Decision Making & Negotiations

A growing literature suggests that even in the absence of any ability to predict returns, holding options on the benchmarks or trading frequently can generate positive alpha. The ratio of alpha to its tracking error appraises a fund's performance. This paper derives the performance-maximizing strategy, which turns out to be a variant of a buy-write strategy, and the least upper bound on such performance enhancement. If common equity indices are used as benchmarks, the potential alpha generated from trading frequently can be substantial in magnitude, but it carries considerable risk.

Nursing care is arguably the single biggest factor in both the cost of hospital care and patient satisfaction. Inadequate inpatient nursing levels have also been cited as a significant factor in medical errors and emergency room overcrowding. Yet, there is widespread dissatisfaction with the current methods of determining nurse staffing levels, including the most common one of using minimum nurse-to-patient ratios. In this paper, we represent the nursing system as a variable finite-source queuing model.

Over the years, the level of analytical rigor has risen in articles published in marketing academic journals. While, ceteris paribus, rigor is desirable, there is a growing sense that rigor has become a, if not the, goal for research in marketing. Consequently, other desirable characteristics, such as relevance, communicability, and simplicity, have been downplayed, to the detriment of the field of marketing.

Scarcity has long been known to impact consumers' choices. Yet, the impact of shelf-based scarcity in retail environments, created by stocking level depletion, has received almost no attention in the literature. Indeed, little research to date has even examined if consumers will attend to shelf-based scarcity in retail environments, much less how this cue can impact choice. A priori, given the inherently noisy and cue-filled nature of retail environments, it is quite reasonable to expect that shelf-based scarcity would play little to no role in consumers' choices.

Extant research recognizes that firms exploit regulatory variations to their advantage but depicts such regulatory arbitrage as a dyadic process between firms and regulators. We extend this account by including the political rivals of a firm and suggest that firms view regulatory differences as part of a corporate political opportunity structure, and exploit regulatory variations to disadvantage their rivals. Empirically, we focus on variations in right-to-work (RTW) laws which signal the pro-business climate in a state and exist in twenty-two of the 50 American states.

Customer switching costs are an important factor in account-based services such as telecommunications, financial, insurance and brokerage services. In these businesses, existing customers incur significant costs if they switch to another provider. Such costs include physical configuration and installation costs, contractual costs (e.g. termination fees) and cognitive costs of learning. These switching costs enable a firm to extract more revenue from incumbent customers by charging them higher prices.

The principal performance measures in an inventory system involve key characteristics of the system's inventory position, i.e., the total inventory the firm is economically committed to, as well as the average order size or order frequency. As to the former, the focus among operation managers is on the maximum inventory (position), the average inventory and the minimum inventory, the latter being related to the so-called safety stock concept. Financial analysts and macroeconomists pay particular attention to the sales/inventory ratio, also referred to as the inventory turnover.

We analyze the computational problem of estimating financial risk in a nested simulation. In this approach, an outer simulation is used to generate financial scenarios and an inner simulation is used to estimate future portfolio values in each scenario. We focus on one risk measure, the probability of a large loss, and we propose a new algorithm to estimate this risk. Our algorithm sequentially allocates computational effort in the inner simulation based on marginal changes in the risk estimator in each scenario.

Contingent capital, a regulatory debt that must convert into common equity when a bank's equity value falls below a specified threshold (a trigger), does not in general lead to a unique equilibrium in the prices of the bank's equity and contingent capital. Multiplicity or absence of equilibrium arises because economic agents are not allowed to choose a conversion policy in their best interests. The lack of unique equilibrium introduces the potential for price manipulation, market uncertainty, inefficient capital allocation, and unreliability of conversion.