Consider an economy in which the underlying security returns follow a linear factor model with constant coeffcients. While portfolios that invest in these securities will, in general, have a linear factor structure, it will be one with time-varying coeffcients. However, under certain assumptions regarding the portfolio's investment strategy, it is possible to estimate these time-varying alphas and betas.
A common feature of managerial and financial reporting is an iterative process wherein various parties selectively correct particular measurements by challenging them and subjecting them to increased scrutiny. We model this feature by adding an agent appeal stage to the standard moral hazard model and show that it can be optimal to allow the agent to decide which performance measures to appeal, despite the agent's incentive to cherry-pick. In the presence of measurement errors, the agent is incentivized by increased opportunities for cherry-picking that arise if he chooses the "right" vs.
Our results are broadly consistent with the predictions of a benign view of the role of investment banks in advising acquisition targets. Fees to investment banks are correlated with attributes of transactions and target firms in ways that make sense if banks are being paid for processing information. The more contingent (and, therefore, risky) the fees, the higher they tend to be, all else held constant. Variation in acquisition premia also can be explained by fundamental deal attributes.
In this paper, we examine the pattern of correlation among consumer price sensitivities for customer purchase incidence decisions across complementary product categories. We use a hierarchical Bayesian multivariate probit model to uncover this pattern. We estimated this model using purchase incidence data for six categories involving three pairs of complementary products.
In many services (e.g., the wireless service industry), consumers choose a service plan according to their expected consumption. In such situations, consumers experience two forms of uncertainty. First, they may be uncertain about the quality of their service provider and can learn about it after repeated use of the service. Second, they may be uncertain about their own usage of minutes and learn about it after observing their actual consumption.
Previous studies of cultural consumption have found a significant but weak relationship between expert judgment (EJ) and popular appeal (PA) and have suggested that this little taste phenomenon reflects a mediating role played by ordinary evaluation (OE) in diluting the association between EJ and PA. However, various weaknesses in this work have involved problems with sequential timing, nonindependence of measurements, and contamination by market(ing)-related influences.
This paper proposes that customers often respond to brand extension concepts by visualizing the product. We call this process spontaneous visualization and suggest that it precedes concept evaluations. In two studies, we show that spontaneous visualization is enhanced by the fit between the parent brand and the extension category and by the ease with which the product category can be imagined. The appeal of the visualized image in turn determines whether visualization enhances or decreases concept evaluations.
The pricing of corporate debt is still a challenging and active research area in corporate finance. Starting with Merton (1974), many authors proposed a structural approach in which the value of the assets of the firm is modeled by a stochastic process, and all other variables are derived from this basic process. These structural models have become more complex over time in order to capture more realistic aspects of bankruptcy proceedings.
Following a successful idea generation exercise, a company might easily be left with hundreds of ideas, generated by experts, employees, or consumers. The next step is to screen these ideas, and identify those with the highest potential. In this paper we propose a practical approach to involving consumers in idea screening. Although the number of ideas may potentially be very large, it would be unreasonable to ask each consumer to evaluate more than a few ideas. This raises the challenge of efficiently selecting the ideas to be evaluated by each consumer.