Search,learning, and tracking

In many search markets, some consumers search to learn both the price and their willingness-to-pay whereas others search only to learn prices. When a seller can track indicators of the likelihood that consumers already know their willingness-to-pay, I show that price discrimination reduces profits and welfare relative to uniform pricing if search costs are small, but may increase both if search costs are large. The analysis also applies to sequential search if learning causes the likelihood that consumers know their willingness-to-pay to depend on the search history.     

Opacity in bargaining over public good provision

We consider ultimatum bargaining over the provision of a public good. Offer-maker and responder can delegate their decisions to agents whose actual decision rules are opaque. We show that the responder will benefit from strategic opacity, even with bilateral delegation. The incomplete information created by strategic opacity choices does not lead to inefficient negotiation failure in equilibrium. Inefficiencies arise from an inefficient provision level. While an agreement will always be reached, the public good provision will fall short of the socially desirable level. Compared with unilateral delegation, bilateral delegation is never worse from a welfare perspective.     

The moderating effect of management behavior for Lean and process improvement

It is commonly agreed that the success of Lean management is not only determined by its technical practices, but also by the so-called soft practices such as behavior and actions of employees and management. Lean Management behavior is in itself paradoxical in nature as it incorporates technical aspects (e.g., fact-based management, analysis and adhering to the standard operating procedures for sake of efficiency) and social, follower-related aspects (e.g., promotion of employee responsibility to continuously improve their work processes). In this paper, we investigate the (moderating) effect of some important Lean related management actions on the relationship between Lean and the level of process improvement: i) envisioning and communicating the meaning of Lean, ii) setting goals and active steering on improvement performance metrics and ii) encouraging continuous improvement. Survey data of 178 responses from Dutch organizations, shows that these management actions have a positive effect on both Lean and the level of process improvement. In addition, active steering on performance improvement has a reinforcing effect on the relationship between Lean and process improvement. For respondents with a low level of steering on performance improvement Lean does not lead to process improvement, while it does for respondents with average and high levels of steering on performance improvement. The more management operates on performance improvement, the more Lean will result in a higher level of process improvement.     

Futures basis,inventory and commodity price volatility: An empirical analysis

We employ a large dataset of physical inventory data on 21 different commodities for the period 1993–2011 to empirically analyze the behavior of commodity prices and their volatility as predicted by the theory of storage. We examine two main issues. First, we analyze the relationship between inventory and the shape of the forward curve. Low (high) inventory is associated with forward curves in backwardation (contango), as the theory of storage predicts. Second, we show that price volatility is a decreasing function of inventory for the majority of commodities in our sample. This effect is more pronounced in backwardated markets. Our findings are robust with respect to alternative inventory measures and over the recent commodity price boom.     

Predicting the equity market with option-implied variables

We comprehensively analyze the predictive power of several option-implied variables for monthly S&P 500 excess returns and realized variance. The correlation risk premium (CRP) and the variance risk premium (VRP) emerge as strong predictors of both excess returns and realized variance. This is true both in- and out-of-sample. Our results also reveal that statistical evidence of predictability does not necessarily lead to economic gains. However, a timing strategy based on the CRP leads to utility gains of more than 5.03% per annum. Forecast combinations provide stable forecasts for both excess returns and realized variance, and add economic value.     

How do leaders' perceptions of organizational health climate shape employee exhaustion and engagement? Toward a cascading-effects model

Although researchers and practitioners increasingly focus on health promotion in organizations, research has been mainly fragmented and fails to integrate different organizational levels in terms of their effects on employee health. Drawing on organizational climate and social identity research, we present a cascading model of organizational health climate and demonstrate how and when leaders' perceptions of organizational health climate are linked to employee well-being. We tested our model in two multisource studies (N_{Study 1} = 65 leaders and 291 employees; N_{Study 2} = 401 leader–employee dyads). Results showed that leaders' perceptions of organizational health climate were positively related to their health mindsets (i.e., their health awareness). These in turn were positively associated with their health-promoting leadership behavior, which ultimately went along with better employee well-being. Additionally, in Study 1, the relationship between perceived organizational health climate and leaders' health mindsets was moderated by their organizational identification. High leader identification strengthened the relationship between perceived organizational health climate and leaders' health mindsets. These findings have important implications for theory and practice as they show how the dynamics of an organizational health climate can unfold in organizations and how it is related to employee well-being via the novel concept of health-promoting leadership.     

The Link between Institutional and Economic Integration: Insights for Latin America from the European Experience

The European experience illustrates that institutional integration interacts with economic integration at the regional level. In this paper we ask how economic and institutional integration are linked and whether there is a causal link between the two. We present an original indicator of institutional integration and study how it developed vis-à-vis diverse measures of economic integration. In particular, we ask what insights can be drawn from the European process of regional integration, which started in the 1950s, for regional integration in Latin America today. We find that Latin America is currently less economically integrated not only than the European Union today, but for certain economic variables even than the European Union in the 1960s. A VAR analysis illustrates that the link between institutional and economic integration has worked both ways throughout the European experience. There is also evidence that stronger institutional integration has indeed led to deeper economic integration.     

Purchasing Power Parities for Industry Comparisons Using Weighted Elteto–Koves–Szulc (EKS) Methods

This study has three main objectives. First, it develops a generalization of the commonly used EKS method to multilateral price comparisons. It is shown that the EKS system can be generalized so that weights can be attached to each of the link comparisons used in the EKS computations. These weights can account for differing levels of reliability of the underlying binary comparisons. Second, various reliability measures and corresponding weighting schemes are presented and their merits discussed. Finally, these new methods are applied to an international data set of manufacturing prices from the ICOP project. Although theoretically superior, it appears that the empirical impact of the weighted EKS method is generally small compared to the unweighted EKS. It is also found that this impact is larger when it is applied at lower levels of aggregation. Finally, the importance of using sector specific PPPs in assessing relative levels of manufacturing productivity is indicated.     

The influence of executive cognition on competitive dynamics

Prior competitive dynamics research has drawn on theories of information processing to model the subjective antecedents of executives' retaliation choices. This prior work has made great progress in developing our understanding of the retaliation choices most firms will make to a given type of attack. What the information processing perspective has not been able to do is explain firm‐specific behavior to predict which competitive moves individual firms will challenge, or explain why individual firms differ in the types of actions that they are most likely to challenge. The goal of this paper is to sharpen the theoretical and empirical focus on predicting firm‐level retaliation proclivities. We leverage managerial cognition research to examine the relationship between firm‐level differences in the cognitive frameworks that executives possess, and firm‐level differences in whether and how quickly firms challenge a market move. Results from a longitudinal study of the airline industry suggest that the addition of a cognitive perspective provides important insights into competitive retaliation. Copyright © 2010 John Wiley & Sons, Ltd.     

Optimal portfolio choice with wash sale constraints

We analytically solve the portfolio choice problem in the presence of wash sale constraints in a two-period model with one risky asset. Our results show that wash sale constraints can heavily affect portfolio choice of investors with unrealized losses. The trading behavior of such investors is to a large extent driven by the desire to realize those losses, either immediately by sharply decreasing the holding of assets carrying unrealized losses, or indirectly by increasing such holdings in order to prepare for a decrease in a future period to earn the tax rebate payment. Our findings are robust to increasing the number of trading dates and introducing a second risky asset and a correlation structure.