statistical efficiency of double bounded dichotomous choice contingent valuation the statistical efficiency of conventional dichotomous choice contingent valuation surveys can be improved by asking each respondent a second dichotomous choice question which depends on the response to the first question if the first response is yes the second bid is some amount greater than the first bid while if the first response is no the second bid is some amount smaller this double bounded approach is shown to be asymptotically more efficient than the conventional singlebounded approach using data from a survey of californians regarding their willingness to pay for wetlands in the san joaquin valley we show that in a finite sample the gain in efficiency can be very substantial

management of non maturing deposits by multistage stochastic programming abstract the management of non maturing account positions in a bank s balance like savings and sight deposits as well as certain types of variable rate mortgages is complicated by the embedded options that its clients may exercise in addition to the usual interest rate risk uncertainty in the timing and amount of cash flows must be taken into account when investment or refinancing strategies are determined this paper introduces a multistage stochastic programming model where the stochastic evolution of interest rates and volume under management is described by stochastic processes in discrete time scenarios are generated by means of barycentric approximation which is particularly useful to deal with the observed correlations between interest rates and volume practical experience from the application at a major swiss bank is reported where the model has been employed since the mid 90s

precision of dichotomous choice contingent valuation welfare measures some simulation results the purpose of this research is to examine the roles of individuals heterogeneous economic factors and model misspecification in dichotomous choice contingent valuation welfare measurement willingness to pay for an improvement of environmental quality is studied simulation results indicate that the precision of welfare estimates increases with individuals income levels and decreases with the price of the quality related good the dependence of the consumption of the quality related good on the environmental quality also affects the reliability of welfare estimates

identifying valuing and hedging of embedded options in non maturity deposits abstract non maturity deposits like savings accounts or demand deposits contain significant option risks caused by the bank s discretionary pricing and the customers withdrawal right option risks follow from inherent non linear factor exposures i propose an ordinal response model for deposit rate jumps to identify non linear factor exposures and a discrete time term structure model to value the resulting option risks and to derive hedge measures outside the model my delta profile resembles a constant maturity swap but vega and gamma are more pronounced which demonstrates that the widespread practice of static hedging with zero bonds is inadequate

vertical contracts in the video rental industry a large body of theoretical work has explored the channels through which vertical contracts can induce efficiency improvements however it is also important to study vertical contracts empirically in order to gain insight into the relative size of different types of efficiency gains in this paper i empirically analyse a contractual innovation in the vertically separated video rental industry prior to 1998 video stores obtained inventory from movie distributors using simple linear pricing contracts in 1998 revenuesharing contracts were widely adopted i investigate the effect of the introduction of revenue sharing contracts on firms profits and consumer welfare i analyse a new panel data set of home video retailers that includes information on individual retailers contract and inventory choices as well as rentals and contract terms for 246 movie titles and 6137 retailers in the u s during each week of 1998 and 1999 and the first half of 2000 a structural econometric model of firms behaviour is developed that describes the nature of firms contract choices estimates from this model indicate that both upstream and downstream profits increase by 10 under the revenue sharing contract for popular titles for less popular titles the effects can be even larger i also estimate that consumers benefit when revenue sharing contracts are adopted

bond pricing and the term structure of interest rates a new methodology for contingent claims valuation this paper presents a unifying theory for valuing contingent claims under a stochastic term structure of interest rates the methodology based on the equivalent martingale measure technique takes as given an initial forward rate curve and a family of potential stochastic processee for its subsequent movements a no arbitrage condition restricts this family of processes yielding valuation formulae for interest rate sensitive contingent claims which do not explicitly depend on the market prices of risk examples are provided to illustrate the key results in relation to the term structure of interest rates arbitrage pricing theory has two purposes the first is to price all zero coupon default free bonds of varying maturities from a finite number of economic fundamentals called state variables the second is to price all interest rate sensitive contingent claims taking as given the prices of the zero coupon bonds this paper presents a general theory and a unifying framework for understanding arbitrage pricing theory in this context of which all existing arbitrage pricing models are special cases in particular vasicek 1977 brennan and schwartz 1979 langetieg 1980 ball and torous 1983 ho and lee 1986 schaefer and schwartz 1987 and artzner and delbaen 1988 the primary contribution of this paper however is a new methodology for solving the second problem i e the pricing of interest rate sensitive contingent claims given the prices of all zero coupon bonds the methodology is new because i it imposes its stochastic structure directly on the evolution of the forward rate curve ii it does not require an inversion of the term structure to eliminate the market prices of risk from contingent claim values and iii it has a stochastic spot rate process with multiple stochastic factors influencing the term structure the model can be used to consistently price and hedge all contingent claims american or european on the term structure and it is derived from necessary and more importantly sufficient conditions for the absence of arbitrage the arbitrage pricing models of vasicek 1977 brennan and schwartz 1979 langetieg 1980 and artzner and delbaen 1988 all require an iformerly titled bond pricing and the term structure of interest rates a new methodology

