design and analysis of simulated consumer choice or allocation experiments an approach based on aggregate data the authors integrate concepts in conjoint analysis and discrete choice theory in econometrics to develop a new approach to the design and analysis of controlled consumer choice or resource allocat

utility covariances and context effects in conjoint mnp models experimental conjoint choice analysis is among the most frequently used methods for measuring and analyzing consumer preferences the data from such experiments have been typically analyzed with the multinomial logit mnl model however there are several problems associated with the standard mnl model because it is based on the assumption that the error terms of the underlying random utilities are independent across alternatives choice sets and subjects the multinomial probit model mnp is well known to alleviate this assumption of independence of the error terms accounting for covariances in utilities in modeling choice experiments with the mnp is important because variation of the coefficients in the choice model may occur due to context effects previous research has shown that subjects utilities for alternatives depend on the choice context that is the particular set of alternatives evaluated simonson and tversky s tradeoff contrast principle describes the effect of the choice context on attribute importance and patterns of choice they distinguish local contrast effects which are caused by the alternatives in the offered set only and background contrast effects which are due to the influence of alternatives previously considered in choice experiments these effects are hypothesized to cause correlations in the utilities of alternatives within and across choice sets respectively the purpose of this study is to develop an mnp model for conjoint choice experiments this model is important for a more detailed study of choice patterns in those experiments in developing the mnp model for conjoint choice experiments several hurdles need to be taken related to the identification of the model and to the prediction of holdout profiles to overcome those problems we propose a random coefficients rc model that assumes a multivariate normal distribution of the regression coefficients with a rank one factor structure on the covariance matrix of these regression coefficients the parameters in this covariance matrix can be used to identify which attributes and levels of attributes are potentional sources of dependencies between the alternatives and choice sets in a conjoint choice experiment we present several versions of this model moreover for each of these models we allow utilities to be either correlated or independent across choice sets the independent probit ip model is used as a benchmark given the dimensionality of the integrations involved in computing the choice probabilities the models are estimated with simulated likelihood where simulations are used to approximate the integrals involved in the choice probabilities we apply and compare the models in two conjoint choice experiments in both applications the random coefficients mnp model that allows choices in different choice sets to be correlated rc displays superior fit and predictive validity compared with all other models we hypothesize that the difference in fit occurs because the rc model accommodates correlations among choice sets that are caused by background contrast effects whereas the model that treats choice sets as independent irc accounts for local contrast effects only the irc model shows superior model fit compared with the ip model but its predictions are worse than those of the ip model we find differences in the importance of local and background contrast effects for choice sets containing different numbers of alternatives the background contrast effect may be stronger for smaller choice sets whereas the local contrast effect may be stronger for bigger choice sets we illustrate the differences in simulated market shares that are obtained from the rc irc and ip models in three hypothetical situations product modification product line extension and the introduction of a me too brand in all of those situations substantially different market shares are predicted by the three models which illustrates the extent to which erroneous predictions may be obtained from the misspecified irc and ip models

green market expansion by reducing information asymmetries evidence for labeled organic food products abstract we investigate how the provision of objective information about the environmental and health impact of organic labels by policy makers can influence the willingness to pay of consumers for labeled organic apples in flanders belgium using a stated choice experiment we initially find that flemish consumers are willing to pay a positive price premium of some 33 eurocent per kilogram for labeled organic apples after the provision of information on the actual environmental and health effects of organic apple production this price premium becomes even more pronounced and increases to 57 eurocent per kilogram using a conditional logit model with covariates and a mixed logit model we find evidence of preference heterogeneity also the effect of information provision is more pronounced for certain groups of consumers such as non vegetarians infrequent buyers of organic products and members of a nature protection organization as such this paper illustrates that there is a role for policy makers and csr producers in providing more accurate and reliable information about socially responsible production processes moreover it is important to take the observed preference heterogeneity into account and tailor policies to specific consumer groups

