Head-heart disparity among future managers: Implications for ethical conduct

An examination of the ethical perceptions of business students using Macobby's head/heart traits and a comparison to earlier studies of managers, accountants, and business students is made. The data were collected at three universities that are similar in size, enrollment and degree programs within the College of Business. Results indicate that present day business students are no less ethically inclined than are their business counterparts in previous eras. In general head traits dominated over heart traits, an indication that business schools continued to do a good job emphasizing and developing analytical skills but a poor job of developing the qualities of the heart that are generally associated with ethical behavior. The implications of these findings are discussed.     

Price Competition When Consumersare Uncertain About Which Firm Sells Which Quality

In this paper we analyze the properties of price equilibria in a duopoly market where firms sell vertically differentiated products, consumers being uncertain about which firm sells which quality. Both existence and properties of price equilibria are characterized by the beliefs of the consumers' population about the distribution of quality between firms.     

THE SQUARED ORNSTEIN-UHLENBECK MARKET

We study a complete market containing J assets, each asset contributing to the production of a single commodity at a rate that is a solution to the squared Ornstein-Uhlenbeck (Cox-Ingersoll-Ross) SDE. The assets are owned by K agents with CRRA utility functions, who follow feasible consumption/investment regimes so as to maximize their expected time-additive utility from consumption. We compute the equilibrium for this economy and determine the state-price density process from market clearing. Reducing to a single (representative) agent, and exploiting the relation between the squared-OU and squared-Bessel SDEs, we obtain closed-form expressions for the values of bonds, assets, and options on the total asset value. Typical model parameters are estimated by fitting bond price data, and we use these parameters to price the assets and options numerically. Implications for the total asset price itself as a diffusion are discussed. We also estimate implied volatility surfaces for options and bond yields.     

Does Hedging Affect Firm Value? Evidence from the US Airline Industry

Does hedging add value to the firm, and if so, is the source of the added value consistent with hedging theory? We investigate jet fuel hedging behavior of firms in the US airline industry during 1992–2003 to examine whether such hedging is a source of value for these companies. We illustrate that the investment and financing climate in the airline industry conforms well to the theoretical framework of Froot, Scharfstein, and Stein (1993). In general, airline industry investment opportunities correlate positively with jet fuel costs, while higher fuel costs are consistent with lower cash flow. Given that jet fuel costs are hedgeable, airlines with a desire for expansion may find value in hedging future purchases of jet fuel. Our results show that jet fuel hedging is positively related to airline firm value. The coefficients on the hedging variables in our regression analysis suggest that the “hedging premium” is greater than the 5% documented in Allayannis and Weston (2001), and might be as large as 10%. We find that the positive relation between hedging and value increases in capital investment, and that most of the hedging premium is attributable to the interaction of hedging with investment. This result is consistent with the assertion that the principal benefit of jet fuel hedging by airlines comes from reduction of underinvestment costs.     

Assessing Applied Protection across the World*

This paper presents MAcMap–HS‐6, a database providing a consistent, ad valorem equivalent measure of tariff duties and tariff rate quotas for 163 countries and 208 partners, at the six‐digit level of the Harmonized System (5111 products), accounting for all preferential agreements. We describe the methodology used to compute and aggregate an ad valorem equivalent of applied protection. Emphasis is placed on minimizing the endogeneity bias in the aggregation procedure, while acknowledging structural differences in export specialization. The resulting quantitative assessment is illustrated by giving an overview of applied protection across the world in 2001, in terms of average as well as distribution.     

