Integrating partitioned prices via computational estimation

This paper introduces computational estimation to the literature on consumers’ numerical cognition. Computational estimation involves simplifying an arithmetic problem via mathematical procedures to produce an approximate answer. Employing calculation knowledge and approximation together, consumers are likely to use computational estimation as it is relatively accurate while saving cognitive effort compared to calculating values. Three studies applied to partitioned prices in the form of a base price and a percentage discount, demonstrate that when faced with this numeric integration task, the strategy consumers undertake is dependent on the characteristics of the numerals with discounts that are round or close to round being associated with greater use of computational estimation. Further, when employing computational estimation, consumers arrive at more accurate, and lower, price estimates in which they place more confidence than when using alternative an integration strategy. As a result, discounts that are near a round value are preferred to those that are not; a result that is dependent upon the use of computational estimation.     

PRICING FOR LARGE POSITIONS IN CONTINGENT CLAIMS

Approximations to utility indifference prices are provided for a contingent claim in the large position size limit. Results are valid for general utility functions on the real line and semi‐martingale models. It is shown that as the position size approaches infinity, the utility function's decay rate for large negative wealths is the primary driver of prices. For utilities with exponential decay, one may price like an exponential investor. For utilities with a power decay, one may price like a power investor after a suitable adjustment to the rate at which the position size becomes large. In a sizable class of diffusion models, limiting indifference prices are explicitly computed for an exponential investor. Furthermore, the large claim limit arises endogenously as the hedging error for the claim vanishes.     

Where is the balance? Implications of adopting Special Products and Sensitive Products in Doha negotiations for world and China's agriculture

This paper analyzes the potential impacts of the agreements of Special Products and Sensitive Products (SPs) in Doha negotiations on world and China's Agriculture. By linking a global trade model to a national policy model which itself is connected to a set of disaggregated household data, we are able to assess the effects of the inclusion of SPs into a Doha agreement on agriculture in China and the rest of the world and different farmers across China. Our results show that since the inclusion of SPs in a Doha agreement adds more protection in agriculture, the total quantity of resources used in world agriculture increases. Although increasing, it is important to note that the total rise is only a fraction of a percent of agricultural value added and the gains to rural income per capita are likewise small. Moreover, an important difference between the apparent benefits of SPs is highlighted when they are considered for one country alone and when they are made available to all WTO members. The benefits to agriculture in China (and other countries) from increases in protection resulting from SPs are typically offset when these flexibilities are made available to all countries. While there are some positive benefits for certain vulnerable groups in society (in China), we show that there are adverse effects on equity and the impacts differ largely among regions.     

Salute and critique: Remarks on Ratchford and Gupta's analysis of price-quality relations

The author argues that the assumptions contained in the model constructed by Ratchford and Gupta in an earlier issue of this journal are highly unrealistic. These assumptions concern the nature, extent, and outcome of consumer search. In the opinion of the author, Ratchford and Gupta's conclusion that the lack of a price-quality correlation is most likely not the most important determinant of consumer losses, is a child of the assumptions of the model. Had Ratchford and Gupta made the more realistic assumption that consumers search little, the typical near-zero correlation between price and quality would probably have been a very important determinant of losses.

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Zusammenfassung Respekt und Kritik: Bemerkungen zur Analyse der Beziehungen zwischen Preis und Qualität von Ratchford und Gupta. Soweit sich der Autor kritisch mit dem genannten Aufsatz auseinandersetzt, wendet er sich vor allem gegen die Annahmen des Modells der beiden Autoren. Diese Annahmen betreffen die Art, das Ausma\ und das Ergebnis der Informationssuche von Konsumenten. Nach Auffassung dieses Autors ist die Schlu\folgerung des ursprünglichen Beitrages, die niedrige Preis-Qualitäts-Korrelation sei nämlich nicht der wichtigste Faktor von Kaufkraftverlusten der Konsumenten, lediglich eine Implikation dieser unrealistischen Modellannahmen. Hätten Ratchford und Gupta die wirklichkeitsnähere Annahme gemacht, da\ Konsumenten wenig Information suchen, wäre die typische geringe Korrelation zwischen Preis und Qualität ein sehr wesentlicher Bestimmungsfaktor für Kaufkraftverluste gewesen.

