Reversible Jump Markov Chain Monte Carlo Method for Parameter Reduction in Claims Reserving

Abstract

We present an application of the reversible jump Markov chain Monte Carlo (RJMCMC) method to the important problem of setting claims reserves in general insurance business for the outstanding loss liabilities. A measure of the uncertainty in these claims reserves estimates is also needed for solvency purposes. The RJMCMC method described in this paper represents an improvement over the manual processes often employed in practice. In particular, our RJMCMC method describes parameter reduction and tail factor estimation in the claims reserving process, and, moreover, it provides the full predictive distribution of the outstanding loss liabilities.     

The role of open innovation in emerging economies: Do companies profit from the scientific knowledge of others?

Our contribution lies in explaining why inter-firm variations in the strategic decision to actively seek and acquire external scientific knowledge impact not only financial performance but also the effects of firms’ own R&D. We further demonstrate that the performance implications of using external knowledge and technologies vary considerably depending on their source (domestic or foreign). Knowledge sourcing from domestic organizations has negligible consequences for financial performance and an adverse effect on firms’ own R&D. By contrast, knowledge acquisition from foreign countries results in superior performance and assists firms in unlocking their innovation potential.     

Competition Between Exclusive Religions: The Counter‐Reformation As Entry Deterrence

This article sets forth a theory of competition between exclusive religions as an entry deterrence game, in which the incumbent may find it profitable not to accommodate but to deter the competitor's entry by precommitting to sufficient capacity expansion in the event of entry. If entry costs are high enough, deterrence is optimal and the incumbent remains a monopolist, although the entry threat distorts its effort upward. The model is then applied to the Catholic Church's reaction to the Protestant Reformation. It is argued that the model provides a better fit to the historical data of the Counter‐Reformation than the price‐cutting model proposed by economists Ekelund, Hébert and Tollison ( 2004 , 2006 ).     

Services for the underserved: unintended well-being

There is a lack of research on service consumption practices of Base of the Pyramid consumers. This study contributes to the Transformative Service Research agenda by understanding stigmatized service consumption practices and their effect on the well-being of these consumers; this has not been fully addressed until now. Additionally, it is shown that understanding the relations among consumers, communities, and informal service offerings results in the design of services with unintentional positive effects on well-being at individual, collective, and relational levels. Findings show that informal service offerings are non-discriminatory, hassle-free, jargon-free, and reputation-based. These findings pave the way to further explore such complex contexts to better understand the impact of service design on the well-being of such consumers. Positive practices can be adopted by any service industry that intends to serve that segment through the intentional redesign of offerings that are engaging, inclusive, and simple and acknowledge social standing.     

A Matter of Survival - Determinants of Rational Behavior in B-to-B Markets

The paper focuses on the question of whether the frequently stated industrial/consumer dichotomy with respect to the involved degree of rationality in decision making, namely that it is high in b-to-b and low in b-to-c markets, is in fact justified. We develop a universal framework to determine which factors lead to rational behavior. The framework may be used for determining if a given decision situation should be analyzed by means of an economic or rather a behavioral approach. When adapting this framework to evaluate decisions in business markets, we identify conditions under which rational behavior is unlikely. Thus, from a purely theoretical standpoint, the proposed dichotomy seems questionable. Whether or not, however, the identified conditions promoting ‘irrationality’ in both industrial and consumer markets in fact must be determined empirically. Therefore, we also suggest an empirical test for the universal framework.     

Universities and global competition for graduate students: scenarios for Latin America

The purpose of this paper is to lay out future scenarios related to the impact of the intensification of competition between universities and research centres of OECD countries on the stocks and flows of university graduates in Latin America. In conditions of intensified competence, it is possible that the ways in which Latin American countries, universities and university professionals participate in the processes of international mobility will change significantly. This paper proposes different scenarios, combining hypotheses about the global dynamics of skilled mobility and migration of graduate students (conditioned by the behaviour of the demand in developed countries), about their main impacts on Latin America, and about the responses that Latin American governments and universities could make to face this process.     

Estimating Consistent Border Effects in Gravity Models with Multilateral Resistance

We suggest a modification of the Anderson and van Wincoop gravity model that relies on trade friction parameter estimates that are robust to the correlation of trade friction variables with any country‐specific unobservable variables. This leads to significantly different US–Canadian border effects as compared to the original approach.