Body support testing and rating

The REF, C, and score are a means to give quantitative values for product performance. Other product variables defined as humidity control factor, shear control factor, differential temperature control factor, product life factor, and cost factor were not addressed as part of this study. Additional variables include delivery, maintenance, and warranties. These components can be added to the score in some weighted manner as they become clinically founded. Interface pressures and shears were not measured for beds that are gatched. Each product tested will have characteristics pertinent to its own design that must be addressed to minimize sacral and coccyx skin breakdown when subjects are in this posture because some pneumatic pads bottom out to give excessive sacral and coccyx pressure while others wrinkle when used in this position. This is of major concern when one considers that the coccyx is more susceptible to pressure than any other bony prominence. There may be some aversion to labeling support product performance because it will allow the purchaser to know what is being bought. This initial study indicates the feasibility of quantitating what all patients require: a valid interface support surface for each specific need. The user can be adequately informed before the purchase as to a product's merits without being influenced by the results of inadequate testing, referrals, or sales media influences. Although cushions, shoes, or other prosthetic/orthotic devices were not part of this study, it is appropriate to rate all these devices in a similar manner by simply comparing pressure relief attained to that desired, expressing the result as a percentage of the worst case, and then labeling the product accordingly. Those subjects with sensation can rate comfort as part of the overall score. For cushions, ischial tuberosity pressure relief can be expressed as a percentage of the maximum attainable relief. Metatarsal head relief during gait as well as during static testing can be measured, and claims can be made for shoes and sneakers. Where impact loads and shear forces are paramount, the score must comprise appropriate parameters. Similarly, amputee distal stump relief as a percentage of worst case could be specified by the fitter. Iliac crest relief as a percentage of worst case can also be specified by the fitter. In all instances the score is not a subjective rating but one that can be measured correctly. All body support products can be given an REF, C value, and score as well as other qualifying values where appropriate instrumentation and sufficient subject sampling is used.     

Social learning with private and common values

Summary. We consider an environment where individuals sequentially choose among several actions. The payoff to an individual depends on her action choice, the state of the world, and an idiosyncratic, privately observed preference shock. Under weak conditions, as the number of individuals increases, the sequence of choices always reveals the state of the world. This contrasts with the familiar result for pure common-value environments where the state is never learned, resulting in herds or informational cascades. The medium run dynamics to convergence can be very complex and non-monotone: posterior beliefs may be concentrated on a wrong state for a long time, shifting suddenly to the correct state.Received: 6 January 2005, Revised: 5 May 2005, JEL Classification Numbers: C72, D82.Jacob K. Goeree: Correspondence toFinancial support from the National Science Foundation NSF (SBR-0098400 and SES-0079301) and the Alfred P. Sloan Foundation is gratefully acknowledged. We thank Richard McKelvey posthumously for insights and conjectures about information aggregation that helped shape our thinking about the problem. We also acknowledge helpful comments from Kim Border, Tilman Börgers, Bogachen Celen, Luis Corchon, Matthew Jackson and seminar participants at University College London, the University of Arizona, Universitat Autonoma de Barcelona, the California Institute of Technology, the 2003 annual meeting of ESA in Pittsburgh, the 2003 Malaga Workshop on Social Choice and Welfare Economics, the 2003 SAET meetings in Rhodos, and the 2003 ESSET meetings in Gerzensee.     

The transformational management of conflict: A perspective from the early Christian church

An understanding of transformational leadership has been developed for many spheres of management, but not previously for organizational conflict. This paper analyzes a successful conflict mediation attempt in the early Christian church and draws from it elements of a model of the transformational management of conflict that can be applied by managers in many contemporary work organizations. The elements include (a) reframing the conflict, (b) a focus on a shared organizational vision, (c) the placement of responsibility for dispute resolution in the hands of organizational members directly and indirectly involved in conflict, and (d) the use of communication devices consistent with the desired outcome. The paper suggests skills necessary for managers to implement the model and implications for research on it.     

Revenue Sharing versus Expenditure Sharing in a Federal System

Problems of intergovernmental policy coordination can take many forms and are becoming increasingly important with continuing economic integration. In this paper we focus on the fiscal competition problem where the non-cooperative choice of taxes and transfers among governments typically leads to a suboptimal outcome. We look at the effect of two widely used corrective policies: revenue sharing and expenditure sharing (or intergovernmental matching grants). Our main result is that these two corrective policies have opposite effects depending on the form of competition between governments, namely whether governments compete in taxes or expenditures. More precisely, for any form of competition, revenue sharing is desirable exactly when expenditure sharing is not and vice versa. The implication is that the choice of the optimal corrective policy requires a complete understanding of the underlying non-cooperative behavior among governments. Our second main result is that neither revenue sharing or expenditure sharing can be sustained as a Nash equilibrium among governments, although all governments would benefit from one of these two corrective policies. Central intervention is therefore inevitable unless governments can pre-commit to the optimal corrective policy before setting their fiscal policies.