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

a note on inertia in market share abstract in a simple model in which market share displays inertia i show that a larger firm will always charge a higher price and make more profits than its smaller rival but its market share will remain larger than its rival s

promoting groundwater reform in the guadiana basin in many parts of the world there is a substantial disconnect between existing water institutions and the institutions needed to ensure sustainable water supplies for the future implementing large scale institutional change is politically challenging in many cases changes must emerge from political bargaining or negotiation accordingly there is substantial literature looking at applications of negotiation theory to water policy carraro marchiori and sgobbi 2007 review this literature in detail

preferences for proxy attributes a proxy attribute is an indirect measure of an ultimate decision objective keeney and raiffa keeney r l h raiffa 1976 decisions with multiple objectives preferences and value tradeoffs john wiley new york argued that assessing utility functions over proxy attributes requires complex inferences that may exceed the human capacity for consistent judgment thus biasing utility assessments this hypothesis was tested in an experimental study of preferences for pollution control alternatives each decision maker made two sets of utility assessments the first regarding outcomes described by the fundamental attributes pollution control cost and pollution related illness the second regarding outcomes described by the fundamental attribute pollution control cost and the proxy attribute pollution emissions level which served as an indirect measure of illness the subjects displayed a near universal bias to overweight the proxy attribute relative to the prescriptions of expected utility theory the bias was large resulting in a substantial loss of expected utility in a simulated policy decision making scenario to account for this bias we developed three heuristic models of preferences for proxy attributes the best guess worst case and relative importance models the results strongly favored the relative importance model according to which decision makers assess scaling constants by relying on general attitudes regarding the relative importance of different decision objectives rather than on well articulated preferences for rates of substitution between pairs of attributes

stakeholder interviews with two mavt preference elicitation philosophies in a swiss water infrastructure decision aggregation using swing weighting and disaggregation using uta gms abstract we used two types of preference elicitation methods based on multi attribute value theory mavt for a wastewater infrastructure decision in switzerland we aimed to register the implementation impacts of two preference elicitation philosophies aggregation disaggregation in a large real world case and give guidance on these elicitation approaches for practitioners we conducted two series of face to face interviews with the same ten the first interview set used direct aggregation preference elicitation methods which decomposed an additive value model into the elicitation of weights smart swing variant and marginal value functions bi section method in the second interview series indirect disaggregation was used based on uta gms the weights and marginal value functions for 19 objectives were later simultaneously inferred with linear programming from pairwise comparisons of hypothetical alternatives one aim was to design the uta gms comparisons for many objectives further we aimed to identify differences and commonalities of the two methods concerning the elicited preferences the mavt evaluation results of six real world wastewater infrastructure alternatives and the stakeholders and analysts feedbacks similar best alternatives indicate convergence of the two elicitation methods this demonstrates the applicability of the uta gms elicitation procedure to a very complex decision problem however the two elicitation methods were perceived differently by the respondents and required different effort from the analysts for individual stakeholders preferences were sometimes rather different between the interviews which could be largely explained by the constructive nature of preference formation this indicates the importance of supporting stakeholder learning in the application of mcda

a comparison of contingent preference models i compare the informational efficiencies of contingent rating contingent ranking and two contingent paired comparison methods as alternatives to the referendum contingent valuation method the contingent rating method is hypothesized to be most efficient because ratings convey information on preference intensities and can uniquely represent respondent indifference or ambivalence survey data on hunters ratings of alternative hypothetical hunting trips are used to estimate four alternative indirect utility models from which marginal willingness to pay measures for individual trip attributes are derived model comparison wtp estimates and their confidence intervals confirm the relative efficiency of the contingent rating approach

a political economy model of implementing pollution laws abstract a model of the implementation process as applied in pollution control is developed it differs from previous bureaucracy models in that it subjects the control agency to pressures from both firms and procontrol citizen groups each of these three actors maximizes utility over environmental quality and some other variable environmental quality may be in the actor s preference function or it may represent derived demand working through the agency budget and other policy variables each actor constrains another actor s attempts to move policy in preferred directions this results in movement toward a concensus environmental quality not necessarily the efficient quality several institutional changes are analyzed to demonstrate the workings of the model