estimation of consumer demand with stock out based substitution an application to vending machine products the occurrence of temporary stock outs at retail is common in frequently purchased product categories available empirical evidence suggests that when faced with stock outs consumers are often willing to buy substitute items an important implication of this consumer behavior is that observed sales of an item no longer provide a good measure of its core demand rate sales of items that stock out are right censored while sales of other items are inflated because of substitutions knowledge of the true demand rates and substitution rates is important for the retailer for a variety of category management decisions such as the ideal assortment to carry how much to stock of each item and how often to replenish the stock the estimated substitution rates can also be used to infer patterns of competition between items in the category in this paper we propose methods to estimate demand rates and substitution rates in such contexts we develop a model of customer arrivals and choice between goods that explicitly allows for possible product substitution and lost sales when a customer faces a stock out the model is developed in the context of retail vending an industry that accounts for a sizable part of the retail sales of many consumer products we consider the information set available from two kinds of inventory tracking systems in the best case scenario of a perpetual inventory system in which times of stock out occurrence and cumulative sales of all goods up to these times are observed we derive maximum likelihood estimates mles of the demand parameters and show that they are especially simple and intuitive however state of the art inventory systems in retail vend ing provide only periodic data i e data in which times of stock out occurrence are unobserved or missing for these data we show how the expectation maximization em algorithm can be employed to obtain the mles of the demand parameters by treating the stock out times as missing data we show an application of the model to daily sales and stocking data pooled across multiple beverage vending machines in a midwestern u s city the vending machines in the application carry identical assortments of six brands since the number of parameters to be estimated is too large given the available data we discuss possible restrictions of the consumer choice model to accomplish the estimation our results indicate that demand rates estimated naively by using observed sales rates are biased even for items that have very few occurrences of stock outs we also find significant differences among the substitution rates of the six brands the methods proposed in our paper can be modified to apply to many nonvending retail settings in which consumer choices are observed not their preferences and choices are constrained because of unavailability of items in the choice set one such context is in store grocery retailing where similar issues of information availability arise in this context an important issue that would need to be dealt with is changes in the retail environment caused by retail promotions

insider trading revisited a recent article in this journal argued that insider trading is an unethical practice leading to an inefficiently functioning market the debate on this topic has primarily pitted ethical defenses of prohibition against economic arguments extolling its allowance in addition to being incomplete this approach ignores other unwanted economic effects of prohibition itself and unethical implications of its existence this article shows that adam smith s free market concept when properly interpreted provides all the incentive structure necessary for an efficient and ethical marketplace even when insider trading is permitted

the investor specific price of renewable energy project risk a choice experiment with incumbent utilities and institutional investors abstract renewable energy investments in germany have recently soared trebling the output of wind and solar power generation in only ten years while incumbent utilities have lagged behind in terms of investment new entrants have significantly contributed to this growth existing literature has primarily focused on explaining the lethargy of incumbents former investments although there is a growing need to investigate recent investment drivers to secure the necessary power plant capacity at a moderate cost from incumbents and new entrants alike to close this gap a choice experiment involving 1 659 investment choices by 52 european professional investors was conducted in significant contrast to the case with altruistic investors this survey underlines the importance of using financial incentives to attract professional investors given full exposure to electricity price risk incumbent utilities would facilitate projects at a 3 04 risk premium whereas institutional investors demand 6 61 generally incumbent utilities and institutional investors are equally attracted by low risk projects however when risk increases institutional investors are more hesitant to become involved while incumbent utilities confidently navigate these higher risk projects

social networks and new product choice to successfully market new products in a social network it is essential to identify influential individuals whose product recommendations influence the consumption choices of their peers in this study we use spatial econometric methods to determine how individuals revise their preferences for product attributes when exposed to product recommendations from peers and how different individuals who vary in their degree of network connectedness exert influence on the product choices of others we find evidence that consumers look to others for guidance from peers in their preference for subjective taste specific parameters but tend not to respond to peer price choices our spatial methods allow us to empirically determine the influence exerted by individual members on the consumption choices of other members of the social network we find that connected members of the social network are not always the most influential in revising the consumption choices of others our estimates reveal that network proximity explains only 8 8 of influence

