a multiobjective approach to vendor selection abstract purchases from vendors involve significant costs for many firms decisions related to these purchases include the selection of vendors and the determination of order quantities to be placed with the selected vendors such decisions are frequently multiobjective in nature that is they are evaluated by more than one criterion at least 23 criteria for various vendor selection problems have been identified in this article we present a multiobjective approach to systematically analyze the inherent tradeoffs involved in multicriteria vendor selection problems the approach is motivated by and demonstrated with an actual purchasing problem facing a division of a fortune 500 company

human capital inequality life expectancy and economic growth this article presents a model in which inequality affects per capita income when individuals decide to invest in education taking into account their life expectancy which depends to a large extent on the human capital of their parents our results show the existence of multiple steady states depending on the initial distribution of education the low steady state is a poverty trap in which children raised in poor families have low life expectancy and work as non educated workers the empirical evidence suggests that the life expectancy mechanism explains a major part of the relationship between inequality and human capital accumulation increases in life expectancy and human capital accumulation have accelerated since the post world war ii period in most parts of the world however in spite of the convergence in life expectancy across countries during this period see for example becker et al 2005 in 2000 there was still an immense gap between the rich and the poor world life expectancy was 78 years in oecd countries but only 47 years in sub saharan africa where the gap with rich countries is increasing nowadays due to aids being widespread likewise the striking disparities in human capital are also evident whereas the secondary school enrolment rate was almost 100 in rich countries more than 70 of children in sub saharan africa were not enrolled in secondary schooling and therefore entered the labour market as unskilled workers from childhood these disparities in schooling are also accompanied by huge differences in the distribution of education thus the human capital gini coefficient in sub saharan africa 0 56 is twice as high as that of oecd countries 0 21 in this article we argue that high human capital inequality low life expectancy and low human capital accumulation rates reinforce each other and may explain the persistence of poverty in a great part of the world

financial futures hedging via goal programming this paper presents multiperiod multiple objective goal programming as an alternative to the more conventional hedge ratio approaches to financial futures hedging the described model offers the potential benefits of i simultaneous achievement of multiple hedge related objectives i e minimization of transactions and margin opportunity costs regulation of cash flow and maximization of profits accruing from both the cash and futures positions and ii periodic modification and updating of the futures position as suggested by actual observed prices and interest rates throughout the hedging period to assess its overall effectiveness the model was applied to develop appropriate hedging strategies for three separate time periods each representing a unique interest rate trend i e upward movement downward movement and no change since real world implementation of the model requires the use of forecast data independent forecasts of both cash and futures prices were generated via 1 moving average 2 exponential smoothing and 3 random walk techniques in progressing through each of the 13 week time periods all forecasts were updated with the previous weeks actual price data revised forecasts and actual price data were then incorporated into the model constraints on a weekly schedule this approach in essence provided weekly futures activity recommendations based on the most recent price and interest rate developments observed at any point during the hedging period the realized gains or losses were then compared to the previously derived perfect foresight model results and to the traditional hedge ratio results this allowed for evaluation of the model s effectiveness under varying forecast methods and varying interest rate trends the results show that the goal programming model outperformed other strategies in most cases

the effect of life expectancy on fertility saving schooling and economic growth theory and evidence we construct a simple growth model where agents with uncertain survival choose schooling time life cycle consumption and the number of children we show that rising longevity reduces fertility but raises saving schooling time and the growth rate at a diminishing rate cross section analyses using data from 76 countries support these propositions life expectancy has a significant positive effect on the saving rate secondary school enrollment and growth but a significant negative effect on fertility through sensitivity analyses the effect on the saving rate is inconclusive while the effects on the other variables are robust and consistent these estimated effects are decreasing in life expectancy

endogenous lifetime and economic growth abstract endogenous mortality is introduced in a two period overlapping generations model probability of surviving from the first period to the next depends upon health capital that is augmented through public investment high mortality societies do not grow fast since shorter lifespans discourage savings development traps are possible productivity differences across nations result in persistent differences in capital output ratios and relatively larger gaps in income and mortality high mortality also reduces returns on education where risks are undiversifiable when human capital drives economic growth countries differing in health capital do not converge to similar living standards threshold effects may also result

multi objective stochastic programming for portfolio selection abstract generally in the portfolio selection problem the decision maker dm considers simultaneously conflicting objectives such as rate of return liquidity and risk multi objective programming techniques such as goal programming gp and compromise programming cp are used to choose the portfolio best satisfying the dm s aspirations and preferences in this article we assume that the parameters associated with the objectives are random and normally distributed we propose a chance constrained compromise programming model cccp as a deterministic transformation to multi objective stochastic programming portfolio model cccp is based on cp and chance constrained programming ccp models the proposed program is illustrated by means of a portfolio selection problem from the tunisian stock exchange market