on optimal audit mechanisms for environmental taxes abstract we consider the auditing problem of an environmental enforcement agency with fixed audit resources how to decide which firms to audit after having observed the firms taxable emissions reports the goal of the agency is to implement the socially efficient emissions level the audit mechanism is the agency s sole choice variable while other variables such as the tax rate on emissions and the fine for non compliance are determined by other governmental actors the fines and budget of the agency are constrained in such a way that the common random audit mechanism fails to implement socially efficient emissions assuming perfect information among the firms we derive an optimal audit mechanism capable of implementing the socially efficient emissions level the optimal audit mechanism creates a contest exploiting the strategic interdependencies between the firms where the probability of winning not being audited for each firm depends on costly efforts their taxable emissions reports

betting your favorite to win costly reluctance to hedge desired outcomes we examined whether people reduce the impact of negative outcomes through emotional hedging betting against the occurrence of desired outcomes we found substantial reluctance to bet against the success of preferred u s presidential candidates and major league baseball national football league national collegiate athletic association ncaa basketball and ncaa hockey teams this reluctance was not attributable to optimism or a general aversion to hedging reluctance to hedge desired outcomes stemmed from identity signaling a desire to preserve an important aspect of the bettor s identity reluctance to hedge occurred when the diagnostic cost of the negative self signal that hedging would produce outweighed the pecuniary rewards associated with hedging participants readily accepted hedges and pure gambles with no diagnostic costs they also more readily accepted hedges with diagnostic costs when the pecuniary rewards associated with those hedges were greater reluctance to hedge identity relevant out

firm incentives to promote technological change in pollution control reply abstract the process of technological change in pollution control is broken into three basic steps innovation diffusion and optimal agency response firm incentives to promote these steps are then examined under five regulatory regimes direct controls emission subsidies emission taxes free marketable permits and auctioned marketable permits on a relative basis emission taxes and auctioned permits provide the highest firm incentives to promote technological change at times free permits generate lower incentives direct controls which are common regulatory tools usually provide the lowest relative firm incentives to promote technological change

the effectiveness of alternative preference elicitation procedures in predicting choice in a large scale national study the authors evaluated the effectiveness of several preference elicitation techniques for predicting choices the criteria for accuracy included both individual hit

fighting pollution when decisions are strategic in this paper we analyse anti pollution policies in a 2 by 2 game played between a polluter and the police in which the payoffs can be manipulated by an exogenous third player called the policy maker we show that the efficiency of the policies may depend on whether the players of the 2 by 2 game choose nash equilibrium strategies or prefer maximin

when more is less and less is more the role of ideal point availability and assortment in consumer choice contrary to the common wisdom that more choice is always better selections made from large assortments can lead to weaker preferences building on the extant literature this research identifies ideal point availability as a key factor moderating the impact of assortment on choice it is proposed that in the case of large assortments ideal point availability can simplify choice leading to a stronger preference for the selected alternative in contrast for choices made from smaller assortments ideal point availability is proposed to have the opposite effect leading to weaker preferences data obtained from four experiments lend support for the theory and the empirical predictions advanced in this article

up close and personal investor sophistication and the disposition effect this paper analyzes the trading records of a major discount brokerage house to investigate the disposition effect the tendency to sell stocks that have appreciated in price winners sooner than stocks that trade below the purchase price losers in contrast to previous research that has demonstrated the disposition effect by aggregating across investors our main objective is to identify differences in the disposition bias across individuals and explain this in terms of underlying investor characteristics building on the findings in experimental economics and social psychology we hypothesize that differences in investor literacy about financial markets and trading frequency are responsible in part for the variation in individual disposition effect using demographic and socioeconomic variables as proxies for investor literacy we find empirical evidence that wealthier individuals and individuals employed in professional occupations exhibit a lower disposition effect consistent with experimental economics trading frequency also tends to reduce the disposition effect we provide guidelines for investment advisors regulators and investment communities to utilize our findings and help investors make better decisions