managing channel profits a channel of distribution consists of different channel members each having his own decision variables however each channel member s decisions do affect the other channel members profits and as a consequence actions a lack of coordination of these decisions can lead to undesirable consequences for example in the simple manufacturer retailer consumer channel uncoordinated and independent channel members decisions over margins result in a higher price paid by the consumer than if those decisions were coordinated in addition the ensuing suboptimal volume leads to lower profits for both the manufacturer and the retailer this paper explores the problems inherent in channel coordination we address the following questions what is the effect of channel coordination what causes a lack of coordination in the channel how difficult is it to achieve channel coordination what mechanisms exist which can achieve channel coordination what are the strengths and weaknesses of these mechanism what is the role of nonprice variables e g manufacturer advertising retailer shelf space in coordination does the lack of coordination affect normative implications from in store experimentation can quantity discounts be a coordination mechanism are some marketing practices actually disguised quantity discounts we review the literature and present a simple formulation illustrating the roots of the coordination problem we then derive the form of the quantity discount schedule that results in optimum channel profits this article was originally published in marketing science volume 2 issue 3 pages 239 272 in 1983

using a generalized linear mixed model to analyze dichotomous choice contingent valuation data willingness to pay wtp responses from dichotomous choice contingent valuation studies are often modeled using logistic regression from which estimates of mean or median wtp are calculated however a great many factors influence an individual s wtp some of which may be unobserved hence the regression model may have inadequate explanatory power and parameter estimates may be biased and their significance overestimated the effects of this overdispersion are examined within a generalized linear mixed modeling framework and an example given using published data from cooper and loomis 1992

on credible delegation by oligopolists a discussion of distribution channel management several papers in the recent marketing literature have suggested that delegation in distribution e g the use of independent middlemen helps manufacturers to precommit strategically to profit enhancing competitive actions further the literature suggests that the profitability of such actions depends on market structure we challenge these conclusions here this is done in two steps first we perform an analysis of the entire class of models which have been used in the literature using internally consistent assumptions about market structure and contracting the only subgame perfect equilibrium is one in which all distribution channels have infinitely many levels of delegation obviously this is not what we see in the real world next we relax a key hidden assumption namely that all intra channel agreements are observable to competitors without this assumption the usual results unravel unless channel members can offer credible guarantees that unobservable agreements do not exist the strategic effects of delegation disappear since these guarantees are virtually impossible to maintain credibly we would expect to reject the hypothesis in the earlier literature relating channel structure to competition in an empirical study controlling for observability we conclude that mechanisms other than strategic ones must be responsible for the existence of delegated channels and make some suggestions about promising avenues for future theory research in channel structure

strategic decentralization in channels the purpose of this paper is to understand the effect of strategic interaction on a manufacturer s channel structure decision in the model i analyze if there were no strategic interaction then the manufacturer would prefer vertical integration to decentralization with strategic interaction however decentralization can be a nash equilibrium strategy as mcguire and staein mcguire timothy richard staelin 1983a an industry equilibrium analysis of downstream vertical integration marketing sci 2spring 161 192 showed so the question arises what is it about strategic interaction that makes decentralization a nash equilibrium strategy the answer i give is that strategic interaction makes it possible for a manufacturer s retail demand curve to rise when he decentralizes i show that this raising of the demand curve on decentralization can happen only if one of the following mutually exclusive conditions is satisfied 1 the manufacturers products are demand substitutes at the retail level and strategic complements at the manufacturer or retailer levels 2 the manufacturer s products are demand complements at the retail level and strategic substitutes at the manufacturer or retailer levels strategic complementarity at the retailer manufacturer level means that if one retailer manufacturer raises his price then the other retailer manufacturer would raise his price as well strategic substitutability is just the opposite these results show that what is important for decentralization to occur is not how demand substitutable the two manufacturers products are as one might have thought from earlier works in the literature but rather the nature of coupling between demand dependence and strategic dependence

