Self-perceptions, government policies and tax compliance in Germany

The policy of choice to fight tax non-compliance is an increase in deterrence, i.e. fines and audits, which seems to be well-grounded theoretically as the economics of crime justifies such an increase of the expected costs of illegal activities. In this paper, the impact of subjectively perceived deterrence on undeclared work is analyzed for the German case. Germany is particularly interesting because it considerably increased deterrence to fight tax non-compliance recently. The data set used for this analysis contains several waves of survey data conducted between 2004 and 2008. According to our evidence, (subjectively perceived) deterrence has an impact on undeclared work, but the influence of social norms is similarly important.     

Word-of-mouth marketing influence on offline and online communications: Evidence from case study research

This case study reports results from three research studies conducted over 12 weeks as part of a product seeding campaign. Partnering with a word-of-mouth marketing (WOMM) agency for this research, studies 1 and 2 report agency-conducted surveys of campaign participants' online and offline word-of-mouth (WOM) behaviors. Study 3 deployed an innovative web-based methodology to map and visualize WOM communication patterns, to reveal how campaign-related conversations spread within and across offline friendship networks and the role played by tie strength in that process. We find that agency reports of WOMM campaign results overstate reach and understate frequency. Our results have implications for the measurement of reach and frequency of WOMM campaigns.     

From Research on Mergers to Merger Policy

Since at least the early 1990s, researchers have criticized the antitrust authorities’ method for assessing the possible anticompetitive effects of mergers. Despite this, only recently, a method with a more sound economic foundation was included in the merger guidelines. We discuss how a sound economic foundation was developed and finally applied to merger control.     

Cause-related marketing persuasion research: an integrated framework and directions for further research

This paper presents an integrative review of the literature on cause-related marketing (CRM) persuasion research (i.e. studies of how CRM influences evaluations of the partner brand). The aim of the study was to review CRM persuasion research and to integrate the findings into a theoretical framework that could direct future research efforts in the area. Drawing on Bergkvist and Taylor's model of Leveraged Marketing Communications (LMC), a dual-path model of CRM persuasion effects was developed. According to the model, CRM affects brand evaluations along two paths: the indirect transfer path which is mediated by attribution of motives and the direct transfer path in which attitude towards the cause is transferred to the brand. The model incorporates results from extant research and provides guidance for future studies.     

Optimal vs satisfactory transparency: The impact of global macroeconomic fluctuations on corporate competitiveness

Being able to separate temporary global macroeconomic influences – caused by fluctuations in exchange rates, interest rates and inflation – from intrinsic performance – related to a superior product, production process or management – is crucial to assessing the development of a firm’s competiveness. Against that background, this paper analyzes institutions’ role in making firms supply outside shareholders with relevant information corresponding to satisfactory transparency from the shareholder perspective. Based on a sample of the 100 largest public European firms, it is found that no firm provided information to a level deemed satisfactory by the outside shareholder. One explanation may be that optimal transparency for the firm does not equal satisfactory transparency for the outside shareholder. However, the implementation of IFRS/IAS 1 in the EU as of 2005 and a company’s international cross-listing activities exhibit associations with a better supply of information and a narrowing of the gap. Shareholders in the Anglo-Saxon corporate governance system are provided with more relevant information than those in other corporate governance systems. The paper adds to the literature on the role of institutions in international corporate governance, with a particular focus on information asymmetries in an international business context.     

Unequal opportunities and public policy: The impact of parental disability benefits on child postsecondary attendance

This paper uses Canada's National Longitudinal Survey of Children and Youth to examine whether greater cash transfers available to parents with disabilities when their child was aged 5 to 15 increase the chances that the child will attend postsecondary education (PSE) as a young adult. We exploit differences across provinces and over time in the generosity of provincial disability benefits programs in Canada and find that higher disability benefits when the child was aged 5 to 15 years increase the probability that he or she will have attended or be attending PSE by age 19 to 25. The estimated effect size increases with the severity of the parental disability and the number of disabled parents. Because lower disability benefits significantly worsen performance of public school aged children on standardized math tests and elevate anxiety symptoms, one plausible pathway from disability benefit levels to PSE attendance may be through the cognitive and non‐cognitive skills children acquire by the age of 15. We conclude that the level of disability transfers available early in a child's life mitigates the impact of having a parent with a disability as a source of inequality of opportunity and of unequal probability of PSE participation.     

HOW TO VALUE THE POORER PROSPECTS OF YOUTH IN THE EARLY 1990s?

Young workers in the 1990s can expect greater economic insecurity, as well as lower average earnings, compared to older workers, or compared to the youth of previous decades. The cost of greater insecurity depends upon an individual's probability of unemployment, marginal utility of income gains/losses and the extent to which individuals can smooth consumption over time by borrowing and drawing down assets. Since unemployment insurance cutbacks and higher unemployment have increased the risk exposure of youth, changes in the expected value of their income may understate utility losses as measured by the change in certainty equivalent income.
This paper uses a behavioural microsimulation model to compare the impacts of 1971 and 1994 unemployment insurance legislation and unemployment rates in Canada. It calculates both the expected value of income changes and, using a Stone-Geary utility function, the change in inequality of well-being (as measured by certainty equivalent income) for youth and for prime age workers. Both calculations reveal that youth were disproportionately affected by Canada's changing labour market environment. Very few youth have enough assets to finance consumption during spells of unemployment.     

Differentiable von Neumann-Morgenstern utility

Summary. Differentiability is a convenient property of von Neumann-Morgenstern utility functions which is almost always imposed but has not been translated into behavioral terms. In applications, expected utility is usually maximized subject to a constraint, and the maximization is carried out by differentiating the utility function. This paper presents two sets of necessary and sufficient conditions for a risk averse von Neumann-Morgenstern utility function to be differentiable. The first of them is formulated in terms of the equivalent risk premia of small gambles. It says, in brief, that the equivalent risk premium is of a smaller order of magnitude than the risk itself, as measured by the expectation of the absolute value of the risk. The second set of necessary and sufficient conditions is formulated in terms of the probability premium of small lotteries. It says, essentially, that the probability premium for small binary lotteries goes to zero as the size of the lottery goes to zero. Received: May 11, 1997; revised version: May 14, 1998