A nonparametric analysis of multi-product oligopolies

We develop revealed preference tests for models of multi-product oligopoly, building on the work in Carvajal et al. (Econometrica 81(6):2351–2379, 2013). We analyze a Cournot model with multiple goods and show that it has testable restrictions when at least one good is produced by two or more firms. We also develop a revealed preference test for Bertrand oligopoly in a setting where each firm produces a single differentiated good, and these goods are potentially substitutes for each other. Our tests require qualitative assumptions on the shape of the demand curves and (in the Bertrand case) their evolution across observations, but they do not rely on the estimation of market demand.     

Earnings dynamics of men and women in Finland: permanent inequality versus earnings instability

I decompose the earnings variance of Finnish male and female workers into its permanent and transitory components using the approach of Baker (J Labor Econ,15:338–375, 1997) and Haider (J Labor Econ, 19:799–836, 2001) in the spirit of scientific replication. I find that the increasing earnings inequality of men and women is driven by both the transitory and permanent components of earnings. In addition, I find considerable differences in the earnings dynamics of men and women, that have been largely neglected in previous studies of earnings dynamics. The inequality among men is dominated by the permanent component. Conversely, permanent and transitory components are of comparable magnitudes to women. As a corollary, men experience more stable income paths but display larger permanent earnings differences. Women, on the other hand, face more unstable earnings profiles but show smaller permanent differences in earnings.     

Leaders’ Personal Wisdom and Leader–Member Exchange Quality: The Role of Individualized Consideration

Business scholars have recently proposed that the virtue of personal wisdom may predict leadership behaviors and the quality of leader–follower relationships. This study investigated relationships among leaders’ personal wisdom—defined as the integration of advanced cognitive, reflective, and affective personality characteristics (Ardelt, Hum Dev 47:257–285, 2004)—transformational leadership behaviors, and leader–member exchange (LMX) quality. It was hypothesized that leaders’ personal wisdom positively predicts LMX quality and that intellectual stimulation and individualized consideration, two dimensions of transformational leadership, mediate this relationship. Data came from 75 religious leaders and 1–3 employees of each leader (N = 158). Results showed that leaders’ personal wisdom had a positive indirect effect on follower ratings of LMX quality through individualized consideration, even after controlling for Big Five personality traits, emotional intelligence, and narcissism. In contrast, intellectual stimulation and the other two dimensions of transformational leadership (idealized influence and inspirational motivation) did not mediate the positive relationship between leaders’ personal wisdom and LMX quality. Implications for future research on personal wisdom and leadership are discussed, and some tentative suggestions for leadership development are outlined.     

Product market competition and conditional conservatism

Based on pooled cross-sectional analysis, we find a robust positive relation between product market competition and conditional accounting conservatism. We also find evidence of an inter-temporal increase in conditional conservatism following industry deregulation and increased antitrust case filings. Distinguishing further between two dimensions of competition, we find conditional conservatism is greater when there is a higher threat of new entrants as well as stiff existing competition. Moreover, we find these results largely hold for industry followers as opposed to industry leaders, suggesting that strategic considerations shape the extent to which product market competition affects conditional conservatism.     

Portfolio Selection and Optimization with Higher Moments: Evidence from the Indian Stock Market

The Markowitz portfolio optimization model, popularly known as the Mean-Variance model, assumes that stockreturns follow normal distribution. But when stock returns do not follow normal distribution, this model wouldbe inadequate as it would prescribe sub-optimal portfolios. Stock market literature often deliberates that stock returns are non-normal. In such context the Markowitz model would not be sufficient to estimate the portfolio risks. The purpose of this paper is to expand the original Markowitz portfolio theory (mean-variance) via adding the higher order moments like skewness (third moment about the mean) and kurtosis (fourth moment about the mean) in the return characteristics. The research paper investigates the impact of including higher moments using multi-objective programming model for portfolio stock selection and optimization. The empirical results indicate that the inclusion of higher moments had a considerable impact in estimating the returns behavior of portfolios. The portfolios optimized using all the four moments, generated higher returns for the given level of risk in comparison to the returns of the Markowitz model during the study period 2000–2011. The results of this study would be immensely useful to fund managers, portfolio managers and investors as it would help them in understanding the Indian stock market behavior better and also in selecting alternative portfolio selection models.     

