Agarwal, R, Bajada, C, Brown, PJ & Green, R 2014, 'Managerial Practices in a High Cost Manufacturing Environment' in Roos, G & Kennedy, N (eds), Global Perspectives on Achieving Success in High and Low Cost Operating Environments, IGI Global, Hershey, PA, USA, pp. 268-289.
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This chapter explores the management strategies adopted by manufacturing firms operating in high versus low cost economies and investigates the reasons for differences in the management practice choices. The study reported in this chapter identifies a subset of countries that have either high or low labour costs, with USA, Sweden, and Japan being high, and India, China, and Brazil being low labour cost economies. The high labour cost manufacturing firms are found to have better management practices. In this chapter, the authors find that Australia and New Zealand manufacturing firms face relatively high labour cost but lag behind world best practice in management performance. The chapter concludes by highlighting the need for improvement in management capability for Australian and New Zealand manufacturing firms if they are to experience a reinvigoration of productivity, competitiveness, and long-term growth.
Green, R, Agarwal, R, Bajada, C & Brown, PJ 2014, 'Management Practices in Medium-Sized Enterprises: Insights from Benchmarking Australian Manufacturing Firms' in Kotey, B, Mazzarol, T, Clark, D, Foley, D & McKeown, T (eds), Meeting the Globalisation Challenge, Tilde University Press, Australia, pp. 84-105.
Landini, S, Gallegati, M, Stiglitz, JE, Li, X & Guilmi, CD 2014, 'Learning and Macro-Economic Dynamics' in Dieci, R, He, XZ & Hommes, C (eds), Nonlinear Economic Dynamics and Financial Modelling, Springer International Publishing, Germany, pp. 109-134.
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This chapter focuses on the relevance of the learning activity in an economy populated by many heterogeneous and interacting financially constrained firms. The economy is represented as an Agent-Based Model (ABM), which constitutes the data generating process (DGP) of the aggregate observables. Following the line of a companion chapter Landini et al. 2014, agents learn and make decisions, according to the notion of “social atom”. The artificial economy is a complex system whose evolution can be predicted inferentially. The analysis of the ABM-DGP aggregate observables is analysed by means of master equations and combinatorial master equations. Inference results confirm the relevance of learning providing insights in two main directions: (a) a new perspective for the micro-foundation of macro models; (b) an interpretation of the system phase transitions.
Atalay, K, Bakhtiar, F, Cheung, S & Slonim, R 2014, 'Savings and prize-linked savings accounts', Journal of Economic Behavior & Organization, vol. 107, pp. 86-106.
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Baddeley, M 2014, 'Rethinking the micro-foundations of macroeconomics: insights from behavioural economics', European Journal of Economics and Economic Policies: Intervention, vol. 11, no. 1, pp. 99-112.
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In the aftermath of the financial crisis, macroeconomics is at a crossroads: on the one hand, the analytically rigorous, assumption-based approaches based on dynamic stochastic general equilibrium (DSGE) models lack intuitive plausibility and predictive power; on the other hand, alternative models lack an underlying analytical core. Behavioural economics offers a potential solution if it can unify intuition and analytical rigour. The aim of this paper is to assess the extent to which macroeconomics can embed behavioural and psychological insights from behavioural microeconomic analysis in order to build a rigorous and intuitively plausible understanding of how economic systems, including the macroeconomy and the financial system, work.
Bajada, C & Trayler, R 2014, 'A fresh approach to indigenous business education', Education + Training, vol. 56, no. 7, pp. 613-634.
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Purpose – The social and economic disadvantages confronted by many Indigenous Australians are well known. A close look at Indigenous employment highlights that Indigenous Australians are substantially under-represented in the technical and professional areas of business and management. Closing the gap and improving the social and economic outcomes requires a greater focus in these areas. The purpose of this paper is to outline the design of an innovative undergraduate business degree for Indigenous students that: meets the targets set by government, produces the “T-shaped” graduate expected by business (disciplinary and interdisciplinary knowledge and soft skills), addresses the employment needs of the Indigenous community and provides the building blocks for Indigenous students to enrol in post-graduate business courses. Australians is well known. A close look at Indigenous employment highlights that Indigenous Australians are substantially under-represented in the technical and professional areas of business and management. Closing the gap and improving the social and economic outcomes requires a greater focus in these areas. This paper outlines the design of an innovative undergraduate business degree for Indigenous students that: (i) meets the targets set by government; (ii) produces the “T-shaped” graduate expected by business (disciplinary and interdisciplinary knowledge and soft skills); (iii) addresses the employment needs of the Indigenous community; and (iv) provides the building blocks for Indigenous students to enrol in post-graduate business courses. Design/methodology/approach – The development of the Bachelor of Business Administration (Indigenous) provided an opportunity to address ...