a multi objective multi period stochastic programming model for public debt management while raising debt on behalf of the government public debt managers need to consider several possibly conflicting objectives and have to find an appropriate combination for government debt taking into account the uncertainty with regard to the future state of the economy in this paper we explicitly consider the underlying uncertainties with a complex multi period stochastic programming model that captures the trade offs between the objectives the model is designed to aid the decision makers in formulating the debt issuance strategy we apply an interactive procedure that guides the issuer to identify good strategies and demonstrate this approach for the public debt management problem of turkey

financial portfolio management through the goal programming model current state of the art abstract since markowitz 1952 formulated the portfolio selection problem many researchers have developed models aggregating simultaneously several conflicting attributes such as the return on investment risk and liquidity the portfolio manager generally seeks the best combination of stocks assets that meets his her investment objectives the goal programming gp model is widely applied to finance and portfolio management the aim of this paper is to present the different variants of the gp model that have been applied to the financial portfolio selection problem from the 1970s to nowadays

public versus private investment in human capital endogenous growth and income inequality in this paper we present an overlapping generations model with heterogeneous agents in which human capital investment through formal schooling is the engine of growth we use simple functional forms for preferences technologies and income distribution to highlight the distinction between economies with public education and those with private education we find that income inequality declines more quickly under public education on the other hand private education yields greater per capita incomes unless the initial income inequality is sufficiently high we also find that societies will choose public education if a majority of agents have incomes below average

ipssis an integrated multicriteria decision support system for equity portfolio construction and selection abstract a fundamental principle of modern portfolio theory is that comparisons between portfolios are generally made using two criteria corresponding to the first two moments of return distributions namely the expected return and portfolio variance according to this model and according to most of the portfolio models derived from the stochastic dominance approach the group of portfolios open to comparisons is divided into two parts on the one hand there are the efficient portfolios those that are not dominated by any other portfolio in the group and on the other those that are dominated in other words these models do not solve for one optimal portfolio but rather solve for an efficient set of portfolios among which the investor must choose given his preference system one criticism over these models which has often been addressed both by practitioners and academics is that they fail to embody the objectives of the decision maker dm through the various stages of the decision process our purpose in this article is to present an integrated and innovative methodological approach for the construction and selection of equity portfolios which will take into account the inherent multidimensional nature of the problem while allowing the dm to incorporate his preferences in the decision process the proposed approach which grounds its basis on the field of multiple criteria decision making mcdm and more specifically on multiobjective mathematical programming mmp is implemented in the ipssis integrated portfolio synthesis and selection information system decision support system dss the validity of the proposed approach is tested through an illustrative application in the athens stock exchange ase

optimal consumption and portfolio strategies in a discrete time model with summary dependent preferences a preference model wherein current wealth and a summary description of past consumption condition preferences for future consumption is used to develop relationships between optimal consumption and portfolio strategies financial variables are described by a continuous time continuous state stochastic process the results complement and extend results of previous models

the political intergenerational welfare state abstract using a three period overlapping generations economy framework we characterize an intergenerational welfare state with endogenous education and pension under voting we show that although politically establishing pay as you go payg social security in isolation in a dynamically efficient economy will always reduce the capital investment and therefore the social welfare as expected in contrast politically implementing education pension policy package instead can improve both human and physical capital accumulation and social welfare over laissez faire however for this the political influence of the old has to be small thus limiting the size of the payg social security program

financial planning for the multinational corporation with multiple goals this paper presents a methodology for analyzing the financing problems raised by uncertain exchange rates and the various barriers to free capital flows the stochastic goal programming model developed allows a way to improve the efficiency with which alternative combinations of corporate strategies various environmental assumptions and financing mechanisms can be evaluated

public and private expenditures on health in a growth model abstract this paper introduces endogenous longevity into an otherwise standard overlapping generations model with capital in the model a young agent may increase the length of her old age by incurring investments in health such private health investments are assumed to be more productive if accompanied by complementary tax financed public health programs the presence of the public input in private longevity is shown to expose the economy to aggregate endogenous fluctuations and even chaos and such volatility is impossible in its absence the model is capable of generating dramatic reversals in life expectancy as has been observed in many countries

distributional effects of public education in an economy with public pensions we study how the allocation of government expenditures between two major outlays education and pay as you go social security affects human capital distribution in an economy with heterogeneous agents we consider an overlapping generations economy where the government maintains both programs and allocates tax revenues to finance them in our model human capital is one of the factors of production it is itself produced as a combined result of public inputs and private inputs parents decisions to invest time and material resources in education of their children are motivated by altruism heterogeneous in its strength across the population which leads to heterogeneity of incomes we investigate the effect of an increase in public funding for education on the human capital distribution we show that in this framework contrary to some earlier results increased spending on public education may lead to higher inequality our results depend crucially on the interaction of education funding with the social security budget and on the elasticity of substitution in the learning technology

