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Postpurchase out-of-stock (PP-OOS) often happens in an online grocery context, where products appear to be available at the time a consumer places an order, but become OOS when the order is to be dispatched. This paper investigates two substitution policies that can mitigate negative responses: substitutions can match (i) on the dominant attribute and (ii) with a product from the consumers’ past purchase portfolio. According to data collected through two computer-simulated purchase experiments, involving more than 3,000 households and five product categories, matching the substitution on the dominant attribute increases acceptance, but this dominant attribute varies across\ud category differentiation level (flavor for horizontal differentiated categories like cereals or crips vs. brand for vertical differentiated categories like margarine or ketchup). Category differentiation also informs acceptance of national brand or private-label flavor substitutes, such that, same-flavor private label is prefered more in horizontal differentiated categories. Matching on the basis of previous purchases has positive effects for both category differentiation levels, and when combining both policies, the previous purchase matching effect grows stronger for same flavor, rather than same brand, matching. These detailed insights establish several key managerial implications for substitution policies in online grocery contexts.

We study whether carbon emissions affect the cross-section of US stock returns. We find that stocks of firms with higher total carbon dioxide emissions (and changes in emissions) earn higher returns, controlling for size, book-to-market, and other return predictors. We cannot explain this carbon premium through differences in unexpected profitability or other known risk factors. We also find that institutional investors implement exclusionary screening based on direct emission intensity (the ratio of total emissions to sales) in a few salient industries. Overall, our results are consistent with an interpretation that investors are already demanding compensation for their exposure to carbon emission risk.

On October 26, 2008, Porsche announced a largely unexpected domination plan for Volkswagen. The resulting short squeeze in Volkswagen’s stock briefly made it the most valuable listed company in the world. We argue that this was a manipulation designed to save Porsche from insolvency and the German laws against this kind of abuse were not effectively enforced. Using hand-collected data we provide the first rigorous academic study of the Porsche-VW squeeze and show that it significantly impeded market efficiency. Preventing manipulation is important because without efficient securities markets, the EU’s major project of the Capital Markets Union cannot be successful.

ispartof: JOURNAL OF MONETARY ECONOMICS vol:121 pages:15-18 status: published

In this paper we extend to a dynamic setting the robust Orlicz premia and Haezendonck–Goovaerts risk measures introduced in Bellini, Laeven and Rosazza Gianin (2018). We extensively analyze the properties of the resulting dynamic risk measures. Furthermore, we characterize dynamic Orlicz premia that are time-consistent, and establish some relations between the time-consistency properties of dynamic robust Orlicz premia and the corresponding dynamic robust Haezendonck–Goovaerts risk measures.

Managing an online corporate reputation (OCR) is increasingly strategic to improving the corporation's eco-nomic performance. What becomes crucial is to collect, process and analyse the comments expressed in the online medium, considering them as an intangible asset with an impact on tangible assets and consequences on business value. This research contributes to show the potential of the big-data environment, enhanced by the use of business intelligence tools and combined with panel econometric models. This is complemented by the elaboration of an Online Corporate Reputation Index (OCRI) to measure the economic corporate performance. The findings show that after applying the conceptual model to the banking sector, the experience associated with ethics is the intangible asset that has the most impact on the economic performance associated with each bank. In addition, the definition of an index helps to position one company in relation to another and to an entire economic sector. FCT - Foundation for Science and TechnologyPortuguese Foundation for Science and Technology [UIDB/04020/2020]; University of the Algarve, Portugal; University of Malaga, Spain info:eu-repo/semantics/publishedVersion

We compare the performances of a wide set of regression techniques and machine learning algorithms for predicting recovery rates on non-performing loans, using a private database from a European debt collection agency. We find that rule-based algorithms such as Cubist, boosted trees and random forests perform significantly better than other approaches. In addition to loan contract specificities, the predictors referring to the bank recovery process -- prior to the portfolio's sale to the debt collector -- are also proven to strongly enhance forecasting performances. These variables, derived from the time-series of contacts to defaulted clients and clients' reimbursements to the bank, help all algorithms to better identify debtors with different repayment ability and/or commitment, and in general with different recovery potential.

