Lysine and Price Fixing: How Long? How Severe?

In October 1996 the Archer Daniels Midland Company(ADM) pleaded guilty to criminal price fixing withrespect to sales of lysine and agreed to pay a $70million fine. Earlier, in August 1996 two Japaneseproducers and a Korean producer of lysine had agreedto plead guilty to criminal price fixing charges. Andearlier still, in July 1996 ADM and the two Japanesecompanies settled the civil suits filed by some harmedbuyers by agreeing to pay a sum of $45 million.It is this last event that serves as the focus forthis paper. The adequacy of the settlement amount wasa major area of dispute. Connor (1996, 1997, 1998)has claimed that the trebled damages to lysinepurchasers were an order of magnitude larger. Crucialto Connor's conclusions are his assumptions as to thetime period during which the conspiracy had an effecton prices and the but for price that otherwise wouldhave prevailed in the absence of the conspiracy. Thispaper will argue that Connor substantiallyover-estimated the period of the conspiracy andunder-estimated the but-for price.     

The very real dangers of executive coaching

A personal coach to help your most promising executives reach their potential--sounds good, doesn't it? But, according to Steven Berglas, executive coaches can make a bad situation worse. Because of their backgrounds and biases, they ignore psychological problems they don't understand. Companies need to consider psychotherapeutic intervention when the symptoms plaguing an executive are stubborn or severe. Executives with issues that require more than coaching come in many shapes and sizes. Consider Rob Bernstein, an executive vice president of sales at an automotive parts distributor. According to the CEO, Bernstein had just the right touch with clients but caused personnel problems inside the company. The last straw came when Bernstein publicly humiliated a mail clerk who had interrupted a meeting to ask someone to sign for a package. At that point, the CEO assigned Tom Davis to coach Bernstein. Davis, a former corporate lawyer, worked with Bernstein for four years. But Davis only exacerbated the problem by teaching Bernstein techniques for "handling" employees--methods that were condescending at best. While Bernstein appeared to be improving, he was in fact getting worse. Bernstein's real problems went undetected, and when his boss left the company, he was picked as the successor. Soon enough, Bernstein was again in trouble, suspected of embezzlement. This time, the CEO didn't call Davis; instead, he turned to the author, a trained psychotherapist, for help. Berglas soon realized that Bernstein had a serious narcissistic personality disorder and executive coaching could not help him. As that tale and others in the article teach us, executives to be coached should at the very least first receive a psychological evaluation. And company leaders should beware that executive coaches given free rein can end up wreaking personnel havoc.     

Firm reputation with hidden information

Summary. An adverse selection model of firm reputation is developed in which short-lived clients purchase services from firms operated by overlapping generations of agents. A firm's only asset is its name, or reputation, and trade of names is not observed by clients. As a result, names are traded in all equilibria regardless of the economy's horizon The general equilibrium analysis links the value of a name to the market for services. This causes a non-monotonicity that precludes higher types from sorting themselves through the market for names, and leads to “sensible” dynamics: reputations, and name prices, increase after success and decrease after failure. Received: July 31, 2001; revised version: December 20, 2001 RID="*" ID="*" I thank Jon Levin, Eric Maskin and Drew Fudenberg for valuable discussions, and Heski Bar-Isaac for comments on an earlier draft. Financial support from the National Science Foundation (NSF grants SBR-9818981 and SES-0079876) is gratefully acknowledged. This paper replaces an older (and incomplete) working paper titled “Reputation with Hidden Information”.     

Financial Times Business School Rankings: A Nontraditional Assurance Case in Three Parts*

The Financial Times of London (FT) is a business newspaper, with daily editions published in the United Kingdom, continental Europe, the United States, and Asia, and an estimated daily readership of 10 million people. In 1999 the FT began to publish a ranking of what it considered to be the top business schools in the world. Since their inception, these rankings have become increasingly relied upon by potential students and business school administrators worldwide. The FT's ranking is unique compared with other rankings because of its special international focus. Given the prominence of these rankings and the FT's position as a well‐respected business newspaper, the question of providing assurance over the business school rankings that the FT provides is particularly challenging.     