government education spending and human capital formation abstract given the interest rate an increase in government education spending increases human capital but in general equilibrium more government education spending increases the interest rate which could reduce the time people spend learning and therefore could reduce human capital if the initial education spending is relatively high

the evolution of modern educational systems technical vs general education distributional conflict and growth abstract we study the evolution of an educational system founded on a hierarchical differentiation between vocational and general education with vocational playing an inferior role in the society the dynamics are best summarized by the ratio of the fraction of the population in vocational to that in general education which we interpret as a measure of the degree of stratification of the society we show that this ratio first rises and then declines with the level of development displaying an inverted u shape which reflects the complex interaction between economic and political forces including aggregate income growth wealth inequality and political participation

progress in behavioral game theory i s game theory meant to describe actual choices by people and institutions or not it is remarkable how much game theory has been done while largely ignoring this question the seminal book by von neumann and morgenstern the theory of games and economic behavior was clearly about how rational players would play against others they knew were rational in more recent work game theorists are not always explicit about what they aim to describe or advise at one extreme highly mathematical analyses have proposed rationality requirements that people and firms are probably not smart enough to satisfy in everyday decisions at the other extreme adaptive and evolutionary approaches use very simple modelsmostly developed to describe nonhuman animals in which players may not realize they are playing a game at all when game theory does aim to describe behavior it often proceeds with a disturbingly low ratio of careful observation to theorizing this paper describes an approach called behavioral game theory which aims to describe actual behavior is driven by empirical observation mostly experiments and charts a middle course between over rational equilibrium analyses and under rational adaptive analyses the recipe for behavioral game theory i will describe has three steps start with a game or naturally occurring situation in which standard game theory makes a bold prediction based on one or two crucial principles if behavior differs from interested readers familiar with game theory should read crawford 1997 whose approach is more eclectic than mine he concludes p 236 that most strategic behavior can be understood via a synthesis that combines elements from each of the leading theoretical frameworks traditional game theory evolutionary game theory and adaptive learning with a modicum of empirical information about behavior behavioral game theory adds psychological interpretations to this synthesis

socially optimal social security and education subsidization in a dynastic model with human capital externalities fertility and endogenous growth abstract this paper considers socially optimal government policies in a dynastic family model with physical capital human capital endogenous fertility and positive spillovers from average human capital such spillovers reduce human capital investment but raise fertility from their social optimum we first characterize the social optimum with a non convex feasible set due to the quantity quality tradeoff concerning children we then show that social security and education subsidization together financed by labor income taxes can fully eliminate the efficiency losses of the spillovers and achieve the social optimum under plausible conditions however none of the policies can do so alone

a multiple objective programming technique for structuring tax exempt serial revenue debt issues a multiple objective decision model to structure tax exempt serial revenue bonds is presented in this paper based on goals dealing with true interest cost marketability debt coverage production and level debt we define a goal programming model to generate a maturity schedule and coupon rate assignment for a municipal bond issue the model is designed to be a flexible interactive decision making tool to aid in the development of a minimal risk cost effective issue

finding the most preferred alliance structure between banks and insurance companies in this paper we have studied alternative alliances between banks and insurance companies first we defined six different possible structure models for such alliances and nine criteria used to evaluate the models the models and the criteria were introduced together with bank and insurance experts the experts are representatives of the top management of finnish banks and insurance companies searching for the most preferred alliance model is a multiple criteria decision making mcdm problem to solve the problem we used an expert panel and the analytic hierarchy process ahp based on the evaluations of the panel the alternatives financial conglomerate and cross selling agreement no overlapping service channels are most preferred which one is chosen depends on how risk is emphasized

childhood preventive care adult healthcare and economic growth the role of healthcare financing we analyze the impact of healthcare financing on economic growth focusing on the issue of the joint public private financing of healthcare co payment we use an overlapping generations model with endogenous growth based on health human capital accumulation where families pay for childhood preventive care and the government can either fully finance or co finance adulthood curative care from a growth maximizing perspective distortionary taxes give an advantage to co financing nevertheless we prove that if agents are assumed to be heterogeneous in preferences full financing can become the best option

public education under capital mobility the paper considers a two country model of overlapping generations economies with intergenerational transfers motivated by altruism and investment in human capital we examine in a non stationary competitive equilibrium the optimal provision of education with and without capital market integration first we explore how regimes of education provision public private or mixed arise and how they affect the dynamics of autarkic economies second we study the effects of capital market integration in equilibrium on the optimal provision of education third we show that capital market integration enhances government intervention in the provision of public education to improve the welfare of its constituents and consider various solutions to such a competition