confidence intervals for evaluating benefits estimates from dichotomous choice contingent valuation studies i evaluate the potential usefulness of nonmarket valuation concepts and techniques from environmental economics for improving wildlife conservation the concepts include distinguishing between on site recreation use value and off site passive use or

moviemod an implementable decision support system for prerelease market evaluation of motion pictures in spite of the high financial stakes involved in marketing new motion pictures marketing science models have not been applied to the prerelease market evaluation of motion pictures the motion picture industry poses some unique challenges for example the consumer adoption process for movies is very sensitive to word of mouth interactions which are difficult to measure and predict before the movie has been released in this article we undertake the challenge to develop and implement moviemod a prerelease market evaluation model for the motion picture industry moviemod is designed to generate box office forecasts and to support marketing decisions for a new movie after the movie has been produced or when it is available in a rough cut but before it has been released unlike other forecasting models for motion pictures the calibration of moviemod does not require any actual sales data also the data collection time for a product with a limited lifetime such as a movie should not take too long for moviemod it takes only three hours in a consumer clinic to collect the data needed for the prediction of box office sales and the evaluation of alternative marketing plans the model is based on a behavioral representation of the consumer adoption process for movies as a macroflow process the heart of moviemod is an interactive markov chain model describing the macro flow process according to this model at any point in time with respect to the movie under study a consumer can be found in one of the following behavioral states undecided considerer rejecter positive spreader negative spreader and inactive the progression of consumers through the behavioral states depends on a set of movie specific factors that are related to the marketing mix as well as on a set of more general behavioral factors that characterize the movie going behavior in the population of interest this interactive markov chain model allows us to account for word of mouth interactions among potential adopters and several types of word of mouth spreaders in the population marketing variables that influence the transitions among the states are movie theme acceptability promotion strategy distribution strategy and the movie experience the model is calibrated in a consumer clinic experiment respondents fill out a questionnaire with general items related to their movie going and movie communication behavior they are exposed to different sets of information stimuli they are actually shown the movie and finally they fill outpostmovie evaluations including word of mouth intentions these measures are used to estimate the word of mouth parameters and other behavioral factors as well as the movie specific parameters of the model moviemod produces forecasts of the awareness adoption intention and cumulative penetration for a new movie within the population of interest for a given base marketing plan it also provides diagnostic information on the likely impact of alternative marketing plans on the commercial performance of a new movie we describe two applications of moviemod one is a pilot study conducted without studio cooperation in the united states and the other is a full fledged implementation conducted with cooperation of the movie s distributor and exhibitor in the netherlands the implementations suggest that moviemod produces reasonably accurate forecasts of box office performance more importantly the model offers the opportunity to simulate the effects of alternative marketing plans in the dutch application the effects of extra advertising extra magazine articles extra tv commercials and higher trailer intensity compared to the base marketing plan of the distributor were analyzed we demonstrate the value of these decision support capabilities of moviemod in assisting managers to identify a final plan that resulted in an almost 50 increase in the test movie s revenue performance compared to the marketing plan initially contemplated management implemented this recommended plan which resulted in box office sales that were within 5 of the moviemod prediction moviemod was also tested against several benchmark models and its prediction was better in all cases an evaluation of moviemod jointly by the dutch exhibitor and the distributor showed that both parties were positive about and appreciated its performance as a decision support tool in particular the distributor who has more stakes in the domestic performance of its movies showed a great interest in using moviemod for subsequent evaluations of new movies prior to their release based on such evaluations and the initial validation results moviemod can fruitfully and inexpensively be used to provide researchers and managers with a deeper understanding of the factors that drive audience response to new motion pictures and it can be instrumental in developing other decision support systems that can improve the odds of commercial success of new experiential products

fat tails and truncated bids in contingent valuation an application to an endangered shorebird species a yes response function in a contingent valuation study is said to have fat tails if it has a high and slowly declining yes response rate at high bid levels truncated bids refer to the practice of dropping high bid offers before a yes response rate of near zero is reached this is a common practice in contingent valuation we explore the extent and implications of fat tails and truncated bids in a study of an endangered shorebird species we find among other things that mean willingness to pay is quite sensitive to the highest bid offered so much so that the choice of highest bid nearly dictates outcomes

