Five recent economic revolutions

In recent years, some changes in economic behavior and institutions are fundamental enough to be called revolutions. Five of these are discussed briefly. They are the increasing financial disintermediation in France, the U.K., and the U.S.; the rise of global firms; the increasing need for international economic regulation; diminishing brand loyalty on the part of consumers, especially in food items; and the growing tendency to admit labor representatives to managerial functions. These changes are described briefly in each case and some of their implications for economics are suggested. Questions about the implications are raised. President of the Atlantic Economic Society 1977–78.     

Optimal social security claiming behavior under lump sum incentives: Theory and evidence

Many Americans claim Social Security benefits early, though this leaves them with lower monthly payments throughout retirement. We build a lifecycle model that closely tracks claiming patterns under current rules, and we use it to predict claiming delays if, by delaying benefits, people were to receive a lump sum instead of an annuity. We predict that current early claimers would defer claiming by a year given actuarially fair lump sums, and the predictions conform with respondents' answers to a strategic survey about the lump sum. In other words, such a reform could provide an avenue for encouraging delayed retirement without benefit cuts or tax increases. Moreover, many people would still defer claiming even for smaller lump sums.     

Kapital Kunde – mehr Markterfolg durch Customer Lifecycle Management

Nie waren Unternehmen ihren Kunden n?her als heute. Interaktive Medien und Kundenkartensysteme gew?hren detaillierte Einblicke in Produktpr?ferenzen und Kaufverhalten. Systematische Datenanalysen helfen, aus der Fülle verfügbarer Informationen ma?geschneiderte Angebote zu entwickeln und so einen maximalen Return on Investment zu erzielen. Die Praxis zeigt: Ein professionelles Customer Lifecycle Management kann Unternehmen hohe Gewinnsteigerungen bescheren.     

The 1996 FAIR Act: Measuring the Impacts on Land Leasing

Using a 1997 survey of Arkansas farm operators, Federal Agricultural Improvement and Reform (FAIR) Act impacts on changes in cropping mixes on leased land, operator attitudes concerning the sharing of FAIR Act benefits with landlords, and changes in leasing arrangements due to the FAIR Act are investigated. Operators indicated that the FAIR Act caused cropping-mix changes on 24% of surveyed leases. Although some operators believe that landlords disproportionately benefit from the FAIR Act, about three-quarters feel that there was no change or had no opinion. Similarly, we find little evidence that leasing arrangements changed as a result of the FAIR Act.     

Stochastic differential equation modeling the prevalence of rare chronic diseases with an application to systemic lupus erythematosus

In this article we describe a system of stochastic differential equations to model the age‐specific prevalence of rare chronic diseases from incidence and mortality rates. As an application, the age profile of the prevalence of systemic lupus erythematosus in England and Wales in1995 is calculated. The results are in good agreement with the observed epidemiological measures.     

The surplus prior to ruin and the deficit at ruin for a correlated risk process

This paper presents an explicit characterization for the joint probability density function of the surplus immediately prior to ruin and the deficit at ruin for a general risk process, which includes the Sparre-Andersen risk model with phase-type inter-claim times and claim sizes. The model can also accommodate a Markovian arrival process which enables claim sizes to be correlated with the inter-claim times. The marginal density function of the surplus immediately prior to ruin is specifically considered. Several numerical examples are presented to illustrate the application of this result.     

Economic Analysis at the Federal Communications Commission, 2012–2013

Pointing to the role of economic analysis, this article reviews major Federal Communications Commission actions and initiatives that are related to universal service support in high-cost areas that are served by price-cap incumbent local exchange carriers, special access policy, secondary market spectrum transactions, spectrum reassignments, and rules that govern interoperability among certain licensees in the 700 MHz band and spectrum ownership. Also discussed are activities of the recently created Technology Transitions Policy Task Force and challenges to communications policy that are posed by the transition to voice over internet protocol interconnection.     

Hedging in Incomplete Markets: An Approximation Procedure for Practical Application

Derivative financial instruments are frequently used as a tool for influencing the risk of entrepreneurial uncertain payoff. To this end, an approximation procedure is developed capable of calculating the optimal quantity of derivatives to be used. It is assumed that the entrepreneurial cash flow is governed by several stochastic factors and that derivatives are only available as a hedging tool for one of these factors. In general, it is easy to determine optimal hedging payment structures with respect to this factor, but real‐life hedging opportunities will typically not allow to perfectly reproduce such a fictitious payment structure, thus leading to complex numerical optimization problems. Instead of directly approximating the entrepreneurial expected utility maximum, we suggest using the fictitious optimal hedging payment structure as a starting point and to minimize the quadratic deviation between payment structures realizable by financial derivatives actually available and the resulting entrepreneurial payoff achieving the fictitious optimal hedging payment structure. This approach proves to be rather easy. Indeed, under certain conditions an explicit solution can be reached. After analyzing the qualitative properties of our approximation solution, we examine its efficiency for two practical hedging problems. In the first example, we get nearly the same solutions with our approximation procedure as with a grid programming approach presented by some other authors. Among other things, our second example may explain why some special kinds of financial derivatives, known as shared currency option under tenders, are not used in international invitations for tenders even though they offer hedging opportunities that are otherwise not available. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21: 599–631, 2001     

The Behaviour of the Firm under Alternative Regulatory Constraints

We review the case for intermediate power incentive regulation such as sliding scale when the regulator is badly informed and the firm's profits have a shadow resource cost. We then evaluate a number of different regulatory regimes including sliding scale in terms of productive and allocative efficiency. We find that the sliding scale principle can be applied quite generally—to dividends, profits or rate of return and that it has attractive economic properties.