portfolio selection under strict uncertainty a multi criteria methodology and its application to the frankfurt and vienna stock exchanges abstract in modern portfolio theory it is common practice to first compute the risk reward efficient frontier and then to support an individual investor in selecting a portfolio that meets his her preferences for profitability and risk potential flaws include a the assumption that past data provide sufficient evidence for predicting the future performances of the securities under consideration and b the necessity to mathematically determine or approximate the investor s utility function in this paper we propose a methodology whose initial phase filters portfolios that are inefficient from a historical perspective while this is consistent with traditional approaches the second phase differs from the standard approach as it uses a decision table constructed by considering multiple scenarios assuming strict uncertainty the table cells measure consequences by a multi criteria linear performance index of simulated future returns which avoids difficulties with performance ratios the real world applicability is illustrated through two studies based on data from the stock exchanges in frankfurt and vienna

pairs trading and outranking the multi step ahead forecasting case abstract pairs trading is a popular speculation strategy several implementation methods are proposed in the literature they can be based on a distance criterion or on co integration this article extends previous research in another direction the combination of forecasting techniques neural networks and multi criteria decision making methods electre iii the key contribution of this paper is the introduction of multi step ahead forecasts it leads to major changes in the trading system and raises new empirical and methodological questions the results of an application based on s p 100 index stocks are promising this methodology could be a powerful tool for pairs selection in a highly non linear environment

financial networks with intermediation risk management with variable weights in this paper we develop a framework for the modeling analysis and computation of solutions to multitiered financial network problems with intermediaries in which both the sources of financial funds as well as the intermediaries are multicriteria decision makers in particular we assume that these decision makers seek not only to maximize their net revenues but also to minimize risk with the risk being penalized by a variable weight we make explicit the behavior of the various decision makers including the consumers at the demand markets for the financial products we derive the optimality conditions and demonstrate that the governing equilibrium conditions of the financial network economy can be formulated as a finite dimensional variational inequality problem qualitative properties of the equilibrium financial flow and price pattern are provided a computational procedure that exploits the network structure of the problem is proposed and then applied to several numerical examples

bankadviser an industrial evaluation system abstract bankadviser is a multicriteria industrial evaluation system it provides evaluations of individual items such as firms industries companies industrial clients within a set of similar ones the evaluations take into account not only the own scores of the item but also those of the other ones in the set positioning the evaluation procedure is based on financial data from the balance sheet and the income statement of each item bankadviser is particularly useful for decision makers financial analysts banks insurance companies when they have to make decisions about their industrial clients the system allows one to manage the data about the clients to analyse their economic profile to detect their strong and weak features to evaluate any risk associated with them decisions such as whether or not to provide a loan fix the loan modalities interest terms offer guarantee for foreign activities cover some deficits can easily be finalized after the bankadviser evaluation bankadviser is a visual interactive modelling system it is interactive because for each item the user has the opportunity to run through one part of the information to another because he can ask for additional information on the strong or the weak features of the profile because comparison with similar items can be given on request it is a modelling system because an intricate multicriteria situation is modelled by using the extended promethee mcdm methodology bankadviser has been implemented on a microcomputer for the sake of an effective presentation the paper has been written according to the structure of the microcomputer software it is illustrated by data of a real world application

a dynamic bank portfolio planning model with multiple scenarios multiple goals and changing priorities abstract the paper discusses a practical application of a two stage linear goal programming model to the management of the domestic and foreign currency denominated assets and liabilities of a large bank in finland the planning horizon includes three one year planning periods a number of alternative scenarios are used to describe uncertainty concerning future developments in these periods the scenarios are related to general economic conditions as well as the state of the domestic and foreign financial markets the bank is assumed to have multiple conflicting goals with different and changing priorities the goals deal with expected profits risk liquidity capital adequacy growth customer relationships and several other aspects of the bank s operations

multicriteria decision aid in financial management abstract the financial decisions of an organization are usually included in the context of optimization concerning a long term period there are decisions related to the optimal allocation of funds and decisions related to the optimal financial structure in the short term case the decisions are related to the optimization of stocks cash accounts receivable current liabilities etc the financial theory analyzes these decisions mainly from an optimal point of view the optimal character of such decisions has led researchers to propose operations research techniques to solve the problems that are inherent in such decisions this paper examines the contribution of multicriteria analysis in solving financial decision problems in a realistic context the paper also includes an extensive bibliography on the subject

