Default risk in a model of corporate and government finance

A simple framework is proposed to analyse the interaction of corporate and government financial decisions. Default on corporate and household debt plays a central role having implications for the truth of both the Modigliani–Miller and Ricardian equivalence propositions. The novelty of the analysis is that the general equilibrium of the model reflects the interaction of three distinct groups of households. We show how, in the presence of default-risk bond financed transfers affect consumption opportunities across states of nature and affect private capital formation. The affects differ depending on whether the Modigliani–Miller proposition is true or false.     

Measuring the Costs of Custom Products through Better Technology Utilization

This case study details the process of determining the economic feasibility of implementing lean manufacturing in a small mass customization manufacturing company in the medical industry. The case study investigates the information required for a lean implementation and proposes a number of changes to the work procedures (including instrumentation) to obtain the data. A large number of enterprise resource planning systems were evaluated for their suitability to track data in the mass customization environment and the top candidates are compared in the article. The current labor and materials costs are estimated to determine the magnitude of potential savings to support the changes. Based on the analysis the recommended solution has a payback period of approximately two years.     

Lapses in long-term care insurance

About a quarter of long-term care insurance (LTCI) policy holders aged 65 let their policies lapse before death, forfeiting all benefits. We find that lapse rates are substantially higher among the cognitively impaired in the Health and Retirement Study. This generates a pernicious form of dynamic advantageous selection, as the cognitively impaired are more likely to use care. Simulations show that an inappropriately optimistic asset drawdown path further increases the individual welfare cost of unanticipated lapses. Meanwhile, we find evidence of a significant but very small role for either strategic or financial motives for lapsing.     

Self-managing selling teams and team performance: The complementary roles of empowerment and control

This work is the first to examine systematically the influence of empowerment and control on the degree to which selling teams engage in desired self-managing behaviors. Further, this work is the first to propose the construct of desired self-managing behaviors in a selling team context, and empirically examine its influence on selling team performance. Our investigation indicates that control of team self-management provides a complementary positive influence to that of empowerment on the degree to which selling teams exhibit desired self-managing behaviors. In addition, we find a positive relationship between the degree to which teams exhibit desired self-managing behaviors and selling team performance; moreover, this relationship explains, to a large degree, selling team performance. These findings are consistent with our thesis that control of teamwork facilitates performance on the selling team level, just as control of selling skills facilitates performance on the individual sales rep level.     

Using screen video capture software to aide and inform cognitive interviewing

Web-based surveys are a salient tool in the repertoire of social and behavioral scientists. The increase in web-based surveys is understandable considering the distinct advantages offered, including: (a) lower costs and reduced labor time, (b) ability to directly transfer data into statistical packages (reducing coding errors), (c) customization options enabling more attractive presentation, (d) ability to reduce respondent burden by embedding skip patterns, and (e) access to larger sample sizes in different geographic regions. It is important to note, however, that administering web-based surveys also introduces distinct sources of error (e.g., coverage, sampling and non-response). Regardless of format (e.g., paper-and-pencil or web-based), specific, prescribed steps must be followed when constructing an instrument in order to reduce survey error and lend credence to the data collected before subsequent analysis is performed. One of those crucial stages integral to the pretesting process is cognitive interviewing. Cognitive interviewing is a qualitative process, encompassing two main techniques: think aloud interviewing and verbal probing. Collectively, these two methods seek to (a) produce information on what the respondent is thinking while answering the questions, (b) the cognitive processes used to answer the questions, and (c) how the respondent answers the questions. The purpose of this article is to provide a practical guide outlining how Camtasia, a screen video capture software, can aide and inform the cognitive interview process.     

Reworking wild bootstrap-based inference for clustered errors

Cluster-robust inference is increasingly common in empirical research. With few clusters, inference is often conducted using the wild cluster bootstrap. With conventional bootstrap weights the set of valid $P$-values can create ambiguities in inference. I consider several modifications to the bootstrap procedure to resolve these ambiguities. Monte Carlo simulations provide evidence that both a new 6-point bootstrap weight distribution and a kernel density estimation approach improve the reliability of inference. A brief empirical example highlights the implications of these findings.