improved estimation of willingness to pay in dichotomous choice contingent valuation studies this paper uses recently developed statistical techniques to achieve improved parameter estimates from models ofdichotomoiis choice contingent valuation data random effects associated with bid amounts presented to respondents are modelled alongside the variance of individual responses to give a nested model which more truly reflects the structure of the data being analyzed quasi likelihood methods for estimating parameters in such hierarchical models are discussed and a simulation method for assessing goodness of fit is demonstrated however estimated parameters may still be biased and hence a parametric bootstrap technique is presented and compared to a delta method approximation jel q26

measuring the business stealing cannibalization and market expansion effects of entry in the u s motion picture exhibition market using a large and comprehensive theater level database covering over 18 billion in theater revenues over a five year period i document the extent and nature of business stealing revenue cannibalization and market expansion that occurred during the height of the 1990 s boom in movie theater construction

optimal experimental design for double bounded dichotomous choice contingent valuation the double bounded dichotomous choice model is becoming popular in the contingent valuation literature this technique considers the responses to two bids the second one being determined according to the response to the first and it has been shown to be statistically more efficient than the standard single bounded model in this paper the issue of the optimal choice of bid values for the double bounded logit model is addressed these designs are derived to satisfy the d optimal c optimal and fiducial method criteria

a general theory of pass through in channels with category management and retail competition i provide a general formulation of the channel pass through problem as a comparative static of the retail price equilibrium and i analyze the impact of category management and retail competition on pass through focusing on brand and retailer differences and the nature of the cost change being passed through whether it is brand specific retailer specific both or neither with category management a retailer s response to a brand specific cost change is not limited to that brand in general a retailer will also change the prices of other brands the cross brand effect can be positive or negative and depending on its sign it either enhances or attenuates pass through i explain the cross brand effect as an interaction between two forces a demand substitution force that pushes for a negative cross brand effect and a strategic complementarity force that pushes for a positive cross brand effect retail competition adds another layer of strategic complementarity causing other retailers to respond even for retailer specific cost changes and increasing pass through of categorywide cost changes but its effect for brand specific cost changes is ambiguous i apply the theory to two commonly used demand functions linear demand and nested logit and show that they have significantly different pass through properties the paper concludes with a discussion of how the theory relates to the empirical literature including the companion piece by besanko et al besanko d j p duba s gupta 2005 own brand and cross brand retail pass through marketing sci 24 1 123 137

channel coordination when retailers compete this paper explores channel coordination by a manufacturer that sells through competing retailers and that treats these retailers equally as required by the robinson patman act the authors show that in general there exists no single two part tariff with a constant per unit charge that will duplicate the behavioral results i e prices quantities and channel profits that are obtained by a vertically integrated system that is the channel cannot be coordinated except in the trivial cases of identical or noncompeting retailers however an appropriately specified quantity discount schedule will enable the channel to earn the same profits generated by a vertically integrated system conditions are derived under which a manufacturer will prefer to offer various two part tariffs with constant per unit charges instead of the channel coordinating quantity discount schedule the authors also establish the existence of a menu of two part tariffs that mimics all results of a vertically integrated system however only under stringent conditions will retailers select the appropriate tariff from the menu when these conditions are not satisfied the channel is worse off than in the case of a single second best tariff it is also demonstrated that under a wide range of parametric values the manufacturer will prefer to offer the second best two part tariff rather than a menu of two part tariffs that could maximize channel profits

estimating four hicksian welfare measures for a public good a contingent valuation investigation using equivalent loss the mone tary loss equivalent to a proposed amenity reduc tion el and equivalent gain the gain equivalent to a proposed amenity increase eg alongside traditional welfare measures in a contingent valu ation study of traffic disamenity we report an ex periment designed to test theoretical explanations of the well known disparity between compensat ing surplus and equivalent surplus measures of welfare no compelling evidence is found in favor of loss aversion as a cause of the disparity mean while as valuation measures the performance of el is similar to the traditional willingness to pay for a gain while eg performs poorly jel q26