on the evolution of attitudes towards risk in winner take all games abstract a long standing conjecture is that winner take all games such as patent races lead to the survival of risk takers and the extinction of risk averters in many species a winner take all game determines the males right to reproduce and the same argument suggests that males will evolve to be risk takers psychological and sociological evidence buttresses the argument that males are more risk taking than females using an evolutionary model of preference formation we investigate to what extent evolution leads to risk taking in winner take all environments journal of economic literature classification numbers c7 d8

multiple criteria decision making combined with finance a categorized bibliographic study abstract this paper provides a categorized bibliography on the application of the techniques of multiple criteria decision making mcdm to problems and issues in finance a total of 265 references have been compiled and classified according to the methodological approaches of goal programming multiple objective programming the analytic hierarchy process etc and to the application areas of capital budgeting working capital management portfolio analysis etc the bibliography provides an overview of the literature on mcdm combined with finance shows how contributions to the area have come from all over the world facilitates access to the entirety of this heretofore fragmented literature and underscores the often multiple criterion nature of many problems in finance

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

does society benefit from investor overconfidence in the ability of financial market experts abstract this paper develops a securities market model in which participants beliefs diverge and prices are monotonic in beliefs relative to rational expectations i e correct and unanimous beliefs overconfidence among uninformed traders about the precision of experts information leads to pareto superior equilibria efficiency enhancing departures from rational expectations occur over a dense subset of parameter space but only for one configuration of beliefs uninformed traders must be more confident than informed experts overconfidence in the form of excessive trust in the predictive ability of experts sets off a virtuous cycle of increased trading that improves liquidity and reduces transaction costs for everyone

an interest rate risk management model for commercial banks abstract this paper develops a goal programming model to assist a commercial bank in managing its exposure to interest rate risk the bank s objective is to immunize its equity position against innovations in interest rates while maximizing its market value to accomplish this task a duration gap framework is developed that does not require interest rate forecasts as decision variables the model includes assets liabilities and off balance sheet derivative securities the focus is on a protective put strategy that uses options on interest rate futures but to provide contrast a short interest rate futures position is examined as well application of the model to an illustrative environment indicates that for larger interest rate changes the option strategy provides better protection against interest rate risk than the short futures position

demographic structure and the political economy of education subsidies this paper investigates the politico economic impact of a society s age structure on the extent of public funding of education education subsidies serve to internalize positive spillovers of human capital investment but redistribute resources from the working old to the non working young thus creating a conflict of interest between the two generations the political process is characterized by a representative democracy

multiple criteria decision aiding for finance an updated bibliographic survey finance is a popular field for applied and methodological research involving multiple criteria decision aiding mcda techniques in this study we present an up to date bibliographic survey of the contributions of mcda in financial decision making focusing on the developments during the past decade the survey covers all main areas of financial modeling as well as the different methodological approaches in mcda and its connections with other analytical fields on the basis of the survey results we discuss the contributions of mcda in different areas of financial decision making and identify established and emerging research topics as well as future opportunities and challenges

pairs selection and outranking an application to the s p 100 index pairs trading is a popular quantitative speculation strategy this article proposes a general and flexible framework for pairs selection the method uses multiple return forecasts based on bivariate information sets and multi criteria decision techniques our approach can be seen as a sort of forecast combination but the output of the method is a ranking it helps to detect potentially under and overvalued stocks a first application with s p 100 index stocks provides promising results in terms of excess return and directional forecasting

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

education subsidies social security and growth the implications of a demographic shock we develop a three period overlapping generations model in which individual decisions about education are the engine of growth in this setting we investigate the normative role of education subsidies and old age pensions calibrating this model on empirical data it is shown that the case for positive pension benefits is rather weak on the optimal path an important part of education subsidies should be financed by lump sum taxes on retirees we also examine how these transfers should be adjusted in the presence of a baby boom baby bust demographic shock it turns out that an appropriate policy could be to increase education when the baby boom generation is at work labor productivity will then be higher when aging peaks so that the pension bill can be financed without reducing welfare for the baby bust generations

healthcare investment and income inequality abstract this paper examines how the relative shares of public and private health expenditures impact income inequality we study a two period overlapping generation s growth model in which longevity is determined by both private and public health expenditure and human capital is the engine of growth increased investment in health reduces mortality raises return to education and affects income inequality in such a framework we show that the cross section earnings inequality is non decreasing in the private share of health expenditure we test this prediction empirically using a variable that proxies for the relative intensity of investments private versus public using vaccination data from the national sample survey organization for 76 regions in india in the year 1986 87 we link this with region specific expenditure inequality data for the period 1987 2012 our empirical findings though focused on a specific health investment vaccines suggest that an increase in the share of the privately provided health care results in higher inequality