insider trading investment and liquidity a welfare analysis we compare equilibrium trading outcomes with and without participation by an informed insider assuming inflexible ex ante aggregate investment choices by agents noise trading arises from aggregate uncertainty regarding other agents intertemporal consumption preferences the welfare levels of outsiders can thus be ascertained the allocations without insider trading are not ex ante pareto efficient because our model differs from standard ones with negative exponential utility functions and normal returns we characterize the circumstances under which the revelation of payoff relevant information via prices arising from insider tradingbenefits outsiders with stochastic liquidity needs by improving risk sharing among them in models of informed trading allen 1984 dennert 1992 grossman and stiglitz 1980 kyle 1985 leland 1992 repullo 1994 it has been customary in order not to have an unrealistic fully revealing rational expectation equilibrium ree and no profits for informed traders to postulate some portion of the market demand for securities as arising from unmodeled noise traders whose endowments and preferences for consumption are left unspecified this makes it difficult to reach a welfare judgment regarding the impact of insider trading even when the implications for the informativeness of asset prices and investment can be ascertained thus an important issue in financial regulatory policy regarding the desirability of allowing trading by asymmetrically informed corporate insiders remains largely unresolved at the conceptual level our major goal in this paper is to rectify this shortcoming by modeling both noise traders and rational a priori uninformed traders together as agents with well specified preferences these agents allocate their endowments across a risky long term and a riskless short term investment ex ante london school of economics and political science and cepr and universita degli studi di torino respectively we are grateful for financial support from the ente einaudi the italian murst and the international centre for economic research icer torino it is a pleasure to acknowledge the excellent research assistance of giacomo elena work on this paper was begun while bhattacharya was a visiting fellow at icer during the summer of 1995 we wish to thank without implicating in errors gabriella chiesa and jose marin for advice and encouragement and participants at seminars at the universities of brescia roma tor vergata tilburg torino the cepr conference on information financial intermediation and the macroeconomy alghero 1997 as well as an anonymous referee and the editor rene stulz for their very helpful comments and suggestions

securing the base electoral competition under variable turnout i evaluate the securing the base strategy which prescribes that candidates position themselves away from the political center in order to maximize turnout among their supporters and reduce defections of their supporters to third party candidates my results support the notion that voters abstain due to indifference and imply that candidate positioning has a large effect on voter turnout and third party voting nonetheless my results indicate that the candidates can best compete by adopting centrist positions while a candidate can increase turnout among his supporters by moving away from the center many moderate voters will defect to his opponent

applying ethics to insider trading insider trading has received a bad name in recent decades the popular press makes it sound like an evil practice where those who engage in it are totally devoid of ethical principles yet not all insider trading is unethical and some studies have concluded that certain kinds of insider trading are actually beneficial to the greater investment community some scholars in philosophy law and economics have disputed whether insider trading should be punished at all while others assert that it should be illegal in all cases this paper explores the nature of insider trading and analyzes the issues to determine the positive and negative aspects of insider trading and how policy should be changed the best hope would be for studies to be made that isolate the individuals or groups who are fraudulently harmed by insider trading if any such groups exist then clearly worded legislation could be passed to prevent any fraud from being committed against these individuals and groups while allowing non fraudulent transactions to be completed without fear of prosecution until it can be clearly determined that someone is fraudulently harmed by insider trading there should be no law or regulation restricting the practice since such restrictions violate individual rights and will likely have a negative market reaction

analyzing public preferences and increasing acceptability for the renewable portfolio standard in korea abstract in order to respond to the challenge of climate change similar to other countries korea has announced various policies to vitalize the development and uptake of renewable energy the renewable portfolio standard rps is the most striking example of a policy in this area this study employs a conjoint survey and bayesian mixed logit model to analyze consumer preferences for specific attributes of the rps policy it analyzes households marginal willingness to pay mwtp for the rps with specific attributes and simulates the degree of household acceptability of the policy through a scenario analysis comparison between costs and benefits of implementing the policy is also attempted by analyzing the households mwtp with the actual transition expense of rps implementation incurred by electricity supply companies the simulation results provide implications for improving rps policy implementation households consider the creation of new jobs as the most important policy attribute followed by increase in electricity prices damage to forests reduction in co 2 emissions and length of power outages moreover the korean household is willing to accept an increase of up to 1 39 in its electricity prices relative to 2012 and the median mwtp of each household for rps implementation is krw 734 99 month usd 0 67 month