Objectives: The standard framework of economic evaluation of health programs, which is increasingly used for policy funding decisions, is insufficiently equipped to reflect the full range of health and economic benefits conferred by vaccines and thus undervalues vaccination. Methods: In 2019, a group of Belgian health economic and clinical experts, supported by 2 senior international vaccination experts (1 American, 1 Belgian), convened 4 roundtable meetings to highlight which particular value elements of vaccination remain neglected in economic evaluations. Results: They concluded that the standard economic evaluation framework fails to reflect the full value of vaccination with respect to prevention of complications linked to some vaccine-preventable diseases, health gains for caregivers, herd effects, changes in exposure to and distribution of serotypes, the effect on antimicrobial resistance, productivity gains for caregivers and patients, and the distributive implications of vaccination programs. Conclusions: Here, suggestions are made regarding how these shortcomings can be addressed in future economic evaluations of vaccines and how a more level playing field between vaccines and other health programs can be created., SCOPUS: ar.j, info:eu-repo/semantics/published

ispartof: JOURNAL OF BUSINESS RESEARCH vol:154 status: published

The promise of contingent convertible capital securities (CoCos) as a ”bail-in” solution has been the subject of considerable theoretical analysis and debate, but little is known about their effects in practice. We undertake the first comprehensive empirical analysis of bank CoCo issues, a market segment that comprises over 730 instruments totaling $521 billion. Four main findings emerge: (1) the propensity to issue a CoCo is higher for larger and better capitalized banks; (2) CoCo issues result in a statistically significant decline in issuers’ CDS spread, indicating that they generate risk-reduction benefits and lower costs of debt (this is especially true for CoCos that convert into equity, have mechanical triggers, and are classified as Additional Tier 1 instruments); (3) CoCos with only discretionary triggers do not have a significant impact on CDS spreads; and (4) CoCo issues have no statistically significant impact on stock prices, except for principal write-down CoCos with a high trigger level, which have a positive effect.

This article uses a survey amongst students at European universities to explore whether Russia's invasion of Ukraine has affected attitudes towards European integration. Some respondents completed the survey just before Russia's assault on 24 February 2022, and some did so just afterwards, thus delivering a quasi-experimental design situation, which we exploit. Our results suggest that the ominous news about the Russian attack increased the participants' interest in EU politics, consolidated their attachment to the EU and made them more mindful and appreciative of the benefits of deeper European integration. In effect, the war so close to the EU Eastern border provoked a rally around the supranational EU flag, with convergence of public opinion towards shared European values.

We report a study designed to determine the most efficient means of pursuing sonic seasoning in international marketing. For the first time, music chosen to trigger specific emotional responses was directly and cross-culturally compared with music chosen as crossmodally congruent with specific taste/flavors (the latter usually referred to as ‘sonic seasoning’). The effects triggered by ‘emotional’ music were more prominent than those triggered by ‘crossmodally-corresponding’ music. Specifically, chocolate was liked more, rated as sweeter, and the purchase intent was higher, when tasted while listening to music that conveyed positive, as compared to negative, emotion. By contrast, the same chocolate was mostly rated as tasting more bitter with the negative music, as compared to the positive music. Companies looking to use sonic seasoning in marketing strategies, should therefore principally aim at intelligently classifying music based on the likely emotions that they can trigger in their customers (at least when thinking globally).

The paper investigates the problem of optimal control of water distribution networks without storage capacity. Using mathematical optimization, we formulate and solve the problem as a non-convex NLP, in order to obtain optimal control curves for both variable speed pumps and pressure reducing valves of the network and thus propose a methodology for the automated control of real operational networks. We consider both single-objective and multi-objective problems with average zonal pressure, pump energy consumption and water treatment cost as objectives. Furthermore, we investigate global optimality bounds for the calculated solutions using global optimization techniques. The proposed approach is shown to outperform state-of-the-art global optimization solvers. The described procedure is demonstrated in a case study using a large size operational network.