more equal but less mobile education financing and intergenerational mobility in italy and in the us a centralised and egalitarian school system reduces the cost of education for poor families and so it should reduce income inequality and make intergenerational mobility easier in this paper we provide evidence that italy compared to the usa displays less income inequality as expected given the type of school system but also less intergenera tional upward mobility between occupations and between education levels we explore some of the reasons which can explain this puzzling result and conclude that in a world in which family background is important for labor market success a centralised and egalitarian tertiary education does not necessarily help poor children and may take away from them a fundamental tool to prove their talent and to compete with rich children 1999 elsevier science s a all rights reserved

intergenerational transfers production and income distribution abstract we consider an overlapping generations economy where the aggregative production process uses physical capital and human capital intergenerational transfers from parents to their children are motivated by altruism we distinguish between two types of transfers investment of parents in the education of their offspring and capital transfer the gift bequest motive we show that the intensity of each type of altruism and hence the composition of the two types of transfers affect significantly the equilibrium output and the intragenerational income distributions comparing competitive equilibria from the same initial distributions of capital transfers and human capital we derive a the economy with the higher education inclined altruism attains lower output and more equal intragenerational income distributions if either the production function s elasticity of substitution is not large or the altruism is weak b for more bequest inclined altruism the effects are usually reversed c under public provision of education higher bequest inclined altruism results in lower output and less equal distribution of income in all dates

calculation and decomposition of income inequality in low and middle income countries a survey data analysis this article estimates income inequality in a sample of four low and middle income lmi countries namely albania nepal tajikistan and tanzania using the household survey data nepal living st

ahp based synergy allocation to the partners in a merger abstract many corporations try to overcome vulnerabilities by external alliances with other corporations this paper concentrates on the merger case in member states of the european community under the premise that synergies are to be expected from such a transaction in this context synergy will be understood as the difference between the capitalized earning power of the merger firm and the sum of the capitalized earning powers the companies could expect when operating alone this article presents a method to allocate the financial effect to the partners in a merger based on the formal procedure of the analytic hierarchy process the method allocates synergy to the partners according to the impact intensities of their performance potentials on this synergistic effect

the effect of health on economic growth a production function approach abstract we estimate a production function model of aggregate economic growth including two variables that microeconomists have identified as fundamental components of human capital work experience and health our main result is that good health has a positive sizable and statistically significant effect on aggregate output even when we control for experience of the workforce we argue that the life expectancy effect in growth regressions appears to be a real labor productivity effect and is not the result of life expectancy acting as a proxy for worker experience

modeling of financial supply chain the research work on supply chain management has primarily focused on the study of materials flow and very little work has been done on the study of upstream flow of money in this paper we study the flow of money in a supply chain from the viewpoint of a supply chain partner who receives money from the downstream partners and makes payments to the upstream partners the objective is to schedule all payments within the constraints of the receipt of the money a penalty is to be paid if payments are not made within the specified time any unused money in a given period can be invested to earn an interest the problem is computationally complex and non intuitive because of its dynamic nature the incoming and outgoing monetary flows never stop and are sometimes unpredictable for tractability purposes we first develop an integer programming model to represent the static problem where monetary in flows and out flows are known before hand we demonstrate that even the static problem is np complete first we develop a heuristic to solve this static problem next the insights derived from the static problem analysis are used to develop two heuristics to solve the various level of dynamism of the problem the performances of all these heuristics are measured and presented

the effects of poor neonatal health on children s cognitive development we make use of a new data resource merged birth and school records for all children born in florida from 1992 to 2002 to study the relationship between birth weight and cognitive development using singletons as well as twin and sibling fixed effects models we find that the effects of early health on cognitive development are essentially constant through the school career that these effects are similar across a wide range of family backgrounds and that they are invariant to measures of school quality we conclude that the effects of early health on adult outcomes are therefore set very early

education and the poverty trap an overlapping generations model is constructed in which individual wealth is related to educational attainment and in which liquidity constraints may induce children to invest in a sub optimal level of education given their ability financing for education is obtained from within the family abilities differ among children and may be related to parental ability stationary state equilibria are found to exist in which children of poorer families are caught in a poverty trap because of an inability to finance their education the role of redistributive policy is studied in this context

honey i shrunk the kids benefits revisiting intergenerational conflict in oecd countries intergenerational conflict may arise when the interests of different age groups do not align we examine cross country data to find evidence for this conflict in oecd countries we derive our results from a fgls estimation model which is complemented by a system gmm estimation to account for potential endogeneity the data are from a panel of 22 oecd countries over the time period 1985 2005 we find little support for intergenerational conflict in general however those who are close to statutory retirement age dislike public expenditure on families and education because once they retire they will have less income compared to their work income this effect is transitory however implying a change in voting behavior during retirement age

