Adaptive metric utility balance is at the heart of one of the most widely used and studied methods for conjoint analysis. We use formal models, simulations, and empirical data to suggest that adaptive metric utility balance leads to partworth estimates that are relatively biased—smaller partworths are upwardly biased relative to larger partworths. Such relative biases could lead to erroneous managerial decisions.
Combining survey responses and trading records of clients of a German retail broker, this paper examines some of the causes for the apparent failure to buy and hold a well-diversified portfolio. The subjective investor attributes gleaned from the survey help explain the variation in actual portfolio and trading choices. Self-reported risk aversion is the single most important determinant of both portfolio diversification and turnover; other things equal, investors who report being more risk tolerant hold less diversified portfolios and trade more aggressively.
A liquidity trader wishes to trade a ?xed number of shares within a certain time horizon and to minimize the mean and variance of the costs of trading. Explicit formulas for the optimal trading strategies show that risk-averse liquidity traders reduce their order sizes over time and execute a higher fraction of their total trading volume in early periods when price volatility or liquidity increases. In the presence of transaction fees, numerical simulations suggest that traders want to trade more frequently when price volatility goes up or liquidity declines.
In this chapter, I'll lay out the principal facts and controversies surrounding international flows of capital and their attendant risks. I'll review the perspectives of economic historians and economists on the implications of capital mobility, both during the first wave of globalization (prior to World War I) and during the recent wave (since 1980). I'll emphasize changes over time - especially political changes - that have weakened the case for unfettered capital mobility and have made capital flows more controversial among economists today than in the past.
This study examines the factors that influence the type and amount of trust managers have in members of their professional networks. Results indicate that affect-based trust is high in alters who are densely embedded in ego's network, provide social support, and demographically similar to ego. Cognition-based trust is higher in those with whom ego engages in instrumental exchange, and is unaffected by embeddedness or demographics.
This paper is concerned with the issue of how to balance bailouts (or "lending into arrears") with debt reductions (or "private sector involvement") in the resolution of sovereign debt crises. It provides a review of recent proposals to regulate sovereign debt renegotiations under a Sovereign Debt Restructuring Mechanism (SDRM). In addition to defending a sovereign bankruptcy proposal we have put forward in recent work, this article proposes a major reorientation of the IMF's role in sovereign debt crises.
The purpose of this chapter is to discuss how regulatory focus theory (Higgins 1997, 1998, 2002)—a theory of motivation and self-regulation that has been rapidly gaining prominence in consumer research (e.g., Aaker and Lee 2001; Briley and Wyer 2002; Pham and Avnet 2004; Zhou and Pham 2004)—can be drawn upon to explain a variety of consumer decision-making phenomena. We briefly review the major tenets of the theory, which proposes a fundamental distinction between two modes of self-regulation called promotion and prevention.
Lynne Sagalyn's chapter from Contentious City reviews the emotionally charged planning for the redevelopment of the WTC site between September 2001 and the end of 2004. Though we do not yet know how these plans will be realized, we can nonetheless examine how the initial plans emerged—or were extracted—from competing ambitions, contentious turf battles, intense architectural fights, and seemingly unresolvable design conflicts.
In this paper, we investigate the equilibrium behavior of decentralized supply chains with competing retailers under demand uncertainty. We also design contractual arrangements between the parties that allow the decentralized chain to perform as well as a centralized one.