Behavioral Economics Commons^™

The Auditor And The Firm: A Simple Model Of Corporate Cheating And Intermediation, Brishti Guha

Research Collection School Of Economics

We apply a game-theoretic model to the analysis of the recent spate of corporate scandals in which firms have cheated their investors, often with the aid of external auditors. We characterize the different types of equilibria that obtain for different parameter ranges in an auditor’s absence (the parameters we consider being early signal accuracy – a measure of transparency – and withdrawal costs – a measure of the liquidity of investments). We also analyze whether and under what conditions the presence of an informed auditor could lead to an improvement in the sense of honest behavior replacing cheating as the …

Games Suppliers And Producers Play: Upstream And Downstream Moral Hazard With Unverifiable Input Quality, Brishti Guha

Research Collection School Of Economics

We pin down the optimal relational contract between an input supplier and a final goods producer given a framework of bilateral moral hazard with variable but non-verifiable input quality. Given the inability of third parties to verify input quality, each party has an incentive to cheat the other by making a false claim about input quality. We derive the contract which (a) induces honest behavior and brings about the Pareto superior first-best outcome for the widest possible range of exogenous parameters, and (b) maximizes the Nash product of both parties’ payoffs subject to incentive compatibility. An interesting feature of the …

Optimal Sequential Decision Architectures And The Robustness Of Hierarchies And Polyarchies, Winston T. H. Koh

Research Collection School Of Economics

This paper studies collective decision making in the context of a project selection model. We derive the optimal decision architecture in the presence of marginal decision costs, and investigate the circumstances under which the hierarchy and polyarchy emerge as optimal sequential architectures. Our analysis extends previous results on optimal organizational decision-making to a sequential setting, and further demonstrates the fragility of the hierarchy and polyarchy as optimal architectures.

Connections Between U.S. Consumer Magazine Cover Characteristics And Single Copy Sales Circulation, Stephanie C. Barlow

Renée Crown University Honors Thesis Projects - All

In the realm of journalism, conventional wisdom suggests that magazine covers “sell” magazines at newsstands. This study explores this idea by looking at the econometric relationship between cover characteristics such as presence of people and “catch” words and single copy sales. Several significant characteristics influencing such sales are found. In addition, this study is based on a new data set developed by the author indicating various characteristics of numbers of magazine covers over a five-year time span.

Specifically, a set of 14 magazines were observed for 10 characteristics. The percentage of the presence of these characteristics on magazine covers over …

Corruption Across Countries And Regions: Some Consequences Of Local Osmosis, Raaj Sah

Research Collection School Of Economics

Large and persistent differences in corruption across comparable countries is a challenging research issue. Even more intriguing are such differences across regions within the same country, because the typically considered socioeconomic and governance characteristics are generally more similar across such regions than across different countries. This paper's principal theme is that individuals’ perceptions of their environments are influenced by the realities that they have faced in the past; these perceptions affect their current and future actions; which in turn influence the current and future realities. An articulation and analysis of these dynamics yields significant observations concerning individuals’ behavior and societal …

Law And Behavioral Biology, Owen D. Jones, Timothy H. Goldsmith

Vanderbilt Law School Faculty Publications

Society uses law to encourage people to behave differently than they would behave in the absence of law. This fundamental purpose makes law highly dependent on sound understandings of the multiple causes of human behavior. The better those understandings, the better law can achieve social goals with legal tools. In this Article, Professors Jones and Goldsmith argue that many long held understandings about where behavior comes from are rapidly obsolescing as a consequence of developments in the various fields constituting behavioral biology. By helping to refine law's understandings of behavior's causes, they argue, behavioral biology can help to improve law's …

Household Demand, Network Externality Effects And Intertemporal Price Discrimination, Winston T. H. Koh

Research Collection School Of Economics

This paper examines the optimality of intertemporal price discrimination when network externality effects are present in the consumption of a durable good. We conduct our study in two settings. In a model with two household types, utilities are dependent on the cumulative proportion of households that have purchased the durable good. Next, in a model with a continuum of household types, we extend the analysis to the case where households consume both a durable good and a stream of non-durable goods. We show that in both settings, the presence of network externalities facilitates a sales strategy with intertemporal price discrimination.

