Entry,Trade, and Exporting over the Cycle

We study how international trade and exporting affect the cyclicality of establishment creation. We build a general equilibrium model with two features: (i) new establishments start small and grow gradually and (ii) exporters are persistently bigger and more productive than nonexporters. When establishments creation costs fluctuate with aggregate productivity, the model generates procyclical fluctuations in domestic establishments and importers. Without international trade, entry is weakly countercyclical and too smooth. The model generates reasonable fluctuations in the stock of importers, exporters, and domestic establishments. With an entry margin, output is hump‐shaped following a productivity shock and this hump is stronger with trade.     

Asset Pricing with Countercyclical Household Consumption Risk

We show that shocks to household consumption growth are negatively skewed, persistent, countercyclical, and drive asset prices. We construct a parsimonious model where heterogeneous households have recursive preferences. A single state variable drives the conditional cross‐sectional moments of household consumption growth. The estimated model fits well the unconditional cross‐sectional moments of household consumption growth and the moments of the risk‐free rate, equity premium, price‐dividend ratio, and aggregate dividend and consumption growth. The model‐implied risk‐free rate and price‐dividend ratio are procyclical, while the market return has countercyclical mean and variance. Finally, household consumption risk explains the cross section of excess returns.     

Attitude toward Risk and Risk‐Taking Behavior of Business‐Owning Families

Using data from the 1995 Survey of Consumer Finances, this study found that family business owners are more risk tolerant than nonowners. Among family business owners, age, race, net worth, and the number of employees in the business affect risk‐taking attitudes and behavior. In addition, the following factors are associated with risk‐taking behaviors: number of years of ownership, gross sales, who started the business, and sole proprietorship. Education influences risk‐taking attitudes.     

Consumer Education and the Preschool Child

Children are consumers and subject to a number of factors which socialize them into this role. Consumer education is often cited as an important tool in directing this socialization process toward the desired result of developing efficient and knowledgeable consumers. But how early can consumer education begin in the school setting? Can the preschool child be taught basic marketplace concepts and sequences or is this consumer simply too young? What are the early building blocks of consumer education? Do some approaches to teaching the very young consumer work better than others? This study presents a conceptual framework and the results of an exploratory laboratory study which begin to answer these important questions.     

Conceptualization and Measurement of Optimal Consumer Decision-Making

The theory of optimal choice is founded on the classic principles of maximization and rationality which are developed in economics and other social sciences. The principle of maximization is applicable to the analysis of consumers' choices in contexts ranging from individual consumer decisions to efficient operation of consumer markets in aggregate. Newer and revised formulations of maximization have evolved in the related concepts of satisficing behavior, efficiency of choice, decision quality and choice accuracy. This paper reviews the evolution of these concepts, with special attention to the context of optimal consumer choice at the individual level. Empirical measures of optimal consumer decision-making are also reviewed. Finally, optimal consumer decision-making is conceptualized both in terms of 1) optimal outcomes (choices) and 2) optimality of the actual decision-making process prior to choice.     

Affirmative Disclosure In Home Purchasing

This paper investigates significant gaps in the information available to prospective home buyers as perceived by recent purchasers. The gaps in available information perceived by recent purchasers included the fair value of the house, its structural condition, and the ambience of the neighborhood. It was found that independent or personal sources were used for subjective information while objective data tended to be obtained from marketer-dominated sources.