Rational Pricing of Adjustable Rate Mortgages

In this paper we develop a general method for valuing adjustable rate mortgages and by producing a set of simulation results, we show that our approach can be implemented. While the simulations are of interest in their own right, we view the approach itself as the major contribution of the paper.     

Timing, diffusion, and substitution of successive generations of technological innovations: The IBM mainframe case

Based on the behavioral assumptions of diffusion theory, this article proposes an extension of the Bass diffusion model that simultaneously captures the substitution pattern for each successive generation of a durable technological innovation, and the diffusion pattern of the base technology. Normative guidelines based on the model suggest that a firm should either introduce a new generation as soon as it is available or delay its introduction to a much later date at the maturity stage of the preceding generation. The decision depends on a number of factors including the relative size of the market potentials, gross profit margins, the diffusion and substitution parameters, and the discount factor of the firm. This “now or at maturity” rule is thus an extension and generalization of the “now or never” rule of Wilson and Norton [25]. Empirical and normative implications of the proposed model are explored for four successive generations on IBM mainframe computers: first generation (vacuum tubes); second generation (transistors); 360 family (integrated circuits); and 370 family (silicon chips). The model describes the growth of these generations well. The application of normative guidelines suggests that IBM introduced the two successive generations of 360 and 370 families too late, i.e., their time to market should have been shorter. Limitations and further extensions of the model and the application are discussed.     

Order of Play, Forward Induction, and Presentation Effects in Two-Person Games

We investigate the effects of order-of-play (simultaneous, unobserved sequential and fully observed sequential play) and form of presentation (extensive vs. normal) in three simple two person games: battle-of-the-sexes with and without outside option and a three strategy game which differentiates between virtual observability (VO) and iterated elimination of dominated strategies as principles of equilibrium selection. VO predicts that knowledge of the order of play alone will affect the distribution of strategies chosen. We contrast this with the predictions of iterated elimination of dominated strategies. We report results from 1800 one-shot games conducted in 6 sessions with 120 subjects and analysed as panel data. The form of presentation strongly affects the distribution of outcomes and strategies. Information about order of play shifts the distribution of strategies away from the distribution in simultaneous play and towards the distribution in fully observed play, especially in the less complicated games presented in normal order. Order-of-play effects are less evident as complexity of the game increases. Extensive form presentation appears to induce sequential thinking even in simultaneously played games.     

Urban water security in Africa: The face of climate and development challenges

ABSTRACT

Resilience has been promoted as an important objective for the global development community, in part, as a response to concern about the potential impacts of climate change and related risks. A review of the challenges of achieving water security in urban areas of developing countries suggests that a specific focus on resilience may distract communities from more effective interventions. It would be more useful to support relevant institutions to address current service delivery priorities. This will better enable them to manage future climate change and the challenges that this may bring.     

Do agricultural outputs of partly autarkic peasants affect their health and nutrition? Evidence from Rwanda

In rural areas of less developed countries because of market imperfections, the health and nutritional status of peasants may directly depend on the production levels of specific agricultural goods rather than solely on income levels. This channel of health and nutrition determination has never been studied.     

Do price-tags influence consumers’ willingness to pay? On the external validity of using auctions for measuring value

This paper considers the external validity of the growing corpus of literature that reports the use of laboratory auctions to reveal consumers’ willingness to pay for consumer goods, when the concerned goods are sold in retail stores through posted price procedures. The quality of the parallel between the field and the lab crucially depends on whether being informed of the actual field price influences a consumer’s willingness to pay for a good or not. We show that the elasticity of the WTP revision according to the field price estimation error is significant, positive, and can be roughly approximate to one quarter of the error. We then discuss the normative implications of these results for future experiments aimed at eliciting private valuations through auctions.     

The Socially Aware Baby Boomer: Gaining a Lifestyle-Based Understanding of the New Wave of Ecotourists

As the Baby Boomers approach retirement, tourism, in general, is expected to increase among members of this generation. This increase in travel is expected to be accompanied by a surge of interest in ecotourism—resulting in a new wave of ecotourists, over the next quarter century. This four-nation analysis of the post-war Baby Boom generation in Canada, Australia, New Zealand and the United States (the CANZUS countries) argues that Baby Boomers should be segmented by their lifestyle characteristics, in order to isolate the best prospects for ecotourism. Data are presented to show that the prime-prospect ecotourist among Baby Boomers is in the Socially Aware lifestyle group, in Australia, and its counterparts in the other CANZUS populations—Autonomous Rebels in Canada, Educated Liberals in New Zealand, and Actualisers in the United States. Additional data on the travel motives and value priorities of Socially Aware Baby Boomers give a fuller picture of this group. Members of the Baby Boom generation are currently experiencing middle age; the psychological implications of this life stage for ecotourism activity are also given. Strategy pointers are offered for the ecotourism manager, given the growing importance of the Socially Aware Baby Boomer as an ecotourist.     

Human resource and industrial relations practices of UK and US multinationals in Germany

Most of the research about HRM and IR practices of MNCs in their host country has been conducted in deregulated countries such as the UK and the US. Host countries with relatively weak institutional arrangements facilitate the transfer of home-country practices. In contrast, those with institutionally strong systems, such as Germany, impose stronger pressures for adaptation. This paper reports research about nine US and four UK subsidiaries operating in Germany. It examines how their HRM and IR practices are shaped by German labour and IR institutions, how they differ from a control group of indigenous firms and what room for manoeuvre is left for the introduction of home-country practices. The main conclusions are that small and medium-sized subsidiaries in particular can to some extent avoid the pressures exerted by German labour and IR institutions. This facilitates the transfer of home-country practices. However, even larger affiliates that comply with the German institutions can transfer practices from their parent company. The highly regulated German system leaves some room for flexibility. Nevertheless, the institutional environment prevents large companies from following a unitarist HRM and IR approach.     

In Memoriam

Rotterdam, April 1874.