Agricultural Policy Reform and Off‐farm Labour Decisions

Off‐farm labour decisions of a sample of Kansas farmers are evaluated. The central question of our analysis pertains to whether 1996 US farm policy reforms may have altered the decisions to work off the farm. The effects of policy decoupling on off‐farm labour are complex: different aspects of policy changes can have opposing effects on off‐farm work decisions. Essentially, this makes this issue an empirical question. Results show that the introduction of fixed, decoupled payments in 1996 might have reduced the likelihood of off‐farm labour participation. However, the new policy environment may have increased farm households’ revealed aversion to risk, motivating a higher participation in non‐farm labour markets. The effects of 1996 policy reforms on farm income variability could have been attenuated by changes in US crop insurance programmes and by an increase in emergency assistance payments towards the end of the 1990s. The reduction in price supports may have increased the motivation for working off the farm. The net effect of the overall reforms on off‐farm work participation is not likely to have been large.     

An Exploratory Examination of Serious Surfers: Implications for the Surf Tourism Industry

Surf tourism is a multibillion dollar industry expected to continue expanding. Despite such economic significance, the surf tourism literature has gaps related to surf tourism segments. In response, this study applied the serious leisure framework to profile serious surfers and contrast their sociodemographic composition and travel behaviors. Although more serious surfers are more avid travelers in the quest for the perfect wave as compared with less serious surfers, preference for local attractions and conveniences did not vary between groups. In addition to contributing the scholarship of serious leisure and surf tourism, this study provides insights for the surf tourism industry. Copyright © 2015 John Wiley & Sons, Ltd.     

Understanding the Benefit Sought by Rural Tourists and Accommodation Preferences: A South Korea Case

Rural tourism has been widely acknowledged for its effectiveness in contributing to rural areas’ development. With strong government support, rural tourism has developed in many countries during the last several decades. This study aims to improve the understanding regarding tourism in Korean rural areas using a segmentation approach. The responses of 442 tourists in 23 rural villages were analyzed. Four segments of tourists were identified based on the different benefits they sought for their vacation in rural establishments. The estimation of a multinomial logit model determined the socio‐demographic characteristics and the preferred accommodations of a rural tourist. Discussions and implications of the detailed findings are provided in the last section. Copyright © 2012 John Wiley & Sons, Ltd.     

The cost of capital and optimal financing policy in a dynamic setting

This paper revisits the Modigliani–Miller propositions on the optimal financing policy and cost of capital in a dynamic setting. In an environment without taxes and bankruptcy costs, the results are generally consistent with the Modigliani–Miller Propositions 1 and 2. However, the first proposition should be presented and interpreted more carefully, as given firm characteristics, there is only one optimal capital structure. Thus, a firm’s capital structure is relevant. A relaxation of assumptions about either taxes or bankruptcy costs leads to conclusions that are generally different from those in Modigliani and Miller (1958). The model predicts that leverage and sales-to-capital ratios decrease but firm size and capital stock increase with the subjective discount factor of the firm’s manager if there are taxes and bankruptcy costs. The empirical analysis supports these predictions.     

Optimal portfolios under worst-case scenarios

In standard portfolio theories such as Mean–Variance optimization, expected utility theory, rank dependent utility heory, Yaari’s dual theory and cumulative prospect theory, the worst outcomes for optimal strategies occur when the market declines (e.g. during crises), which is at odds with the needs of many investors. Hence, we depart from the traditional settings and study optimal strategies for investors who impose additional constraints on their final wealth in the states corresponding to a stressed financial market. We provide a framework that maintains the stylized features of the SP/A theory while dealing with the goal of security in a more flexible way. Preferences become state-dependent, and we assess the impact of these preferences on trading decisions. We construct optimal strategies explicitly and show how they outperform traditional diversified strategies under worst-case scenarios.     

Vertical differentiation via multi-tier geographical indications and the consumer perception of quality: The case of Chianti wines

We derive and estimate a model of demand for Geographical Indications allowing for subjective and heterogeneous quality perceptions, and study vertical differentiation based on multi-tier quality labels within the context of the strategy adopted by the Chianti Consortium. Quality perceptions and wine choices are elicited in an online experiment where the number of quality tiers is augmented incrementally in a between-subject design. The empirical model includes subjective quality perceptions as an (endogenous) explanatory variable, and unexplained heterogeneity in WTP for quality as a random parameter. We find that quality perceptions are endogenous to the labeling regime, and adding a high-quality label (Chianti Classico Gran Selezione) decreases the perceived quality of all other Chianti wines, but not the competitor wines. However, the market shared lost to perception restructuring is small compared to the benefits of increased vertical differentiation.     

Consumer preferences before and after a food safety scare: An experimental analysis of the 2010 egg recall

In August 2010, more than half a billion eggs were recalled in the U.S. because of a Salmonella outbreak. This study examines the effect of the recall with a unique pair of auction experiments investigating willingness to pay (WTP) for conventional and organic eggs, one conducted shortly before and one right after the recall with the same participants. In addition to the before and after bids, participants bid again after a negative information or balanced information treatment about the event. Accompanying surveys showed consumers had a high level of awareness of the recall but less knowledge of specific details, and viewed information on egg farm conditions as very important in their WTP. While there were no significant before and after differences, WTP for organic eggs significantly increased in the negative information treatment, and balanced information had a positive effect on consumer WTP for conventional eggs.     

Keeping Up with the Joneses and the Home Bias

We argue that when individuals care about their consumption relative to that of their neighbours, a home bias emerges, that is investors overweight domestic stocks in their portfolios. Domestic stocks are preferred because they also serve the objective of mimicking the economic fortunes and welfare of the investor's neighbours, countrymen, and social reference group. We also demonstrate that globalization mitigates the home bias, and derive a modified international CAPM.     

Networked innovation and coalition formation: the effect of group-based social preferences

In this paper, we study the production and dissemination of public knowledge goods, such as technological knowledge, generated by a network of voluntarily cooperating innovators. We develop a private-collective model of public knowledge production in networked innovation systems, where group-based social preferences have an impact on the coalition formation of developers. Our model builds on the large empirical literature on voluntary production of pooled public knowledge goods, including source code in communities of software developers or data provided to open access data repositories. Our analysis shows under which conditions social preferences, such as ‘group belonging’ or ‘peer approval’, influence the stable coalition size, as such rationalising several stylized facts emerging from large-scale surveys of open-source software developers, previously unaccounted for. Furthermore, heterogeneity of social preferences is added to the model to study the formation of stable but mixed coalitions.     

Motivations to grow energy crops: the role of crop and contract attributes

Perennial energy crops are a promising source of bioenergy whose production involves production risks, long‐term commitment of land and need for crop‐specific investments without the coverage of crop insurance potentially available for conventional crops. We conduct a choice experiment in five states in the Midwestern and South‐central regions of the U.S. to examine the effect of crop‐contract attributes on the joint discrete‐continuous choice decisions to adopt an energy crop and convert acres to it from a status quo use, while controlling for the effect of various farmers’ risk and time preferences, sociodemographic characteristics, and availability of crop insurance for conventional crops. We find robust evidence that high discount rates, high upfront establishment costs and need for crop‐specific investments create disincentives for adoption and allocation of land to energy crop production. The effects of riskiness of returns and risk aversion are less robust across specifications. The effect of conventional crop insurance on the energy crop adoption decision differs across types of insurance; in particular, farmers with revenue insurance are statistically significantly less likely to adopt an energy crop. Our results have implications for the design of effective contracts and policy incentives to induce the production of energy crops.