Rush,delay or money burning: Informational biases in policy decisions

We examine the consequences when the public is unsure about the ability of governments to foresee the effects of decisions. Governments with much information should invest either immediately or never. Governments that are not well informed should wait for better information. But since governments want to signal their abilities to solve problems, we observe rash decisions and problems are portrayed as crises. We also show that excessive delay can occur. Delay or rush occur even if there is very little uncertainty about abilities of governments. We discuss three institutional rules to alleviate the rush and delay bias: Limiting expenditures before elections, experimental clauses or money burning.     

Finding Form: Looking at the Field of Organizational Aesthetics

abstract Organizational research has long focused on the instrumental sphere with its questions of efficiency and effectiveness and in recent decades there has been interest in the moral sphere with its questions of ethics. Within the last decade there has also emerged a field that draws on the aesthetic sphere of our existence in organizations. In this review we look at the field of organizational aesthetics in terms of content and method, suggesting four broad categories of organizational aesthetics research: intellectual analysis of instrumental issues, artistic form used to look at instrumental issues, intellectual analysis of aesthetic issues, and artistic form used to look at aesthetic issues. We then suggest how organizational scholars might pursue artistic aesthetic organizational research.     

“Panelizing” Repeated Cross Sections

This paper considers the implementation of a non-stationary, heterogeneous Markov model for the analysis of binary dependent variables in a time series of repeated cross-sectional (RCS) surveys. The model offers the opportunity to estimate entry and exit transition probabilities and to examine the effects of time-constant and time-varying covariates on the hazards. We show how maximum likelihood estimates of the parameters can be obtained by Fishers method-of-scoring and how to estimate both fixed and time-varying covariate effects. The model is exemplified with an analysis of the labor force participation decision of Dutch and West German women using ISSP (and other) data from 10 annual Dutch surveys conducted between 1987 and 1996 and 7 annual West German surveys conducted between 1988 and 1994. Some open problems concerning the application of the model are discussed.     

Differentiated interchange fees

Payment networks typically differentiate interchange fees across different merchant sectors. This paper shows that it is generally efficient for a regulator to leave the decision on the structure of interchange fees to payment networks.     

Human capital and the internationalisation of venture capital firms

We examine the neglected area of internationalisation by VCs. Using a representative sample of 195 VCs, we show that the decision of a European VC firm to invest internationally is driven by its human resources. Having more VC executives in general and more VC executives with previous international experience in specific, results in a higher probability of investing internationally. In contrast, more VC executives with experience in the VC industry or with an engineering background lead to a higher probability of remaining domestic.     

Seasonality and non-linear price effects in scanner-data-based market-response models

Scanner data for fast moving consumer goods typically amount to panels of time series where both N and T are large. To reduce the number of parameters and to shrink parameters towards plausible and interpretable values, Hierarchical Bayes models turn out to be useful. Such models contain in the second level a stochastic model to describe the parameters in the first level.     

On optimal investiment strategies

Suppose an investor has a fixed decision horizon and an appropriate utility function for measuring his or her utility of wealth. If there are only two investment vehicles, a risky and a risk-free asset, then the optimal investment strategy is such that, at any time, the amount invested in the risky asset must be the product of his or her “current risk tolerance” and the risk premium on the risky asset, divided by the square of the diffusion coefficient of the risky asset. In the case of more than one risky asset, the optimal investment strategy is similar, with the ratios of the amounts invested in the different risky assets being constant over time.