Optimal investment and pricing in the presence of defaults

We consider the optimal investment problem with random endowment in the presence of defaults. For an investor with constant absolute risk aversion, we identify the certainty equivalent, and compute prices for defaultable bonds and dynamic protection against default. This latter price is interpreted as the premium for a contingent credit default swap, and connects our work with earlier articles, where the investor is protected upon default. We consider a multiple risky asset model with a single default time, at which point each of the assets may jump in price. Investment opportunities are driven by a diffusion X taking values in an arbitrary region . We allow for stochastic volatility, correlation, and recovery; unbounded random endowments; and postdefault trading. We identify the certainty equivalent with a semilinear parabolic partial differential equation with quadratic growth in both function and gradient. Under minimal integrability assumptions, we show that the certainty equivalent is a classical solution. Numerical examples highlight the relationship between the factor process, market dynamics, utility‐based prices, and default insurance premium. In particular, we show that the holder of a defaultable bond has a strong incentive to short the underlying stock, even for very low default intensities.     

Can tourism be part of the decarbonized global economy? The costs and risks of alternate carbon reduction policy pathways

Global leaders agree on the need to substantially decarbonize the global economy by 2050. This paper compares potential costs associated with different policy pathways to achieve tourism sector emission reduction ambitions (?50% by 2035) and transform the sector to be part of the mid-century decarbonized economy (?70% by 2050). Investment in emissions abatement within the tourism sector, combined with strategic external carbon offsets, was found to be approximately 5% more cost effective over the period 2015–2050 than exclusive reliance on offsetting. The cost to achieve the ?50% target through abatement and strategic offsetting, while significant, represents less than 0.1% of the estimated global tourism economy in 2020 and 3.6% in 2050. Distributed equally among all tourists (international and domestic), the cost of a low-carbon tourism sector is estimated at US$11 per trip, equivalent to many current travel fees or taxes. Exclusive reliance on offsetting would expose the sector to extensive and continued carbon liability costs beyond mid-century and could be perceived as climate inaction, increasing reputational risks and the potential for less efficient regulatory interventions that could hinder sustainable tourism development. Effective tourism sector leadership is needed to develop a strategic tourism policy framework and emission measurement and reporting system.     

The contribution of social tourism to sustainable tourism: a case study of seasonally adjusted programmes in Spain

Recent policy from the European Union has attempted to justify social tourism initiatives on the basis that they lead to a more sustainable tourism industry. However, the majority of latest research in the field has been focused on the benefits for participants, with the addition of some evidence on the economic impacts of such programmes on destinations, which have pointed towards sustainability outcomes including: a longer tourism season, more even spread of demand, and longer periods of employment for tourism workers. Yet there is a lack of direct evidence linking such programme to these outcomes. This paper aimed to explore this important disconnect between policy assumptions and evidence-based outcomes through an analysis of the deseasonalising effects of the Spanish social tourism programme for older people. The research found that this programme does have an effect on the seasonal nature of employment and economic activity in most regions studied, but that the huge volume of demand from international tourists in the high seasons masks the quantitative effects in the regions with the highest seasonal concentration of international tourists. Recommendations for policy and practice in sustainable tourism are made that are transferable to many countries and regions that adopt social tourism programmes.     

Business models among SMTEs: identifying attitudes to environmental costs and their implications for sustainable tourism

This paper examines how environmental resources and costs feature in business models of small- and medium-sized tourism enterprises (SMTEs). Several studies have pointed to the generally positive nature of the relationship between the economic and environmental performance of tourism firms. Yet, although business models act as a vector between these aspects of firm performance, they have been overlooked in sustainable tourism discourse. The paper reports findings from discussion groups of SMTE businesses in South West England during the global economic downturn. Environmental costs and cost control were afforded relatively little importance in terms of value creation; conversely, there was a strong and predictable emphasis on revenue generation. Indirect tactics emerged for dealing with guests’ environmental behaviours which reflected this prevailing commercial logic. Green credentials were routinely de-emphasized, sometimes regarded as liabilities, in a form of greenhushing. Responses were framed by reference to social media and how online reviews may negatively impact on future value capture. Conceptually, the business model emerged as an important lens for understanding how environmental resources and costs were valourized. The paper highlights the need to ensure that contemporary approaches to environmental management in SMTEs reflect the current and fast-changing conditions that frame business models.     

Has Dodd–Frank affected bank expenses?

Journal of Regulatory Economics - This paper examines the potential effects of the Dodd–Frank Act of 2010 on banks’ noninterest expenses. Using data on U.S. bank holding companies from...     

A Critical Investigation of the Bargaining Behavior of Tourists: The Case of Hong Kong Open-Air Markets

Shopping has long been recognized as an indispensable tourist activity. Hong Kong's open-air markets, where a multitude of bargaining activities can be observed, ranked as the second most popular of the island territory's diverse range of attractions in 2008 in terms of tourist arrivals. To develop cutting-edge marketing strategies that promote tourists' enjoyment of their bargaining adventure and ultimately enhance the overall shopping experience, the study reported in this article was aimed at identifying the dimensions underlying tourists' perceptions of the importance of 18 bargaining motivators and 12 bargaining attitudes and types of bargaining behavior, respectively, and subsequently evaluating the predictability of these underlying dimensions on tourists' shopping contentment indicators (overall bargaining satisfaction, the likelihood of a subsequent visit, and the likelihood of recommending open-air markets to others). A non-probability quota sampling technique was used to survey 203 Asian and non-Asian tourists in Hong Kong. A multivariate approach encompassing factor analysis and multiple regression was employed: Factor analysis delineated four underlying dimensions of factors affecting bargaining intentions. “Value for money” was shown to be the factor rated most important to tourists' bargaining intention; similarly, two underlying dimensions of bargaining attitudes and behavior—“bargain for psychological well-being” and “bargaining intensity”—were identified. Multiple regression results indicated the statistical significance of “bargaining for psychological well-being” and “bargaining intensity” to the existence of positive relations between shopping contentment indicators.     

Progression,Stability, or Decline? Sociological Mechanisms Underlying Change in Specialization Among Birdwatchers

Using a panel of American birdwatchers collected in 1997 and 2002, we tested the extent to which birdwatchers progressed over a five-year period. The impact different career contingencies and life course events had on predicting change in birdwatchers' behavior, skill, and commitment was also examined. Findings indicated that although progression characterized some birdwatchers' participation, involvement by others was better characterized by stability or decline, which was true for each of the indicators used to measure specialization. Career contingencies and life course changes had only a moderate influence on predicting change in the specialization indicators over time. Support from family members and retirement were the best predictors of change in specialization.