Cultural practices and life insurance consumption: An international analysis using GLOBE scores

This cross-disciplinary study examines how national culture practice affects cross-country variations in life insurance consumption. To proxy for national culture dimensions, we use the refined measure of the GLOBE project which includes several additional cultural dimensions not included in Hofstede's analysis. Using 1966–2004 data across thirty-eight countries, our analysis reveals a strong relationship between life insurance consumption and the practice scores of in-group collectivism as well as power distance. These relationships continue to hold, even after controlling for other country-level variables such as national income, expected inflation rate, banking sector development, investor protection index, dependency ratio, life expectancy, and religion.     

Search for financial returns and social security privatization

I develop a general equilibrium model in which the quality of household financial decisions is endogenously determined by the incentives to exert effort in learning about financial opportunities. The model generates predictions for asset market participation and returns across households. Moreover, search for financial returns enables the model to generate a more skewed equilibrium wealth distribution. In this context, social security privatization affects household search effort, asset market participation and the competitiveness of the asset market. Privatization reduces average welfare and this reduction is somewhat magnified by the search friction. While some have suggested that household decision making could be important for the consequences of privatization, my analysis does not bear this out.     

Risk sensitivity in distribution channel partnerships: implications for manufacturer return policies

The manufacturer return policy is widely regarded as a means for channel partners to share risk. However, existing studies of this popular institutional practice use frameworks that assume risk-neutrality of all parties.This report analyzes how sensitivity to risk affects both sides of the manufacturer-retailer relationship under various scenarios of strategic power, and how these dynamics are altered by a return policy. A key finding is that the penalty for ignoring risk sensitivity can be substantial. This will suggest an informational motive affecting the use of return policies, a consequence of the potential difficulty of inferring another party’s risk sensitivity and the positive incentive for deception.