welfare evaluations in contingent valuation experiments with discrete response data comment in the case of private goods individuals reveal their preferences in the market place no similar market mechanism exists in the case of public goods however one obvious possibility is to ask people about their maximal willingness to pay for public goods or government expenditure johansson 1987 1990 miller in some recent contingent market valuation studies people instead have been asked to accept or reject a specified amount of money for a change in the provision of a public good different subsamples are confronted with different bids the resulting yes and no responses usually are analyzed by logit or probit techniques e g johansson and kristrom this raises the question of how to compute the average willingness to pay when only yes and no responses are available this point was advanced by hanemann in his seminal 1984 paper on welfare evaluations with discrete responses see also hanemann 1987 however we believe a minor imperfection in hanemann s presentation may confuse and mislead practitioners hanemann s approach assumes that negative bids cannot occur but at the same time gives the impression that it also applies to models that allow for negative bids we also extend hanemann s discussion of the choice of money measure in cost benefit analysis

risk management of non maturing liabilities abstract risk management of non maturing liabilities is a relatively unstudied issue of significant practical importance non maturing liabilities include most of the traditional deposit accounts like demand deposits savings accounts and short time deposits and form the basis of the funding of depository institutions therefore the asset and liability management of depository institutions depends crucially on an accurate understanding of the liquidity risk and interest rate risk profile of these deposits in this paper we propose a stochastic three factor model as general quantitative framework for liquidity risk and interest rate risk management for non maturing liabilities it consists of three building blocks market rates deposit rates and deposit volumes we give a detailed model specification and present algorithms for simulation and calibration our approach to liquidity risk management is based on the term structure of liquidity a concept which forecasts for a specified period and probability what amount of cash is available for investment for interest rate risk management we compute the value the risk profile and the replicating bond portfolio of non maturing liabilities using arbitrage free pricing under a variance minimizing measure the proposed methodology is demonstrated by means of a case study the risk management of savings accounts

silverscreener a modeling approach to movie screens management managing the allocation of shelf space for new products is a problem of significant importance for retailers the problem is particularly complex for exhibitors the retailers in the motion picture supply chain because they face dynamic challenges given the short life cycles of movies the changing level of demand over time the scarcity of shelf space and the complex revenue sharing contract between the exhibitor and the distributor in the face of this complexity the aim of current research is to provide a structure for analyzing management problems of exhibitors in the movie industry using a mathematical programming approach and a fast but readily accessible algorithm we propose a decision support model silverscreener whose aim is to help exhibitors make effective and timely decisions regarding theater screens management the major objective is to help select and schedule movies for a multiple screens theater over a fixed planning horizon in such a way that the exhibitor s cumulative profit is maximized by treating the multiple screens as parallel machines and the movies as jobs we provide an analogy of the current problem to the parallel machine scheduling problem we formulate the resulting problem as an integer program we depart from the typical parallel machine scheduling problems by introducing the time indexed formulation that is particularly useful for solving the current problem an important distinction between the current problem and typical machine scheduling problems is that the present approach allows for the choice of which movies to play typically in machine scheduling all jobs have to be scheduled we provide various analyses of normative versus actual decision making based on publicly available data the developed model is readily implementable and appears to lead to improved profitability in different comparative cases through sensitivity analysis we demonstrate that the above results are robust to variations in various parameters of the problem the main findings and insights from the normative policy suggest the following 1 based on silverscreener s recommendations the exhibitor can achieve substantially higher cumulative profit 2 the improvement over actual decisions in terms of profitability appears to result from a combination of better selection and scheduling of the movies 3 the general structure of the exhibitor s normative decision is choose fewer right movies and run them longer we propose a two tier integrated application of the model to show how the model can be applied to realistic decisionmaking the first tier involves development of a movie selection plan to help the manager plan an entire season and bid for movies before the start of that season an ex ante revenue prediction scheme is developed based intuitively on a matching of the forthcoming movies with similar movies played in this theater previously if the forthcoming season s scheduling plan can be visualized as a two dimensional week by screen matrix then that matrix contains only empty cells before the first tier after a bid plan is developed the exhibitor can fill some of those empty cells the remaining empty cells represent slots which can be decided during the season by either extending movies the exhibitor booked before the season or by scheduling other movies which may become available later in the season this motivates the second tier adaptive scheduling approach of the integrated approach the second tier helps the exhibitor in weekly decision making during the season this application involves rolling and updating data from one time window to another the approaches followed in the two tiers of the integrated application are quite general in that they can incorporate a sophisticated demand prediction model managerial judgments or a combination of both we also propose an alternative behavioral decision rule heuristic which exemplifies relationship dilemmas in the movie industry this heuristic shows that the exhibitors need to be selective in their choice of movies and may suffer a substantial loss in profitability if they place too much emphasis on accommodating distributors

