Dynamics of fine wine and asset prices: evidence from short- and long-run co-movements

This article examines short- and long-term price linkages among the majority of fine wine and equity markets over the period of 2003 to 2012. We do not consider the price index (LIV-EX 100 or 500), as is typically undertaken in previous studies, but rather examine the auction price series of the world’s most traded wine-vintage pairs (5 Bordeaux first growth, 8 Bordeaux second growth, 5 Burgundy, 3 Rhone, 4 Italian, 5 Californian, 1 Australian and 1 Portuguese). A global equity index is also included using the Morgan Stanley Capital International World. Cointegration procedures, the Granger non-causality test, and ECM are used to analyse short- and long-run relationships among these markets. The results indicate a strong effect of financial markets on wine prices and short-term causality for certain wines. Moreover, the findings indicate short-run causality between the wines themselves, revealing a leader (exogenous) or follower (endogenous) status of certain fine wines in price dynamics, and also long-run causality for endogenous wines. This approach is relevant to portfolio diversification strategies and allows price movements to be anticipated more accurately than using an index approach.     

Implementing the Mortensen rule in a frictional labor market

We show that, in settings where meetings can be multilateral, the allocation rule proposed by Mortensen (1982) can be relatively straightforward to implement: as a local auction conducted by sellers. The implications of using this mechanism in a simple model of the labor market are then explored. We characterize the equilibrium properties of this model, which include wage dispersion, and examine its implied Beveridge curve. A dynamic version of the model is calibrated to the US labor market, and we show that the model can account for observed vacancy rates, given parameters that are chosen to match the average wages and the natural rate of unemployment, although the implied wage dispersion is quite small. Finally, in the limit, as the time between offer rounds in the model approaches zero, the equilibrium approaches the Walrasian competitive equilibrium.     

Color blind is not color neutral: testing differences and affirmative action

Employers or universities determine the qualifications of applicantsbased on the results of a test. Members of socioeconomicallydisadvantaged groups tend to score less well than equally qualifiedmembers of other groups. As a result, color blind practicesdiscriminate against disadvantaged groups. This discriminationmay persist even if rational firms realize that the test is(statistically) biased. Furthermore, test bias against a groupis consistent with the test overpredicting group members' performance.An affirmative action program may be needed to achieve color-neutralresults.     

Does Service Employees’ Appearance Affect the Healthiness of Food Choice?

Derived from previous research on social influence on food consumption and social comparison theory, this article examines the effect of service employees’ appearance on consumers’ food choice using an experimental study, involving a video manipulation and eye‐tracking technique. The video shows a menu being proffered by a waitress whose degree of apparent healthiness varies (healthy, overweight, unhealthy lifestyle). The menu contains both healthy and unhealthy meal alternatives. The analysis of participants’ eye movements demonstrated that exposure to the overweight employee did not stimulate greater (i.e., earlier or longer) attention to unhealthy meal alternatives, whereas exposure to the employee who displayed an unhealthy lifestyle did. These findings have social and managerial implications: The postulated stigma according to which the presence of overweight others encourages unhealthy eating appears questionable. Service providers that might secretly hire according to body weight have no grounds to do so. In contrast, employees signaling an unhealthy lifestyle through their style choices prompt patrons to pay more attention to unhealthy meal alternatives. Food service providers might want to take this factor into consideration and actively manage the aspects that can be altered by simple measures.     

Financial behaviours of consumers in credit counselling

Positive financial behaviours of consumers are examined using a national sample of consumers who use credit counselling services in the US from a behavioural economic perspective. The findings indicate that consumers in credit counselling may follow a hierarchical pattern in their financial behaviours, paying off debts and adjusting spending before considering saving. Consumers who are older, have a part‐time job (vs. the unemployed), and report a more secure retirement, a better family relationship, and a higher score of self‐evaluation of financial behaviours are likely to report more positive financial behaviours. Reporting more financial behaviours and a higher score of self‐evaluation of financial behaviours, along with several demographic and perception variables, tend to reduce financial stress and increase financial satisfaction among consumers who use credit counselling services.     

Outlier‐Robust Bayesian Multinomial Choice Modeling

A Bayesian method for outlier‐robust estimation of multinomial choice models is presented. The method can be used for both correlated as well as uncorrelated choice alternatives and guarantees robustness towards outliers in the dependent and independent variables. To account for outliers in the response direction, the fat‐tailed multivariate Laplace distribution is used. Leverage points are handled via a shrinkage procedure. A simulation study shows that estimation of the model parameters is less influenced by outliers compared to non‐robust alternatives. An analysis of margarine scanner data shows how our method can be used for better pricing decisions. Copyright © 2015 John Wiley & Sons, Ltd.     

DO WATER-RICH REGIONS HAVE A COMPARATIVE ADVANTAGE IN FOOD PRODUCTION? IMPROVING THE REPRESENTATION OF WATER FOR AGRICULTURE IN ECONOMIC MODELS

With growing demand for fresh water and uncertain supplies, there is an increasing concern about future water scarcity. Since most freshwater withdrawals are for agriculture, reliance on water embodied in imported food (trade in ‘virtual water’) is a possible strategy to provide food to water-stressed regions while conserving their scarce supply for other purposes. To evaluate this proposition, we extend a model of interregional trade by (1) defining endowments of water that cannot be exceeded, (2) allowing simultaneous operation of rainfed and irrigated agriculture, and (3) distinguishing sub-regional endowments within a larger economic region. An application to the Mexican economy compares region-specific water abundance with economic comparative advantage under alternative scenarios. We conclude that the water-rich regions of Mexico are relatively high-cost producers of food and that they do not pick up the slack even when the lowest-cost Mexican regions are constrained by binding water constraints.     

