On the Practice of Rescaling Covariates

Whether doing parametric or nonparametric regression with shrinkage, thresholding, penalized likelihood, Bayesian posterior estimators (e.g., ridge regression, lasso, principal component regression, waveshrink or Markov random field ), it is common practice to rescale covariates by dividing by their respective standard errors ρ. The stated goal of this operation is to provide unitless covariates to compare like with like, especially when penalized likelihood or prior distributions are used. We contend that this vision is too simplistic. Instead, we propose to take into account a more essential component of the structure of the regression matrix by rescaling the covariates based on the diagonal elements of the covariance matrix Σ of the maximum-likelihood estimator. We illustrate the differences between the standard ρ- and proposed Σ-rescalings with various estimators and data sets.     

Service crisis recovery and firm performance: insights from information breach announcements

The extant literature has studied the effects of a firm’s service recovery efforts on the reactions of customers and employees following an individual service failure. However, the impact of recovery efforts on a firm’s performance after a public and large service failure—such as a large-scale information breach—has received scant attention. To address this gap, this current research develops a framework and finds support for the impact of service crisis recoveries on a firm’s performance, as measured by firm-idiosyncratic risk. Using a unique dataset of service crisis recoveries, the authors find that firms offering compensation (i.e., tangible redresses) or process improvement (i.e., improvements in organizational processes) show more stable performance (less idiosyncratic risk), from two quarters to two calendar years after the announcement of their recovery plan. In line with the documented dual effect of apologies, firms that offer apology-based recoveries display more volatile performance (higher idiosyncratic risk). Of note, this volatility increases with the number of affected individuals, and it remains unaffected even when the apology is expressed with high intensity.     

An Assessment of Partial Dairy Trade Liberalization on the U.S., EU–15 and Canada

The next round of multilateral trade negotiations will involve the expansion of tariff rate quotas and the reduction of export subsidies in the dairy industry. A nonspatial multiregion model of the world dairy industry is used to analyze the potential impact of such reforms on the Canadian, the EU–15 and the U.S. dairy industries. The results from selected partial trade liberalization scenarios indicate that there is no scenario that provides benefits to all participants in the dairy industry. The analysis of partial trade liberalization, in terms of its growth effects, varies by country and by sector, making win–win compromises hard to reach among the participants in a country, and even more so across countries. More market-oriented though still protected regions such as the U.S. generally improve their competitive position in the world dairy market as border measures are removed. By contrast, the dairy sectors in regulated milk production markets such Canada and the EU–15 are projected to be better off when the reform package does not compromise current policy settings, while giving some additional market access for surplus dairy production. La prochaine ronde de négotiations commerciales mullilalérales abordera les questions de l'expansions des contingents tarifaires et la réduction des subventions à l'exportation dans le secteur laitier. Utilisant un modèle multirégion non spatial du secteur laitier mondial, nous analysons les répercussions évenluelles de ces réformes sur les secteurs laitiers du Canada, de l'Union Européenne et des États-Unis. Les résultals obtenus pour certains scénarios de libéralisation partielle des échanges font voir qu'aucun scénario ne profite à tous les participants de lafilière. Les effets de cette libéralisation partielle sur la croissance varient d'un pays et d'un segment de la filière à l'autre, rendanl difficile la recherche d'un compromis salisfaisant pour tous entre les participants d'un même pays el plus encore entre différents les pays. Les régions plus axées sur le marché, malgré un niveau relalivemenl élevé de protections, comme les États-Unis, améliorenl en général leur situation concurrentielle sur le marché mondial lorsque les barrières tarifaires sont enlevées. À l'inverse, les pays où la production du lail est réglement4eAe, comme le Canada el l'Europe des 15, le secteur laitier a tout avanlage à ce que le bloc de réformes ne vienne pas menacer le cadre actuel, tout en ouvrant quelque peu le marché aux productions lailières excédenlaires.     