comment managing channel profits comment in a recent paper in this journal jeuland and shugan jeuland a s shugan 1983 managing channel profits marketing sci 2 summer 239 272 proposed a quantity discount schedule as a way of coordinating a channel as they put it on p 253 of their paper a quantity discount schedule which would fix the retailer s and hence the manufacturer s profits to some fixed linear function of total channel profits would lead the channel to maximize profits the purpose of this note is to show that a quantity discount schedule is not necessary for channel coordination

multivariate mixed models for open ended contingent valuation data willingness to pay for conservation of monk seals although dichotomous choice dc contingent valuation cv has been recommended by the us noaa blue ribbon panel for large scale contingent valuation studies useful information can still be obtained from smaller open ended oe studies often undertaken as a precursor to a dc survey the cv study considered here was carried out in greece and looked at willingness to pay wtp for protecting the mediterranean monk seal monachus monachus in the aegean area this is the most endangered seal in the world and the application of the cv methodology was the first such application in greece the oe data consist of two responses first a binary response detailing whether or not respondents were in principle prepared to pay for the protection of this seal secondly those respondents who answered yes to the first question were then asked to state their maximum wtp for such protection a multivariate binomial log normal mixture model is used to develop a bid function including explanatory variables such as income sex age and education such a modelling approach provides an alternative to more commonplace tobit estimation however the model is extended to include further information which was collected on

on deposit volumes and the valuation of non maturing liabilities abstract in this paper we propose a framework for the modelling of non maturing liabilities the latter referring to deposits without a specific maturity or deposits whose actual time horizon significantly differs from their contractual maturity the set of non maturing liabilities include most of the traditional deposit accounts like demand deposits and savings accounts and form the basis of the funding for depository institutions our framework consists of three pieces models for market rates deposit rates and deposit volumes for the market rate an extended one factor vasicek model is used but the framework developed is general and any other and potentially more sophisticated and accurate model for the market rate can be applied deposit rates are modelled using policy functions which are allowed to depend on the current market rate and the volume deposited concerning deposit volumes we develop a framework in which models for deposit volumes can be derived in theoretically sound way this is done in two steps in the first step we propose reasonable rules or strategies based on which we attempt to capture the behaviour of the individual customer in the second step we then define notions of homogeneity in customer behaviour and use these to derive models for the behaviour of the average customer and for the volumes deposited by the average customer finally the pieces of the framework are integrated in a valuation formula we here use the approach of jarrow and van deventer 1998 the arbitrage free valuation and hedging of demand deposits and credit card loans journal of banking and finance 22 249 272 and a value is assigned to a portfolio of demand deposits this valuation formula also forms the basis for the risk management of the interest rate risk embedded in the demand deposits

learning design contingent valuation ldcv noaa guidelines preference learning and coherent arbitrariness we extend the contingent valuation cv method to test three differing conceptions of individuals preferences as either i a priori well formed or readily divined and revealed through a single dichotomous choice question as per the noaa cv guidelines k arrow r solow p r portney e e leamer r radner h schuman report of the noaa panel on contingent valuation fed reg 58 1993 4601 4614 ii learned or discovered through a process of repetition and experience j a list does market experience eliminate market anomalies q j econ 2003 41 72 c r plott rational individual behaviour in markets and social choice processes the discovered preference hypothesis in k arrow e colombatto m perleman c schmidt eds rational foundations of economic behaviour macmillan london st martin s new york 1996 pp 225 250 iii internally coherent but strongly influenced by some initial arbitrary anchor d ariely g loewenstein d prelec coherent arbitrariness stable demand curves without stable preferences q j econ 118 1 2003 73 105 findings reject both the first and last of these conceptions in favour of a model in which preferences converge towards standard expectations through a process of repetition and learning in doing so we show that such a learning design cv method overturns the stylised facts of bias and anchoring within the double bound dichotomous choice elicitation format

inference and optimal design for a welfare measure in dichotomous choice contingent valuation this paper considers the use of contingent valuation to estimate non market benefits from separately valued nested goods survey respondents were asked referendum wtp questions regarding either a scheme to protect the whole area of a wetland or a

