Waves in consumption with interdependence among consumers

Abstract. In this paper we model the development of consumption when there are interactions between consumers. The consumer recognizes three reference groups: peer, distinction, and aspiration. The interplay of aspiration and distinction can lead to ‘waves’ in consumption; for example, the avant‐garde consumption of up‐market pioneers is copied by other types of consumer. As the latter aspire to emulate the former, the former seek distinction by varying their consumption. A consumption activity may start up market, then gradually descend the social spectrum. More complex patterns with continuing cycles in consumption can also be found. JEL classification D11,D62     

Simultaneous Public and Private Provision of Services, Asymmetric Information and Innovation

Public and private provision of a service coexist. There is asymmetric information between the government and the agency providing the public service with respect to the costs, the quality of the service and the innovation effort of the agency. We examine the optimal government design of the funding contracts to induce the agency to reveal its costs and exert high innovation effort. The optimizing behaviour of consumers and private firms generates observable information, which can be used by the government to reduce its information problem. In the optimal contracts, the informational rents of the agency increase with the level of innovation effort that the government induces from the agency. Correlation between public and the private sector costs results in a trade-off in the government's policy between inducing innovation and extracting the informational rent of the agency. To increase the redistribution inherent in the public provision of the service, the government will manipulate the expected profits of the private firms to induce higher innovation effort.     

Representational predicaments at work: How they are experienced and why they may happen

Representational predicaments reflect unfavorable perceptual or attributional incongruence between subordinates and superiors about the employees’ work, and adversely affect morale. Critical incident interviews were held with 63 Hong Kong Chinese employees from over 50 organizations. Stories about undervaluation of contextual performance were compared with stories about duly appreciated contextual performance, and stories about negative spotlighting (disproportionate emphasis on shortcomings or mistakes) were compared with stories about fair treatment of mistakes. Subordinates attributed undervaluation of contextual performance to: the superior’s unfamiliarity with the employee’s work, the superior’s perception that the work was of marginal importance, the subordinate’s lack of empowerment to report contextual performance, the lack of considerate attention by the superior, and the subordinate’s felt need to keep a low profile. Underlying factors were inhibitions against employee voice, leadership styles characterized by lack of benevolence and lack of individualized consideration, and absence of close subordinate-superior relationships. Subordinates attributed negative spotlighting to: the superior’s abusive behavior, prejudicial and hostile attitudes, or insistence on one “right way”; rivalry between the superior and the subordinate; and the absence of legitimate channels for upward feedback. Underlying factors were absence of just grievance procedures, and leadership styles characterized by authoritarianism, which could be compounded by lack of benevolence and lack of moral restraint, leading to abusive supervision. Cross-cultural research could establish whether large power distance and other cultural and institutional factors render Asian employees especially vulnerable to representational predicaments.