Household Demand, Network Externality Effects And Intertemporal Price Discrimination, Winston T. H. Koh

Research Collection School Of Economics

This paper examines the optimality of intertemporal price discrimination when network externality effects are present in the consumption of a durable good. We conduct our study in two settings. In a model with two household types, utilities are dependent on the cumulative proportion of households that have purchased the durable good. Next, in a model with a continuum of household types, we extend the analysis to the case where households consume both a durable good and a stream of non-durable goods. We show that in both settings, the presence of network externalities facilitates a sales strategy with intertemporal price discrimination. …

Bearing The Costs Of Human-Wildlife Conflict: The Challenges Of Compensation Schemes, Philip J. Nyhus, Steve A. Osofsky, Paul Ferraro, H Fischer, Francine Madden

Faculty Scholarship

No abstract provided.

Assessing The State Of Black America In Terms Of Black Buying Power From 1990 To Present, Samina J. Mcgill

Seton Hall University Dissertations and Theses (ETDs)

.

Profit Maximization Versus Disadvantageous Inequality: The Impact Of Self-Categorization, Stephen M. Garcia, Avishalom Tor, Max H. Bazerman, Dale T. Miller

Journal Articles

Choice behavior researchers (e.g., Bazerman, Loewenstein, & White, 1992) have found that individuals tend to choose a more lucrative but disadvantageously unequal payoff (e.g., self—$600/other—$800) over a less profitable but equal one (e.g., self—$500/other—$500); greater profit trumps interpersonal social comparison concerns in the choice setting. We suggest, however, that self-categorization (e.g., Hogg, 2000) can shift interpersonal social comparison concerns to the intergroup level and make trading disadvantageous inequality for greater profit more difficult. Studies 1–3 show that profit maximization diminishes when recipients belong to different social categories (e.g., genders, universities). Study 2 further implicates self-categorization, as selfcategorized individuals tend to …

The Economic Impact Of Methamphetamine Use In Benton County, Arkansas, Jeffery T. Collins

Publications and Presentations

Methamphetamine use among the employed population is on the rise as general methamphetamine use increases. Many employers are unaware of the extent of the methamphetamine crisis and the harmful effects that employee methamphetamine use has on the firm. While methamphetamine use is associated with tremendous expenses for society in the form of direct health care, law enforcement, and environmental costs, this study focuses exclusively on the increased costs that firms bear as a result of the methamphetamine use of their employees. The Benton County Methamphetamine Task Force commissioned this project from the Center for Business and Economic Research in the …

Expectations Formation And Forecasting Of Vehicle Demand: An Empirical Study Of The Vehicle Quota Auctions In Singapore, Sing-Fat Chu, Winston T. H. Koh, Yiu Kuen Tse

Research Collection School Of Economics

This paper studies expectations formation and forecasting of vehicle demand in Singapore under the vehicle quota system. Under the system, a car buyer must first bid for a vehicle license in monthly auctions in order to purchase a new car. We construct an econometric model to test the hypothesis that past bid distributions of the license auctions contain information that car buyers can use to update their expectations about the intensity of market demand, forecast license premiums and formulate their bidding strategies in future auctions. Our empirical analysis indicates that past bid distributions have a good degree of predictive power …

Expectations Formation And Forecasting Of Vehicle Demand: An Empirical Study Of The Vehicle Quota Auctions In Singapore, Sing-Fat Chu, Winston T. H. Koh, Yiu Kuen Tse

Research Collection School Of Economics

This paper studies the expectations formation and forecasting of vehicle demand in Singapore under the vehicle quota system. Under the system, a car buyer must first bid for a vehicle license in monthly auctions in order to purchase a new car. We construct an econometric model to test the hypothesis that past bid distributions of the license auctions contain information that car buyers can use to update their expectations about the intensity of market demand, forecast the license premiums and formulate their bidding strategies in future auctions. Our empirical analysis indicates that past bid distributions have a good degree of …

Full Cost Pricing: An Approach To Internalize The Full-Cost Of A Gallon Of Unleaded Gasoline In The U.S And The Feasibility Of Markets Sustaining This Result, Joseph Mack

Honors Capstones

Capstone submitted as a graduation requirement for the BSU Honors Program.