the impact of utility balance and endogeneity in conjoint analysis adaptive metric utility balance is at the heart of one of the most widely used and studied methods for conjoint analysis we use formal models simulations and empirical data to suggest that adaptive metric utility balance leads to partworth estimates that are relatively biased smaller partworths are upwardly biased relative to larger partworths such relative biases could lead to erroneous managerial decisions metric utility balanced questions are also more likely to be inefficient and in one empirical example contrary to popular wisdom lead to response errors that are at least as large as nonadaptive orthogonal questions we demonstrate that this bias is because of endogeneity caused by a winner s curse shrinkage estimates do not mitigate these biases combined with adaptive metric utility balance shrinkage estimates of heterogeneous partworths are biased downward relative to homogeneous partworths although biases can affect managerial decisions our data suggest that empirically biases and inefficiencies are of the order of response errors we examine viable alternatives to metric utility balance that researchers can use without biases or inefficiencies to retain the desired properties of 1 individual level adaptation and 2 challenging questions

optimal environmental regulation under asymmetric information abstract a market model of environmental regulation with interdependent production and pollution abatement costs and heterogeneous firms is developed firms have private information about costs which have a quadratic form firms pursue bayes nash strategies in communication with the regulator the full information optimum cannot be attained unless gains from trade in the product market net of external damages exceed the information rents earned by firms aggregate output and externality levels are lower at the regulated equilibrium than at the full information social optimum

incomplete enforcement with endogenous regulatory choice abstract this paper extends the economic literature on the incomplete enforcement of social regulation by incorporating regulatory choice in an institutional environment of limited regulatory resources and powers we show how regulatory decisions determine the structure of incentives faced by regulated firms our results indicate that the expense of monitoring relative to the regulator s power to levy penalties helps to explain the differences between compliance and deterrence enforcement styles we find that in most circumstances firms with higher abatement costs will receive a larger share of regulatory resources and thus face higher penalties than firms with lower costs

correlated payoffs in the inspection game some theory and an application to corruption the inspection game as formulated by tsebelis am polit sci rev 83 77 91 1989 has the counterintuitive implication that crime is unaffected by the magnitude of the penalty this paper demonstrates that to attain this outcome it is necessary to assume independence of enforcer and offender payoffs given correlated payoffs the comparative statics of the equilibrium yield an inverse relationship between crime and the severity of the sanction in an application we enrich the framework of tsebelis by adding corruption stages and show that this can imply such a correlation of payoffs another interesting finding is that harsher anticorruption measures can increase crime incentives

improving statistical efficiency and testing robustness of conjoint marginal valuations we investigate the effect of panelestimators and sample weighting to improve efficiency of coefficient estimates and confidence intervals on marginal values panel estimators are appropriate because most conjoint studies have respondents rate multiple product profiles using a random effects ordered probit model increases significance levels on two forest health attribute coefficients and results in substantial tightening of confidence intervals on marginal values to mitigate the effects of low response rate we weight the returned surveys using census data to match the sample to the population two of the four marginal values from this weighted ordered probit model are substantially different copyright 2001 oxford university press

the regulatory choice of noncompliance in emissions trading programs this paper addresses the following question to achieve a fixed aggregate emissions target cost effectively should emissions trading programs be designed and implemented to achieve full compliance or does allowing a certain amount of noncompliance reduce the costs of reaching the emissions target the total costs of achieving the target consist of aggregate abatement costs monitoring costs and the expected costs of collecting penalties from noncompliant firms under common assumptions i show that allowing noncompliance is cost effective only if violations are enforced with an increasing marginal penalty however one can design a policy that induces full compliance with a constant marginal penalty that meets the aggregate emissions target with lower expected costs this last result does not depend on setting an arbitrarily high constant marginal penalty in fact the marginal penalty need not be higher than the equilibrium marginal penalty under the policy with the increasing marginal penalty and can actually be lower finally tying the marginal penalty directly to the permit price allows the policy objective to be achieved without any knowledge of firms abatement costs

multiattribute risky choice behavior the editing of complex prospects this investigation draws upon concepts from prospect theory kahneman and tversky kahneman d a tversky 1979 prospect theory an analysis of decisions under risk econometrica 47 263 291 and multiattribute utility theory keeney and raiffa keeney r l h raiffa 1976 decisions with multiple objectives preferences and value tradeoffs wiley new york in an examination of the multiattribute risky choice behavior of 128 managers the questions of how managers edit multiattribute prospects and how editing relates to various independence assumptions were explored the major result is that managers appear to violate attribute independence in its general form and especially in the form of the marginality assumption the most common form of behavior observed was multiattribute risk aversion for prospects involving only gains and multiattribute risk seeking for prospects involving only losses this result reinforces the importance of a target reference point or aspiration level that has been f