educational policy in a credit constrained economy with skill heterogeneity an overlapping generations model where agents choose whether to become educated when young is presented education enhances productivity but needs to be financed by borrowing because of the possibility of default lenders may ration credit we characterize the steady state equilibrium with and without credit constraints and show that credit constraints are associated with lower education and a lower real interest rate we then study the role of public policy in remedying the inefficiency which occurs with credit market imperfections and examine whether public education can improve on the constrained equilibrium

an application of the ahp to bank strategic planning the mergers and acquisitions process abstract strategic planning is one of the most complex and ill structured tasks faced by banks it usually requires adopting a course of action from a large set of alternatives with uncertain long term outcomes which depend to a large extent on unknown and turbulent environments in deriving these strategies bankers usually try to achieve multiple and sometimes conflicting objectives such as profitability growth liquidity and market share subject to constraints on credit and exchange risks and regulatory requirements moreover specific strategies are normally determined by a board of directors whose members have different backgrounds judgments and personal goals this paper describes the application of the ahp methodology to the evaluation of bank mergers and acquisitions m a strategy the model developed for this important problem was tested with the assistance of the board of directors of a billion dollar bank holding company although it is difficult to generalize from one experiment dealing with a single issue there was nothing unique in the situation where the test was performed hence it is safe to assume that the ahp methodology can be applied to other complex and ill defined strategic issues faced by other banking institutions compared with existing techniques on the one hand and with qualitative managerial judgement on the other hand the ahp provides a useful simple and powerful tool for dealing with strategic planning in banking

arrogance can be a virtue overconfidence information acquisition and market efficiency abstract in behavioral finance overconfidence has been established as a prevalent psychological bias which can make markets less efficient by creating mispricing in the form of excess volatility and return predictability in this paper we develop a model in which overconfidence causes investors to overinvest in information acquisition when this information could improve market efficiency by driving prices closer to true values we study the impact of overconfidence on mispricing and information acquisition comparing their net effect on prices we derive several novel implications first overconfidence generally improves market pricing provided the level of overconfidence is not too high pricing can also improve even when overconfidence is arbitrarily high depending on the amount of private information acquired relative to publicly available information

capital taxation under political constraints this paper studies optimal dynamic tax policy under the threat of political reform a policy will be reformed ex post if a large enough coalition of citizens supports reform thus sustainable policies are those that will continue to attract enough political support in the future we find that optimal marginal capital taxes are either progressive or u shaped so that savings are subsidized for the poor and or the middle class but are taxed for the rich u shaped capital taxes always emerge when individuals political behavior is purely determined by economic motives

a credit score system for socially responsible lending ethical banking microfinance institutions or certain credit cooperatives among others grant socially responsible loans this paper presents a credit score system for them the model evaluates social and financial aspects of the borrower the financial aspects are evaluated under the conventional banking framework by analysing accounting statements and financial projections the social aspects try to quantify the loan impact on the achievement of millennium development goals such as employment education environment health or community impact the social credit score model should incorporate the lender s know how and should also be coherent with its mission this is done using multi criteria decision making mcdm the paper illustrates a real case a loan application by a social entrepreneur presented to a socially responsible lender the decision support system not only produces a score but also reveals strengths and weaknesses of the application

a goal programming model for bank assets and liabilities management abstract assets and liabilities management is one of the most important issues in bank strategic planning in the past this problem has often been addressed through conventional mathematical programming i e linear programming however bank management typically involves several conflicting goals such as the maximisation of returns minimisation of risk expansion of deposits and loans etc the complexity of this problem can be captured more adequately by multiobjective mathematical programming this paper discusses the construction and application at the commercial bank of greece of a goal programming model that takes into account the essential institutional financial legal and bank policy considerations

a preference disaggregation decision support system for financial classification problems abstract classification is one of the most extensively studied problems in the fields of multivariate statistical analysis operations research and artificial intelligence decisions involving a classification of the alternative solutions are of major interest in finance since several financial decision problems are best studied by classifying a set of alternative solutions firms loan applications investment projects etc in predefined classes this paper proposes an alternative approach to the classical statistical methodologies that have been extensively used for the study of financial classification problems the proposed methodology combines the preference disaggregation approach a multicriteria decision aid method with decision support systems more specifically the financial classification finclas multicriteria decision support system is presented the system incorporates a plethora of financial modeling tools along with powerful preference disaggregation methods that lead to the development of additive utility models for the classification of the considered alternatives into predefined classes an application in credit granting is used to illustrate the capabilities of the system

early and late human capital investments borrowing constraints and the family we develop a dynastic human capital investment framework to study the importance of family borrowing constraints and uninsured labor market risk as well as the process of intergenerational ability