decomposition of warm glow for multiple stakeholders stated choice valuation of shellfishery policy a monetary valuation study of marine management in the dutch wadden sea the largest natural area of the netherlands is presented the study is motivated by a conflict between shellfisheries and large populations of birds that forage on cockles different management scenarios are valued using multiple stakeholders namely dutch citizens local residents tourists policy makers and natural scientists a considerable difference in willingness to pay wtp between these groups is found in addition the influence of motivational profiles is examined estimates confirm the presence of two such motivations namely material and moral warm glow these allow for decomposition and correction of the wtp estimates

the choice theory approach to market research this paper surveys economic choice theory stressing developments that permit use of data from psychometric and conjoint experiments to produce market demand forecasts alternatives to the widely used multinomial logit model are summarized and a new method for estimating multinomial probits is described an integration of choice models with attitudinal scaling and perceptual mapping within a latent variable system is described estimation of such systems under either random effects or fixed effects descriptions of heterogeneity across individuals is discussed issues in the use of choice models to describe responses from conjoint experiments are presented new regression diagnostic tests for the consistency of multinomial logit representations are discussed

where should the line be drawn on insider trading ethics finance ethics have drawn increasing attention from both government regulators and academic researchers this paper addresses the issue of insider trading ethics previous studies on insider trading ethics have failed to provide convincing arguments and consistent results in particular the arguments against insider trading are based primarily on moral and philosophical grounds and lack empirical rigor this study intends to establish and examine the relationship between the ethical issue and economic issue of insider trading we argue that the ethics of insider trading is in essence an economic rather than a moral issue it is so far not clear to what extent insider trading may increase or decrease shareholders wealth until then we must take care to avoid over regulating insider trading

are choice experiments incentive compatible a test with quality differentiated beef steaks this study compares hypothetical and nonhypothetical responses to choice experiment questions we test for hypothetical bias in a choice experiment involving beef ribeye steaks with differing quality attributes in general hypothetical responses predicted higher probabilities of purchasing beef steaks than nonhypothetical responses thus hypothetical choices overestimate total willingness to pay for beef steaks however marginal willingness to pay for a change in steak quality is in general not statistically different across hypothetical and actual payment settings

ethical reasoning and the use of insider information in stock trading the cognitive developmental theory of ethics suggests that there is a positive relationship between ethical reasoning and ethical behavior in this study we trained a sample of accounting and finance students in performing competitive stock trading in our state of the art trading room the subjects then performed trading of stocks under two experimental conditions insider information and no insider information where significant performance based financial awards were at stake we also administered the defining issues test dit ethical behavior as the dependent variable was measured in a binary scale whether the subjects used insider information for trading of stocks or not ethical reasoning as measured by the dit p score indicated statistically significant effect on ethical behavior the results have important implications for recruitment and training of professionals engaged in the use of financial markets for securities trading

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

the effects of economic status and recent experience on innovative behavior under environmental variability an experimental approach we build and empirically test a model that predicts the display of innovative behavior as a function of environmental change with recent experience and economic status acting as moderators we start with the model developed by slevin 1971 which evolved from the so called innovation boundary this is the threshold beyond which the display of innovative behavior becomes attractive we show how environmental change creates uncertainty about the position of the innovation boundary however this uncertainty is reduced by recent experiences furthermore economic status serves as both an enhancer and an inhibitor of innovation our model was tested and largely confirmed in two experiments one conducted in a laboratory setting and one conducted as a discrete choice experiment currently experiments are rarely conducted in the field of innovation studies by presenting this evidence we also hope to encourage more authors to conduct experiments in their work

ma and sun on insider trading ethics ma and sun have recently argued that some forms of insider trading are ethically acceptable we argue that the authors fail to prove three key premises of their argument which is therefore unsound

ethical spillovers in firms evidence from vehicle emissions testing in this paper we explore how organizations influence the unethical behavior of their employees using a unique data set of over three million vehicle emissions tests we find strong evidence of ethical spillovers from firms to individuals when inspectors work across different organizations they adjust the rate at which they pass vehicles to the norms of those with whom they work these spillovers are strongest at large facilities and corporate chains and weakest for the large volume inspectors these results are consistent with the economics literature on productivity spillovers from organizations and peers and suggest that managers can influence the ethics of employee behavior through both formal norms and incentives the results also suggest that employees have persistent ethics that limit the magnitude of this influence these results imply that if ethical conformity is important to the financial and legal health of the organization managers must be vigilant in their hiring training and monitoring to ensure that employee behavior is consistent with firm objectives

