Outsourcing of advanced business services in the Spanish economy: Explanation and estimation of the regional effects

The use of advanced business services has become an essential element for competitiveness in modern economies in which traditional competitive advantages based on prices, lower labour costs or the abundance of natural resources are being replaced by new advantages based on higher quality, greater knowledge or the use of information and communication technologies (ICTs). Within this context certain services (computing, communications, human resources, engineering, consulting or management) are generally outsourced so as to exploit the advantages derived from specialisation and division of labour, as well as those of economies of scope and scale. However, some businesses, sectors or regions appear to have very different patterns of outsourcing advanced producer services. This paper presents an explanation of elements of business outsourcing decisions applied to the Spanish economy, applying discrete response models to the information obtained in a survey elaborated by the authors. The data thus obtained have enabled us to identify differences between the Spanish regions in the tendencies of businesses to use internal or external advanced services.     

Theory-Driven Choice Models

We explore issues in theory-driven choice modeling by focusing on partial-equilibrium models of dynamic structural demand with forward-looking decision-makers, full equilibrium models that integrate the supply side, integration of bounded rationality in dynamic structural models of choice and public policy implications of these models.     

Coveted or Overlooked? The Psychology of Bidding for Comparable Listings in Digital Auctions

This article elaborates on, and provides evidence of the herd behavior bias -- the tendency to gravitate toward, and bid for, auction listings with one or more existing bids, ignoring comparable or even more attractive unbid-for listings available at the same time -- exhibited by buyers in digital auctions. Some listings attract many bidders and become coveted, the center of bidding attention, while other equivalent or even superior listings are overlooked, receiving no bids at all. Empirical analysis using data from digital auctions across different product categories shows that this herd behavior bias is attenuated with increasing bid price, but increases with the difficulty of evaluating quality. The practical implications of these findings, and promising research opportunities in this area are also discussed.     

Predator or prey? Effects of farm growth on neighbouring farms

We provide explorative insights on how farms which manage strong and successful growth affect farms in their neighbourhoods through spatial competition for land. The study is based on an exploratory analysis of repeated framed experiments within the business game FarmAgriPoliS (Appel & Balmann, Ecological Complexity, 40, 2019). In particular, we analyse the spatial influences of different behavioural clusters of farm managers. Our analysis finds that farms which manage strong growth substantially affect the development of farms in a spatial neighbourhood of some 10 km. Although the influence on the neighbourhood decreases with distance, the functional correlations of farm growth as well as exits are neither linear nor exponential, but eventually rather wave-like. We further discuss the spatial interdependence of farms and the related overlaps of the predator–prey phenomenon with the phenomena of farms' path dependency and agricultural structural change. We conclude that along with farmers' strategies and their abilities, the characteristics of their neighbours and the distances between neighbouring farms also determine who is ‘predator’ and who is ‘prey’.     

Excessive Volatility is Also a Feature of Individual Level Forecasts

The excessive volatility of prices in financial markets is one of the most pressing puzzles in social science. It has led many to question economic theory, which attributes beneficial effects to markets in the allocation of risks and the aggregation of information. In exploring its causes, we investigated to what extent excessive volatility can be observed at the individual level. Economists claim that securities prices are forecasts of future outcomes. Here, we report on a simple experiment in which participants were rewarded to make the most accurate possible forecast of a canonical financial time series. We discovered excessive volatility in individual-level forecasts, paralleling the finding at the market level. Assuming that participants updated their beliefs based on reinforcement learning, we show that excess volatility emerged because of a combination of three factors. First, we found that submitted forecasts were noisy perturbations of participants’ revealed beliefs. Second, beliefs were updated using a prediction error based on submitted forecast rather than revealed past beliefs. Third, in updating beliefs, participants maladaptively decreased learning speed with prediction risk. Our results reveal formerly undocumented features in individual-level forecasting that may be critical to understand the inherent instability of financial markets and inform regulatory policy.     

The default heuristic in strategic decision making: When is it optimal to choose the default without investing in information search?

Many studies have shown that decision makers have a tendency to choose the default or standard action among several possible actions. The article develops a model to explore under what conditions it is optimal for a firm facing a strategic decision problem to choose the default action without investing in obtaining more information that allows a more accurate decision. The model shows that the strategy to follow the default without additional information (“the default heuristic”) is more likely to be optimal when the cost of obtaining information is higher, and when the variation in possible outcomes is lower. The model also analyzes the optimal level of information search, showing that if the firm chooses to obtain information at all, it will invest in more accurate information when the cost of obtaining information is lower and when the variation in possible outcomes is lower.     

Understanding how consumers view green hotels: how a hotel's green image can influence behavioural intentions

As the public is increasingly concerned about environmental issues, green management is rapidly becoming a strategic tool that can enhance a hotel's competitive advantage. This study explores how to develop the image and branding of a green hotel using the concepts of cognitive, affective and overall images. The study, based on a survey of 416 hotel users, also investigates how a green hotel image can affect behavioural intentions (i.e. intention to revisit, intention to offer positive recommendations to others and willingness to pay a premium). The findings confirm that cognitive image components (namely value and quality attributes) can exert a positive influence on a green hotel's affective and overall images. The affective image is also found to positively affect a green hotel's overall image. A green hotel's overall image, in turn, can contribute to more favourable behavioural intentions. Quality attributes were found to be more powerful than value attributes. The importance of the concept of selfish altruism and obtaining a feeling of wellbeing from a purchase were shown to be very strong. A range of theoretical and practical implications are discussed.     

Market overreaction and investment strategies

We investigated the overreaction of the Korean market in response to shocks in the US stock market, and analysed the dynamic relationship between these two markets since 1996. We found that the KOSPI 200 index futures overreacted to the S&P 500 index returns during the period from 2000 to 2009 when the Korean market was in its growth stage. As the Korean market matured and the KOSPI 200 overnight futures were introduced in 2009, the overreaction disappeared. When investors employed the Kelly model or Value-at-Risk to exploit the overreaction, their trading strategies produced significant profits during the growth stage even after considering transaction costs and risk, but the profits attenuated once the overnight futures market was launched in 2009.     

Determinants of retirement planning behaviour and differences by age

This paper presents the results of an investigation into the determinants of retirement planning behaviour and differences among three age groups: 21‐ to 39‐year‐olds, 40‐ to 59‐year‐olds and those aged 60 years and older. A national survey of 911 individuals from households with incomes of $75 000 or greater was conducted in the US. The significance of socio‐demographic variables, the ability to recover from loss, behavioural tendencies and perceived or actual personal control were investigated; together with their role in the prediction of maximization of retirement contributions and ownership in the personal individual retirement account (IRA) or Keogh accounts. The results identified several significant variables in the prediction of ownership in a personal IRA or Keogh, including age, sources of financial information, being an early investor and investor activity. The results also identified several significant variables in the prediction of the maximization of retirement contributions, including employment, income, savings activity, ex ante research, review of investment performance, early investor, investor activity, such as planning for financial future, setting up automatic deposits and reviewing financial information in the mail.     

Three approaches to teaching business ethics

The question on what the purpose of teachingbusiness ethics should be, never fails todivide opinion. In this article three basicpositions taken with regard to this questionare distinguished. They are the cognitivecompetence, the behavioural competence and themanagerial competence positions. Once the coreof each these positions has been identified,the ontological presuppositions underlying eachof them is retrieved. It is then argued thatthese three positions and their accompanyingpresuppositions should not be regarded as rivalpositions, but as complementary approaches inteaching business ethics. Finally the teachingstrategies required by each of these threepositions are discussed.