A Classification of Factors Influencing Participating in Collusive Tendering Agreements

The morality of tendering practices is an issue of economic and social significance, especially when large government contracts are involved. Criticisms are mostly concentrated around collusive tendering: illegal agreements between tenderers that result in seemingly competitive bids, price fixing or market distribution schemes that circumvent the spirit of free competition and defraud clients. Although collusion has been identified as an endemic malaise of tendering, its behavioural and moral dimensions have not been systematically studied before. The paper addresses this knowledge gap and describes part of an exploratory empirical investigation of the decision-making patterns utilised by estimators in Australia'slargest construction organisations.     

Residential Mobility and the Housing Market in a Two-sector Neoclassical Growth Model

The impact of residential mobility and competitive housing markets on long run growth is examined using a two-sector general equilibrium overlapping-generations model in continuous time. There is an infinity of agents with finite lives who adjust their housing consumption by moving, which is costly. We explore the model's steady-state properties, first with a free housing market, then under rent control when the market clears through restrictions on the frequency of moves. Rent controls do not just reduce welfare; they may increase the steady-state capital-labor ratio.     

Accounting contagion: The case of Enron

The Enron scandal offers the opportunity to assess the degree to which misleading accounting can affect connected firms and industry rivals. While the market was inept at detecting the inaccuracy of Enron’s financial statements, it swiftly punished many connected firms once Enron's faulty accounting was publicized. A cross-sectional analysis documents that the market punished connected firms that had greater exposure to Enron’s business, whose financial statements were viewed as more complex, and that had greater financial leverage. Most of the negative news indicating concern with Enron’s accounting corresponded with a significant decline in the stock prices of firms in the energy and natural gas (ENG) industry, regardless of an explicit connection to Enron. Furthermore, rival firms with direct exposure to Enron and more aggressive earnings-reporting methods also experienced more detrimental effects.     

Impact of investors’ status on their evaluation of positive and negative,and past and future information

This paper examines the effect of investors’ status (current and prospective) on their evaluation of information varying in valence (negative and positive) and temporality (past and future). Master of Business Administration graduates, proxying for current or prospective investors, rated the relevance of negative, positive, past, and future Management Discussion and Analysis information. Investors’ relevance ratings of information resulted in the following ranking (from highest to lowest): negative‐future, negative‐past, positive‐future, and positive‐past information. Furthermore, prospective investors (relative to current) rated positive and future information as more relevant and negative information as less relevant. Implications for effective disclosure strategies and policies are discussed.     

Equity and efficiency aspects of the Italian debt reduction

The paper deals with the distributional and efficiency consequences of debt reduction in Italy. A reduction of the deficit from six to three percent of GDP is financed by the so-called Eurotax (introduced temporarily or permanently) combined with an adjustment of consumption taxes or public transfers. The quantitative analysis is based on a dynamic simulation model of the Auerbach-Kotlikoff type, which distinguishes between five lifetime income classes within each age cohort. Our simulation results indicate that debt reduction increases the welfare of future generations between 1 and 2% of lifetime resources and that consumption taxes are preferable to the Eurotax on allocative grounds.     

A Stochastic Control Approach to Risk Management Under Restricted Information

We use techniques from discrete-time stochastic control under partial state information to determine a shortfall-risk minimizing investment strategy in the case when there is only restricted information on the underlying market model and transaction costs as well as shortselling constraints are present. The approach is adaptive in the sense that it takes into account all the information on the underlying model that becomes successively available to an economic agent by observing the prices in the market. As an immediate byproduct of the approach it is possible to determine the entire shortfall distribution corresponding to the optimal strategy and to various values of the initial capital.     

Negotiation Support for Multi-Party Resource Allocation: Developing Recommendation for Decreasing Transportation-Related Air Pollution in Budapest

Decisions about how to allocate scarce resources among potential programs are common sources of conflict in both public and private life. This paper describes a case in which negotiation support was provided for a five-member task force trying to reach agreement about how to allocate limited resources among programs designed to improve the air quality in Budapest, Hungary. The intervention consisted of a series of facilitated decision conferences, plus individual interviews. The task force eventually reached agreement about a recommended package of 15 air quality management programs costing 1,500 million Hungarian forints. The research makes four significant contributions. First, it demonstrated that resource allocation models provide a useful framework for understanding and facilitating multi-party negotiation processes. Second, because resource allocation models were elicited individually for each group member before building a single group model, it was possible to analyze the five-dimensional feasible settlement space (i.e., the joint distribution of benefits for each task member for all possible resource allocation packages). Third, several innovative applications of analytical techniques (i.e., Pareto-efficiency analyses, numerical and graphical analyses of feasible settlement spaces and efficient frontiers, and analyses of task force members' investment progressions) served to improve understanding of disagreements within the group and to evaluate the quality of potential resource allocation packages. Fourth, changes in individual preferences and group agreement were assessed over time. Group members appeared to change substantially and their level of agreement to increase markedly over time.     

Offsetting the implicit incentives: Benefits of benchmarking in money management

Money managers are rewarded for increasing the value of assets under management. This gives a manager an implicit incentive to exploit the well-documented positive fund-flows to relative-performance relationship by manipulating her risk exposure. The misaligned incentives create potentially significant deviations of the manager’s policy from that desired by fund investors. In the context of a familiar continuous-time portfolio choice model, we demonstrate how a simple risk management practice that accounts for benchmarking can ameliorate the adverse effects of managerial incentives. Our results contrast with the conventional view that benchmarking a fund manager is not in the best interest of investors.     

The Impact of Option Popularity,Social Inclusion/Exclusion,and Self-affirmation on Consumers’ Propensity to Choose Green Hotels

Previous research on consumers’ willingness to choose a green hotel has yielded mixed results, with some studies indicating a positive relationship with the hotel’s CSR initiatives, while others suggesting that there is no booking advantage for hotels going green. The present research seeks to understand the social nature of green hotel booking decisions and proposes a conceptual framework elucidating three primary factors that underlie consumers’ propensity to choose a green hotel. The study findings indicate that, importantly, a consumer’s social relationship situation (social inclusion vs. social exclusion) with other consumers, self-affirmation (self-value/self-concept reinforcement), and the option popularity jointly influence consumers’ willingness to choose a green hotel. The authors adopt a 2 × 2 × 2 factorial experimental design to test the proposed hypotheses. Theoretical and managerial implications are discussed.