political pressure and regulatory control conclusions of previous regulatory studies addressing the impact of fines on firm s behavior are contradictory a simple game theoretic model is developed which uses continuous payoff functions to reconcile these contradictory conclusions the game suggests changing the fine shifts the reaction functions of both the regulatory agency and the firm the nature of such shifts are partially caused by political pressure different interest groups place on regulatory agencies competing goals within the agency also help explain why such shifts occur

stochastic pollution costly sanctions and optimality of emission permit banking abstract this paper identifies a new economic motive for pollution regulations that allow polluting firms to bank and borrow emission permits over time when aggregate pollution is stochastic an intertemporal permit trading regime can provide firms with efficient incentives for pollution abatement without the need for costly government enforcement actions that would otherwise be required

state dependent enforcement to foster the adoption of new technologies harrington j public econ 37 29 53 1988 shows that a suitable strategy for regulators to make enforcement more efficient is to target surveillance resources according to past compliance records such scheme generates enforcement leverage as non compliance triggers greater future scrutiny increasing the expected costs of non compliance beyond the avoidance of immediate fines in this paper we propose an improved transition structure for the audit framework in which targeting is based not only on firms past compliance record but also on adoption of environmentally superior technologies we show that this transition structure would not only foster the adoption of new technology but also increase deterrence by changing the composition of firms in the industry toward an increased fraction of cleaner firms that pollute and violate less

why competition may drive up prices abstract we show that the expected price of an incumbent firm may increase in response to increasing competition as it may become more profitable to exploit a rather immobile fraction of consumers instead of capturing a larger but more contested segment of the market to derive this result we consider two approaches of modelling the degree of competition first in a duopolistic setting competition is said to be more intense if the entrant s product becomes more attractive to the mobile fraction of buyers in this case we find that all buyers i e both the mobile and the immobile fraction may lose if the market becomes more competitive secondly in a model with two entrants competition is said to become intense if entrants serve an overlapping segment of the market for mobile buyers

economists opinions on environmental policy instruments analysis of a survey incentive instruments effluent charges are theoretically expected to be preferred to direct regulations individual emission ceilings by university employed theoretically inclined politically right wing professional economists living in a market oriented country ceteris paribus public sector employed politically left wing professional economists living in a country with a long tradition of government involvement prefer the regulatory approach ceteris paribus these theoretical hypotheses tend to be supported by a bivariate probit analysis based on a survey of more than 1400 economists in five countries 22 references 4 tables

risk preferences for gains and losses in multiple objective decision making payne laughhunn and crum payne j w d j laughhunn r crum 1984 an experimental study of multiattribute risky choice management sci 30 1350 1361 found that managers were multiattribute risk averse for gains but multiattribute risk prone for losses a pattern that is inconsistent with both the additive and the multiplicative multiattribute utility models in this paper we develop the reference risk value rrv model which is simple in structure yet capable of representing the kinds of multiattribute reference effects observed by payne et al we also report the results of two experiments that compare the descriptive validity of the rrv model with that of the additive and multiplicative utility models experiment 1 involved choices between risky multiperiod cash flows experiment 2 choices between risky job alternatives described by change in salary and change in type of work in experiment 1 subjects were multiattribute risk averse for gains but multiattribute risk neutral for losses in e

allocation of tasks for reliability growth using multi attribute utility abstract in reliability growth models in particular and project risk management more generally improving the reliability of a system or product is limited by constraints on cost and time there are many possible tasks which can be carried out to identify and design out weaknesses in the system under development this paper considers the allocation problem which subset of tasks to undertake while the method is applicable to project risk management generally the work has been motivated by reliability growth programmes we utilise a model for reliability growth based on an efficacy matrix developed with engineering experts in the aerospace industry we develop a general multi attribute utility function based on targets for cost time on test and system reliability the optimal subset is identified by maximising the prior expected utility we derive conditions on the model parameters for risk aversion and loss aversion based on observed properties of preference we give conditions for multivariate risk aversion under the general form of the utility function the method is illustrated using an example informed by work with aerospace organisations

