how these beliefs affect decisions, and (iv) the historical and economic antecedents of identity norms and their consequences for economic behavior. We introduce a distinction between synchronic and diachronic approaches, and highlight important unresolved questions that will help these fields to more fully understand the role that identity plays in shaping choices.     

Re-matching, information and sequencing effects in posted offer markets

This paper evaluates the effects of some standard procedural variations on outcomes in posted offer oligopoly experiments. Variations studied include the presence or absence of market information, the use of re-matched or fixed seller pairs and alterations in the order of sequencing. Experimental results indicate that such variations can have first order effects on outcomes. For this reason, we recommend that results in oligopoly experiments be carefully interpreted in light of the procedures selected.

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Electronic Supplementary Material  The online version of this article () contains supplementary material, which is available to authorized users.      

Cost-effectiveness analysis of bariatric surgery for morbid obesity in Belgium

Aims: This study presents the cost-effectiveness analysis of bariatric surgery in Belgium from a third-party payer perspective for a lifetime and 10-year horizon.

Materials and methods: A decision analytic model incorporating Markov process was developed to compare the cost-effectiveness of gastric bypass, sleeve gastrectomy, and adjustable gastric banding against conventional medical management (CMM). In the model, patients could undergo surgery, or experience post-surgery complications, type 2 diabetes, cardiovascular diseases, or die. Transition probabilities, costs, and utilities were derived from the literature. The impact of different surgical methods on body mass index (BMI) level in the base-case analysis was informed by the Scandinavian Obesity Surgery Registry and the Swedish Obese Subject (SOS) study. Healthcare resource use and costs were obtained from Belgian sources. A base-case analysis was performed for the population, the characteristics of which were obtained from surgery candidates in Belgium.

Results: In the base-case analysis over a 10-year time horizon, the increment in quality-adjusted life-years (QALYs) gained from bariatric surgery vs CMM was 1.4 per patient, whereas the incremental cost was €3,788, leading to an incremental cost-effectiveness ratio (ICER) of €2,809 per QALY. Over a lifetime, bariatric surgery produced savings of €9,332, an additional 1.1 life years and 5.0 QALYs. Bariatric surgery was cost-effective at 10 years post-surgery and dominant over conventional management over a lifetime horizon.

Limitations: The model did not include the whole scope of obesity-related complications, and also did not account for variation in surgery outcomes for different populations of diabetic patients. Also, the data about management of patients after surgery was based on assumptions and the opinion of a clinical expert.

Conclusions: It was demonstrated that a current mix of bariatric surgery methods was cost-effective at 10 years post-surgery and cost-saving over the lifetime of the Belgian patient cohort considered in this analysis.     

Non-price determinants of automotive demand: Restyling matters most

This paper analyzes market share changes in automobile and light truck submarkets. We find that new product, as measured by restyling, represents the most consistent, dominant determinant of demand. On average a 10% reduction in relative price would yield only one-tenth the market share impact of a restyling. Alternatively, one would have to double one's relative advertising expenditures to match the impact of a restyling. Several demand determinants not previously modeled, including rebranding and warranty curtailments, were detrimental to domestic manufacturer market shares. Safety appliance adoptions and changes in vehicle reliability had minimal impact on demand.     

Fast and accurate pricing of barrier options under Lévy processes

We suggest two new fast and accurate methods, the fast Wiener–Hopf (FWH) method and the iterative Wiener–Hopf (IWH) method, for pricing barrier options for a wide class of Lévy processes. Both methods use the Wiener–Hopf factorization and the fast Fourier transform algorithm. We demonstrate the accuracy and fast convergence of both methods using Monte Carlo simulations and an accurate finite difference scheme, compare our results with those obtained by the Cont–Voltchkova method, and explain the differences in prices near the barrier. The first author is supported, in part, by grant RFBR 09-01-00781.     

Individual characteristics and behavior in repeated games: an experimental study

Using a laboratory experiment, we investigate whether a variety of behaviors in repeated games are related to an array of individual characteristics that are popular in economics: risk attitude, time preference, trust, trustworthiness, altruism, strategic skills in one-shot matrix games, compliance with first-order stochastic dominance, ability to plan ahead, and gender. We do find some systematic relationships. A subject’s compliance with first-order stochastic dominance as well as, possibly, patience, gender, and altruism have some systematic effects on her behavior in repeated games. At the level of a pair of subjects who are playing a repeated game, each subject’s gender as well as, possibly, patience and ability to choose an available dominant strategy in a one-shot matrix game systematically affect the frequency of the cooperate–cooperate outcome. However, overall, the number of systematic relationships is surprisingly small.     

Corporate social responsibility or CEO narcissism? CSR motivations and organizational performance

This study builds on insights from both upper echelons and agency perspectives to examine the effects on corporate social responsibility (CSR) practices of CEO's narcissism. Drawing on prior theory about CEO narcissism, we argue that CSR can be a response to leaders' personal needs for attention and image reinforcement and hypothesize that CEO narcissism has positive effects on levels and profile of organizational CSR; additionally, CEO narcissism will reduce the effect of CSR on performance. We find support for our ideas with a sample of Fortune 500 CEOs, operationalizing CEO narcissism with a novel media‐based measurement technique that uses third‐party ratings of CEO characteristics with validated psychometric scales. Copyright © 2014 John Wiley & Sons, Ltd.     

Conditional dependence in post-crisis markets: dispersion and correlation skew trades

Review of Quantitative Finance and Accounting - Strengthening of asset return dependence during the 2007–2008 credit crisis highlighted its dynamic and conditional nature. Option prices...