Leadership & Organizational Behavior

In this paper we describe the challenges of Bayesian computation in Finance. We show that empirical asset pricing leads to a nonlinear non-Gaussian state space model for the evolutions of asset returns and derivative prices. Bayesian methods extract latent state variables and estimate parameters by calculating the posterior distributions of interest. We describe the use of direct estimation methods such as Markov chain Monte Carlo (MCMC) and sequential Monte Carlo (SMC) methods based on particle filtering (PF).

We develop a structural demand model that endogenously captures the effect of out-of-stocks on customer choice by simulating a time-varying set of available alternatives. Our estimation method uses store-level data on sales and partial information on product availability. Our model allows for flexible substitution patterns, which are based on utility maximization principles and can accommodate categorical and continuous product characteristics.

A certain number of corporations, probably an increasing number, go considerably beyond what is required of them legally in minimizing their environmental impact. They meet legal limits on environmental impacts and then go beyond these. This has been called "overcompliance," a descriptive, if not elegant, phrase designating going well beyond what is required by laws and regulations in force. Why do corporations overcomply, going beyond what is legally required of them?

We study the structure of optimal wedges and capital taxes in a dynamic Mirrlees economy with endogenous distribution of skills. Human capital is a private, stochastic state variable that drives the skill process of each individual. Building on the findings of the labor literature, we construct a tractable life-cycle model of human capital evolution with risky investment and stochastic depreciation.

Trade reform conditions are common in IMF supported programs. Of the 99 countries that had IMF programs during 1993–2003, 77 had trade reform conditions in their programs. Since the WTO has not been found especially effective in promoting trade openness for most developing countries, it is of great interest to see if the IMF has been more effective as it combines carrots and sticks not available to the WTO. Yet, the effectiveness of these trade conditions has not been systematically studied. Using a unique dataset, this paper provides such an assessment.

The paper explores the conditions that determine the effect of rule enforcement policies that imply an attempt to punish all the visible violations of the rule. We start with a simple game theoretic analysis that highlights the value of gentle COntinuous Punishment (Gentle COP) policies. If the subjects of the rule are rational, Gentle COP can eliminate violations even when the rule enforcer has limited resources. The second part of the paper uses simulations to examine the robustness of Gentle COP policies when the subjects of the rule are adaptive learners.

Much discussion has focused on the economic and financial issues related to the continued growth of China. Of equal importance are the marketing and branding issues. How Chinese managers develop and implement their marketing and branding strategies has enormous implications for the future growth of Chinese organizations.