A Qualitative Exploration into Voters' Ethical Perceptions of Political Advertising: Discourse, Disinformation, and Moral Boundaries

Political campaign advertising continues to be a controversial policy topic in advertising and marketing research. It is also a prime subject for investigating the ethical evaluations of consumers (or voters). The following study draws from postmodern communication theory and employs a qualitative research methodology in order to explore voters' intimate and subjective views about politics, candidates, and political advertising. The findings include emergent themes relating to significant media rituals in voters' lives, the cynical perspective of politics as a game, and the widespread disapproval and suspicion with which voters regard negative political advertising. Additionally, the a priori theme of political information as disinformation was proposed and expanded upon. Findings are discussed in light of a greater understanding of the appropriateness of the traditional versus the postmodern perspective of political communication, informants' construction of moral boundaries which help them determine right from wrong, acceptable vs. unacceptable political behaviours in this particular context.     

Acceptability and Ethics of Product Placement in Sport Video Games

Product placement in sport video games is an emerging area of marketing and advertising communication, but it also raises controversial ethical issues. In order to investigate these issues from a consumer perspective, this study examines the perceptions of the acceptability of product placement in sport video games (SVGs). Data were gathered from 253 sport video gamers using an online survey. The results indicate that while sport video gamers generally have favorable attitudes toward product placement in sport video games, ethically-charged products such as alcohol, cigarettes, and guns are perceived as less acceptable than other products. Individual differences among sport video gamers are found based on their related attitudes, hours of playing sport video games, and gender. Also, sport video gamers who have favorable attitudes toward product placement, in general, are more likely to intend to purchase a product or brand which may be placed in sport video games.     

Dividend‐Rollover Effect and the Ad Hoc Black‐Scholes Model

One of the most widely used option‐valuation models among practitioners is the ad hoc Black‐Scholes (AHBS) model. The main contribution of this study is methodological. We carefully consider three dividend strategies (No dividend, Implied‐forward dividend, and Actual dividend) for the AHBS model to investigate their effect on pricing errors. We suggest a new dividend strategy, implied‐forward dividend, which incorporates expectational information on dividends embedded in option prices. We demonstrate that our implied‐forward dividend strategy produces more consistent estimates between in‐sample market and model option prices. More importantly our new implied‐forward dividend strategy makes more accurate out‐of‐sample forecasts for one‐day or one‐week ahead prices. Second, we document that both a “Return‐volatility” Smile and a “Return‐pricing Error” Smile exist. From these return characteristics, we make two conclusions: (1) the return dependency of implied volatility is an important explanatory variable and should be controlled to reduce the pricing error of an AHBS model, and (2) it is important for the hedging horizon to be based on return size, that is, the larger the contemporaneous return, the more frequent an option issuer must rebalance the option's hedge. © 2012 Wiley Periodicals, Inc. Jrl Fut Mark 32:742‐772, 2012     

The analytics of search with posted prices

Summary. This paper investigates the characteristics of the optimal posted price in the standard sequential search paradigm. Much of the intuition gleaned from the extensive sequential search literature in which the seller adopts a reservation price does not carry over to the posted price setting. For example, an increase in buyer valuations can lead to a reduction in the optimal posted price. We do, however, provide sufficient conditions on the hazard rate function h which ensure that an increase in demand induces an increase in the optimal posted price. As exhibited herein, the analysis of the posted price model depends critically upon analytical properties of h. Amongst the issues treated are the elasticity of demand, finite horizon, sale of multiple units, and competitive equilibrium. Received: October 21, 1999; revised version: March 7, 2000     

Time Deformation in UK Consumers' Expenditure

Cook, Holly and Turner recently developed a hypothesis of a positive relationship between the durability of consumers' expenditure and the asymmetric behaviour it exhibits. Supportive evidence was found by applying Sichel's tests of business cycle asymmetry to the component series of UK consumers' expenditure, which represent goods of differing durability. In this paper the relationship is re‐examined using the original data, by implementing Stock's diagnostic tests of time deformation. The results provide further support for the durability–asymmetry hypothesis.