An Insurance Market Simulation With Both Adverse and Advantageous Selection

The theory of adverse selection predicts that high‐risk individuals are more likely to buy insurance than low‐risk individuals if asymmetric information regarding individuals’ risk type is present in the market. The theory of advantageous selection predicts the opposite—a negative relationship between insurance coverage and risk type can be obtained when hidden knowledge in other dimensions (e.g., the degree of risk aversion) is present in addition to the risk type. Using the heterogeneity of insurance buyers in either risk type or risk aversion, we first introduce a classroom‐based insurance market simulation game to show that adverse selection and advantageous selection can coexist. We then explain the underlying concepts using two methods: a mathematical framework based on expected utility theory and an empirical framework based on the results of the game itself. The game is easy to implement, reinforces textbook concepts by providing students a hands‐on experience, and supplements current textbooks by bringing their content up to date with current research.     

Regulating Unfair Trade Practices: an Analysis of the Past and Present Indian Legislative Models

The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) which for the first time incorporated detailed provisions as to unfair trade practices (UTPs) in India has now been repealed and succeeded by the Consumer Protection Act, 1986 which has included the same substantive definition of UTPs. This article analyses the law as to UTPs under the repealed MRTP Act including the cases decided thereunder and compares it with the structure of the Consumer Protection Act with the objective of evaluating whether the present Consumer Dispute Redressal Agencies under the Consumer Protection Act have adequate substantive provisions and effective procedural competence to ward off UTPs. Our analysis of legislative provisions and decided cases shows that the present system of protection against UTPs under the Consumer Protection Act is blighted by a strict and restrictive definition of consumer; lack of in-house enquiry and investigation system, incompetency of traders and trade associations to pursue cases, and lack of inherent power of the Consumer Dispute Redressal Agencies to suo motu take up matters. The article uses analytical and statistical methods to quantify, in terms of actual effect, these drawbacks which significantly hamper the present system and suggests various means to improve the functioning of the system so as to effectively deal with UTPs.     

An empirical analysis of individual level casino gambling behavior

Gambling and gaming is a very large industry in the United States with about one-third of all adults participating in it on a regular basis. Using novel and unique behavioral data from a panel of casino gamblers, this paper investigates three aspects of consumer behavior in this domain. The first is that consumers are addicted to gambling, the second that they act on “irrational” beliefs, and the third that they are influenced by marketing activity that attempts to influence their gambling behavior. We use the interrelated consumer decisions to play (gamble) and the amount bet in a casino setting to focus on addiction using the standard economic definition of addiction. We test for two irrational behaviors, the “gambler’s fallacy” and the “hot hand myth”—our research represents the first test for these behaviors using disaggregate data in a real (as opposed to a laboratory) setting. Finally, we look at the effect of marketing instruments on the both the decision to play and the amount bet. Using hierarchical Bayesian methods to pin down individual-level parameters, we find that about 8% of the consumers in our sample can be classified as addicted. We find support in our data for the gambler’s fallacy, but not for the hot hand myth. We find that marketing instruments positively affect gambling behavior, and that consumers who are more addicted are also affected by marketing to a greater extent. Specifically, the long-run marketing response is about twice as high for the more addicted consumers.     

Corporate governance and the sensitivity of investments to cash flows

We find very strong and consistent evidence that investments in Strong‐Governance firms (managers not entrenched) are strongly sensitive to availability of internal cash flows while such sensitivity is not different from zero for Weak‐Governance firms (entrenched management). We interpret this as evidence in support of Kaplan and Zingales' (1997) contention that sensitivity of investments to cash flows is not an adequate measure of financing constraints. More importantly, our findings are consistent with Kaplan and Zingales’ conjecture that the observed sensitivity of investments to cash flows in firms that do not face financing constraints may be driven by excessive risk aversion of managers.     

What motivates the adoption of green restaurant products and services? A systematic review and future research agenda

Issues regarding green restaurants have received significant scholarly and practitioner attention in the last decade, particularly concerning why consumers adopt green restaurants. Although several reviews exist on green hospitality, a comprehensive review of the literature on consumers' green restaurant adoption is currently lacking. The following systematic literature review examines 50 research studies published on the consumer adoption of green restaurant services to address this gap accordingly. Through a detailed content analysis, the research profile and thematic analysis are presented. The review further identifies four key thematic foci: (a) consumer behavior variables studied, (b) antecedents internal to the consumer, (c) antecedents due to the perception of external factors, and (d) moderators. Limitations and gaps from each of the themes are offered with potential future research questions. The novelty of the review lies in the development of a “green restaurant adoption research framework” that cuts across multiple theoretical perspectives to summarize why consumers adopt green restaurant services.     

