The economic analysis of offender’s choice: Old and new insights

The economics of crime has followed the basic Becker model (1968), according to which a criminal act results from a rational decision based on cost-benefit analysis. This paper surveys some extensions to Becker’s model, by giving some emphasis to earlier work that tries to explain differences in offender’s choice across places. At the end, the paper analyses the contribution of Steven Levitt (the new Gary Becker), which has stimulated an empirical renaissance in the economic analysis of crime. His new book (co-author Dubner) Freakonomics (2005) offers a new argument in understanding why crime fell in the 1990s in the USA. I am very grateful to an anonymous referee for his valuable comments, which improved the final version of this paper. I would also like to thank Steven Levitt for sending me his unpublished work. The usual disclaimer applies.     

Do corporate codes of ethics reflect issues of societal transformation? Western German and Slovak companies compared

Can differences in corporate codes of ethics arise from the specific situation of transformation in Slovakia in contrast to the stable context of the firms in Western Germany? This paper compares codes of ethics of large‐scale enterprises in both countries in terms of ethical issues addressed. It demonstrates that codes of ethics of the Slovak companies mirror the specific transformational circumstances in the country. Compared with Western Germany the codes of these firms include multiple ethical issues, meaning that they experience a broader range of relevant ethical problems. Furthermore, their codes are internally oriented, in terms of the ethical issues raised most often; they put more emphasis on committing employees, managers and shareholders/owners to the firm. Based on the differences discovered, it is proposed that negative experiences within the past process of transformation and in part the socialist heritage are the main reasons for differences between the two samples.     

Argumatics: a text analysis procedure for supporting problem formulation

Problem formulation is the most critical phase of the decision making process. This, particularly in the case of high level multi-stakeholder problems, is not trivial, as the problems do not come “neatly packaged”. The procedure presented in this paper aims to support (i) the exploration of the stakeholders' mental constructs, and (ii) the generation, comparison and synthesis of alternative problem formulations. The suggested procedure — while using the decision analytic approach of the traditional text analysis procedures, follows an inverse, bottom-up direction of analysis: first the individual arguments inherent in the text are explored, then taking them as a starting point, the structures behind the arguments are identified.     

A Classification of Factors Influencing Participating in Collusive Tendering Agreements

The morality of tendering practices is an issue of economic and social significance, especially when large government contracts are involved. Criticisms are mostly concentrated around collusive tendering: illegal agreements between tenderers that result in seemingly competitive bids, price fixing or market distribution schemes that circumvent the spirit of free competition and defraud clients. Although collusion has been identified as an endemic malaise of tendering, its behavioural and moral dimensions have not been systematically studied before. The paper addresses this knowledge gap and describes part of an exploratory empirical investigation of the decision-making patterns utilised by estimators in Australia'slargest construction organisations.     

Residential Mobility and the Housing Market in a Two-sector Neoclassical Growth Model

The impact of residential mobility and competitive housing markets on long run growth is examined using a two-sector general equilibrium overlapping-generations model in continuous time. There is an infinity of agents with finite lives who adjust their housing consumption by moving, which is costly. We explore the model's steady-state properties, first with a free housing market, then under rent control when the market clears through restrictions on the frequency of moves. Rent controls do not just reduce welfare; they may increase the steady-state capital-labor ratio.     

Impact of investors’ status on their evaluation of positive and negative,and past and future information

This paper examines the effect of investors’ status (current and prospective) on their evaluation of information varying in valence (negative and positive) and temporality (past and future). Master of Business Administration graduates, proxying for current or prospective investors, rated the relevance of negative, positive, past, and future Management Discussion and Analysis information. Investors’ relevance ratings of information resulted in the following ranking (from highest to lowest): negative‐future, negative‐past, positive‐future, and positive‐past information. Furthermore, prospective investors (relative to current) rated positive and future information as more relevant and negative information as less relevant. Implications for effective disclosure strategies and policies are discussed.     

Equity and efficiency aspects of the Italian debt reduction

The paper deals with the distributional and efficiency consequences of debt reduction in Italy. A reduction of the deficit from six to three percent of GDP is financed by the so-called Eurotax (introduced temporarily or permanently) combined with an adjustment of consumption taxes or public transfers. The quantitative analysis is based on a dynamic simulation model of the Auerbach-Kotlikoff type, which distinguishes between five lifetime income classes within each age cohort. Our simulation results indicate that debt reduction increases the welfare of future generations between 1 and 2% of lifetime resources and that consumption taxes are preferable to the Eurotax on allocative grounds.     

A Stochastic Control Approach to Risk Management Under Restricted Information

We use techniques from discrete-time stochastic control under partial state information to determine a shortfall-risk minimizing investment strategy in the case when there is only restricted information on the underlying market model and transaction costs as well as shortselling constraints are present. The approach is adaptive in the sense that it takes into account all the information on the underlying model that becomes successively available to an economic agent by observing the prices in the market. As an immediate byproduct of the approach it is possible to determine the entire shortfall distribution corresponding to the optimal strategy and to various values of the initial capital.     

Offsetting the implicit incentives: Benefits of benchmarking in money management

Money managers are rewarded for increasing the value of assets under management. This gives a manager an implicit incentive to exploit the well-documented positive fund-flows to relative-performance relationship by manipulating her risk exposure. The misaligned incentives create potentially significant deviations of the manager’s policy from that desired by fund investors. In the context of a familiar continuous-time portfolio choice model, we demonstrate how a simple risk management practice that accounts for benchmarking can ameliorate the adverse effects of managerial incentives. Our results contrast with the conventional view that benchmarking a fund manager is not in the best interest of investors.