     

Adam Smith and the ethics of contemporary capitalism

This paper presents a theoretical elaboration of the ethical framework of classical capitalism as formulated by Adam Smith in reaction to the dominant mercantilism of his day. It is seen that Smith's project was profoundly ethical and designed to emancipate the consumer from a producer and state dominated economy. Over time, however, the various dysfunctions of a capitalist economy — e.g., concentration of wealth, market power — became manifest and the utilitarian ethical basis of the system eroded. Contemporary capitalism, dominated as it is by large corporations, entrenched political interests and persistent social pathologies, bears little resemblance to the system which Smith envisioned would serve the common man. Most critiques of capitalism are launched from a Marxian-based perspective. We find, however, that by illustrating the wide gap between the reality of contemporary capitalism and the model of amoral political economy developed by Smith, the father of capitalism proves to be the most trenchant critic of the current order.G. R. Bassiry is currently professor of Management and international business at California State University, San Bernardino, California. Formerly he served as Vice President and Acting President of Farabi University. His most recent articles on business ethics include Ethics, Education, and Corporate Leadership,Journal of Business Ethics and Business Ethics and the United Nations: A Code of Conduct,Sam Advanced Management Journal. He has also published numerous journal articles on international business, corporate strategy and corporate leadership, and is the author ofPower vs. Profit by Arno Press of New York Times.Marc Jones is a management lecturer at the University of Otago, New Zealand. His research interests include multinational corporations and economic development. He has worked as a financial analyst for Electronic Data Systems Corporation and as a management consultant for Peat Marwick Main & Company.     

Sources of power and infrastructural conditions in medieval governmental accounting

The role which accounting plays in power and governance is a key issue in accounting history. This study looks at a crucial development in accounting history, the emergence in the 12th century of Exchequer accounting. Exchequer accounting played a significant part in the rise of the European administrative state. This paper uses Mann’s Model of the sources of power to study the nature and role that accounting played in medieval governance. The ideological, economic, military and political sources of power are shown to be underpinned by key infrastructures such as accounting. The interrelationships between accounting, other medieval infrastructures (such as the feudal system, administrative and territorial organisation, logistics, coinage, and literacy and numerical technologies) and the sources of power are explored.     

Prison Labor: The Local Effects of Ohio Prison Industries

Prison labor has both positive and negative effects. Keeping prisoners active, training and socializing them to be productive citizens after prison, and helping to pay for their incarceration are some of the positives. Potential crowding out of free labor and industry is the major potential negative. This paper addresses the quantitative financial and employment consequences on local free labor and industry of prison industries in Ohio using an input–output model for Ohio. Based on the analysis, prison industries employment in Ohio has negligible to positive employment consequences for the Ohio economy and partially offsets the incarceration cost of the inmates who participate – providing between 5 and 10 percent of the incarceration cost in net cash flow and induced tax revenues.Presented at the 59th International Atlantic Economic Conference, London, March 9–13, 2005.     

Slicing,Dicing, Spicing,and Pricing: Factors Influencing Purchase and Consumption of Fresh Potatoes

To better understand potential reasons for a North American decline in fresh potato consumption, a region-wide survey (n = 1009) was undertaken in eastern Canada. Results were examined comparing high- and low-frequency potato users on a variety of factors, including beliefs, attitudes, barriers, needs, and satisfaction with potatoes. Respondents indicated positive perceptions pertaining to potato nutrition, taste, preparation, and overall enjoyment. Multiple logistic regression analysis suggested two variables—age and the perceived importance of potatoes for the everyday meal—were strong predictors of high versus low frequency of potato consumption. Respondents judged the ability to see the potato in the package, potato firmness, and locally produced as point-of-purchase characteristics particularly important when buying fresh potatoes. However, respondents also indicated that their needs were not fully met and expressed relatively low levels of satisfaction when purchasing potatoes. Based on the results, suggestions are provided for improving the marketing of fresh potatoes.     

Consumer Preferences for Coffee: Hot and Wet,or Quality and Flavor?

An econometric model is developed and estimated for all brands of coffee sold at the retail level in four supermarkets in Columbus, Ohio. These brands are segmented into 24 categories, and the four stores are classified into two groups, inner-city and suburban, based on 2010 census tract data. Using estimated measures of price-sensitivity, these 24 categories are further segmented into four groups to help guide and clarify the discussion. Estimated results show different purchasing patterns and different levels of price-sensitivity for inner-city and suburban shoppers. Further, these purchasing patterns and levels of price-sensitivity suggest alternative marketing strategies for retailers. Private-label coffee brands are shown to be quite competitive with many national brands, and indeed private-label brands command a market share among inner-city shoppers that is more than double that for the nation (21.95% vs. 9%).