Application of sparse matrix techniques to inter-regional input-output analysis

Conclusions Combining the concepts described in this paper makes it possible to solve inter-regional input-output systems (and other types of large, sparse, linear systems) with considerable efficiency in storage and computation. The exact number of operations and corresponding savings in computational time and storage depend on the particular zero-non zero structure of each matrix in the system, but in any case the savings can be enormous. A recommended procedure is summarized below.1. Take the entire inter-regional IO system which includes the representation of each of the regions and of the links among them and express it in the formMx=Bz or, more simply,Mx=b (since bothB andz are known). It may be helpful for this purpose to draw a picture of the large matrixM.2. PartitionM into blocks, exploiting the structure of the particular system. For example, at the very least, the matrix or matrices corresponding to each region will probably be separate blocks. The analysis required for this step may lead to reformulating the matrix representation of the given economic system by, for example, replacing a set of equations with linear combinations of these same equations, particularly for the equations representing the links among regions.3. Identify an appropriate partition of the blocks ofM, and a corresponding partition of the vectorsx andb, for performing a block factorization. This solution algorithm, which solves forx inMx=b (whereM now represents the entire system) is not available as a packaged program and so for the foreseeable future must be written in home-made computer code that assumes a sparse matrix storage scheme compatible with the package to be used (as in 4 below). The algorithm for block factorization in the 2×2 case relevant to our particular inter-regional IO system is given in Section 8 of this paper.4. Some steps of the algorithm require solving smaller systems of the formHu=v foru, given some matrixH and some vectorv. Efficient packaged subroutines can be obtained at low cost in order to solve these systems by finding the block triangular form corresponding to a particularH, then performing theLU factorization of the diagonal blocks only. The home-made code will interact with these subroutines.The idea of applying the sparse matrix techniques described in this paper to input-output models was conceived in 1978 at meetings of the first author and Dietrich Fischer with Fred Gustavson and with Don Goldfarb and Olof Widlund. Both Fred Gustavson and Olof Widlund made valuable suggestions while the work was carried out, and they, Dietrich Fischer, Wassily Leontief and Vu Viet reviewed early drafts of the paper, making many corrections and valuable suggestions. We also thank Alan George for useful discussions.This paper was presented at the Seventh International Conference On Input-Output Techniques at Innsbruck, Austria, 9–13 April 1979. Since then, the design described here has been implemented and the operational World Model has served as a tool for several empirical studies.     

Managing culturally diverse buyer-seller relationships: The role of intercultural disposition and adaptive selling in developing intercultural communication competence

Given the increase in cultural diversity within marketing organizations as well as within current and potential customer bases, possessing the appropriate communication skills becomes crucial to success in managing culturally diverse relationships. Although marketing researchers have recognized the importance of adaptive selling behavior for successful buyer-seller relationships, the exploration of the intercultural aspects of these relationships has only recently begun. This article examines how adaptive selling behaviors and intercultural dispositions of marketing executives contribute to their perceived intercultural communication competence. Results show that in addition to being adaptive, the intercultural disposition of a marketer is of key importance in developing intercultural communication competence. Theoretical and practical implications for incorporating intercultural communication into the development of successful buyer-seller relationships are discussed. Victoria D. Bush (Ph.D., University of Memphis) is an associate professor of marketing at the University of Mississippi. Her research has appeared in such journals as theJournal of Advertising, theJournal of Advertising Research, Industrial Marketing Management, theJournal of Public Policy and Marketing, theJournal of Business Ethics, and theJournal of Services Marketing. Her research interests are in diversity, advertising, and ethics. Gregory M. Rose (Ph.D., University of Oregon) is an associate professor of marketing at the University of Mississippi. His research interests include consumer socialization and cross-cultural consumer behavior. He has published or has forthcoming articles in theJournal of Consumer Research, theJournal of the Academy of Marketing Science, theJournal of Business Research, theJournal of Consumer Psychology, theJournal of Advertising, theJournal of Marketing, and other journals and proceedings. Faye Gilbert (Ph.D., University of North Texas) is an associate professor of marketing at the University of Mississippi. She has published in theJournal of Business Research, Psychology and Marketing, theJournal of Health Care Marketing, theJournal of Research in Pharmaceutical Economics, theJournal of Applied Business Research, theJournal of Marketing Management, theJournal of Marketing Theory and Practice, and theJournal of Marketing Education, among others. Her work emphasizes the application of consumer behavior theory to health care and to channel relationships. Thomas N. Ingram (Ph.D., Georgia State University) is a professor of marketing at Colorado State University. He has been honored as the Marketing Educator of the Year by Sales and Marketing Executives International (SMEI) and as a recipient of the Mu Kappa Tau National Marketing Honor Society Recognition Award for Outstanding Scholarly Contributions to the Sales Discipline. He has served as the editor of theJournal of Personal Selling and Sales Management and is the current editor of theJournal of Marketing Theory and Practice. His primary research is in personal selling and sales management. His work has appeared in theJournal of Marketing, theJournal of Marketing Research, theJournal of Personal Selling and Sales Management, and theJournal of the Academy of Marketing Science, among others. He is the coauthor of three textbooks:Professional Selling: A Trust-Based Approach, Sales Management: Analysis and Decision Making, andMarketing: Principles and Perspectives.