On policymakers’ loss functions and the evaluation of early warning systems: Comment

Sarlin (2013) suggests that if a loss function approach is chosen to derive the optimal threshold for financial crisis early warning indicators, the loss function specification should explicitly take into account the unconditional sample crisis probability. In this comment we argue that this approach is not robust to small perturbations of the preference parameter and is not easy to use for policy purposes. We suggest therefore to continue using a simpler loss function specification.     

Service quality in the private banking business

This paper examines the concept of service quality in private banking theoretically and empirically and identifies factors which contribute to service quality. A multidimensional and hierarchical model is developed based on the work of Rust and Oliver (in Service Quality, pp. 1–20, 1994) and Brady and Cronin (in J. Mark. 65(3):34–49, 2001). The model is then empirically tested among private banking providers with the partial least squares method. Furthermore, the developed model is compared to other approaches, including Grönroos (in Eur. J. Mark. 18(4):36–44, 1984). Another model for comparison excludes the indirect effects of Grönroos (in Eur. J. Mark. 18(4):36–44, 1984) and focuses on the direct effects on service quality. We can conclude that the model based on Rust and Oliver (in Service Quality, pp. 1–20, 1994) and Brady and Cronin (in J. Mark. 65(3):34–49, 2001) produces the best results and can best explain service quality in private banking. Finally, an analysis of various provider groups is conducted in order to identify differences between private banking providers in Germany, Switzerland, Austria and Liechtenstein and between providers with various minimum investment requirements.     

Paying for Minimum Interest Rate Guarantees: Who Should Compensate Who?

Defined contribution pension schemes often have a mandatory minimum interest rate guarantee as an integrated part of the contract. The guarantee is an embedded put option issued by the institution to the individual who is forced to invest in the option. As argued in this paper, the individual may in this way face a constraint on the feasible set of portfolio choices. We quantify the effect of the minimum interest rate guarantee constraint and demonstrate that guarantees may induce a significant utility loss. We also consider the effects of the interest rate guarantee in the case of heterogenous investors sharing a common portfolio on a pro rata basis.     

Response modes in negotiation

Negotiators may respond to each other’s offers and demands in different ways. Whereas many negotiation experiments present participants with numerical information about offers and counteroffers (e.g., “I propose 6–8–2”; numerical response mode), real life negotiations often involve affective and evaluative statements (e.g., “I didn’t like your last offer, but I would be happy to explore alternatives”; affective response mode). The present research explores the differential consequences of responding in affective as opposed to numerical terms. Specifically, we predicted and found that affective responses increase the impact of social and contextual cues on negotiation behavior. Three studies demonstrate that the impact of other’s toughness (Experiment 1), other’s respectability (Experiment 2), and other’s appearance (Experiment 3) on a negotiator’s demands and concessions is greater when the other provides affective rather than numerical feedback.     

Economic and environmental impacts of the Kyoto Protocol

Abstract In 2003 the Kyoto Protocol, which imposes legally binding greenhouse gas emission constraints on industrialized countries, is likely to enter into force. The Protocol has been celebrated as a milestone in climate protection, but standard economic theory casts doubt that it will go beyond symbolic policy. In this paper, we show that the final concretion of the Kyoto Protocol is consistent with the theoretical prediction: Kyoto more or less boils down to business‐as‐usual without significant compliance costs to ratifying parties. JEL Classification: D58, Q43, Q58
Conséquences économiques et environnementales du protocole de Kyoto En 2003, le protocole de Kyoto, qui impose aux pays industrialisés l'obligation de réduire leurs émissions de gaz à effet de serre, entrera probablement en vigueur. Si le protocole a été accueilli comme un grand pas en avant dans le combat pour protéger l'environnement, la théorie économique jette un regard sceptique sur la portée réelle d'un tel accord et le considére comme un geste symbolique. Dans ce mémoire, on montre que la concrétisation finale de l'accord de Kyoto s'arrime aux prédictions théoriques : Kyoto n'est rien de plus que « business‐as‐usual >> et n'impliquera pas de coûts significatifs pour les parties qui ont signé le protocole.     

The 1997–1998 break in industrial statistics: Facts and appraisal

In 1998, the National Bureau of Statistics (NBS) in the published industrial statistics modified the scope of enterprises covered and the enterprise classification system. This paper highlights the modifications and identifies two implications. First, the use of a proportional allocation rule in data aggregation boosts the size of “public ownership,” an important cornerstone of socialism. Second, the switch from compiling detailed statistics on enterprises identified by an administrative criterion to enterprises that exceed a fixed volume of sales revenue poses new difficulties for comparative data analysis but also represents a change in statistical practice that may yet lead to data of better quality.