averages of forecasts some empirical results an alternative to using a single forecasting method is to average the forecasts obtained from several methods in this paper we investigate empirically the impact of the number and choice of forecasting methods on the accuracy of simple averages it is concluded that the forecasting accuracy improves and that the variability of accuracy among different combinations decreases as the number of methods in the average increases thus combining forecasts seems to be a reasonable practical alternative when as is often the case a true model of the data generating process or a single best forecasting method cannot be or is not for whatever reasons identified

public multi criteria assessment for societal concerns and gradual labelling we present a multicriteria product assessment framework that can be used to rank existing products against hypothetical product scenarios products are ranked for environmental impact healthfulness naturalness and fairness assessment criteria and relative importance weights are sourced from the public the framework has been demonstrated for fresh tomato production scenarios results are valid because they correspond to public concerns gradient to reward small production improvements and relative to available product alternatives their interpretation can be normative with reference to existing production averages without agreement on absolute acceptability thresholds data improvement agrees with rational stakeholder behaviour results identify technological applications of higher and lower public acceptability potential for production and research agenda optimisation other producer uses include labelling and brand name protection civil society uses include the critical assessment of production public uses include labelling in consumer driven markets and smooth production sector re structuring by incentivizing a race to the top for production externalities of public concern like the environmental sustainability or the fairness of production

the willingness to adopt agro ecological innovations application of choice modelling to caribbean banana planters this paper proposes an ex ante evaluation of the willingness to adopt agro ecological innovations aimed at reducing pesticide use for banana production in the french west indies four innovative systems including intercropping improved fallow and new pest tolerant varieties are proposed to a sample of 607 planters with innovation and policy attributes calibrated from a bio economic farm model the model interacts technological and economic innovation attributes with farmer individual factors and allows for a dual source of unobserved heterogeneity we estimate a system of random coefficient logit models to obtain marginal values of innovation traits that can be useful for targeting farm types with appropriate innovations and designing policies for securing agricultural revenue

a dynamic model of duopoly with customer loyalties consider a static game model of duopoly in which price is the strategic variable production is costless capacity is limitless and all sales are made by the low price setter according to some fixed bounded demand function it is well known that in such a model there is a unique cournot bertrand nash equilibrium which involves both sellers setting a price of zero and earning zero l otits neither the model nor the outcome seems to be a good description of reality and many other models have been proposed in the literature as more realistic and for which more interesting strategic conclusions can be reached see for example friedman 2 for a discussion of some of these in this paper i consider a modification of the above model which is motivated by speculations about markets such as that for automobile insurance which are characterized by repeat buying of a homogeneous commodity which is supplied by a few sellers and expenditures on which form a relatively small part of each buyer s budget in any time period if expenditures by each buyer are small or if buyers expect that there is not a great difference between the prices set by different sellers buyers are not likely to expend many resources shopping for the best price or making complicated strategic decisions furthermore the repeat purchase aspect suggests that the seller from whom the buyer previously purchased has a natural advantage if information about price or quality for the entire market is not free the model which i propose here reflects these considerations specifically buyers do not optimize instead they act according to a simple rule of thumb each buyer purchases from the same seller from whom he purchased in the last period unless that seller has raised his price in which case the buyer purchases from the current period low price setter in either case the buyer purchases an amount which is a fixed function of the price he faces independent of time the identity of the seller and history assuming such 69 0022 053 l 82 030069 08 02 00 o

nonpoint source pollution taxes and excessive tax burden if a regulator is unable to measure firms individual emissions an ambient tax can be used to achieve the socially desired level of pollution with this tax each firm pays a unit tax on aggregate emissions in order for the tax to be effective firms must recognize that their decisions affect aggregate emissions when firms behave strategically with respect to the tax setting regulator under plausible circumstances their tax burden is lower under an ambient tax relative to the tax which charges firms on the basis of individual emissions firms may prefer the case where the regulator is unable to observe individual firm emissions even if this asymmetric information causes the regulator to tax each firm on the basis of aggregate emissions

endogenous switching costs in a duopoly model we analyze the effect of alternative pricing policies on the competitive outcome in a two period differentiated product duopoly model if firms can precommit to a second period price for their loyal customers equilibrium profits fall but if they precommit to a discount then the equilibrium profits increase in either case switching costs are endogenized in period two firms discriminate against newcomers

