Inequality‐averse well‐being measurement

We construct individual well‐being measures that respect individual preferences and depend on the bundles of goods consumed by the individual. Building on previous work in which general families of well‐being measures are identified, we introduce basic transfer principles that apply either to bundles or directly to indifference sets, and we characterize specific well‐being measures that involve either the ray utility or the money‐metric utility.     

Spirituality,Moral Identity,and Consumer Ethics: A Multi-cultural Study

Competitor pressure is one of the major reasons that a SME engages in environmentally friendly or damaging activities. Extant research has argued that environmental strengths and concerns have mirror opposite relationships with stakeholder antecedents as well as with performance outcomes. We suggest this argument does not reflect the reality. Building on stakeholder management and Red Queen theories, we hypothesize that environmental strengths and concerns have differential relationships with competitors–firm power exchange and financial performance for Chinese SMEs. Results of ten interviews, a pretest, and a large-scale field study indicate that competitors–firm power divergence has a positive relationship with environmental strengths, yet the link between this divergence and environmental concerns does not exist. Further, environmental strengths mediate the relationship between competitors–firm power divergence and financial performance of Chinese SMEs.     

Heteroscedasticity of deviations in market bubble moments – how the goods and bads lead to the ugly

We conjecture that market bubbles may be the results of the interplay of Goods and Bads (toxic products) which develop through three interlocking moments – herding, swarming and stampeding, with deviations marked by heteroscedasticity. We use our stylized model of financial predation, the Consolidated Model of Financial Predation, and data we have accumulated through in-the-field eight-year research and the study of 30 years of U.S. market history in order to explore the foundations of market crises. We find that blind trust (or the positivity bias) and of the fear to miss out on an opportunity to enter/exit a market impacts the investors’ decisions to invest or retract. We show how markets are driven towards a make-or-break predatory dynamic that creates winners and losers due in part to weak regulations and identify a constant k that permeates market behaviours.     

Informality,public employment and employment protection in developing countries

This paper proposes an equilibrium matching model for developing countries’ labor markets where the interaction between public, formal private and informal private sectors are taken into account. Theoretical analysis shows that gains from reforms aiming at liberalizing formal labor markets can be annulled by shifts in the public sector employment and wage policies. Since the public sector accounts for a substantial share of employment in developing countries, this approach is crucial to understand the main labor market outcomes of such economies. Wages offered by the public sector increase the outside option value of the workers during the bargaining processes in the formal and informal sectors. It becomes more profitable for workers to search on-the-job, in order to move to these more attractive and more stable types of jobs. The public sector therefore acts as an additional tax for the formal private firms. Using data on workers’ flows from Egypt, we show empirically and theoretically that the liberalization of labor markets plays against informal employment by increasing the profitability, and hence job creations, of formal jobs. The latter effect is however dampened or even sometimes nullified by the increase of the offered wages in the public sector observed at the same time.     

Discounting and welfare evaluation of policies

We start with the premise that if policy discounting is to have any welfare relevance, one has to accept it being a derivative of a social welfare function (SWF). We show that if that derivative is to have a net present value (NPV) form, then the baseline allocation must be stationary. In addition, we show that at a stationary baseline in an overlapping generations growth economy, the intergenerationally fair discount rate equals the growth rate of per‐capita consumption, which is, roughly, 2% for the United States. This differs from the interest rate, even in the golden rule equilibrium, unless population growth is null. The last result is based on the main theorem in Mertens and Rubinchik (2012) and is demonstrated for a policy space that might naturally arise in applications.     

E-commerce and the market structure of the recorded music industry

In this article, we study the impact of the development of e-commerce on the concentration of the recorded music industry in France, for the period 2003–2010. First, we find that over the whole period, CD sales, measured at the distributor level, are less concentrated online than offline. Second, we find that sales concentration online has increased between the early period of e-commerce (2003–2006) and the later period (2007–2010).     

The Effect of Joint Auditor Pair Composition on Audit Quality: Evidence from Impairment Tests

Using a sample of firms from France, where the law requires the use of two auditors, we study the effect of auditor pair composition on audit quality by examining a specific account, goodwill impairment. We document that firms audited by a Big 4–non‐Big 4 auditor pair (BS) are more likely to book an impairment and book a larger impairment than firms audited by a Big 4–Big 4 auditor pair (BB) when low‐performance indicators suggest a greater likelihood of impairment. Moreover, firms audited by a BB pair reduce impairment disclosures when they book impairments, while firms audited by a BS pair do not, suggesting lower transparency for firms audited by a BB pair. Our results inform investors and firms in mandatory joint audit regimes, as well as regulators who are considering requiring joint audits.     

Development and Pricing of a New Participating Contract

Abstract

This article designs and prices a new type of participating life insurance contract. Participating contracts are popular in the United States and European countries. They present many different covenants and depend on national regulations. In the present article we design a new type of participating contract very similar to the one considered in other studies, but with the guaranteed rate matching the return of a government bond. We prove that this new type of contract can be valued in closed form when interest rates are stochastic and when the company can default.