An Economic Approach to the Psychology of Change: Amnesia, Inertia, and Impulsiveness

This paper examines the effect of memory loss on the continuity of behavior. We consider a player (individual or firm) who remembers previous actions but not underlying rationales. In a stable environment, relative to a full-recall scenario, memory loss increases the probability of following old policies (inertia). In a volatile environment, memory loss can decrease this probability (impulsiveness). The model provides a memory-loss explanation for some documented psychological biases, implies that inertia and organizational routines should be more important in stable environments than in volatile ones, and provides empirical implications relating memory and environmental variables to economic decisions.     

Building a knowledge-based society: The case of South East Europe

Dangers, threats and challenges facing South East European countries are analyzed in the context of the salient features of the contemporary world and of the development program of the European Union (EU). This analysis leads to the conclusion that building a knowledge-based society is an imperative for each country. A roadmap of tasks to be done during the next few decades is outlined.     

Question order effects in taste testing of beverages

The effect of order position has been demonstrated in marketing research, sometimes compromising survey results. This paper studies the influence of order position in product taste trials of carbonated beverages using a sequential monadic design. The authors measure attitude ratings across product trials rather than across products to examine the effect of order position on preference ratings.     

Firm Size, Industry Mix and the Regional Transmission of Monetary Policy in Germany

Abstract. This paper estimates the impact of interest rate shocks on regional output in Germany over the period from 1970 to 2000. We use a vector autoregression (VAR) model to obtain impulse responses, which reveal differences in the output responses to monetary policy shocks across ten German provinces. Next, we investigate whether these differences can be related to structural features of the regional economies, such as industry mix, firm size, bank size and openness. An additional analysis of the volatility of real GDP growth for the period 1992–2000 includes the Eastern provinces. We also present evidence on the interrelationship between firm size and industry, and compare our measure of firm size with those used in previous studies. We conclude that the differential regional effects of monetary policy are related to industrial composition, but not to firm size or bank size.     

The Global Determinants of Direct Office Real Estate Returns

We investigate the determinants of direct office real estate returns by analyzing rents, capital appraisals, and total returns. A recently compiled global database of major cities in Asia, Europe, and the United States provides a unique opportunity to give a macro-view on the effects of economic growth and supply and demand factors on nominal real estate returns. The global database provides quarterly observations from 1986 to 1999. To address the smoothness problem of appraisal-based price data and regulated rents, we employ the Generalized Method of Moments to estimate a dynamic panel-data model. The model allows us to combine the cross-sectional and time-series dimension in our quarterly data. We find that gross domestic product, inflation, unemployment, vacancy rate, and the available stock all have an effect on real estate returns.     

On the Distribution of CBOE Option Trade Prices Occurring Between Consecutive Stock Trades

This paper examines the volume distribution of option trade prices that occurs when the underlying stock price remains constant. The width of these option trade price bands provides direct evidence on the law of one price and the redundancy of options assumed in many option models. We find that index option bands are narrower than equity option bands. Furthermore, for both equity and index options, puts have narrower bandwidths than calls. In general, option price bandwidth is narrow and can be explained by the minimum price movement allowed by the Chicago Board Options Exchanges (CBOE). This supports the single price law and the redundancy assumption. The existence of bid/ask quotes on the option does not materially affect the above results although it does alter the frequency of multiple option trade prices for a given underlying stock price. We note that over 53% of option trading volume occurs without bid/ask quotes on the CBOE compared to less than 15% a decade ago. Our results suggest that the effective bid/ask spread on options is probably no larger than the minimum price movements allowed by the CBOE. Furthermore, the need for the liquidity services of market makers may be declining if the decline in quoting activity stems from cross trading (i.e. trades not involving market makers).     

Why is bank debt senior? A theory of asymmetry and claim priority based on influence costs

This theory can explain why bank debt is universally senior,consistent with the presence of conflict (lawyers) and absolutepriority violations in financial distress: Better organizedbanks would more strongly contest priority in financial distressif they were junior. Because 'deterrence' can reduce creditors'total expenses in a priority contest, the ex post stronger lobbyist/litigantshould be senior ex ante. For equivalent reasons, the theorycan advise when public debt should be senior to trade creditand/or implicit contrasts, and can even suggest one rationalefor the absolute priority rule (APR). This article further showsthat Chapter 11 creditor reimbursement procedures can loweroverall costs.     

The Justice Motive in East Asia’s Territorial Disputes

Many of the most active and most dangerous security challenges in the Asia-Pacific region are generally seen to involve a complex amalgam of material and ideational conflicts. There is surprisingly little consideration, however, of the role of the justice motive. This article explores the role of the justice motive in the context of three specific maritime and territorial disputes: Dokdo/Takeshima, the Senkaku/Diaoyu Islands, and the South China Sea. What explains its intensity? How does it affect political salience, tractability, and danger of conflict? What are the available mechanisms and prospects for resolving justice conflicts?     

Three books,two movements,one story

These three books take different approaches to analysing the transformative potential of the Landless Workers Movement (MST) in Brazil. Vergara‐Camus' book also examines the Zapatista National Liberation Army (EZLN). Carter solicited essays from numerous specialists and sees his book as contributing to existing efforts to overcome inequality. Mészáros emphasizes the influence of power relations on the law, determining that it takes an organized pressure group such as the MST to ensure that authorities implement policies that challenge the status quo. Vergara‐Camus' grassroots approach, which involved periods of living with peasant families, concludes that the MST's strategies for building alternative, autonomous rural communities is more realistic – more universalistic – than that of the Zapatistas, whose military tactics tend to reinforce the group's isolation in the forests of Mexico's southernmost state. The review evaluates these arguments, the authors and their evidence from the perspective of a researcher experienced with the objects studied.     

Relationships among healthy lifestyle beliefs and body mass index in urban China

Consumption is a major driving force in China's economy. The consumer society is particularly emerging in the more urbanized and affluent regions in China. Given the rise of consumerism on the one hand, and the rise of overweight and obesity on the other, this study explored whether the proliferating consumer culture is a threat to the traditional health culture in China. The lifestyle‐oriented approach used in this study does not confirm a straightforward relationship between an upward trend in Chinese with (economic) assets to join the consumer society and a downward trend in health interest among urban Chinese. The result that the rise of the consumer society is not directly accompanied by a devaluation of health issues does not imply that lifestyle research is of no use. On the contrary, this paper successfully identified four dimensions of health‐related lifestyle for urban China, namely Food‐health Belief, Perceived Knowledge, Health Careless and Group Conformity. This result is informative with respect to the complexity of sociocultural factors influencing the increasing prevalence of overweight and obesity.