satisficing and un bounded rationality a formal definition and its experimental validity abstract based on exogenously given or idiosyncratically expected scenarios satisficing is formally defined and shown to include rationality as an unlikely border case our approach suggests new ways of defining risk attitudes and has been applied to risky choice problems and stochastic market games contrary to revealed preferences where one infers goals from observed choices the experimental tests do not only elicit choice behavior but also aspirations and if necessary idiosyncratic expectations

electoral uncertainty income inequality and the middle class we investigate how electoral competition affects the income distribution in society we utilise a standard probabilistic voting setup where parties compete at two stages our model delivers that greater electoral competition in a district results in equalisation of incomes therein we check for these relationships using data from indian national elections which are combined with consumption expenditure data rounds from the national sample survey organization 1987 8 and 2004 5 to yield a district level panel our ols 2 sls and iiv analyses consistently inform that close elections lead to lower inequality and polarisation indicating a larger middle class

informed speculation with imperfect competition competitive rational expectations models have the unsatisfactory property dubbed the schizophrenia problem by hellwig that each trader takes the equilibrium price as given despite the fact that he influences that price an examination of information aggregation in a non competitive rational expectations model using a nash equilibrium in demand functions shows that the schizophrenia problem is avoided by having each trader take into account the effect his demand has on the equilibrium price given a distribution of private information across traders prices reveal less information than in the competition equilibrium and prices no longer become fully informative in the limit as noise trading vanishes or as traders become risk neutral with small traders the model may become one of monopolistic competition not perfect competition in contrast to the competitive model a reasonable model of endogenous acquisition of costly private information is obtained even when traders are risk neutral

the evaluation criteria of the venture capital investment activity an interactive assessment abstract in this paper the modelling of venture capital decision making is being attempted using a multicriteria decision support system the minora system based on the interactive use of the uta ordinal regression model first a review of the literature on the evaluation criteria for venture capital investment is outlined and the general methodology of financing firms is presented then a real world application of the minora system is developed this has been done in a french venture capital firm and concerned the assessment of an analytical evaluation model of firms

a goal programming approach to investment decisions a case study of fund allocation among different shopping malls abstract this study proposes a unique solution to resource allocation problems by combining goal programming gp with a qualitative forecasting model e g the delphi method and a quantitative forecasting technique e g the poisson gravity model goal programming an extension of linear programming lp is a management science technique for resource allocation in multiple objective environment initially in the proposed model the delphi is used to elicit the experts talents to derive the objectives to be considered in resource allocation subsequently a forecasting technique is utilized to predict the future values for these objectives the information obtained from these two forecasting techniques is then used to construct a gp model to test for its practicality the proposed model was applied to allocate funds among different retail stores in the atlanta retailing system to maximize an investor s revenue first the number of shopping trips taken to different retail centers in the atlanta area were predicted and then these forecasts were treated as goals to be achieved these forecasted goals were subsequently used to formulate a goal programming model to allocate funds for leasing retail stores in different shopping centers within the system the atlanta retailing system was chosen only as an example the proposed methodology can be applied to any resource allocation problem

strategic financial management in a multinational financial conglomerate a multiple goal stochastic programming approach abstract the paper discusses a multi stage stochastic programming approach to the strategic financial management of a multi company financial conglomerate the planning system creates a comprehensive strategy which simultaneously covers a number of future scenarios within a multi period planning horizon multiple conflicting goals may be specified for the group level company level or individual business area level and the decision maker s preferences are allowed to change over time to reflect changing operating conditions and trade off relationships between the goals special features include among other things full market valuation throughout the model integrated treatment of different types of risks explicit modelling of various types of intra group transactions and relationships extensive structures to deal with distressed assets and the covering of losses within the group as well as consideration of potential portfolio effects of a diversified group structure on the cost of funding

the effect of microenterprise lending on child schooling in guatemala many recent theoretical models which portray human capital investment as a primary engine of economic growth underemphasize the structure of the microeconomic decision making process which gives rise to human capital investment in both developed and developing countries human capital investment tends to be a household level decision made in the form of child schooling for families in developing countries which operate household enterprises the decision involves an economic trade off between future returns to schooling and the current return to childrens labor in the enterprise the author explores how access to credit in developing countries can affect the child schooling decision a 2 period household model is presented which endogenously generates an optimal level of child schooling by households accounting for the possibility of asymmetric information in credit and labor markets comparative statics are then conducted to show the conditions under which child schooling will increase or decrease when credit constraints are relaxed a brief background of the schooling system in guatemala and a brief description of the survey data collected in guatemala are provided followed by the presentation of empirical tests and a summary of empirical findings with suggestions made for further research