Ex-post implementation and preference aggregation via potentials

We introduce several notions of potentials for mechanism design problems with interdependent values, and relate them to implementation in ex-post equilibrium. Whereas ex-post implementation is closely linked to the ordinal concept of best-alternative potentials, the celebrated Vickrey–Clarke–Groves mechanism corresponds to the stronger notion of a cardinal potential: agents agree not only on the best alternative, but also on the quantitative differences between all alternatives. We characterize all valuations that allow for cardinal potentials, and use this characterization for: (1) Identifying valuations for which ex-post implementation is possible; (2) Identifying classes of valuations for which all ex-post implementable choice rules correspond to cardinal potentials. The latter allows us to extend to interdependent valuations a result for dominant strategy implementation in private values settings, due to Roberts (The Characterization of Implementable Choice Rules, North-Holland, Amsterdam, 1979). We wish to thank an associate editor, two anonymous referees, Paul Milgrom and Burkhard Schipper for helpful comments and stimulating remarks.     

Dynamic price dispersion in airline markets

This study analyzes the factors that explain the variations of daily airfares across fare histories, or dynamic price dispersion. Empirical analyses show that dynamic price dispersion is significantly influenced by demand characteristics variables such as population, income and the share of business passengers, as well as by competitive pressures stemming from the presence of low-cost carriers, but not by the competition intensity. The impact of these variables intensifies as the departure date approaches. These results imply that in the presence of low-cost carriers, full-service carriers tend to adopt a more aggressive high-low pricing strategy.     

Learning elemental structures and dynamic processes in technological systems: a cognitive framework

An important objective of science and technology education is the development of pupils’ capacity for systems thinking. While in science education the term system relates mainly to structures and phenomena in the natural world, technology education focuses on systems designed to fulfill people’s needs and desires: examples include systems to control the local environment, or the position or motion of objects. Despite the centrality of the system concept to technology and technology education, issues relating to the teaching and learning of systems within the technology curriculum have been little addressed. This paper explores some elemental structures common to technological feedback control systems, and highlights the relationships between the structural nature and the dynamic behavior of these systems. It is argued that the study of systems and control concepts in technology has the potential to promote higher learning skills such as interdisciplinary thinking and modeling, and an instructional framework for achieving this goal is proposed. Questions and research issues on the fostering of systems thinking in technology education are identified.     

Government Weakness and Local Public Debt Development in Flemish Municipalities

The Weak Government Hypothesis states that government fragmentation leads to higher public deficits and debt. This relation can be explained by government inaction, common pool problems or the strategic use of debt that arise in coalition governments. Importantly, whereas government inaction models concentrate on the short-term effects of government fragmentation on indebtedness, common pool and strategic debt models imply that such effects will persist in the long term. We test these hypotheses using a large panel of data on municipal debt in 298 Flemish municipalities (1977–2000). We find that there is no long-run effect from weak governments. However, there is general support for the fact that the number of parties in a coalition has a positive effect on the municipality’s short-term debt levels–in line with government inaction models.JEL Code: E62, H72, H74     

Political fragmentation and projected tax revenues: evidence from Flemish municipalities

The level of revenues pocketed by a government during the fiscal year often deviates from that projected by this government in its budget. Despite a flourishing literature on, for example, the technical or procedural determinants of such forecast errors, little is yet known about how political stratagems may affect forecast errors. In the present paper, we analyse whether differences in the level of government fragmentation are useful in explaining local government tax revenue forecast errors—controlling for various other factors. Using data on 242 Flemish municipalities for the period 1992–2002, we find that two-party governments are more optimistic than single-party governments. In contrast to our initial expectations, governments with at least three parties are significantly more careful (or less optimistic) in their revenue projections than single- or two-party governments.      

Impact of Formulas,Language and Instruction on Student Performance on Cost-Volume-Profit Problems

Abstract

This study investigated how three factors impacted performance on cost-volume-profit homework problems: language, formula use, and instruction. Students enrolled in Introduction to Financial Accounting (the first principles of accounting course) and Managerial Accounting (the second principles of accounting course) from eight different US colleges completed homework problems presented in everyday language or accounting language, with or without a formula ‘cheat sheet’ on the screen, and with or without prior instruction. Scores on formula-facilitated questions (those solvable by use of traditional cost-volume-profit formulas) were contrasted with scores on application questions, novel word problems requiring students to apply their knowledge about how cost behavior and sales impact profits. Students performed better on assignments phrased in everyday language. Students with formulas provided during homework completed more formula-facilitated questions correctly but some evidence indicated that they did worse on application questions; more work is needed in this area. Instruction effects were very small. Participants without instruction performed just as well as instructed students when problems were presented in everyday language or if formulas were provided.     

Optimal seedings in elimination tournaments

We study an elimination tournament with heterogenous contestants whose ability is common-knowledge. Each pair-wise match is modeled as an all-pay auction. Equilibrium efforts are in mixed strategies, yielding complex dynamics: endogenous win probabilities in each match depend on other matches’ outcome through the identity of the expected opponent in the next round. The designer seeds competitors according to their ranks. For tournaments with four players we find optimal seedings for three different criteria: (1) maximization of total tournament effort; (2) maximization of the probability of a final among the two top ranked teams; (3) maximization of the win probability for the top player. We also find the seedings ensuring that higher ranked players have a higher winning probability. We compare our predictions with data from NCAA basketball tournaments.     

On the monetary impact of fashion design piracy

Whether to legally protect original fashion designs against piracy is an ongoing debate among legislators, industry groups, and legal academic circles, which has gained little exposure in the marketing literature. We combine data on the growth of fashion designs, price markups, and industry statistics to develop a formal analysis of the essential questions at the base of the debate. We distinguish between three effects: Acceleration, whereby the presence of a pirated design increases the awareness of the design; Substitution, which represents the loss of sales due to consumers who would have purchased the original design, yet instead buy the knockoff; and loss because of Overexposure of the design resulting from the design's ubiquity. Using data-driven simulation analysis, we find that for the items analyzed (handbags and apparel), overexposure emerged as having a stronger negative effect (on average) on the original's profitability than the positive effect of acceleration. Both effects are considerably larger than that of substitution. This result is of particular interest given that industry groups have consistently focused on the damage caused by substitution. We also show that the effect of a legally mandated postponement on the introduction of a knockoff is non-monotonic for short lag: A short time lag may not affect the original design's NPV, and in fact may even damage it. For the ranges we analyzed, the positive effect of the protection period is observed primarily for time lags of over one year.     

An investigation into the status of public community college tax curricula

The purpose of this study was to determine the current status of tax instruction in U.S. public community colleges. Based on responses to questionnaires sent to public community colleges, a summary of selected findings is as follows: (a) Of the 281 schools responding, 182 schools offer a single tax course, 83 schools offer two tax courses, and only 16 schools offer three tax courses; (b) Textbooks from three publishers (Southwestern, West, and Prentice-Hall) are predominant in public community colleges; (c) Although one tax course is generally required for the associate degree in accounting and public community college tax courses are typically offered for credit, they generally will not transfer to public four-year colleges in the same state.