How to make Dupire’s local volatility work with jumps

There are several (mathematical) reasons why Dupire’s formula fails in the non-diffusion setting. And yet, in practice, ad-hoc preconditioning of the option data works reasonably well. In this note, we attempt to explain why. In particular, we propose a regularization procedure of the option data so that Dupire’s local vol diffusion process recreates the correct option prices, even in manifest presence of jumps.     

Retaining volunteers for the cause: Hope and pride associated with cause-related charity events in cancer control

Special charity events are an important source of revenue for non-profit organisations in cancer control yet volunteering is declining and turnover is high. Experiences at cause-related events may influence retention, particularly emotions connected to the cause and ceremonies which honour cancer survivors and remember loved ones. We explore the degree to which emotions associated with cause-related volunteering and collective action in the literature are felt in response to Relay For Life and what emotions predict three indicators of retention: intention to return for future events, satisfaction with volunteering, and organisational commitment. Volunteers (n = 410) completed a cross-sectional survey at Relay For Life events in Queensland, Australia. Multiple regression analyses examined whether emotions associated with events predicted each indicator of retention, adjusting for number of years spent volunteering for events. Sixty-two percent reported an intention to return the following year. The most commonly reported event-related emotions were hope, pride, and empathy (62–69%). Intention to return, satisfaction, and commitment were each significantly predicted by hope and pride. The findings suggest special charity events in cancer control could retain volunteers by fostering pride and hope (e.g., for a cancer free future); however, future prospective research which examines the mechanisms of these relationships is warranted.     

Classical Swine Fever Changes the Way Farmers Value Pigs in South Africa

Although there is growing demand for animal products in Africa, production is stagnating. Appropriate management of livestock diversity could help reinvigorate production, contribute to food security and improve farmers’ livelihoods, particularly in subsistence‐oriented systems. We assess differences in farmers’ preferences and economic values for pig traits across different production systems and across areas that have been affected and unaffected by classical swine fever (CSF). Not surprisingly, market‐oriented farmers derived higher values from the productive traits such as heavy slaughter weight and large litter size found in exotic pig genotypes. Subsistence‐oriented farmers, particularly in swine fever affected areas, placed high value on tolerance to disease. We found that CSF changed farmers’ preferences for adaptive traits, and less so for productive traits. Therefore, indigenous breeds become more valuable for subsistence farmers and crossbreeds for market‐oriented farmers if CSF is a risk. Our results can have implications for breeding and conservation strategies and for compensation strategies after culling, and will become increasingly relevant if, as predicted, heat waves and disease outbreaks become more frequent in pig production systems in South Africa with climate change.     

Optimal reinsurance under general law-invariant risk measures

In recent years, general risk measures play an important role in risk management in both finance and insurance industry. As a consequence, there is an increasing number of research on optimal reinsurance decision problems using risk measures beyond the classical expected utility framework. In this paper, we first show that the stop-loss reinsurance is an optimal contract under law-invariant convex risk measures via a new simple geometric argument. A similar approach is then used to tackle the same optimal reinsurance problem under Value at Risk and Conditional Tail Expectation; it is interesting to note that, instead of stop-loss reinsurances, insurance layers serve as the optimal solution. These two results highlight that law-invariant convex risk measure is better and more robust, in the sense that the corresponding optimal reinsurance still provides the protection coverage against extreme loss irrespective to the potential increment of its probability of occurrence, to expected larger claim than Value at Risk and Conditional Tail Expectation which are more commonly used. Several illustrative examples will be provided.     

When do incentives work in channels of distribution?

The incentive dilemma refers to a situation in which incentives are offered but do not work as intended. The authors suggest that, in an interorganizational context, whether a principal-provided incentive works is a function of how it is evaluated by an agent: for its contribution to the agent’s bottom line (instrumental evaluation) and for the extent it is strategically aligned with the agent’s direction (congruence evaluation). To further understand when incentives work, the influence of two key contextual variables—industry volatility and dependence—are examined. A field study featuring 57 semi-structured depth interviews and 386 responses from twin surveys in the information technology and brewing industries provide data for hypothesis testing. When and whether incentives work is demonstrated by certain conditions under which the agent’s evaluation of an incentive has positive or negative effects on its compliance and active representation. Further, some outcomes are reversed in the high volatility condition.