Ambiguous events and maxmin expected utility

We study the properties associated to various definitions of ambiguity [L.G. Epstein, J. Zhang, Subjective probabilities on subjectively unambiguous events, Econometrica 69 (2001) 265-306; P. Ghirardato et al., Differentiating ambiguity and ambiguity attitude, J. Econ. Theory 118 (2004) 133-173; K. Nehring, Capacities and probabilistic beliefs: a precarious coexistence, Math. Soc. Sci. 38 (1999) 197-213; J. Zhang, Subjective, ambiguity, expected utility and Choquet expected utility, Econ. Theory 20 (2002) 159-181] in the context of Maximin Expected Utility (MEU). We show that each definition of unambiguous events produces certain restrictions on the set of priors, and completely characterize each definition in terms of the properties it imposes on the MEU functional. We apply our results to two open problems. First, in the context of MEU, we show the existence of a fundamental incompatibility between the axiom of “Small unambiguous event continuity” (Epstein and Zhang, 2001) and the notions of unambiguous event due to Zhang (2002) and Epstein and Zhang (2001). Second, we show that, in the context of MEU, the classes of unambiguous events according to either Zhang (2002) or Epstein and Zhang (2001) are always λ-systems. Finally, we reconsider the various definitions in light of our findings, and identify some new objects (Z-filters and EZ-filters) corresponding to properties which, while neglected in the current literature, seem relevant to us.     

The projected costs and benefits of water diversion from and to the Sultan Marshes (Turkey)

The Sultan Marshes in the Develi Basin, Anatolia, one of twelve internationally important wetlands of Turkey, have been severely affected by the construction of an irrigation project in 1988. Intensive use of surface and ground water in irrigation has caused more than a 1 m decline in water levels and has affected the wetlands' ecological characteristics. Previous studies indicate that Sultan Marshes will need more water to restore viable ecological conditions. In this study, we analyze how economic benefits from agriculture and wetlands would be affected if moderate amounts of water were diverted from agriculture back to wetlands in the Develi Basin. By estimating total and marginal costs and benefits associated with water diversions, we determined the optimum or economically-efficient amount of water diversion. When only direct-use values of the wetland (animal grazing, plant harvesting, and ecotourism) were included in the analysis, the optimum amount of water diversion to the wetlands was found to be 5.2 million m³ year^− 1 (165 L sec^− 1), which compares to about 62 million m³ year^− 1 (1,957 L sec^− 1) used in irrigation. When wastewater treatment benefits (an indirect-use value) were added, the optimum amount rose to 7 million m³ year^− 1. Overall, the analysis showed that water diversion from agriculture to the Sultan Marshes is economically preferable.     

Causal relationship between construction investment policy and economic growth in Turkey

The construction industry in countries experiencing severe economic crisis has vital importance to get out of stagnation because of its direct relations with 200 different sectors. In this study, the relationship between the construction growth data (infrastructure, building and residential (public), building and residential (private) investment) and gross domestic product (GDP) is examined for Turkey. To this end, Engle–Granger cointegration, error correction model (ECM) and Granger causality tests were applied in order to determine the aforementioned relation. It has been found that the infrastructure and building–residential investments have direct relations with the GDP and have causality effects.     

GRAPHICAL MODELS FOR CORRELATED DEFAULTS

A simple graphical model for correlated defaults is proposed, with explicit formulas for the loss distribution. Algebraic geometry techniques are employed to show that this model is well posed for default dependence: it represents any given marginal distribution for single firms and pairwise correlation matrix. These techniques also provide a calibration algorithm based on maximum likelihood estimation. Finally, the model is compared with standard normal copula model in terms of tails of the loss distribution and implied correlation smile.     