the ethics of insider trading despite the fact that a number of economists and philosophers of late defend insider trading both as a viable and useful practice in a free market and as not immoral i shall question the value of insider trading both from a moral and an economic point of view i shall argue that insider trading both in its present illegal form and as a legalized market mechanism undermines the efficient and proper functioning of a free market thereby bringing into question its own raison d etre it does so and is economically inefficient for the very reason that it is immoral thus this practice cannot be justified either from an economic or a moral point of view

technical note simplified estimation procedures for mci models structural transformations of the mci model are presented which make the model easily estimated using dummy variables with widely available regression packages the mci model is empirically shown to provide better predictive power than several other models of similar form but ones which do not produce logically consistent market share estimates

perceptions versus objective measures of environmental quality in combined revealed and stated preference models of environmental valuation abstract this study examines perceptions and objective attribute measures in discrete choice models of recreation site choice behavior these forms of attribute measurement are examined in individual and combined revealed preference stated preference models our results suggest that the model based on perceptions slightly outperforms the models based on objective attribute measures however issues such as the definition of the choice set and the measurement of welfare present significant challenges when using perceptions data

do hypothetical and actual marginal willingness to pay differ in choice experiments application to the valuation of the environment abstract in this paper we test the validity of choice experiments with donations for environmental projects in particular we test whether or not there are differences in preferences between a hypothetical and an actual choice experiment our experiments indicate no differences in addition internal tests of validity indicate transitive and stable preferences in both experiments although there are some indications of possible learning effects during the experiment

analyzing insider trading from the perspectives of utilitarian ethics and rights theory the common view is that insider trading is always unethical and illegal but such is not the case some forms of insider trading are legal furthermore applying ethical principles to insider trading causes one to conclude that it is also sometimes ethical this paper attempts to get past the hype the press reports and the political grandstanding to get to the truth of the matter the author applies two sets of ethical principles utilitarianism and rights theory in an attempt to determine when and in what circumstances insider trading is ethical the views of henry manne an early proponent of insider trading are critically examined as are the major arguments against insider trading is insider trading good for the company if it is used as a form of executive compensation which makes it possible to pay lower salaries than would otherwise be the case does insider trading cause the stock market to work more efficiently if insider trading does increase efficiency is that sufficient to call for its total legalization or are there other things to be considered several arguments against insider trading have been put forth over the last few decades but there are problems with all of them one of the main arguments is the fairness argument the problem with this argument is that different people have different definitions of unfairness a closely related argument is the level playing field argument which advocates wider dissemination of information so that it is less asymmetric one problem with the level playing field argument is that it is better applied to sporting competitions than to trading in information some economists argue that forcing the disclosure of nonpublic information can actually result in more harm than good and must necessarily involve the violation of property rights other arguments examined in this chapter include the fiduciary duty argument the problem of outside traders the misappropriation doctrine and the restrictions that insider trading laws place on freedom of speech and press the article concludes by setting forth some principles or guidelines to determine when insider trading should be punished and when it should not

inertia and incentives bridging organizational economics and organizational theory organizational theorists have long acknowledged the importance of the formal and informal incentives facing a firm s employees stressing that the political economy of a firm plays a major role in shaping organizational life and firm behavior yet the detailed study of incentive systems has traditionally been left in the hands of organizational economists with most organizational theorists focusing their attention on critical problems in culture network structure framing and so on in essence the social context in which economics and incentive systems are embedded we argue that this separation of domains is problematic the economics literature for example is unable to explain why organizations should find it difficult to change incentive structures in the face of environmental change while the organizational literature focuses heavily on the role of inertia as sources of organizational rigidity drawing on recent research on incentives in organizational economics and on cognition in organizational theory we build a framework for the analysis of incentives that highlights the ways in which incentives and cognition while being analytically distinct concepts are phenomenologically deeply intertwined we suggest that incentives and cognition coevolve so that organizational competencies or routines are as much about building knowledge of what should be rewarded as they are about what should be done we argue that this recognition has important implications for our understanding of organizational inertia in the face of environmental change and that it opens up important new areas for further research

