Adverse Shocks in Agriculture: The Assessment and Management of Downside Risk

This paper investigates the assessment and effects of adverse shocks on agricultural production, with an application to corn yield. Adverse shocks are assessed by the probability of facing low yields, i.e. by the probability of being exposed to downside risk. Defined in terms of willingness‐to‐pay to eliminate risk, the ex‐ante cost of facing adverse events is evaluated under prospect theory. Prospect theory is relevant in the evaluation of adverse shocks as it identifies a role for both loss aversion and oversensitivity to low probability events. The analysis is applied to experimental data on corn yield in the US Corn Belt. Estimates show how the distribution of corn yield is affected by management and technology. Implications for the cost of adverse shocks are examined. The results show how management and technology can reduce exposure to adverse shocks and lower the cost of risk in agriculture.     

Digestibility and asymmetric information in the choice between acquisitions and joint ventures: where’s the beef?

<In response to our empirical findings that, contrary to the predictions of the information asymmetry hypothesis, joint ventures are not more, but instead less likely when parents belong to different industries, Balakrishnan and Reurer argue that (1) the information asymmetry and the indigestibility hypotheses are theoretically complementary and (2) our results may be affected by the characteristics of our sample. In fact, the goal of our study was not to deny the theoretical validity of alternative theories of joint ventures, but only to ascertain their relative explanatory power. We therefore agree that both theories are complementary, but show that our findings are not explained by our sample, but instead by the way we test the information asymmetry hypothesis. Copyright © 2000 John Wiley & Sons, Ltd.     

International briefing 8 Training and development in France

Two main features characterise training and development in France: the influence of the school‐based model and a strong institutionalisation of continuing vocational training which is regulated by law and collective bargaining at national and sectoral levels. In the last decade training has been affected by four major changes: the development of alternating training programmes for young people and unemployed persons; a process of decentralisation which gives to regions an essential role of coordination; strengthening of links between training and employment; and an increasing responsibility of firms in the management of training. As a result, training is on an upward trend yet large inequalities in access still exist.     

Adoption of soil conservation practices in Belgium: An examination of the theory of planned behaviour in the agri-environmental domain

Soil erosion is a problem with serious on-site and off-site consequences. There exists a broad series of measures to mitigate soil erosion, unfortunately policy makers observe little voluntary adoption. This paper reports on a study to elicit the factors explaining adoption of soil erosion control practices in Belgium. Following a socio-psychological approach, the theory of planned behaviour (TPB), adoption of cover crops, reduced tillage and buffer strips is evaluated using linear regression techniques. Results show that the most explaining factor is attitude towards the soil conservation practice. The TPB adapted to include perceived control and difficulty appears to provide a suitable framework for evaluating adoption of erosion control measures in Belgium. Future interventions directed at promoting erosion control measures should be directed at changing the attitude of farmers. Further study is, however, required in order to elucidate the cognitive foundations of the negative attitude of a majority of farmers towards the implementation of erosion control practices.     

Export Restrictions and Smooth Transition Cointegration: Export Quotas for Wheat in Ukraine

We extend previous modelling approaches to identify domestic price effects of export controls. We allow for smooth transition between free‐trade price transmission regimes and those under export restricting regimes, using a smooth transition cointegration (STC) approach, rather than the more common assumption that regime changes are abrupt. Our approach has the advantage that the switch in the price transmission regime may be induced not only by an actual but also by an expected policy change. Results confirm the gradual nature of the transition between the regimes, which reflect trader heterogeneity and wheat storage decisions. We find that the STC approach outperforms alternative model approaches in terms of both regime classification and goodness of fit, when explaining Ukrainian domestic wheat prices under export controls. In particular, application of the Markov‐switching error correction model (MSECM) to the same data generates results which do not reflect any identifiable economic reality (in contrast to Götz et al., 2013 ).     

Effets des réglementations sur la rentabilité et le risque des compagnies d'assurances iard

La réglementation des sociétés d'assurances par les autorités de tutelle impose différentes contraintes aux gestionnaires. Il est difficile d'en apprécier les effets finaux si l'on ne dispose pas d'un modèle d'ensemble de l'entreprise. La rentabilité des compagnies d'assurances dépend de la gestion de l'actif et du passif du bilan, portefeuille déplacements et portefeuille d'assurances. La réglementation intervient pour poser des limites à ces choix sous forme de plafonds en pourcentages pour certains types de placements. Cette étude dans le contexte Canadien met en évidence le coǔt économique, en termes de risque et de rendement, d'une réglementation sur les placements. Abstract The control of insurance companies by the regulatory authorities imposes constraints on the manager's decisions. The companies' profitability is a function of the management of both assets and liabilities. Therefore it depends on the relative importance of the diverse lines of insurance - the insurance portfolio - and relative weight of the various assets - the investment portfolio. Portfolio theory demonstrates that the total risk is a non-linear combination of those component risks in a portfolio. This, in turn, determines the pursuit of the optimal portfolio structure, a structure defined by a minimal risk for a given level of profitability. With such a generalized portfolio model for insurance companies, one could simulate the consequences of the modification of any given regulation on either the assets or liabilities. The combination of risk level and profitability accessible to the companies vary as a function of markets constraints and regulations considered. It is therefore possible to demonstrate the effect, in terms of risk and return framework, of various regulations. The first section of this paper discusses the appropriate approach to the portfolio problem applied to insurance. The second section describes the data and the empirical results.     

Mail advertising and consumer behavior

This paper examines some trends in mail advertising and presents some findings from a longitudinal study on mail sent to and from U.S. households. Data from 1987 and 1991 interviews and diaries of a national probability sample of U.S. households were compared. As the third largest advertising medium, mail has grown in market share in the past decade as traditional advertising media declined or stayed the same. The paper examines how consumers feel, perceive and respond to the advertising mail they receive. It also explores how characteristics of the senders and recipients, factors outside the mail piece and the type of mail piece, influence consumer attitudes, perceptions, and treatment of the mail received. The paper concludes with recommendations to advertisers, marketers, and fundraisers for future research and for increasing the effectiveness of mail in their marketing mix. © 1996 John Wiley & Sons, Inc.