Reconciling introspective utility with revealed preference: Experimental arguments based on prospect theory

In an experiment, choice-based (revealed-preference) utility of money is derived from choices under risk, and choiceless (non-revealed-preference) utility from introspective strength-of-preference judgments. The well-known inconsistencies of risky utility under expected utility are resolved under prospect theory, yielding one consistent cardinal utility index for risky choice. Remarkably, however, this cardinal index also agrees well with the choiceless utilities, suggesting a relation between a choice-based and a choiceless concept. Such a relation implies that introspective judgments can provide useful data for economics, and can reinforce the revealed-preference paradigm. This finding sheds new light on the classical debate on ordinal versus cardinal utility.     

Celso Furtado: Culture and Creativity Matter

This article deals with the relationship between development, creativity, and culture. It is based on the works of Celso Furtado — a Brazilian economist, a member of ECLAC’s first generation of scholars (along with Raul Prebisch), and a notable intellectual of sub-development and development in Brazil and Latin America. For Furtado, economic development is an endogenous social process that leads to human ingenuity and creativity. However, Furtado argued that creativity does not occur haphazardly. It is conditioned by cultural structures that can take two forms: material (means) or immaterial (ends). The former steers creativity toward serving material accumulation and consumption, while the latter guides it toward individuals’ existential way of life. Furtado’s central claim is that, in the “industrial civilization,” such values as rationality and efficiency bring human creativity into the production process.     

Are we ignoring supply shocks? A proposal for monitoring cyclical fluctuations

Although there are several mechanisms within theoretical models acknowledging that supply shocks can account for an important part of output fluctuations, even in the short-run, policy practitioners continue endorsing the idea that only demand shocks explain them. This article provides empirical evidence on several Latin American countries and the USA to show that the share of output variance explained by supply shocks in the short-run is substantial. It also offers a more agnostic implementation of the Blanchard–Quah type of structural analysis that focuses on policy evaluation. For this purpose, we propose constructing two indicators out of the historical decomposition of shocks: the goods market unbalance (GMU) and the total cyclical fluctuations (TCF). While GMU is an excess demand measurement that reveals the scope of the distortions caused by shocks, TCF, combined with GMU, helps to understand what type of shock is predominantly explaining (output and inflation) fluctuations. These two pieces of information provide a very different diagnosis than traditional output gaps and should guide monetary policy interventions more adequately. The agnosticism of this proposal has two aspects: the use of a different identification strategy and the assessment of the effects of both supply and demand shocks on output.

     

Tipping the scale? The workings of monetary policy through trade

The monetary policy entails demand‐augmenting and diverting effects, and its impact on the trade balance—and on other countries—depends on the magnitude of these opposing effects. Using U.S. data and a sign‐restricted structural vector autoregressive identification, we investigate the importance of these effects. Overall, the results indicate that a monetary loosening (tightening) leads to a strengthening (weakening) of the overall trade balance, indicating that demand diversion dominates. The paper also explores changes in the effects following the global financial crisis, reflecting the impaired monetary transmission mechanism.     

Service innovation as a political process

Service innovation processes are driven by stakeholders in interaction and are understood and sketched as a value negotiation process that consists of an iterative process of securing potential value in service. While previous research has focused on service innovation as a harmonious closed system, our study explores service innovation as a political process in which stakeholders negotiate to create and secure future value. Data are collected through interviews and participant observations in four different case studies. Our study contributes to the field by illuminating service innovation as a political process and explaining how this is operationalized. The findings also contribute to an understanding of how stakeholder resources impact a chosen strategy; the resulting strategy’s impact on the service concept vis-à-vis its potential value; and how several involved stakeholders formulate, negotiate, and secure future potential value, which are the activities that drive a service innovation process.     

Bridging Business and Society: The Abrinq Foundation in Brazil

This article presents the process of creation and expansion of the Fundação Abrinq pelos Direitos da Criança et do Adolescente (Abrinq Foundation for Rights of Children and Adolescents). Established in 1990 by a group of entrepreneurs from the Brazilian Toy Manufacturers’ Association (ABRINQ), the Fundação Abrinq has been successful at raising the issue of children in Brazilian society by bridging business and several other sectors of society. This article more particularly examines (1) the societal challenges related to the situation of children in Brazil; (2) the creation and development of the Abrinq Foundation; and (3) the achievements of this innovative bridging organization over 15 years.     

Behaviours and entrepreneurial intention: Empirical findings about secondary students

This paper aims to identify some factors that may be explaining differences among secondary students in start-up intentions. For that, the study develops an entrepreneurial intention model sustained by the use of Azjen’s Theory of Planned Behaviour (TBP). Using a sample of students aged between 14 and 15 years old, a questionnaire based on the Li?án and Chen’s Entrepreneurial Intention Questionnaire was administrated. The purpose is to test a model of entrepreneurial intention using structural equations. The findings point that TPB is an appropriate tool to model the development of entrepreneurial intention through pedagogical processes and learning contexts. The education and training should centre itself much more in changing personal attitudes than in knowledge. Moreover, it is desirable that an entrepreneurship educational programme could contribute to the development of competences related to entrepreneurship, social and civic skills, and cultural awareness.     

After over 25 years of accrediting beaches,has Blue Flag contributed to sustainable management?

This paper examines the qualitative, quantitative, and geographical evolution (1987–2012) of the Blue Flag campaign and accreditation process in Spain, a leading coastal tourism destination heading the list of awards. The standard Blue Flag criteria for crowded, developed beaches are now adapting to new demands for natural beaches, but they still fail to capture essential sustainable tourism features, such as limiting user numbers, or preserving and restoring sand ecosystems. Given these shortcomings, some destinations are moving to alternative awards with a higher environmental commitment, such as EMS, ISO14001, and Eco-Management and Audit Schemes (EMAS). A cluster analysis of Blue Flag data for 983 beaches in Spain over 26 years revealed different behaviour patterns: established tourist areas that have always opted for the Blue Flag programme; tourist areas that adopted the Blue Flag early on but replaced it with ISO14001 and EMAS; recently developed destinations applying for the award to boost their tourism promotion; and tourist areas with no well-defined policy that have opted intermittently for Blue Flag. These profiles illustrate the different policies of Spain's Autonomous Regions, and they are useful for tourism managers to verify whether their destination's behaviour pattern contributes to sustainable tourism and matches strategic policies they have designed for them.     

Approximate maximum likelihood estimation for stochastic differential equations with random effects in the drift and the diffusion

Consider N independent stochastic processes \((X_i(t), t\in [0,T])\), \(i=1,\ldots , N\), defined by a stochastic differential equation with random effects where the drift term depends linearly on a random vector \(\Phi _i\) and the diffusion coefficient depends on another linear random effect \(\Psi _i\). For these effects, we consider a joint parametric distribution. We propose and study two approximate likelihoods for estimating the parameters of this joint distribution based on discrete observations of the processes on a fixed time interval. Consistent and \(\sqrt{N}\)-asymptotically Gaussian estimators are obtained when both the number of individuals and the number of observations per individual tend to infinity. The estimation methods are investigated on simulated data and show good performances.