public acceptance of energy technologies the effects of labeling time and heterogeneity in a discrete choice experiment public acceptance is crucial for successful implementation of energy technologies in society however studies that use the concept do so in diverse and often inconsistent ways they also often limit themselves to specific technologies and do not account for the effects of labeling time and the heterogeneity of the general public which may lead to a biased and incomplete understanding of public acceptance this study first conceptualizes three forms of public acceptance socio political acceptance market acceptance and community acceptance it then relates the concept of socio political acceptance to preference formation next it uses two discrete choice experiments that were conducted in 2010 and 2012 to investigate these concerns our results show that public preferences for energy technologies are temporally stable even in the face of exogenous shocks such as the fukushima incident using mixed logit models we further show that labeling has a profound influence on stated preferences when technology labels are revealed respondents favor renewable and natural gas technologies when labels remain unobserved nuclear energy and biomass take prominence however latent class models show that there are distinct classes of respondents tied to specific socio demographic characteristics that differ greatly in their sensitivity to labeling and in the temporal stability of their preferences it follows that changes in public acceptance are not population wide but remain limited to specific sub groups we discuss the theoretical and policy implications of our findings and conclude that future studies and policy initiatives may overlook important insights if they disregard the effects of labels time and heterogeneity

firm behaviour and innovative performance an empirical exploration of the selection adaptation debate innovation is a complex trade off between routinisation and change between reliability and accountability of firms and timely adaptation this innovator s dilemma confronts innovation theory with the question how to align routinisation with innovation induced organisational change and consistent performance obviously it is a complex issue dominant innovation theory neglects this subject due to its pro innovation bias while evolutionary organisation and innovation theory give opposite perspectives on this problem the adaptation perspective considers pro active behaviour as the best condition for innovative performance whereas the selection perspective advances inert firm behaviour as the best alternative to achieve successful innovations our research question focuses on the explanatory value of either the selection or the adaptation perspective for the innovative performance of industrial firms our empirical findings confirm the adaptation perspective and reject the selection perspective comparatively firm behaviour involving the highest risks and uncertainties e g high environmental dynamics and high levels of adaptive activity contributes most significant to the explanation of innovative performance inert risk averse behaviour conversely does not improve or even impedes innovative performance compared with other types of firm behaviour

local ethics in a global world ethics fairness trust and freedom from corruption are parts of social capital and social capital matters in financial markets investors consider not only the information they receive but also their trust in the accuracy of the information and the fairness of the markets in which to trade deficiencies in ethics and fairness mark all countries but surveys of the perception among students and finance professionals of the fairness of insider trading in eight countries indicate that deficiencies are more pronounced in some countries than in others five factors are discussed that affect social capital culture globalization income education and law enforcement

preference for the workplace investment in human capital and gender we use a hypothetical choice methodology to estimate preferences for workplace attributes from a sample of high ability undergraduates attending a highly selective university we estimate that women on average have a higher willingness to pay wtp for jobs with greater work flexibility and job stability and men have a higher wtp for jobs with higher earnings growth these job preferences relate to college major choices and to actual job choices reported in a follow up survey four years after graduation the gender differences in preferences explain at least a quarter of the early career gender wage gap

some remarks on leland s model of insider trading this paper shows that leland s 1992 results on the positive effects of insider trading on investment are not robust to the introduction of noise in the insider s information the paper then considers two variations of his model in which the insider is risk neutral to ensure robustness and the investment decision is prior to the placing of the stock in the market it is shown that if insider trading takes place in the primary market it has no effect on the level of investment whereas if it takes place in the secondary market it has a negative effect on investment ing debate insider trading moves the resolution of uncertainty forward and this may bring benefits better information for investment decisions as well as costs increased volatility of prices and hence higher risk premia to analyse these effects leland 1992 constructs a model with an endogen ous level of investment and he shows that when insider trading is permitted stock prices will be higher on average expected real investment will rise and markets will be less liquid and more volatile leland s model is however very special first of all he assumes that the risk averse insider learns exactly the future return of the risky asset in this paper i analyse the robustness of leland s results to the introduction of some noise in the insider s information i show that given the assumptions of his model an arbitrarily small amount of noise is sufficient to make negligible all the effects of insider trading the source of this lack of robustness lies in the assumption that because of risk aversion the insider s trade is always negligible except in the limit case where holding the asset entails no risk to ensure robustness to the intro duction of noise in the insider s information i then consider a model with a risk neutral insider however for this model insider trading does not have any effect on the average price of the risky asset and hence no effect on the average level of investment another feature of leland s model is the fact that the only supplier of the risky asset is assumed to be a price taker this seems a fairly implausible assumption so i propose an alternative model with a risk neutral insider in which the investment decision is prior to the placing of the asset in the market and which allows the supplier to have market power the equilibrium of this model can be easily derived from leland s analysis and although we get the same results for the volatility of the price and the liquidity of the market now insider trading has no effect on the level of investment the result however depends crucially on the assumption that the supplier of the asset is risk neu tral under risk aversion the increase in price volatility would imply a negative