Chen, C, Zhang, J & Delaurentis, T 2014, 'Quality control in food supply chain management: An analytical model and case study of the adulterated milk incident in China', International Journal of Production Economics, vol. 152, pp. 188-199.
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Managing the food supply chain quality and risk has received significant attention in recent years especially in global emerging markets such as India and China. In this paper, we present a mutually supporting analytical model and exploratory case to study the managerial and policy issues related to quality control in food supply chain management with a focus on the Chinese dairy industry. Based on a general supply-chain model with acceptance sampling tests under uncertain product quality, we show that, depending on the sampling technology, the decentralized supply-chain structure may lead to a distortion in product quality. We also explore the effects of different pricing and regulatory options of vertical control on product quality and the distribution of the total supply-chain profit. In addition, we use an exploratory case study of the 2008 adulterated milk incident in China to investigate practical issues in ensuring product quality/safety in food supply chain management. Our analytical results and two comparative cases show that, instead of the common “poor quality” misperception of food products from global emerging markets, it is actually the poor vertical control strategy for managing the food supply chain quality and risk that caused the adulterated milk incident. A number of other important managerial and policy insights and implications regarding supply chain design, informational visibility, corporate social responsibility, and regulatory action in managing the global food supply chain quality and risk are also discussed.
Collins, J, Baer, B & Weber, EJ 2014, 'ECONOMIC GROWTH AND EVOLUTION: PARENTAL PREFERENCE FOR QUALITY AND QUANTITY OF OFFSPRING', Macroeconomic Dynamics, vol. 18, no. 8, pp. 1773-1796.
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This paper presents a quantitative analysis of the model developed by Galor and Moav [Galor, Oded and Omer Moav (2002) Natural selection and the origin of economic growth.Quarterly Journal of Economics117(4), 1133–1191] in which agents vary genetically in their preference for quality and quantity of children. The simulation produces a pattern of income and population growth that resembles the period of Malthusian stagnation before the Industrial Revolution and the take-off into a modern growth era. We also investigate the stability of the modern growth era as an absorbing state of the model under the introduction of a strongly quantity-preferring genotype. We show that, given the absence of a scale effect of population in the model, the economy can regress to a Malthusian state under this change in the initial distribution of genotypes.
Delavande, A 2014, 'Probabilistic Expectations in Developing Countries', Annual Review of Economics, vol. 6, no. 1, pp. 1-20.
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Many decisions are made under uncertainty, and individuals are likely to form subjective expectations about the probabilities of events that are relevant to their decisions. I review here a recent and growing literature that uses probabilistic expectations elicited from survey respondents in developing countries. I first present an illustrative model of one particular decision under uncertainty—the choice of a college—to exemplify the importance of subjective expectations data for identification purposes. I then review existing evidence emphasizing that it is feasible to elicit probabilities from survey respondents in low-literacy settings and describe common patterns of answers. Finally, I describe existing applications, many of which seek to assess how expectations influence behavior, in various domains, including health, education, agricultural production, and migration.
Delavande, A, Sampaio, M & Sood, N 2014, 'HIV-related social intolerance and risky sexual behavior in a high HIV prevalence environment', Social Science & Medicine, vol. 111, pp. 84-93.
