Price and Volume Reactions to Public Information Releases: An Experimental Approach Incorporating Traders' Subjective Beliefs*

This paper examines how market prices, volume, and traders' dividend expectations respond to public information releases in laboratory markets for a long-lived financial asset. The objective is to study deviations from the symmetric information risk-neutral rational expectations (RE) benchmark, which predicts no trade in such settings. The results of a series of double-auction and call markets are reported in which traders manage a portfolio of cash and asset shares over 15 rounds of trading. A public signal regarding the value of the liquidating dividend is released every third round, and traders' subjective expectations of the liquidating dividend are elicited each round as cash-motivated forecasts. We find that, despite the public dividend signal, traders' dividend forecasts are heterogeneous. Forecasts and prices both underreact to the public signals, with prices under-reacting more than forecasts. In general, price changes are not closely associated with public signals, and there is greater excess price volatility in double auctions than in call markets. Forty-three percent of trades are inconsistent with the trader's forecasts, and inconsistent trades occur more frequently in the double-auction markets. On average, approximately 10 percent of the outstanding shares are traded in each round, and trading volume is increasing in the mean absolute forecast revision and decreasing in the contemporaneous dispersion in forecasts. These results suggest that differential processing of the public signal and/or speculative trading for short-term gain may help to explain why symmetric information RE predictions are often not supported in empirical and experimental settings. They also suggest that market reactions to public information releases may be influenced by market microstructure.     

Factors that Influence Adolescents to Smoke

Predictor variables previously examined in separate studies (prior beliefs, peer pressure, family smoking, advertising, and antismoking information) were combined in a single study, surveying 246 adolescents. The variables were found to be significant predictors of smoking level, but the importance of each predictor varied by grade level, gender, and ethnicity. Overall, family smoking behavior, peer pressure, and prior beliefs were more important in predicting smoking level than were advertising and antismoking information. Public policy implications are discussed.     

Users versus nonusers of supplements: socioeconomic characteristics

The objective of this research was to determine the socioeconomic characteristics of supplement users versus nonusers. Seven western states (Arizona, California, Idaho, Nevada, New Mexico, Oregon and Wyoming) were surveyed to determine the socioeconomic profile of persons who either use or do not use supplements. Results indicated that 60.2% of the supplement users were female. The largest percentage was 31–40 years of age. By most definitions, supplement users tended to be well educated. Under adverse economic conditions, only a small percentage (7%) of users would give up supplements first when asked to choose from a variety of items that were considered to be nonessential.     

U.S. Multinational Activity Abroad and U.S. Jobs: Substitutes or Complements?

Critics of globalization claim that firms are being driven by the prospects of cheaper labor and lower labor standards to shift employment abroad. Yet the evidence, beyond anecdotes, is slim. This paper reports stylized facts on the activities of U.S. multinationals at home and abroad for the years 1977 to 1999. We focus on firms in manufacturing and services, two sectors that have received extensive media attention for supposedly exporting jobs. Using firm‐level data collected by the Bureau of Economic Analysis (BEA) in Washington, D.C., we report correlations between U.S. multinational employment at home and abroad. Preliminary evidence based on the operations of these multinationals suggests that the sign of the correlation depends on the crucial distinction between affiliates in high‐income and low‐income countries. For affiliates in high‐income countries there is a positive correlation between jobs at home and abroad, suggesting that foreign employment of U.S. multinationals is complementary to domestic employment. For firms that operate in developing countries, employment has been cut in the United States, and affiliate employment has increased. To account for firm size, substitution across firms and entry and exit, we aggregate our data to the industry level. This exercise reveals that the observed “complementarity” between U.S. and foreign jobs has been driven largely by a contraction across all manufacturing sectors. It also reveals that foreign employment in developing countries has substituted for U.S. employment in several highly visible industries, including computers, electronics, and transportation. The fact that there were U.S. jobs lost to foreign affiliates in key sectors, despite broad complementarity in hiring and firing decisions between U.S. parents and their affiliates, helps explain why economists view the impact of globalization on U.S. jobs as benign despite negative news coverage for declining industries.     

The significance of fragrance and olfactory acuity for the consumer household product market

The research for this paper evolved from fragrance investigations undertaken within the Product Evaluation Department at SC Johnson Research and Development Centre. It aims to assess the odour perception capabilities of consumers, to compare their odour perception levels and fragrance preferences and to determine whether gender or age affect differential sensitivity to odours. Research into olfaction is inconclusive, but it is valuable for establishing some of the factors which affect the sense of smell. Olfaction and the realm of fragrance are closely related and one cannot be fully understood without the other. Both concepts will be examined through this research and reference will be made to the ‘trickle-down effect’ which is of particular relevance to the household product market.     

Vitamin supplementation practices: health/nutrition education implications

A sample of 310 supplement users, 216 nonsupplement users and 247 inconsistent (user/nonuser) supplementers were followed for 18 months to examine the consistency of supplementation. Since supplementation is often not required for a healthy diet, factors associated with persistence or stability of supplement use have implications for appropriate health/nutrition education. Consistent supplementation (at least 18 months' duration) was associated (P < 0·01) with (i) female sex, (ii) health beliefs in the efficacy of supplementation, (iii) seeking health information from physicians, nurses, dietitians and nutritionists, (iv) using periodicals, TV/radio and books for sources of nutrition information, (v) older age, (vi) higher income and (vii) higher levels of education. Nonusers were more likely to attribute health to chance on the Multidimensional Health Locus of Control scale, and inconsistent users were more likely to have experienced a change in employment status, relocation to another town/city and a higher number of ‘change’ events in the previous 18 months. Based on the characteristics of the consistent supplement user, ‘academic controversy’ may be an effective educational strategy to employ, if changes in supplementation attitudes and beliefs are desired.     

THE IMPACT OF WIFE'S EMPLOYMENT AND EARNINGS ON FAMILY NET WORTH ACCUMULATION

The major focus of this research was the relationship between wife's earnings and employment and family net worth accumulation. Multiple regression analysis of data from the National Longitudinal Surveys found that, for the total sample, family income had a much greater impact than wife's earnings on change in net worth during the 1967–1972 period. Wife's employment was not related to the dependent variable once the effects of other factors were taken into account When the sample was segmented into four groups on the basis of 1967 net worth, independent variables had differential impacts on net worth change. For each group the multiple regression model explained a much greater proportion of total variance than it did for the sample as a whole. Among the two groups in the mid ranges of 1967 net worth, wife's employment was positively related to net worth change even after taking wife's earnings and other factors into account.