Recognizing the benefits of diversity: When and how does diversity increase group performance?

Diversity does not only bring positive consequences. It has often been recognized that heterogeneity in teams can reduce intra-group cohesiveness, and that it can lead to conflicts and misunderstandings which, in turn, can lower employee satisfaction, citizenship behaviors and increase turnover. On the other hand, there is also evidence for performance-increasing effects of diversity because it can improve creativity and innovation through the team members' greater variety of perspectives. Little is known, however, about the conditions and the psychological mechanisms required for increasing group performance under diverse settings. Answers to research questions such as how and when diversity influences performance at work are still limited. The purpose of the paper is to provide theoretical answers to these questions by proposing a model of managing diversity which draws on social psychology theories. The model brings a new perspective by identifying the process of learning from one another's identity within a group. This process underlies two different levels of mechanisms (individual and group level). The model proposes that when these social psychological mechanisms are activated, diversity will lead to an increase in group performance. The model also suggests that collective identity is salient and when psychological safety climate are the psychological conditions that activate these mechanisms.     

Consumers’ preference modeling to price bundle offers in the telecommunications industry: a game with competition among operators

Network operators are merging their services, such as fixed or wireless telephony, internet or television, into single offers, called bundles. It is essential to understand consumers’ preferences to define the most profitable bundles, with their associated prices, especially in the fierce competitive current market. We start by defining a random linear utility model and then, analyze the competition between an integrated operator and new entrants proposing substitutable services. Each operator ignores the consumers’ reservation prices for his offers and has to deal with uncertainties about the marketing strategies of competitors, due to potential different size and cost structure. A two-level game is introduced and solved by backward induction. In the second level, the operators determine their optimal offer prices for each possible combination of marketing strategies while the consumers select their most profitable purchasing processes; the natural framework is that of Bayesian game theory. Finally at the top level, knowing the outcome of the other level, the operators identify which marketing strategy to use between market share expansion, segment targeting or multi-level price discrimination, to maximize their expected utilities conditionally to their private informations.     

Cooperation among companies,universities and local government in a Swedish context

The importance of the business context for company's development work has been stressed in previous research and substantial public resources are now being directed towards university–company interaction to generate innovations. However, cooperation between companies, the public sector and universities could be obstructed by differing logics and purposes for action. This paper examines the interaction among these three actor categories to clarify the possible benefits of becoming more actively involved in each other's development work. A case study in a Swedish context showed that the three actor categories entered into each other's domains in new ways, sharing resources and increasing the potential for innovation. We also found that cooperation allowed a fourth actor category, financiers, to be reached, thereby securing additional resources for the innovation activities, creating action space for cooperation, and for a fifth actor category in the form of independent cooperation facilitators.     

Estimating Final Demand Expenditure at Factor Cost and Net Price Indices

This article describes the methodology which is currently used at Statistics Canada to compute price indices, net of taxes and subsidies (net price indices), and to estimate final demand expenditure at factor cost in the Canadian system of national accounts. This methodology involves the use of a specially designed input–output model of the Canadian economy. The model is used to extract the taxes, net of subsidies paid on the inputs used by industries, and to allocate these net taxes to the direct and indirect final demand deliveries of the industries. Downstream interindustry links are established to trace the final demand deliveries of industries. Using these links, the model could easily be extended to decompose final demand expenditure into other cost components, such as the embedded energy cost or the cost of imported inputs. Some empirical results are shown to illustrate how the calculations are made.     

Using dynamic programming with adaptive grid scheme for optimal control problems in economics

The study of the solutions of dynamic models with optimizing agents has often been limited by a lack of available analytical techniques to explicitly find the global solution paths. On the other hand, the application of numerical techniques such as dynamic programming to find the solution in interesting regions of the state was restricted by the use of fixed grid size techniques. Following Grüne (Numer. Math. 75 (3) (1997) 319; University of Bayreuth, submitted, 2003), in this paper an adaptive grid scheme is used for finding the global solutions of discrete time Hamilton–Jacobi–Bellman equations. Local error estimates are established and an adapting iteration for the discretization of the state space is developed. The advantage of the use of adaptive grid scheme is demonstrated by computing the solutions of one- and two-dimensional economic models which exhibit steep curvature, complicated dynamics due to multiple equilibria, thresholds (Skiba sets) separating domains of attraction and periodic solutions. We consider deterministic and stochastic model variants. The studied examples are from economic growth, investment theory, environmental and resource economics.     

Knowledge engineering for modelling reasoning in a diagnosis task: application to search and rescue

This paper pertains to the application of knowledge engineering methods to aeronautical search and rescue in Canada. We modelled at the knowledge level the reasoning process of a search mission coordinator when conducting a diagnosis task to determine the routes likely followed by an aircraft missing overland. Knowledge engineering allowed us to develop a reasoning model based on documents and on interviews with domain experts. Our study was conducted in the CommonKADS knowledge modelling framework. The proposed model was validated by domain experts and implemented in a rule‐based prototype. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.     

International Trade and Currency Exchange

On the international scene, away from national legal rules, the use of different currencies is largely due to the operation of the "Invisible Hand". The paper develops a three-country model of the world economy. This links real trade patterns with currency exchange structures in a general equilibrium framework which includes transaction costs on foreign exchange markets. In the presence of strategic complementarities, there are multiple equilibrium structures of currency exchange for a given underlying real trade pattern. The existence conditions of these different equilibria are characterized, using the trade links between countries as the key parameters. Finally, repercussions on world output of the choice of a currency exchange structure are analysed.
"So much of barbarism, however, still remains in the transactions of most civilized nations, that almost all independent countries choose to assert their nationality by having, to their own inconvenience and that of their neighbours, a peculiar currency of their own."
John Stuart Mill, 1848.     

Equal treatment and socially optimal R&D in duopoly with one‐way spillovers

This paper examines the standard symmetric two‐period R&D model with a deterministic one‐way spillover structure: know‐how flows only from the high R&D firm to the low R&D firm (but not vice versa). Though firms are ex ante identical, one obtains a unique asymmetric equilibrium (pair) in R&D investments, leading to interfirm heterogeneity in the industry. R&D cooperation by means of a joint lab is considered and compared to the non cooperative solution. The main part of the paper provides a second‐best welfare analysis in which we show that the joint lab yields a socially optimal R&D level subject to an equal treatment (of firms) constraint, which also coincides with the noncooperative solution in the absence of spillovers. We also investigate the welfare costs of this equal treatment constraint and find that they can be quite significant.