an experiment testing the determinants of non compliance with insider trading laws recent stories of corporate insiders avoiding losses and in some cases generating enormous personal profits as their companies crumbled have led investors to question the integrity of american business and the fairness of the united states stock markets the sec tries to ensure the fairness of the stock markets by making and enforcing laws against unfair practices such as insider trading in the united states when insiders trade stock based on non public information they have broken the law and betrayed the trust that has been placed in them

using choice experiments to value the environment this paper we outline the choice experiment approach to environmental valuation this approach has its roots in lancaster s characteristics theory of value in random utility theory and in experimental design we show how marginal values for the attributes of environmental assets such as forests and rivers can be estimated from pair wise choices as well as the value of the environmental asset as a whole these choice pairs are designed so as to allow efficient statistical estimation of the underlying utility function and to minimise required sample size choice experiments have important advantages over other environmental valuation methods such as contingent valuation and travel cost type models although many design issues remain unresolved applications to environmental issues have so far been relatively limited we illustrate the use of choice experiments with reference to a recent uk study on public preferences for alternative forest landscapes this study allows us to perform a convergent validity test on the choice experiment estimates of willingness to pay

the cultures of insider trading paul bond is a lawyer who overheard two other lawyers at his office discussing the proposed purchase of a company by one of their clients he proceeds to buy shares of this company would you rate bond s behavior completely fair acceptable unfair or very unfair i posed this vignette to samples of university students in china taiwan and the u s most students in the u s and taiwan samples rated bond s behavior unfair or very unfair while most students in the china rated bond s behavior completely fair or acceptable perceptions of fairness are part of the culture of a country and culture affects business practices i discuss culture perceptions of fairness and business practices in china taiwan and the u s

policy specific alienation and indifference in the calculus of voting a simultaneous model of party choice and abstention this article aims to combine the spatial models of candidate party choice and abstention participation choice in a single decision model and to provide empirical reaction functions the starting point of this study is the hypothesis of a sequential ordering of candidate choice and participation choice riker and ordeshook 1973 the proposed model simultaneously considers the choice among n 2 parties and the abstention option it differentiates between policy specific effects of alienation and indifference the models are estimated with nested multiattributive discrete choice models which are theoretically founded on random utility theory

tourist preferences for rural house stays evidence from discrete choice modelling in spain abstract although the appeal of rural houses for tourists lies mainly in the natural surroundings and their intrinsic rural characteristics there are other factors which are also important such as their size type of building quality of equipment services and activities offered to evaluate the tourists preferences for these potential or effective attributes a stated preference experiment was conducted in the northwest area of the region of murcia and the data are analysed using discrete choice modelling methodology consistent specifications for multinomial logit and mixed logit models that consider variations in tastes within tourists preferences are found the results could be of use to promoters and owners of rural houses when planning marketing and promotional campaigns or when taking effective investment decisions

dynamic capabilities what are they this paper focuses on dynamic capabilities and more generally the resource based view of the firm we argue that dynamic capabilities are a set of specific and identifiable processes such as product development strategic decision making and alliancing they are neither vague nor tautological although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence they have significant commonalities across firms popularly termed best practice this suggests that they are more homogeneous fungible equifinal and substitutable than is usually assumed in moderately dynamic markets dynamic capabilities resemble the traditional conception of routines they are detailed analytic stable processes with predictable outcomes in contrast in high velocity markets they are simple highly experiential and fragile processes with unpredictable outcomes finally well known learning mechanisms guide the evolution of dynamic capabilities in moderately dynamic markets the evolutionary emphasis is on variation in high velocity markets it is on selection at the level of rbv we conclude that traditional rbv misidentifies the locus of long term competitive advantage in dynamic markets overemphasizes the strategic logic of leverage and reaches a boundary condition in high velocity markets copyright 2000 john wiley sons ltd