Abortion Policy And Fertility Outcomes: The Eastern European Experience, Phillip B. Levine, Douglas Staiger

Dartmouth Scholarship

Theory suggests that abortion restrictions will influence fertility outcomes such as pregnancy, abortion, and birth. This paper exploits the variations in abortion policy generated in Eastern Europe in the late 1980s and early 1990s to examine their impact on fertility outcomes. We distinguish among countries with severe, moderate, and few restrictions on abortion access and examine the impact of changes across all three categories. As we hypothesize, the results indicate that countries that changed from very restrictive to liberal abortion laws experienced a large reduction in births. Changes from modest restrictions to abortion available on request, however, led to no …

Social Trust And Economic Governance, Fali Huang

Research Collection School Of Economics

The paper investigates the dynamic relationship between social trust and economic governance using a principal-agent model with stochastic returns. To mitigate the inherent moral hazard problem both intrinsic and extrinsic incentives are useful. The cooperative tendency of an agent measures his intrinsic discipline against shirking, the distribution of which characterizes social trust in society. The economic governance methods include direct monitoring and efficiency wage. The main results are the following. An agent with a higher cooperative tendency needs less monitoring and a lower wage to make effort, which brings higher profit for the principal. But competition among principals for more …

Understanding And Interpreting Financial Statements, Awoyungbo B. O.

Bullion

As the owners of a company the shareholders, through its Board, are responsible for the hiring and firing of the management of their company. The principles of company finance are therefore based upon the assumption that the objective of management is to maximise the wealth of its ordinary shareholders. This paper discusses some of the general principles which are applied in the preparation of financial statements. It lists and explains the following components of a financial statement; Statement of Accounting Policies, Balance Sheet, Profit and Loss Account, Notes to the Accounts, Cash flow statements ,Value added statements, Five year financial …

Musical Copyright Infringement And Policy Implementation At Higher Education Institutions, Henry Haruaki Wendel

Inquiry: The University of Arkansas Undergraduate Research Journal

Copyright infringement through campus networks has become an increasingly troubling problem for higher education institutions across the nation for two reasons. First, the network infrastructure is being abused to the extent that high percentages of the traffic to and from the university are of illegal material. Second, much of these materials are illegal, so administrators must follow procedures and implement policies, which will identify the university when a member of the university violates the law. Throughout the nation, university administrators are taking different approaches to combat this new issue on campuses. In this study, the policies of the one hundred …

Fear Assessment: Cost-Benefit Analysis And The Pricing Of Fear And Anxiety, Matthew D. Adler

Faculty Scholarship

No abstract provided.

Currency Competition In A Fundamental Model Of Money, Gabriele Camera, Ben Craig, Christopher Waller

Economics Faculty Articles and Research

We study how two fiat monies, one safe and one risky, compete in a decentralized trading environment. The currencies' equilibrium values, their transaction velocities and agents' spending patterns are endogenously determined. We derive conditions under which agents holding diversified currency portfolios spend the safe currency first and hold the risky one for later purchases. We also examine when the reverse spending pattern is optimal. Traders generally favor dealing in the safe currency, unless trade frictions and the currency risk is low. As risk increases or trading becomes more difficult, the transaction velocity and value of the safe money increases.

Social Trust, Cooperation, And Human Capital, Fali Huang

Research Collection School Of Economics

The importance of social trust on economic growth has been suggested by many empirical works. This paper formalizes the concept of social trust and studies its formation process in a game theoretic setting. It provides plausible explanations for a wide range of empirical and experimental findings. The main results of the paper are as follows. For utility-maximizing players, cooperation arises in one-period prisoner’s dilemmas if and only if there is social trust. The amount of social trust in a given game is determined by the distribution of players’ cooperative tendency. Cooperative tendency is in essence a component of human capital …

Congestion Control And Vehicle Ownership Restriction: The Choice Of An Optimal Quota Policy, Winston T. H. Koh

Research Collection School Of Economics

Singapore introduced a vehicle quota system (VQS) in 1990 as part of its overall policy to control urban congestion. While the VQS has reduced the annual growth rate of the vehicle population to about 3 per cent, it has created uncertainty in the cost of vehicle ownership due to the fluctuations in licence prices. This paper discusses three issues relating to the optimal design of a VQS: licence transferability, sub-categorisation, and the choice of an auction format. The analysis shows that licence transferability is not unambiguously desirable, sub-categorisation is highly regressive, and an open auction format results in less aggressive …

