Decimalization,trading costs,and information transmission between ETFs and index futures

The impact of changes in trading costs, due to decimalization, on informed trading and speed of information transmission between exchange‐traded funds (ETFs) and their corresponding index futures is examined. ETFs began to trade in decimals on January 29, 2001, and index futures continued to trade in their original tick sizes. The focus is on whether the decrease in the minimum tick size of ETFs influences the relative performances of these two types of index instruments in the price‐discovery process. It is found that for ETFs, the trading activity increases, but the market depth drops significantly after decimalization. The spreads for ETFs generally decrease, but the adverse selection component of ETF spreads increases. Furthermore, after decimalization, ETFs start to lead index futures in the price‐discovery process and its share of information also increases. Although index futures still assume a dominant role in information discovery, the information content of the ETFs' prices improves significantly after decimalization. © 2006 Wiley Periodicals, Inc. Jrl Fut Mark 26:131–151, 2006     

An exploration of rule configuration effects on the ethical decision processes of advertising professionals

This study explores the ethical perceptions of advertising professionals regarding two child-oriented television advertising issues: deceptive messages and host selling. Differences in ethical evaluative and decision processes are investigated for both issues, using two evaluative rules. The results indicate that variations in advertisers’ ethical judgments and ethical intentions are affected by the type of rule(s) used during the evaluative process, and by the degree to which the rules are embraced. The article concludes with recommendations for advertising management and implications for future research. She graduated with honors in 1989 from Mississippi State University with a D.B.A. in marketing. She has practical experience in marketing research and her research interests are ethics and social responsibility, and professional services marketing. He received his Ph.D. in marketing from Michigan State University in 1980. He is the coauthor of two books on business ethics and has contributed numerous articles on ethics to various academic and applied business journals. He received his D.B.A. in marketing from Louisiana State University in 1969. He has coauthored two books on business ethics and has published articles on ethics in marketing journals. He is a frequent lecturer on business ethics. She graduated in 1990 from Mississippi State University with a D.B.A. in management. Her research interests are business ethics and student ethics, and corporate social responsibility.     

PIMS and BCG: New horizons or false dawn?

Strategic market opportunities arise either because a firm is exceptionally well placed competitively or because it recognizes the opportunity, on the basis of private information, before others. Strategic market analysis must reflect these two possible routes to attractive opportunities. Both the approaches developed by the Strategic Planning Institute (SPI) through its Profit Impact of Market Strategy (PIMS) and the Boston Consulting Group's (BCG) growth/share matrix fail to reflect the full impact of competitive expectations and risk. Analysis of PIMS data should be directed more towards generalities of limited direct economic significance whereas the BCG approach should be used mostly in the context of experience curve effects. Neither approach should dominate a full analysis of the specific nature and critical ambiguities in any strategic option.     

Evolutionary economics and the counterfactual threat: on the nature and role of counterfactual history as an empirical tool in economics

Counterfactual conditional statements are ubiquitous in any scientific endeavour. This paper contains an analysis of the nature of counterfactual conditionals and the conditions under which they are considered assertable by scientists. The paper then applies this analysis to the use of counterfactuals in evolutionary economics, arguing that because evolutionary economics is inherently concerned with historical processes it cannot avoid the use of counterfactual history as one of its tools of empirical analysis. We discuss the strengths and pitfalls of counterfactual history. We argue that because evolutionary economics starts from the foundation that randomness may be inherent in any economic system, the very aspects of evolutionary economics that make counterfactual history a desirable empirical tool also make that tool difficult to employ. RID="*" ID="*" We thank the participants of the International Seminar on Evolutionary Economics as a Research Programme in Stockholm, May 1997, for many helpful comments. We also thank Lorri Baier for many helpful substantive and textual comments. Correspondence to: R. Cowan     

Uncertainty, co-ordination and path dependence

Our objective is to assess whether dynamics hinder or assist co-ordination in a game with strategic complementarities. We study two dynamic aspects: different agents make decisions at different points in time; and extra information about a payoff-relevant state of nature becomes available over time. We find that the dynamic resolution of information matters most for uniqueness of equilibrium. This is demonstrated by showing that the condition for uniqueness is weaker when learning occurs. We also analyse how successfully agents co-ordinate when there is a unique equilibrium. Finally, we show that path dependence occurs: the order in which signals arrive matters, as well as the total amount of information received.     

What did Medicare do? The initial impact of Medicare on mortality and out of pocket medical spending

We study the impact of the introduction of one of the major pillars of the social insurance system in the United States: the introduction of Medicare in 1965. Our results suggest that, in its first 10 years, the establishment of universal health insurance for the elderly had no discernible impact on elderly mortality. However, we find a substantial reduction in the elderly's exposure to out of pocket medical expenditure risk. Specifically, we estimate that the introduction of Medicare was associated with a 40% decline in out of pocket spending for the top quartile of the out of pocket spending distribution. A stylized expected utility framework suggests that the welfare gains from such reductions in risk exposure alone may be sufficient to cover almost two-fifths of the costs of Medicare. These findings underscore the importance of considering the direct insurance benefits from public health insurance programs, in addition to any indirect benefits from an effect on health.     

Positional embeddedness in a community source software development project network: the importance of relationship intensity

This study examines those job and relationship characteristics that explain the positional embeddedness of individuals working in a multi‐organization project network. The analysis focuses differentially on three levels of relationship intensiveness: communication, coordination, and collaboration. Data were collected on the work relationships of 46 technical and administrative personnel involved in the Kuali Financial System, a community source software development project involving 12 organizations, 10 of which were colleges and universities, spread across the United States. Results were generally supportive of the hypotheses. Specifically, positional embeddedness was explained by characteristics of the project worker including the task performed, time spent on the task, and influence, as well as the ease of access to others. There was, however, little consistency in the explanatory power of these factors when comparing across levels of relationship intensity. Findings have implications for design of complex research and development projects that involve interactions across multiple organizations.