Informed Trading in Stock and Option Markets

We investigate the contribution of option markets to price discovery, using a modification of Hasbrouck's (1995) "information share" approach. Based on five years of stock and options data for 60 firms, we estimate the option market's contribution to price discovery to be about 17% on average. Option market price discovery is related to trading volume and spreads in both markets, and stock volatility. Price discovery across option strike prices is related to leverage, trading volume, and spreads. Our results are consistent with theoretical arguments that informed investors trade in both stock and option markets, suggesting an important informational role for options.     

An experimental investigation of entry cost effects in sealed-bid dollar auctions

We experimentally study the effect of entry costs on bidding and entry behavior in common value auctions. We find, with entry costs, players bid lower in first price and higher in second price auctions, compared to no entry fee auctions.     

Are You Risk Averse over Other People's Money?

Decisions with uncertain outcomes are often made by one party in settings where another party bears the consequences. Whenever an individual is delegated to make decisions that affect others, such as in the typical corporate structure, does the individual make decisions that reflect the risk preferences of the party bearing the consequences? We examine this question in two simple settings, lottery choices and sealed‐bid auctions, using controlled laboratory experiments. We find that when an individual makes a decision for an anonymous stranger, there is a tendency to exhibit less risk aversion. This reduction in risk aversion is relative to his or her own preferences, and it is also relative to his or her belief about the preferences of others. This result has significant implications for the design of contracts between principals and agents.     

Distribution of personal income: Development of a new model and its application to U.S. income data

This paper proposes a four-parameter statistical model of the personalized distribution of income using the ‘income share elasticity’ approach suggested by Esteban (1986). Our proposed model includes the Singh–Maddala (1976) and Dagum (1977) distributions as special cases. The generalized beta II distribution of McDonald (1984) is also a variant of this model. It appears to give an excellent fit to US income data and its empirical performance turns out to be superior to those of the Singh–Maddala (1976), Dagum (1977), the five-parameter Champernowne (1953) distributions and the generalized beta II distribution of McDonald (1984) on some data.     

The subgroup decomposable intermediate indices of inequality

An inequality index is called subgroup decomposable if it can be expressed as a weighted sum of inequality values calculated for population subgroups plus inequality arising from differences among subgroup means. This paper derives the class of subgroup decomposable inequality indices that satisfies the Bossert–Pfingsten type intermediate inequality invariance. When the intermediate inequality equivalence concept coincides with the relative notion of inequality, the derived class becomes the Cowell–Shorrocks generalized entropy family. For comments and suggestions, we are grateful to Peter J. Lambert and two anonymous referees. We thank Chranjib Neogi for drawing the only figure of the paper.     

Global cities: A multi-disciplinary review and research agenda

Multinational enterprise (MNE) location decisions are central to international business (IB) scholarship and research shows that global cities are key MNE investment locations. Despite growing awareness of their importance to MNEs, most literature on global cities resides outside the IB domain. To provide IB scholars with a foundation to advance global city research, we conduct a multi-disciplinary review of top journal articles organized into three themes: the nature of global cities, MNE strategic decisions in global cities, and outcomes of MNE investment in global cities. We use this framework to synthesize findings, discuss theoretical implications, and provide future research directions.     

Comparison of costs and outcomes of dapagliflozin with other glucose-lowering therapy classes added to metformin using a short-term cost-effectiveness model in the US setting

Objective: To compare 1-year costs and benefits of dapagliflozin (DAPA), a sodium-glucose cotransporter-2 (SGLT-2) inhibitor, with those of other treatments for type 2 diabetes (T2D), such as glucagon-like peptide-1 receptor agonists (GLP-1RAs), sulfonylureas (SUs), thiazolidinediones (TZDs), and dipeptidyl peptidase-4 inhibitors (DPP-4i), all combined with metformin.

Methods: A short-term decision-analytic model with a 1-year time horizon was developed from a payer’s perspective in the United States setting. Costs and benefits associated with four clinical end-points (glycated hemoglobin [A1C], body weight, systolic blood pressure [SBP], and risk of hypoglycemia) were evaluated in the analysis. The impact of DAPA and other glucose-lowering therapy classes on these clinical end-points was estimated from a network meta-analysis (NMA). Data for costs and quality-adjusted life-years (QALYs) associated with a per-unit change in these clinical end-points were taken from published literature. Drug prices were taken from an annual wholesale price list. All costs were inflation-adjusted to December 2016 costs using the medical care component of the consumer price index. Total costs (both medical and drug costs), total QALYs, and incremental cost-effectiveness ratios (ICERs) were estimated. Sensitivity analyses (SA) were performed to explore uncertainty in the inputs. To assess face validity, results from the short-term model were compared with long-term models published for these drugs.

Results: The total annual medical cost for DAPA was less than that for GLP-1RA ($186 less), DPP-4i ($1,142 less), SU ($2,474 less), and TZD ($1,640 less). Treatment with DAPA resulted in an average QALY gain of 0.0107, 0.0587, 0.1137, and 0.0715 per treated patient when compared with GLP-1RA, DPP-4i, SU, and TZD, respectively. ICERs for DAPA vs SU and TZD were $19,005 and $25,835, respectively. DAPA was a cost-saving option when compared with GLP-1RAs and DPP-4is. Among all four clinical end-points, change in weight had the greatest impact on total annual costs and ICERS. Sensitivity analysis showed that results were robust, and results from the short-term model were found to be similar to those of published long-term models.

Conclusion: This analysis showed that DAPA was cost-saving compared with GLP-1RA and DPP-4i, and cost-effective compared with SU and TZD in the US setting over 1 year. Furthermore, the results suggest that, among the four composite clinical end-points, change in weight and SBP had an impact on cost-effectiveness results.     

Revolution and counter-revolution: two views of unemployment

There is a view in economics that Keynes did not have a microeconomictheory underpinning his explanation of macroeconomics. For example,Friedman (1970) even goes so far as to maintain that pricesare arbitrary in Keyne's approach to economics. The conclusionwhich follows from this critique of Keynes is that Keynesianeconomics cannot explain the occurrence of unemployment in amarket economy except by invoking ad hoc assumptions. It isargued in this paper that the above critique is based on a misunderstandingof the focus of the Keynesian explanation of unemployment. Thefocus in Keynes is not choice, but exclusion from choice. Inconventional microeconomics, the concept of choice is not consideredproblematic. The observation that a particular action is takenis confused with the view that the action is voluntarily chosen.The Keynesian explanation entails an exploration of what theconcept of voluntary choice means.     

THE MEASUREMENT OF SOCIAL EXCLUSION

This paper develops an axiomatic approach to the measurement of social exclusion. At the individual level, social exclusion is viewed in terms of deprivation of the person concerned with respect to different functionings in the society. At the aggregate level we treat social exclusion as a function of individual exclusions. The class of subgroup decomposable social exclusion measures using a set of independent axioms is identified. We then look at the problem of ranking exclusion profiles by the exclusion dominance principle under certain restrictions. Finally, applications of decomposable and non-decomposable measures suggested in the paper using European Union and Italian data are also considered.     

Ethnic polarization orderings and indices

An ethnic polarization index is a summary statistic of ethnic diversity in a population. Reynal-Querol (J Confl Resolut 46:29–54, 2002) suggested an index of ethnic polarization, the RQ index, and discussed its properties. In this paper we develop two ethnic polarization orderings that can rank ethnic distributions in terms of all ethnic polarization indices satisfying certain intuitively reasonable postulates. Some of these postulates and some additional ones taken from the earlier literature are employed to develop some axiomatic characterizations of the RQ index. In the process, a generalized form of the RQ index is also characterized.