时尚报刊、广告与当代中国消费意识形态, Qili Lei

Lingnan Theses

本论文针对 1990 年代以来中国社会在经济文化方面的巨大改变，归纳并指出一种新的“消费意识形态”在中国业已历史地形成并取代日渐式微的传统 意识形态，成为宰制当代中国社会的主导力量。论文批判地回顾了1949 年以后中国大陆语境中意识形态涵义的历史嬗变，以四个具有典型意义的时尚报刊和广告案例、广告事件为例，从不同侧面解析了广告形象以及广告产业如何作为 中介与以时尚报刊为代表的文化工业一起，参与当代中国“消费意识形态”建 构的社会过程。

论文通过对“消费意识形态”所遮蔽的当代中国社会问题的揭示，对“消费意识形态”在当代中国社会发生影响的深度和广度的阐释，回应了九十年代以来在中国思想界有较大影响的“后六·四”文化论争中的一些重要问题，展现了文化研究在中国大陆介入现实社会思考和批判的可能空间。

Open Versus Sealed-Bid Auctions: Testing For Revenue Equivalence Under Singapore's Vehicle Quota System, Winston T. H. Koh, Roberto S. Mariano, Yiu Kuen Tse

Research Collection School Of Economics

Using data from the auction of vehicle quota licenses in Singapore, we study if revenue equivalence holds when the auction format was switched from a sealed-bid format (May 1990 to June 2001) to an open bidding format since July 2001. Our econometric analysis indicates the change in auction format led to a change in bidding behavior. On average, the quota license premium under the open bidding format is about US$1,000 (about 7.5% of the Category E license price in June 2001) lower, compared to the forecast level that would have prevailed if there had been no change in the auction …

Empowering Women As Family Financial Planners: A Mitigation Of The Pandemic's Economic Impact, Faridiah Aghadiati Fajri, Hilda Octavana Siregar, Dianila Oktyawati, Rumiyati Rumiyati

ASEAN Journal of Community Engagement

This article discusses a community engagement program that supports housewives as financial managers in difficult times, like COVID-19 Pandemic. This paper believes in the capacity of housewives, particularly in managing the financial conditions of the domestic. The pandemic conditions affect the world in multiple aspects and levels. Physical distancing as one of the policies applied had a wide impact, especially in the economic sector, globally and locally. The temporary shutdown of various business sectors has impacted the society, starting with a decrease in the family’s income, continuing with the difficulties to meet their needs, and eventually their welfare. This article …

The Shapley-Shubik Index, The Donation Paradox And Ternary Games, Vincent C. H. Chua, H. C. Huang

Research Collection School Of Economics

In this paper, we show that although the Shapley-Shubik index is immune to the donation paradox in weighted binary games, extension of the index to ternary games along the direction suggested in Felsenthal and Machover (1996, 1997) will cause it to be vulnerable to the paradox and this is the case as long as the number of players in the game exceeds three. This undermines the attractiveness of the Shapley-Shubik index as a measure of a priori voting power.

Investor Skepticism V. Investor Confidence: Why The New Research Analyst Reforms Will Harm Investors, John L. Orcutt

Law Faculty Scholarship

Part I of this Article provides an overview of research analysts and their basic functions, including a discussion of sell-side analysts' role in the market's recent boom and bust. Part II examines the conflicts of interest that have plagued sell-side research, and Part III reviews the Regulatory Actions that are meant to address these conflicts. In Part IV, the author will make the case for encouraging, rather than lessening, investor skepticism in sell-side research and will explain why the Regulatory Actions are not likely to improve the performance of sell-side analysts. Finally, Part V will offer a simpler proposal to …

Introduction To, Preferences And Rational Choice: New Perspectives And Legal Implications, Matthew D. Adler, Claire Finkelstein, Peter Huang

Faculty Scholarship

No abstract provided.

Jack Of All Trades Or Master Of One? Specialization, Trade And Money, Gabriele Camera, Robert R. Reed, Christopher Waller

Economics Faculty Articles and Research

We consider a model of decentralized exchange where individuals choose the set of goods they produce. Specialization involves producing a smaller set of goods and doing it more proÞciently. In doing so, agents reduce production costs, but also reduce the ease of trading their output. We derive the equilibrium degree of specialization and examine how it is affected by underlying fundamentals. Due to the existence of a hold-up problem, individuals specialize too little relative to the social optimum. Introducing money leads to more specialization relative to barter and increases welfare.