measuring consumers willingness to pay at the point of purchase abstract economists psychologists and marketing researchers rely on measures of consumers willingness to pay wtp in estimating demand for private and public goods and in designing optimal price schedules existing market research techniques for measuring wtp differ in whether they provide an incentive to consumers to reveal their true wtp and in whether they simulate actual point of purchase contexts the authors present an empirical comparison of several procedures for eliciting wtp that are applicable directly at the point of purchase in particular the authors test the applicability of becker degroot and marschak s 1964 well known incentive compatible procedure for assessing the utility of lotteries to measuring consumers wtp in three studies the authors explore the reliability validity and feasibility of the procedure and show that it yields lower wtp estimates than do non incentive compatible methods such as open ended and double bounded contingent valuation they show experimentally t

premediation analysis of the energy taxation dispute in finland abstract this paper illustrates a real application of negotiation and decision analytic techniques to a long continued dispute between industry and the environmentalists in finland specifically we applied the so called premediation analysis to discover efficient compromise solutions for finland s future energy taxation problem the author s role was to act as a neutral mediator the premediation included the elicitation of the fundamental objectives of the disputants as well as their preferences relating to the issues under negotiation the quantitative analysis pointed out several efficient compromise solutions to the dispute implying that it was worth negotiating rather than unilaterally seeking to influence the state authorities this induced the participants to start unofficial face to face negotiations mediated by the author the compromise achieved together with the contacts created during the post analysis negotiations contributed immediately to the finnish government s first move towards a real ecological tax reform later on the government implemented a refund scheme for the industry that resembled by and large the one outlined in the post analysis negotiations this study thus provides a clear indication of the usefulness of the premediation concept in an unsettled conflict situation where the disputants have not earlier tried to resolve their disagreements by negotiating

reply reflections on the cost of simplifying preference models author s reply to comments by johnson johnson r m 1986 commentary marketing sci 5 322 and greenberg greenberg m g 1986 commentary marketing sci 5 320 321 about this paper hagerty m r 1986 the cost of simplifying preference models marketing sci 5 298 319

market share inertia with more than two firms an existence problem abstract when there is market share inertia there may exist an equilibrium in pure price strategies in a duopoly but when the number of firms is greater than two such an equilibrium never exists

predicting joint choice using individual data choice decisions in the marketplace are often made by a collection of individuals or a group examples include purchase decisions involving families and organizations a particularly unique aspect of a joint choice is that the group s preference is very likely to diverge from preferences of the individuals that constitute the group for a marketing researcher the biggest hurdle in measuring group preference is that it is often infeasible or cost prohibitive to collect data at the group level our objective in this research is to propose a novel methodology to estimate joint preference without the need to collect joint data from the group members our methodology makes use of both stated and inferred preference measures and merges experimental design statistical modeling and utility aggregation theories to capture the psychological processes of preference revision and concession that lead to the joint preference results based on a study involving a cell phone purchase for 214 parent teen dyads demonstrate predictive validity of our proposed method

dominant firms and their alleged decline abstract by way of a survey of recent literature on the theory of strategic competition this paper focuses on the question of whether dominant firms decline the traditional argument suggesting decline is found to be based on a rather unsatisfactory modelling of dominance and more acceptable conceptualizations suggest that such privileged positions will persist

the relationship between firm investments in technological innovation and political action economic theory recognizes the importance of investments in both technological innovation and political activity in firm behavior and extensive research exists which examines independently these expenditures however surprisingly little attention is devoted to analyzing technological innovation and political action expenditures jointly technological innovation and political action are two of the options firms face regarding how to achieve lower costs or market power the characteristics of these choices not only affect the degree to which each is used but also have widely divergent normative and policy implications for society furthermore many forms of technological innovation require regulatory approval so that firms may use the two forms of investment in conjunction with each other in addition to treating them as separate investment alternatives this paper investigates the relationships between firm investments in technological innovation and political activity both forms of investment seek to lower costs and or create market advantage but economists have long recognized the social importance of technological innovation to economic growth while treating most firm political activity as inefficient growing social concerns surrounding declining innovation productivity and growth and increasing firm political activity suggest that these are timely dimensions to explore jointly in the next section i discuss the relationship between firm investments in technological innovation and political action this discussion motivates the subsequent empirical modelling presented in section iii because of the possibility of simultaneity between firm spending in research and development rd these results hold true to various degrees over industries and industry groups section vi offers conclusions and suggestions for further research