efficiency gains afforded by improved bid design versus follow up valuation questions in discrete choice cv studies interval data analysis of cv dis crete choice responses delivers efficiency gains which must be weighed against the risk of intro ducing strategic response bias efficiency gains are also achievable by improved bid design we assess these gains on median wtp estimates first in an empirical application then by means of a monte carlo experiment comparing three differ ent bid designs improved but sub optimal bid design delivers comparable gains to those achieved by one and two follow up questions the first follow up captures more than 50 of the efficiency gain provided by a second follow up jel q26

the arbitrage free valuation and hedging of demand deposits and credit card loans abstract using a market segmentation argument this paper uses the interest rate derivative s arbitrage free methodology to value both demand deposit liabilities and credit card loan balances in markets where deposits loan rates may be determined under imperfect competition in this context these financial instruments are shown to be equivalent to a particular interest rate swap where the principal depends on the past history of market rates solutions are obtained which are independent of any particular model for the evolution of the term structure of interest rates

a comparison of approaches to calculating confidence intervals for benefit measures from dichotomous choice contingent valuation surveys this paper compares the performance of four approaches to calculating confidence intervals around dichotomous choice contingent valuation method dc cvm benefit estimates the performance of the approaches is compared using monte carlo simulation techniques for the two most common specifications for the welfare estimate the results indicate that all four methods tended to perform well on average but the methods differed in the frequency with which they performed well the results indicate the best choice depends on the sample size on the distribution of the welfare estimate and on the choice of functional form for the welfare estimate

statistical approaches to the fat tail problem for dichotomous choice contingent valuation if a cumulative density function esti mated from dichotomous choice data has an unre alistically fat right hand tail mean willingness to pay wtp will be overestimated truncating the range of integration results in a lower bound esti mate of the true mean wtp a normalization pro cedure proposed by boyle welsh and bishop 1988 unnecessarily depresses the estimate further a new statistical approach is presented that allows a best guess estimate of mean wtp because this estimate involves extrapolation beyond the range of the data it tends to be highly variable jel q21

measuring rents and interest rate risk in imperfect financial markets the case of retail bank deposits traditional measures of interest rate risk assume that prices of financial assets and liabilities are set in perfectly competitive markets however evidence suggests that many retail financial markets do not follow the competitive paradigm in this paper we employ a general contingent claims framework to value rents earned by banks in demandable retail deposit markets our analysis provides a natural and economically meaningful measure of interest rate risk for these imperfectly competitive markets using monthly survey data on now accounts and mmdas we estimate the value of retail deposit rents and deposit durations for more than 200 commercial banks

a multilevel modelling approach to triple bounded dichotomous choice contingent valuation the use of dichotomous choice dc questions in the elicitation of willingness to pay wtp in contingent valuation studies is common practice at the present time recent research has shown that double bounded dc questions provide statistically superior results to single bounded questions given an appropriate sampling design this paper uses a relatively new multilevel modelling technique to analyze a triple bounded dc design which in addition includes an initial non monetary question on whether an individual accepts in principle a wtp some unspecified amount the theoretical basis of the multilevel model used is described and some of the possibilities of this potentially powerful and versatile technique are discussed the practical operation of the multilevel model is demonstrated using data from a contingent valuation study conducted in the norfolk broads england an internationally important wetland resource

valuing the recreational benefits from the creation of nature reserves in irish forests abstract data from a large scale contingent valuation study are used to investigate the effects of forest attributes on willingness to pay for forest recreation in ireland in particular the presence of a nature reserve in the forest is found to significantly increase the visitors willingness to pay a random utility model is used to estimate the welfare change associated with the creation of nature reserves in all the irish forests currently without one the yearly impact on visitors economic welfare of new nature reserves approaches half a million pounds per annum exclusive of non recreational values

how complex do movie channel contracts need to be the motion picture industry is characterized by a dynamic market environment limited shelf space and product category management and consequently complex channel contracts specifying the split of box office revenue between distributors and exhibitors although such a contracting practice creates a considerable administrative effort and channel conflict it is not clear whether such complexity is necessary for superior channel performance this study investigates this question by analyzing the impact of movie contract structure on movie scheduling and channel member profitability we develop and analyze a game theoretic model using the genetic algorithm approach and a decision support system silverscreener to capture strategic behaviors of channel members in a complex market environment we find that simpler two part tariff or 50 50 split contracts perform as well as the current contracts thus the complexity of the market environment need not be reflected in the complexity of the channel contracts channel contract structure has significant impact on channel member profitability and the exhibitor s movie scheduling behavior in particular our results indicate that the flat rate contract structure represents an attractive alternative to the current practice for distributors