public preferences for carbon tax attributes the impacts of climate change are already visible throughout the world recognizing the threats posed by climate change the durban platform the 17th session of the conference of parties cop 17 underscores that the global nature of climate change calls for the widest possible cooperation and ambitious action by all countries a crucial starting point for the design of effective and publicly acceptable policies is to explore public preferences for climate policy instruments using a choice experiment this study investigates public preferences for carbon tax attributes in a developing country context the results account for heterogeneity in preferences and show that turkish people prefer a carbon tax with a progressive cost distribution rather than one with a regressive cost distribution the private cost has a negative effect on the probability of choosing the tax earmarking carbon tax revenues increases the public acceptability of the tax moreover there is a preference for a carbon tax that promotes public awareness of climate change

variable risk preferences and adaptive aspirations abstract observations of human decision making indicate that risk preferences depend on the values of possible outcomes relative to levels of aspiration a model of such variable risk preference is specified it suggests that some risk averse behavior may result from a human tendency to focus on targets and from the adaptation of those targets to experience rather than from a fixed trait of risk aversion in addition the model shows how risk preferences varying around adaptive aspirations produce both a greater long run likelihood of survival and a higher average return for survivors than do fixed risk preferences

using a discrete choice experiment to estimate health state utility values in this study we explored a novel application of the discrete choice experiment dce that resembles the time trade off tto task to estimate values on the health utility scale for the eq 5d the dce was tested in a survey alongside the tto in a sample of english speaking canadians recruited by a market research company the study found that the dce is able to derive logical and consistent values for health states valued on the full health dead scale the dce overcame some issues identified in the version of tto currently used to value eq 5d notably allowing for fewer data exclusions and incorporating values considered worse than dead without introducing a separate valuation procedure this has important implications for providing robust values that represent the preferences of all respondents

predictive testing of consumer choice models not subject to independence of irrelevant alternatives the probabilistic modeling of the relationship between objective or perceived characteristics of multiattribute alternatives and consumer choice is receiving increased attention in marketing and ot

technical note pricing under the nested attraction model with a multistage choice structure we develop a solution approach to the centralized pricing problem of a nested attraction model with a multistage tree structure we identify conditions under which the optimal solution can be uniquely determined and we characterize the optimal solution as a fixed point of a single variable in the special case of a multistage nested logit model we show the impact of asymmetry in price sensitivity and adjustment index also known as the dissimilarity index and we derive a closed form solution when the tree structure is symmetric many existing results in the literature regarding the single or two stage nested attraction model are shown to be special cases of the results we have derived we show that the equal markup property which holds for the single stage logit model with symmetric price sensitivity in general does not hold for products that do not share the same immediate parent node in the nested choice structure even when price sensitivities are the same for all products

the use of information system technology to develop tests on insider trading and asymmetric information issues related to insider trading remain popular research topics empirical studies using historical data are limited by two key factors 1 the inability to identify exactly who possesses inside information and 2 the inability to identify the accuracy of information possessed advances in information system technology enable us to overcome these problems in the laboratory using this technology we create a research shell to conduct experiments where we can identify the exact type and quality of information accessible by each trader our system includes the capability to monitor individual activities in accessing inside information the system can automatically impose a monetary penalty if random monitoring identifies a trader accessing inside information our experiments involve traders who receive access to inside information without initial knowledge of the quality of that information the results indicate that traders were able to outperform the market if penalties for being caught accessing such information were not included once penalties were included however no significant performance differences were observed finally in a second set of experiments involving a simplified market with infrequent electronic monitoring and low penalty amounts inside information seemed to be rapidly and effectively disseminated to traders possessing no inside information

the indefensibility of insider trading the article inside trading revisited has taken the stance that insider trading is neither unethical nor economically inefficient attacking my arguments to the contrary developed in an earlier article the ethics of inside trading journal of business ethics 1989 this article constructs careful arguments and even appeals to adam smith to justify its conclusions in my response to this article i shall clarify my position as well as that of smith to support my counter contention that insider trading is both unethical and inefficient