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Although most countries state that fighting social intolerance against persons with HIV is part of their national HIV strategy, the impact of reducing intolerance on risky sexual behavior is largely unknown. In this paper, we estimate the effect of social intolerance against HIV+ persons on risky sexual behavior in rural Malawi using data from roughly 2000 respondents from the 2004 and 2006 waves of the Malawi Longitudinal Study of Families and Health (MLSFH). The effect of social intolerance on risky behavior is a priori ambiguous. On the one hand, higher social intolerance or stigma can lead people to disassociate from the stigmatized group and hence promote risky behavior. On the other hand, intolerance can be viewed as a social tax on being HIV+ and thus higher intolerance may reduce risky behavior. We find that a decrease in social intolerance is associated with a decrease in risky behavior, including fewer partners and a lower likelihood of having extra-marital relations. This effect is mainly driven by the impact of social intolerance on men. Overall the results suggests that reducing social intolerance might not only benefit the HIV positive but might also forestall the spread of HIV. © 2014 Elsevier Ltd.
Di Guilmi, C, He, X-Z & Li, K 2014, 'Herding, trend chasing and market volatility', JOURNAL OF ECONOMIC DYNAMICS & CONTROL, vol. 48, pp. 349-373.
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© 2014 Elsevier B.V. We introduce a heterogeneous agent asset pricing model in continuous-time to show that, although trend chasing, switching and herding all contribute to market volatility in price and return and to volatility clustering, their impacts are different. The fluctuations of the market price and return and the level of the significant autocorrelations (ACs) of the absolute and squared returns increase with the intensities of herding and trend chasing based on long time horizon. However an increase in switching intensity reduces the return volatility and in particular a low switching intensity reduces the price volatility and increases the level of the significant ACs, but the effect becomes opposite when the switching intensity is high. We also show that market noise plays a more important role than fundamental noise on the power-law behavior of returns.
Ehlers, L, Hafalir, IE, Yenmez, MB & Yildirim, MA 2014, 'School choice with controlled choice constraints: Hard bounds versus soft bounds', Journal of Economic Theory, vol. 153, pp. 648-683.
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© 2014 Elsevier Inc. Controlled choice over public schools attempts giving parents selection options while maintaining diversity of different student types. In practice, diversity constraints are often enforced by setting hard upper bounds and hard lower bounds for each student type. We demonstrate that, with hard bounds, there might not exist assignments that satisfy standard fairness and non-wastefulness properties; and only constrained non-wasteful assignments that are fair for same type students can be guaranteed to exist. We introduce the student exchange algorithm that finds a constrained efficient assignment among such assignments. To achieve fair (across all types) and non-wasteful assignments, we propose control constraints to be interpreted as soft bounds–flexible limits that regulate school priorities dynamically. In this setting, (i) the student-proposing deferred acceptance algorithm produces an assignment that Pareto dominates all other fair assignments while eliciting true preferences and (ii) the school-proposing deferred acceptance algorithm finds an assignment that minimizes violations of controlled choice constraints among fair assignments.
Fiorini, M & Keane, MP 2014, 'How the Allocation of Children’s Time Affects Cognitive and Noncognitive Development', Journal of Labor Economics, vol. 32, no. 4, pp. 787-836.
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The allocation of children’s time among different activities may be important for cognitive and noncognitive development. Here, we exploit time use diaries from the Longitudinal Study of Australian Children to study the effects of time allocation. By doing so, we characterize the trade-off between different activities to which a child is exposed. On the one hand, our results suggest that time spent in educational activities, particularly with parents, is the most productive input for cognitive skill development. On the other hand, noncognitive skills appear insensitive to alternative time allocations. Instead, they are greatly affected by the mother’s parenting style.
Goeree, JK & Zhang, J 2014, 'Communication & competition', Experimental Economics, vol. 17, no. 3, pp. 421-438.
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Charness and Dufwenberg (Am. Econ. Rev. 101(4):1211-1237, 2011) have recently demonstrated that cheap-talk communication raises efficiency in bilateral contracting situations with adverse selection. We replicate their main finding and extend their design to include competition between agents. We find that communication and competition act as 'substitutes:' communication raises efficiency in the absence of competition but not with competition, and competition raises efficiency without communication but lowers efficiency with communication. We briefly review some behavioral theories that have been proposed in this context and show that each can explain some but not all features of the observed data patterns. Our findings highlight the fragility of cheap-talk communication and may serve as a guide to refine existing behavioral theories. © 2013 Economic Science Association.