Portfolio diversification: the influence of herding,status-quo bias,and the gambler’s fallacy

This experimental study examines the influence of herding [following the majority of fellow gamblers or the most successful gambler (guru)], status-quo bias, and the gambler’s fallacy on diversification behavior. We find that neither herding nor status-quo bias contributes significantly to non-optimal portfolio choices. The gambler’s fallacy, however, plays an important role in these decisions. Many subjects appear to find patterns in a history of random events and then use these “patterns” to infer the sequence of future events. The gambler’s fallacy is significantly responsible for the fact that the optimal structure of a portfolio is considered in only 37.7% of all choices made by an investor.     

Where Does the Good Shepherd Go? Civic Virtue and Sorting into Public Sector Employment

Several studies have analyzed motives to work in the public versus private sector. However, research on prosocial motivation in the context of public sector employment has largely neglected civic virtue, the motive to contribute to society. This study considers civic virtue in addition to other possible motives, using a representative, longitudinal dataset of employees in Germany including 63,180 observations of 13,683 different individuals. We find that civic virtue relates positively to public sector employment beyond altruism, risk aversion, laziness and (low) financial motivation. The result holds within different branches and is explained by sorting into the sector.     

Antecedents of firm performance in emerging economies: Business groups,strategy, industry structure,and state support

A rich literature has investigated the antecedents of firm performance in developed economies, resulting in a consensus view that firm resources and strategy are the key determinants. Several arguments, however, suggest that in emerging economies other factors are more important for firm performance. This study analyzes the impact of firm strategy and industry structure as well as business group membership and state support on firm performance in an advanced emerging economy, Turkey. Using a data set compiled from a selection of the 1000 largest manufacturing firms in this country, the study employs several regression models to identify the main determinants of firm performance as measured by productivity and net profit margin. In contrast to studies of developed economies, the investigation finds that firm-related factors (competitive strategies) do not significantly influence performance; instead factors related to industry structure and business group membership are the strongest determinants of firm performance; further, state support interacts with business group membership and is positively related to productivity.     

Factors influencing the choice between founder versus non-founder CEOs for IPO firms

Despite the innate advantage founder CEOs have by virtue of their founding vision, organizational influence, positive image, and ownership stakes to lead their firms at their initial public offering (IPO), extant empirical evidence indicates that between a third to half of IPO firms go public with non-founder CEOs at the helm. Relatively little however, is known regarding factors that influence the choice of founder versus non-founder CEO for firms issuing IPOs. This study examines the impact of factors such as founder characteristics, size of founding team, governance structure, ownership structure, top management team independence, venture capitalist influence, and the demand for equity financing on the probability of founder CEO at IPO.     

The accuracy of interest rate forecasts in the Asia-Pacific region: opportunities for portfolio management

We analysed interest rate forecasts from Australia, China, Hong Kong, India, Indonesia, Malaysia, New Zealand, Singapore, South Korea, Taiwan and Thailand. We assessed 532 forecast time series with a total of 85,264 individual interest rate forecasts. To do so, we carried out a comparison to naïve forecasts and investigated the forecast time series for topically orientated trend adjustments. In addition, we deployed the sign accuracy test and the unbiasedness test. The results are very sobering in part: 95.9% of all forecast time series are characterized by the phenomenon of topically orientated trend adjustments, and 99.4% of all forecast time series proved to be biased. Only a small proportion of the forecast time series (3.6%) reflected the future interest rate trend significantly more precisely than a naïve forecast. However, at the same time some of the results of the study are surprisingly positive. The sign accuracy test revealed that 48.3% of all forecast time series predict the interest rate trend significantly better than a random walk forecast.     

Service quality of travel agents in Turkey

Customer satisfaction is an important measure of service quality in travel agents. Customers’ perceptions about agents seem to have been largely ignored by agent management in developing countries. The assessment of service quality provides an important feedback for agents to assess and improve its service to its customers. The aim of this study is to develop a reliable and valid instrument measure customer satisfaction in travel agents. A questionnaire to measure the service quality of travel agents was used and a total of 217 customers in Turkey were interviewed. Factor analysis was utilized to determine the factor structure. The instrument of the customer satisfaction developed in this study provides insights to the researches who study the improvement of customer satisfaction with service quality of travel agents and decision markers.