Consumers’ Behavioral Intentions Toward Self-Service Technology in the Emerging Markets

ABSTRACT

Self-service technologies (SSTs) allow customers to offer their own service encounters via the interaction of electronic service interfaces or machines rather than by interacting with a firm's service personnel. This lack of personal interaction generates doubts and queries in the minds of the people, especially those unaware or less aware of these technology-based services. Such a situation is quite prevalent in the developing nations (like India), where still a large number of people are apprehensive about using the latest technologies. In this regard, the present study aims to develop an integrated model designed to predict and explain the various factors that influence customers’ behavioral intentions to use or not to use one particular SST (i.e., ATM services). The study finds that bank customers are less innovative and less optimistic to try out new technologies. Usefulness of the technology helps in developing positive attitude toward the technology, which in turn affects customers' intentions to use that technology.     

Recent trends in measures to manage capital flows in emerging economies

This paper reviews recent trends in the imposition of capital flow management measures in emerging market economies (EMEs). We find that since the crisis, there has been a shift in the balance of new measures towards net capital inflow reducing measures. However, this is not driven primarily by an increase in inflow tightening measures (e.g. taxes on inflows) relative to pre-crisis periods of inflow surges, but rather by significantly slower inflow liberalization trends (i.e. existing capital controls remaining in place). In addition, there has been a compositional shift in net capital inflow reducing measures: outflow liberalizations were the predominant tools for reducing net capital inflows pre-crisis, but such measures have become less important post-crisis. Overall, the pre-crisis trend towards capital account openness has stalled. The use of capital flow management measures is motivated by macroeconomic as well as financial stability concerns. The IMF recently endorsed use of capital controls as “last resort” measures in macroeconomic management. We also find that by IMF criteria, capital flow measures have not been introduced as a last resort since 2004 – alternative macroeconomic policies to deal with the surge in net capital inflows were available to the majority of countries. Moreover, most capital flow measures introduced by EMEs since 2004 are pure capital controls rather than currency based and/or prudential type measures, suggesting that they were not directly targeted to promote financial stability. However, since the crisis, there has been a small shift towards prudential-type measures.     

Consumer Acceptance of Camel Milk in Emerging Economy

Abstract

Camel is considered as an indispensable part of desert eco-framework across the globe. Apart from helping in transport, it is also used for its milk. Camel's milk is used worldwide because of its salty taste. However, it has many beneficial effects such as cure for autism and helps to control diabetes, allergy, and also prevents liver cirrhosis. Objective of this study is to analyze the ways to make people purchase and consume camel milk. In the last few years, awareness about nutritional and medicinal benefits of camel milk has rapidly increased. Consequently, the demand of the product has also increased. Objective of this article is to analyze the consumers’ willingness to buy camel milk before and after knowing its health benefits. It also explores the linkage between lifestyle diseases and consumer’s willingness to buy. We analyzed data in two stages. Initially, we did qualitative analysis with twitter text mining to understand customer’s sentiments about camel milk. Later, primary data was collected through structured questionnaire from a sample of 120 respondents by convenience sampling for quantitative analysis. There is a significant increase in the proportion of people willing to buy camel milk and once they were aware of the benefits, people are willing to buy more after knowing the benefits. People exposed to lifestyle diseases are more willing to buy camel milk. Hence, support of market-based awareness campaigns to stimulate demand for quality camel milk among consumers can be realized through information dissemination and awareness campaign.     

HR practices and turnover intention: the mediating roles of organizational commitment and organizational engagement in a selected region in Malaysia

This study examined the mediating effects of organizational commitment (OC) and organizational engagement (OE) on the relationship between human resource (HR) practices (career management, performance appraisal, compensation, person–job fit and job control) and turnover intention. A total of 457 employees working in various sectors in a selected region in Malaysia participated in this study. It was found that all the variables used to measure HR practices have significant effects on OC and OE. However, multiple regression analyses indicated that career management and job control did not have any significant influence on turnover intention. OC and OE were discovered to give partial mediating effects on the relationship between HR practices and turnover intention.     

The existence and persistence of the pay-per-use bias in car sharing services

A key benefit of using car sharing services (relative to car ownership) is that they are more cost effective. Car sharing firms offer a menu of pricing plans to make this happen. The two most common plans are flat-rate and pay-per-use pricing. However, little is known about how consumers choose among these pricing plans. In this study, we analyze consumers' choices between pay-per-use and flat-rate pricing using data from a car sharing provider in a large European city. In contrast to previous research, we find a prevalent and time-persistent pay-per-use bias. Specifically, depending on the definition of the bias, 21% to 32% of customers exhibit this bias. This bias also persists over time within customer. We propose three potential explanations for the existence and persistence of this bias. First, we suggest that customers underestimate their usage. Second, we propose that customers have a preference for flexibility, leading them to pay more. Finally, we show that the physical context, such as weather, increases the likelihood of a pay-per-use bias. Our findings suggest that more research into consumer response to pricing in the Sharing Economy is needed.