Goldbaum, D & Zwinkels, RCJ 2014, 'An empirical examination of heterogeneity and switching in foreign exchange markets', JOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION, vol. 107, pp. 667-684.
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In order to study the expectation formation of financial institutions in the foreign exchange market we develop and apply a recursive selection and estimation algorithm to a dataset of surveyed foreign exchange market expectations. Responses are classified into two groups and forecasting models are endogenously determined within the groups. Estimation results reveal that a fundamentalist-chartist model is capable of explaining a large portion of foreign exchange market expectations. Fundamentalists are found to have mean-reverting expectations whereas chartists have contrarian expectations. Allowing panelists to switch between models significantly improves the fit of the model, especially at the relatively shorter forecast horizons. We find that the fundamentalist model is increasingly used as the forecast horizon extends. Finally, results indicate that model choice is based on a combination of period-specific and individual-specific determinants. © 2013 Elsevier B.V. All rights reserved.
Hu, W, Xiao, J & Zhou, X 2014, 'Collusion or Competition? Interfirm Relationships in the Chinese Auto Industry', The Journal of Industrial Economics, vol. 62, no. 1, pp. 1-40.
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The Chinese passenger‐vehicle industry contains a large number of manufacturers. Some of them are members of big corporate groups centered around state owned enterprises. These corporate relationships may facilitate collusion. This paper applies the non‐nested hypothesis test methodology to data on passenger vehicles to identify whether price collusion exists within corporate groups or across groups. Our empirical results support the assumption of Bertrand Nash competition in the Chinese passenger‐vehicle industry: We find no evidence for within or cross‐group price collusion. Our policy experiments show that indigenous brands will gain market shares and profits if within‐group companies merge.
Lacetera, N, Macis, M & Slonim, R 2014, 'On the Importance of Unconditional Rewards for Blood Donations', Clinical Chemistry, vol. 60, no. 2, pp. 423-424.
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Lacetera, N, Macis, M & Slonim, R 2014, 'Rewarding Volunteers: A Field Experiment', Management Science, vol. 60, no. 5, pp. 1107-1129.
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We conducted a field experiment with the American Red Cross (ARC) to study the effects of economic incentives on volunteer activities. The experiment was designed to assess local and short-term effects as well as spatial and temporal substitution, heterogeneity, and spillovers. Subjects offered $5, $10, and $15 gift cards to give blood were more likely to donate and more so for the higher reward values. The incentives also led to spatial displacement and a short-term shift in the timing of donation activity, but they had no long-term effects. Many of the effects were also heterogeneous in the population. We also detected a spillover effect whereby informing some individuals of rewards through official ARC channels led others who were not officially informed to be more likely to donate. Thus, the effect of incentives on prosocial behavior includes not only the immediate local effects but also spatial displacement, social spillovers, and dramatic heterogeneity. We discuss the implications of these findings for organizations with activities that rely on volunteers for the supply of key inputs or products as well as for government agencies and public policy. This paper was accepted by Uri Gneezy, behavioral economics.
Lamla, MJ, Straub, M & Girsberger, EM 2014, 'On the economic impact of international sport events: microevidence from survey data at the EURO 2008', Applied Economics, vol. 46, no. 15, pp. 1693-1703.
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Using firm-level data for more than 700
Swiss hotels and restaurants, we evaluate the economic impact of the EURO
2008 soccer championship in Switzerland. Although aggregated macrodata do
not reveal any sizable economic impact, we report an overall negative
effect based on the surveyed companies. Notably the reported effects of
the individual firms are very heterogeneous. For instance, hotels in
cities benefitted from the tournament as they were able to raise prices
and thereby increase sales. Looking at the long-run impact only a small
fraction of companies do believe in a positive effect. Interestingly, this
outlook does not depend on realized sales, but on the guest structure.
Lilley, A & Slonim, R 2014, 'The price of warm glow', Journal of Public Economics, vol. 114, pp. 58-74.
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Lindo, JM & Siminski, P 2014, 'Should the legal age for buying alcohol be raised to 21 years?', Medical Journal of Australia, vol. 201, no. 10, pp. 571-571.
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Roger, G & Vasconcelos, L 2014, 'Platform Pricing Structure and Moral Hazard', Journal of Economics & Management Strategy, vol. 23, no. 3, pp. 527-547.
