Risk and Return to Housing, Tenure Choice and the Value of Housing in an Asset Pricing Context

Homeowners do not diversify their risky home equity because of fixed costs of issuing securities and information costs. An asset pricing model is developed for homeowners with the undiversifiable home equity asset. Homeowner value and house value to diversified landlords are compared, and a tenure choice equation is developed. We demonstrate the existence of a rational expectations equilibrium under appropriate conditions.     

Probability Distribution of the Project Payback Period Using the Equivalent Cash Flow Decomposition

For stochastic cash flows, probabilistic approaches to determine a complete distribution of payback period are very limited. The payback analysis based on the net present value (NPV) has several advantages. For annual cash flows, however, the NPV-based method does not provide a complete payback distribution. This article proposes a new technique, the equivalent cash flow decomposition (ECFD), which converts an annual cash flow into an equivalent subannual cash flow at a desired level of precision. The ECFD technique can be used in conjunction with any probabilistic cash flow technique. This article demonstrates that the ECFD technique overcomes the discontinuity limitation of the conventional NPV-based payback period method and generates a complete distribution of the payback period of annual cash flows. Examples indicate that the proposed method is robust with the accuracy comparable to Monte Carlo simulation.     

Customer query handling in sales interactions

Using a novel approach with video-recordings of sales interactions, this study focuses on a dynamic analysis of salesperson effectiveness in handling customer queries. We conceptualize salesperson behaviors, namely, resolving, relating, and emoting, as separate elements of customer query handling and empirically identify the distinct verbal and nonverbal cues that salespeople use to display these behaviors during sales interactions. We draw from compensation effects in social cognition theory to propose that customers’ perceptions of a salesperson’s effectiveness are prone to trade-offs between competence (resolving behaviors) and warmth (relating and emoting behaviors). Results, robust to endogeneity corrections, support the proposed tradeoffs such that the effectiveness of salesperson’s resolving behavior is significantly curtailed, even neutralized, by the salesperson’s relating and emoting behaviors. We situate these counterintuitive results within the extant theory and research on sales interactions, and outline implications for practice.     

Reluctant Generalised Additive Modelling

Sparse generalised additive models (GAMs) are an extension of sparse generalised linear models that allow a model's prediction to vary non-linearly with an input variable. This enables the data analyst build more accurate models, especially when the linearity assumption is known to be a poor approximation of reality. Motivated by reluctant interaction modelling, we propose a multi-stage algorithm, called reluctant generalised additive modelling (RGAM), that can fit sparse GAMs at scale. It is guided by the principle that, if all else is equal, one should prefer a linear feature over a non-linear feature. Unlike existing methods for sparse GAMs, RGAM can be extended easily to binary, count and survival data. We demonstrate the method's effectiveness on real and simulated examples.     

An experimental study of decisions in dynamic optimization problems

Summary. We study decisions of subjects who are given an incentive to solve dynamic optimization problems with the structure of a single-agent, one-sector, closed economy macroeconomic model. The decision task involves a sequence of choices of consumption and investment levels. Treatment variables consist of the initial endowment of capital stock, the production technology available to the economy, and the method of creating the structure of an infinite-horizon model. The study includes and contrasts data from both American and Japanese participants. We find that whether over- or underinvestment relative to the optimum occurs depends on the production technology, but not on the initial endowment of capital stock, nor the subject pool used, nor the method of implementing the infinite horizon. Sudden episodes of maximal consumption called binges, which are always suboptimal, are widely observed. Received: December 7, 1998; revised version: March 12, 1999     

DOMINANCE TESTING OF TRANSFERS IN ROMANIA

In this paper we compare the progressivity of different government transfers made to households in Romania. We use distribution free standard errors to examine the difference between concentration curves that may be correlated, and thereafter employ statistical tests that take into account the covariance matrix for the ordinate estimates. In addition, we estimate extended Gini coefficients for the same transfers to check their consistency with the tests of inequality dominance. The results show that almost all transfer payments in Romania are progressive, and that they have an important effect on the distribution of income. Rankings among different transfer payments are, however, not robust. In particular, sensitivity analysis using different household equivalence scales indicates that many results are not consistent across scales, and that lower size elasticities contribute to changes in ranking of Ginis and loss of statistical significance in dominance tests.     

Home country effects of foreign direct investment: From a small economy to a large economy

Previous studies on home country effects mainly focused on FDI from large developed economies to other countries. But today's super recipient is a relatively larger economy than its investors and many of these investors are not classified as “developed economies.” A simple Ak type model implies that a small and more developed country investing in a large and less developed country will experience decreases in both employment and income disparity (compared to the recipient country) as the less-developed recipient country gains the higher technology of production through FDI inflows. The empirical results for the Four Tigers (source countries) and China (recipient country) are consistent with our theoretical model of FDI outflows. We also find that FDI outflows to China decrease the ratio of exports to GDP only for small source countries, even though a higher investment in China raises the share of these countries' exports-to-China to China's total imports.     

Using Information Communication Technology to Develop International Entrepreneurship Competencies

Many researchers claim that the use of web-based learning tools and information and communication technology (ICT) will revolutionize traditional learning methods in university contexts and fundamentally change the process of how knowledge is gathered and disseminated. However, there are conflicting views regarding the benefits of these techniques and actual learning outcomes. This paper posits that by using ICT and particularly the Web as a dynamic and integrating learning tool, several strategic competencies can be deployed and that the international knowledge, skills and competencies of entrepreneurship students can be radically enhanced. In light of an extensive literature review on research in the field, suggestions are provided for using the Web as a comprehensive teaching tool.