note further tests of aspiration level effects in risky choice behavior this note extends the work reported in payne laughhunn and crum payne j w d j laughhunn r crum 1980 translation of gambles and aspiration level effects in risky choice behavior management sci 26 1039 1060 on the need to incorporate a target return reference point or aspiration level concept in the analysis of risky choice behavior two experiments are reported the first experiment provides a more complete test of the model of reference point effects developed by payne laughhunn and crum a translation of outcomes procedure which adds a constant to all outcomes was used to vary the relationship of pairs of gambles to an assumed target or reference point the results fully support the model the second experiment provides evidence of the conceptual validity of the model by using explicit instructions to vary the target levels of managers while holding gamble values constant

myopic solutions of markov decision processes and stochastic games sufficient conditions are presented for a markov decision process to have a myopic optimum and for a stochastic game to possess a myopic equilibrium point an optimum or an equilibrium point is said to be myopic if it can be deduced from an optimum or an equilibrium point of a static optimization problem or a static nash game the principal conditions are a each single period reward is the sum of terms due to the current state and action b each transition probability depends on the action taken but not on the state from which the transition occurs and c an appropriate static optimum or equilibrium point is ad infinitum repeatable these conditions are satisfied by several dynamic oligopoly models and numerous markov decision processes

monopolists and viscous demand we characterize the optimal dynamic price policy of a monopolist who faces viscous demand for its services demand is viscous if it adjusts relatively slowly to price changes we show that with the optimal policy the monopolist stops short of achieving 100 market penetration even when all of the consumers have the same long run willingness to pay for the service furthermore for certain parameter values in the model the price policy requires rapid oscillations of the price path

utilizing conjoint analysis to design modern crop varieties empirical example for groundnut in niger abstract preferences for monetary and non monetary plant traits influence modern crop variety adoption decisions of farmers to enhance adoption probability of modern crop varieties it is necessary to identify and focus research on traits that significantly contribute to utility while de emphasizing insignificant plant attributes this paper illustrates the potential for applying conjoint analysis to aid the design and targeting of client responsive modern crop varieties farmers ranked eight orthogonally derived plant trait combinations used in an illustrative example utilities were estimated using the choice probability based method of ordered probit results showed that conjoint analysis can differentiate significant and non significant traits of modern crop varieties the usefulness of applying conjoint analysis over identifiable disaggregated groups of a sample was also evident future application of conjoint analysis to the design and targeting of modern crop varieties should carefully consider sample composition and size to permit the estimation of relevant sub models for desired farmer segments

farmers perceptions and adoption of new agricultural technology evidence from analysis in burkina faso and guinea west africa economists investigating consumer demand have accumulated considerable evidence showing that consumers generally have subjective preferences for characteristics of products and that their demand for products is significantly affected by their perceptions of the product s attributes however the role of farmers preferences in adoption decisions have received very limited attention in adoption studies conducted by economists this paper tests the hypothesis that farmers perceptions of technology characteristics significantly affect their adoption decisions the analysis conducted with tobit models of modern sorghum and rice varietal technologies in burkina faso and guinea respectively strongly supports this hypothesis our results provide a strong case for future adoption studies to expand the range of variables used away from the broad socio economic demographic and institutional factors to include farmers subjective perceptions of the characteristics of new agricultural technologies

the cost of simplifying preference models formulas are derived which estimate the accuracy of conjoint analysis in predicting preferences in a validation sample this accuracy turns out to depend on among other things which model of preference is used e g whether interactions are added whether partworth or linear functions are used i first show a paradoxical result that simpler models often yield higher predictive accuracy even when a more complex model is the true one the reason for this is that the additional parameters of the complex model are estimated with larger variance which tends to overwhelm the benefits of using the true model i then shift my criterion from predicting an individual s preferences to predicting market share which is of most interest to managers under this criterion my conclusions reverse and i show that a true model even when complex is much more likely to yield higher predictive accuracy than a simpler incorrect model this reverses some previous conclusions in marketing and confirms that finding the