A quantitative analysis of oil-price shocks, systematic monetary policy, and economic downturns

Are the recessionary consequences of oil-price shocks due to oil-price shocks themselves or to the monetary policy that responds to them? We investigate this question in a calibrated general equilibrium model in which oil use is tied to capital utilization. The response to an oil-price shock is examined under a variety of monetary policy specifications. Under our benchmark calibration, which approximates the Federal Reserve's behavior since 1979, monetary policy contributes about 40 percent to the drop in output following a rise in oil prices. Moreover, none of the commonly proposed policies we examine completely offsets the recessionary consequences of oil shocks.     

Euro‐Area Yield Curve Reaction to Monetary News

Abstract. Using intraday data, we assess the impact of monetary news on the full length of the euro‐area yield curve. We find that the publication of monetary data has a significant impact on interest rates with maturities ranging from one to ten years, with the largest effect on the one‐ to five‐year segment. These results suggest that when gauging the policy‐relevant signals, market participants look through short‐term movements of annual M3 growth and focus instead on the trend rate of monetary expansion over the medium term.     

Merging, Reputation, and Repeated Games with Incomplete Information

We relate and unify several results that appeared in the following domains: merging of probabilities, perturbed games and reputation phenomena, and repeated games with incomplete information. Journal of Economic Literature Classification Numbers: C72, D83.     

Determinants of an Organization’s Website Ease of Use: The Moderating Role of Product Tangibility

The ease of use of an organization’s website is central to determining users’ experiences and behavioral intentions. Understanding how the site-related factors contribute to shaping perceived ease of use is thus critical. Nonetheless, we contend that the relative importance of these factors in shaping ease of use may vary according to the product offered by the organization. This research hypothesizes that the information quality of a website and its interactivity and aesthetics are antecedents to perceived ease of use and that the relative tangibility of the offered products moderates these relationships. The hypotheses are examined by performing a large-scale study in which each participant performs a task on one of 59 organizational websites. The study’s hypotheses were supported, and the results were then replicated using a second study conducted on a French-speaking sample. Site information quality is the strongest predictor of perceived ease of use, followed by the site interactivity and aesthetics. The results, however, underscore the moderating role of product tangibility. While the effects of interactivity and aesthetics are greater for sites offering services (e.g., communication, travel, insurance, and financial services), the effect of information quality is stronger for sites offering tangible products (e.g., electronics, books, and home improvement goods). The findings suggest that organizations offering tangible products should focus on providing their sites’ visitors with quality information, whereas organizations offering services should primarily focus on their sites’ aesthetics, interactive, and personalization features.     

Alliances Between Corporate and Fair Trade Brands: Examining the Antecedents of Overall Evaluation of the Co-branded Product

This research investigates the potential for a “fair” co-branding operation. A major corporate brand is fictitiously allied with a Fair Trade labelling organization brand. The sample for the study is composed of 540 respondents, representative of the French population. By considering commercial brands and Fair Trade labels as dissimilar in terms of customers’ perceived Fair Trade orientations, this article studies (1) how this lack of similarity impacts perceived congruence between both entities (i.e. perceived relevancy and expectancy of the alliance) and (2) how prior brand attitudes and congruence influence customers’ evaluation of the co-branded product. The results of this research demonstrate that: (1) Consumer prior brand attitudes toward the partner brands influence very little customers’ evaluation. (2) Perceived similarity of the partner brands has a strong influence toward congruence of the co-branding operation. Results also indicate that congruence (measured as relevancy and expectancy) has a strong influence upon customers’ evaluation. (3) An inverted U-shaped relationship exists between perceived similarity and relevancy of the alliance, and between expectancy and customers’ evaluation. The results obtained through the test of a partial least square model, and inverted U-shaped hypothesis, represent a new insight into co-branding theory. The high discursive power of fair co-branding is a key issue: the corporate brand provides the alliance with its leading position, while the Fair Trade brand provides the ethical attribute.