Incentive Effects of Community Rating in Insurance Markets: Evidence from Massachusetts Automobile Insurance

Rate regulations in insurance markets often impose cross-subsidies in insurance premiums from low-risk consumers to high-risk consumers. This paper develops the hypothesis that premium cross-subsidies affect risk taking by insurance consumers, and tests this hypothesis by examining the marginal impact of premium subsidies and overcharges on future insurance costs. The empirical analysis uses 1990–2003 rating cell-level data from the Massachusetts automobile insurance market, in which regulation produced large cross-subsidies across cells. Consistent with the hypothesized effects, premium subsidies are found to be significantly related to higher future insurance costs, and the opposite effects are found for premium overcharges.     

应对两方面风险的平衡管理策略

俗话说,将军们总是在打“上一场”战争。意思是说,在新的情况下他们仍然使用从之前战争中总结出来的已经过时的战略战术。信用卡发行机构通常使用余额控制策略来规避高风险的客户,同时留住有价值的长期客户。但是,信贷危机前制定的策略已经不能满足当前的业务需求了。在新形势下涌现出了大量高风险、低价值客户,     

Limited attention and the role of the venture capitalist

This research analyzes the venture capitalist's incentives to maximize the profits of the entrepreneurs of ventures and the limited partners of a venture fund. Venture capital is a professionally managed pool of capital invested in equity-linked private ventures. Entrepreneurs turn to venture capitalists for financing because high-technology startup firms have low or negative cash flows, which prevent them from borrowing or issuing equity. In addition, venture capitalists are actively involved in management of the venture to assure its success. This solves the problem of startup firms that do not have the cash flows to hire management consultants.Venture capital contracts have three main characteristics: (1) staging the commitment of capital and preserving the option to abandon, (2) using compensation systems directly linked to value creation, and (3) preserving ways to force management to distribute investment proceeds. These characteristics address three fundamental problems: (1) sorting the venture capital among the entrepreneurial ventures, (2) providing incentives to motivate venture capitalists to maximize the value of the funded ventures, and (3) providing incentives to motivate entrepreneurs to maximize the value of the ventures. Venture capitalists fund only about a dozen projects a year out of a thousand evaluated. Each project may receive several rounds of financing. Payoffs to VCs can be very high or be a complete loss.The typical venture capital (VC) firm is organized as a limited partnership, with the venture capitalists serving as general partners and the investors as limited partners. General partner VCs act as agents for the limited partners in investing their funds. VCs invest their human capital by placing their reputation on the line. The goal is to begin to convert the investment into cash or marketable securities, which are distributed to the partners. VC management companies receive a management fee equal to a percentage (usually 2.5%) of the capital of each fund. They also receive a percentage (15–30%) of the profits of each fund, called carried interest. Periodic reports are made by the VC firm to the limited partners. Usually these are only costs of managing the fund, and so revenues are negative. Most contracts specify the percentage of time that the VC will devote to managing the fund.The analysis of this research deals with the incentives of the VC who has limited attention to be allocated between improving current ventures and evaluating new ventures for possible funding. The analysis shows that the VC, as agent for both the entrepreneur and the general partners, does not have the incentives required to maximize their profits. The VC allocates attention among ventures and venture funds less frequently than required to maximize the entrepreneurs' and limited partners' profits. However, the VC does maximize the total profits of all ventures. Because the VC considers the opportunity cost of attention, the VC's allocation of attention is efficient. The implication of this result is that, although the entrepreneurs and limited partners could be made better off with a different allocation of the VC's time, this would be an inefficient use of the VC's time.     

Are women expected to be more generous?

This paper analyzes if men and women are expected to behave differently regarding altruism. Since the dictator game provides the most suitable design for studying altruism and generosity in the lab setting, we use a modified version to study the beliefs involved in the game. Our results are substantial: men and women are expected to behave differently. Moreover, while women believe that women are more generous, men consider that women are as generous as men.

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Electronic Supplementary Material  The online version of this article () contains supplementary material, which is available to authorized users. We appreciate comments from Josemari Aizpurua, Shoshana Neuman and participants in seminars at Bar-Ilan University, Max Planck Institute of Economics, Univ. Publica Navarra. Tim Cason and one anonymous referee made substantial comments on the previous draft. Financial support from CICYT (SEJ2007-62081/ECON and SEJ2006-00959/SOCI) and FCEA (SOC2.05/43) is gratefully acknowledge. Martha Gaustad revised the English grammar.     

A large-scale test of the biorhythm-shoplifting connection hypothesis

The impact of shoplifting on retailers and on the public in general is significant. Stores lose revenue, local governments lose tax monies, and the public pays higher prices at the checkout counter, all because of the actions of individuals who shoplift. Because a large percentage of shoplifting is due to the actions of retail employees, an effort that would reduce losses due to employee theft could have a significant impact on the problem. Biorhythmic charting was hypothesized as providing a potential avenue through which the problem could be addressed. This study provides a large-scale test of the relationship between biorhythm criticality and shoplifting. A managerially useful relationship was not discerned. © 1996 John Wiley & Sons, Inc.     

Scalable sociality and “How the world changed social media”: conversation with Daniel Miller

Daniel Miller is Professor of Material Culture at University College London. His prolific work in consumption studies, material culture studies and, more recently, digital anthropology has made fundamental contributions to our understanding of consumption, markets and culture. Miller is currently in the midst of a five-year European Research Council grant titled, Social Network Sites and Social Science, which funds the Global Social Media Impact Study. Developing concepts such as scalable sociality and understandings of “Why We Post,” anthropologists in nine locations around the world have conducted ethnographies, each of 15 months, focusing on everyday social media use in relation to issues of migration, family, politics, education, and commerce, as well as, on the ways in which genres of content flow through different platforms. The project's output includes 11 scholarly books, the launch of the Why We Post website, and an online university course, all of which are open access and have creative commons license. Miller is a Fellow of the British Academy and has won the Royal Anthropological Institute's Rivers Memorial Prize, given in past years to such luminaries as Bronislaw Malinowski, E. E. Evans-Pritchard, and Mary Douglas. This interview took place in London, 19 October 2015.