Socio-economic influences of population density

While population density represents an important socio-economic parameter, its role is rarely studied in the economic literature （contrary to natural sciences）. Population density plays an important role in harvesting societies, i.e. those that depend on agriculture and natural resources. With the development of industry and services and emergence of urban areas, population density becomes less economically important unless we consider aspects related to pollution. There exists a phase transition between rural and urban area which makes population density less important in urban area contrary to rural. However, the economic influence of population density in harvesting societies is also not straight forward. Too high population density decreases the natural endowment per capita, but eases the development of infrastructure, leading to existence of an optimal population density for economic growth. It also influences the demand for a monopolistic product, where too little density can lead to non-survival of a monopoly. Emergence of ethnic communities is based on more cooperative behavior in the case of low cultural and physical distances. At the same time, higher probability of large projects （like infrastructure） leads to development of cooperative behavior in the society. Elaboration along these lines leads to the conclusion that population density positively correlates with individualistic （non-cooperative, non-altruistic） behavior, through less time spent in cooperative infrastructure projects and higher frequency of meetings between individuals that with some probability lead to non-cooperative games.     

Tourists' attitudes towards textiles and apparel-related cultural products: A cross-cultural marketing study

This study examined American, Korean, and Chinese female consumers' evaluations of and purchase intentions towards Korean textiles and apparel-related cultural products. This study also investigated how a consumer's evaluations of Korean textiles and apparel-related cultural products are related to novelty-seeking tendency, world-mindedness, and familiarity with Northeast Asian culture on the part of female tourists. Novelty-seeking appeared to be useful only when predicting how one will respond to cultural products from other countries and cultures, but not from one's own. Regardless of the sample, respondents' evaluations of the color and design of the product stood out as the most important indicator, across all four products, of how much they would like a given product, and further, would also like to purchase the product. Northeast Asian design contributed to favorable purchase intention even for those who are from Northeast Asia, indicating that fashion cultural products are not targeted only at those from other cultures.     

Integrating Real Options with Managerial Cash Flow Estimates

This article presents a real options model that fits managerial cash flow estimates (optimistic, likely, and pessimistic projections) to a continuous geometric Brownian motion (GBM) cash flow process with changing growth and volatility parameters. The cash flows and the value of a project are correlated to a traded asset, so the real option is priced under the risk-neutral measure with a closed-form solution. The analysis is extended to a sequential compound call option for investments over multiple periods. If the project is correlated to the market, then some of the risk may be mitigated by a delta-hedging strategy. A numerical example shows that the effect of the correlated asset on the real option value is significant, and the relationship between the volatility of the project and the real option value is not analogous to the typical relationship found in financial option pricing. Integrating the expertise and industry knowledge of management, this approach makes possible a more rigorous estimation of model inputs for real option pricing.     

Fuzzy model estimation of the risk factors impact on the target of promotion of the software product

ABSTRACT

This article studies the application of fuzzy logic to the risk analysis of a new software product development and marketing in specific case of a small size IT company. Identification and analysis of external and internal risk factors show that this type of business activity could be evaluated as high-risk enterprise. So, the purpose of the paper is to develop robust method to evaluate probability of occurrence of major risk events and their impact on the company financial health. The fuzzy logic is used to estimate degrees of threat of each relevant risk factor due to lack of reliable statistical data. The novelty of proposed approach is the inclusion into the model the risk event time.     

Financial accumulation implies ever-increasing wealth inequality

Wealth inequality is an important matter for economic theory and policy. The recent rise in wealth inequality has been discussed in connection with the recent development of active global financial markets. The existing literature on wealth distribution links wealth inequality to a variety of drivers. Our approach develops a minimalist modelling strategy that combines three featuring mechanisms: active financial markets, individual wealth accumulation and compound interest structure. We provide mathematical proof that accumulated financial investment returns involve ever-increasing wealth concentration and inequality across individual investors most of the time. This cumulative effect over space and time depends on financial accumulation processes, including under efficient financial markets, which generate a fair investment game that individual investors repeatedly play through time.

     

Understanding fashion communication between Korean middle‐aged mothers and daughters

Daughters can be considered important social role models for middle‐aged mothers in fashion communication such as the clothing purchase or conformity. This study explores antecedents (trust in daughters as fashion informants and internalized social pressure for appearance management) and outcomes (solidarity between mother and daughter, psychological well‐being of mother) of fashion communication (mother–daughter shopping, clothing conformity) between middle‐aged mothers and daughters. The data were collected using a self‐administered online survey of 307 middle‐aged Korean women between ages of 45 and 65. The result shows that mothers’ trust in daughters as fashion informants and internalized social pressure for appearance positively influence mother–daughter shopping and mothers’ clothing conformity to daughters. Next, mother–daughter shopping and mothers’ clothing conformity have a positive influence on the solidarity of mothers and daughters. When solidarity becomes stronger, the degree of the mothers’ psychological well‐being increases.     

Semi-Static Hedging Based on a Generalized Reflection Principle on a Multi Dimensional Brownian Motion

On a multi-assets Black-Scholes economy, we introduce a class of barrier options, where the knock-out boundary is a cone. In this model we apply a generalized reflection principle in a context of the finite reflection group acting on a Euclidean space to give a valuation formula and the semi-static hedge. The result is a multi-dimensional generalization of the put-call symmetry by Bowie and Carr (Risk (7):45–49, 1994), Carr and Chou (Risk 10(9):139–145, 1997), etc. The important implication of our result is that with a given volatility matrix structure of the multi-assets, one can design a multi-barrier option and a system of plain options, with the latter the former is statically hedged.     

Compensation and performance: An experimental study

This paper investigates how compensation structure affects performance in a simple but effort-consuming task. In this experimental study, the subjects were asked to multiply two-digit numbers for 40 min and were paid using either a linear (with different pay for performance sensitivities) or a convex (option-based) compensation mechanism. We found that per-unit wage has a non-linear positive effect on performance: whereas increasing per-unit compensation from $0 to $0.02 or from $0.05 to $0.15 has virtually no effect on performance, an increase from $0.02 to $0.05 results in higher productivity. We also found that option-based compensation results in better performance.     

Economic life replacement under improving technology

The economic life (EL) method of asset replacement is analyzed under improving technology that impacts the maintenance cost, new asset cost, and salvage value. In particular, we prove that the asset EL is constant when all these costs decrease with the same rate. If these costs decrease geometrically, then the EL method with a corrected capital recovery factor calculates the optimal asset lifetime over the infinite horizon for arbitrary age-dependent deterioration and salvage value. In a general case, the EL method delivers an optimal replacement decision when the relative rate of technological change is less than 1%. For larger rates, we recommend to minimize the annual cost over two future replacement cycles, which was earlier proposed and implemented by Christer and Scarf, Journal of the Operational Research Society 45, 1994.