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We study pricing by a two‐sided platform when it faces moral hazard on the sellers' side. In doing so, we introduce an equilibrium notion of platform reputation in an infinite horizon model. We find that with transaction fees only, the platform cannot eliminate the loss of reputation induced by moral hazard. If registration fees can be levied, moral hazard can be overcome. The registration fee determines the participation threshold of sellers and extracts them, whereas (lower) transaction fees provide incentives for good behavior. This provides a motivation for platforms to use registration fees in addition to transaction fees.
Slonim, R, Wang, C & Garbarino, E 2014, 'The Market for Blood', Journal of Economic Perspectives, vol. 28, no. 2, pp. 177-196.
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Donating blood, “the gift of life,” is among the noblest activities and it is performed worldwide nearly 100 million times annually. The economic perspective presented here shows how the gift of life, albeit noble and often motivated by altruism, is heavily influenced by standard economic forces including supply and demand, economies of scale, and moral hazard. These forces, shaped by technological advances, have driven the evolution of blood donation markets from thin one-to-one “marriage markets,” in which each recipient needed a personal blood donor, to thick, impersonalized, diffuse markets. Today, imbalances between aggregate supply and demand are a major challenge in blood markets, including excess supply after disasters and insufficient supply at other times. These imbalances are not unexpected given that the blood market operates without market prices and with limited storage length (about six weeks) for whole blood. Yet shifting to a system of paying blood donors seems a practical impossibility given attitudes toward paying blood donors and concerns that a paid system could compromise blood safety. Nonetheless, we believe that an economic perspective offers promising directions to increase supply and improve the supply and demand balance even in the presence of volunteer supply and with the absence of market prices.
Stavrunova, O & Yerokhin, O 2014, 'Tax incentives and the demand for private health insurance', JOURNAL OF HEALTH ECONOMICS, vol. 34, pp. 121-130.
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We analyze the effect of an individual insurance mandate (Medicare Levy Surcharge) on the demand for private health insurance (PHI) in Australia. With administrative income tax return data, we show that the mandate has several distinct effects on taxpayers' behavior. First, despite the large tax penalty for not having PHI coverage relative to the cost of the cheapest eligible insurance policy, compliance with mandate is relatively low: the proportion of the population with PHI coverage increases by 6.5 percentage points (15.6%) at the income threshold where the tax penalty starts to apply. This effect is most pronounced for young taxpayers, while the middle aged seem to be least responsive to this specific tax incentive. Second, the discontinuous increase in the average tax rate at the income threshold created by the policy generates a strong incentive for tax avoidance which manifests itself through bunching in the taxable income distribution below the threshold. Finally, after imposing some plausible assumptions, we extrapolate the effect of the policy to other income levels and show that this policy has not had a significant impact on the overall demand for private health insurance in Australia.
Vasconcelos, L 2014, 'Contractual signaling, relationship-specific investment and exclusive agreements', Games and Economic Behavior, vol. 87, pp. 19-33.
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I analyze a model of hold-up with asymmetric information at the contracting stage. The asymmetry of information concerns the value of trade with external parties. I show that contractual signaling and efficiency of investment can conflict if only quantity is contractible. This conflict generates inefficient equilibria in terms of investment. Contracting on exclusivity in addition to quantity resolves the conflict and consequently eliminates the inefficiency of investment. © 2014 Elsevier Inc.
Xiao, J & Ju, H 2014, 'Market Equilibrium and the Environmental Effects of Tax Adjustments in China's Automobile Industry', The Review of Economics and Statistics, vol. 96, no. 2, pp. 306-317.
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Abstract This paper explores the effects of consumption-tax and fuel-tax adjustments in the Chinese automobile industry. Applying the model and simulation method of Berry, Levinson, and Pakes (1995), we conduct a comparative static analysis of equilibrium prices and sales, fuel consumption, and social welfare before and after tax adjustments. For the first time, we compare the progressivity of both taxes. Our empirical findings suggest that the fuel tax is effective in decreasing fuel consumption at the expense of social welfare, while the consumption tax does not significantly affect either fuel consumption or social welfare.