We consider a procurement auction where the buying firm can manipulate the distribution of the uncertainty facing competing suppliers via reducing subjectivity in the scoring rule announced before the auction, and we examine the optimal choice of information revelation for the buyer. Specifically, we model a multi-attribute scoring auction in which the suppliers submit bids involving both price and non-price attributes and the buyer selects one supplier according to a weighted scoring system. Although the scoring rule is preannounced and the buyer commits to it during the bid evaluation, it contains elements that are subjective in nature and not precisely defined, so the suppliers still do not have full information about the exact score that will be awarded. It may be possible for the buyer to reduce the subjective component in the scoring rule by giving unusually detailed descriptions of what corresponds to specific scores. We demonstrate that it is beneficial for the buyer to limit the information revealed by retaining some subjective or imprecisely defined components in the announced scoring rule, so that the suppliers continue to be uncertain about their final scores. It is also shown that the buyer can gain more from this type of imprecision (i.e., releasing less information) if the suppliers are more different in terms of their costs to achieve a given quality level or other aspects of utility for the buyer. We consider both sealed bid and open auction formats.

We explore how large and small banks make funding decisions when system-wide bailouts are possible. We show that bank size, purely on strategic grounds, is a key determinant of banks’ leverage choices, even when bailout policies treat large and small banks symmetrically. Large banks leverage more than small banks because they internalize that their decisions directly affect bailout policies. In equilibrium, this effect is amplified by strategic spillovers to small banks since banks’ leverage choices are strategic complements. Overall, the presence of large banks makes bailouts more likely. The optimal regulation features size-dependent policies that disproportionately restrict large banks’ leverage.

This paper explicitly derives the optimal dynamic consumption and portfolio choice of an individual with prospect theory preferences. The individual is loss averse, endogenously updates his reference level over time, and distorts probabilities. We show that the optimal consumption strategy is rather insensitive to economic shocks. In particular, in case the individual sufficiently overweights unlikely unfavorable events, our model generates an endogenous floor on consumption. As a result, an individual with prospect theory preferences typically implements a (very) conservative portfolio strategy. We discuss implications of our results for the design of investment-linked annuity products.

This study reviews the presence of articles related to Central and Eastern Europe (CEE) in Web of Science (WOS). Bibliometric analysis first reveals the trends of CEE-related articles in the areas of international business (IB), management and economics up to 2016. The results show steady growth in absolute and relative numbers after 1990, intensifying since 2010. Second, we conduct topic research using network analysis with blockmodeling. We identify a network of topics and their interrelations over time and used them to periodise the CEE-related research in IB. The most-cited CEE-related IB articles and the main citation path are also presented. The analysis adds to the discussion of how the CEE region is explored in IB research, its contributions, impacts and the challenges facing regional research in the future. In this study, a methodology and framework for performing a comprehensive bibliometric analysis on regional IB research is applied.

Europe's forest provide multiple ecosystem services for societies, ranging from provisioning (e.g. wood) and regulating (e.g. climate mitigation and biodiversity) to cultural (e.g. recreation) services. In this paper, we assess the state and prospects of forest ecosystem services provision in Europe, introducing new data from the European collaborative research projects SINCERE, NOBEL and CLEARING HOUSE, and combining it with findings from the literature. We identify six challenges (1 an insufficient alignment of FES supply and demand, 2 lacking policy integration, 3 ambiguous and conflicting regulatory frameworks, 4 a lack of precise information on FES demand and provision, and innovations to align both, 5 an increasing pressure to adapt to climate change, and 6 a striking diversity constraining European level policy solutions) and three opportunities (1 increasingly heterogenous forest owner objectives potentially matching pluralistic societal demands, 2 diversifying forest enterprises levering innovations in regulating and cultural ecosystem services provision, and 3 the potential of forests to mitigate climate change). Subsequently, we introduce four distinct but complimentary policy pathways for European forest policy to better align forest ecosystem services provision and demand: 1 Better monitoring of FES supply and demand, 2 Enhanced policy integration, 3 Payments for ecosystem services, and 4 Bottom-up participation and learning among ecosystem services innovators. We conclude by emphasizing the momentum that the EU Green Deal unfolds for a future European forest policy to incentivise the provision of multiple forest ecosystem services.

The emerging trend of organic food consumption is manifested by the opening of organic food restaurants in the hospitality sector. In this respect, drawing on cue utilization theory, stimulus-organism-response (S–O-R) theory, equity theory and the principle of dual entitlement, the aim of the current study is to investigate the role of perceived food quality (PFQ), price fairness (PF), perceived value (PV) and customer satisfaction (CS) on customers' revisit and word-of-mouth (WOM) intentions towards organic food restaurants. For this purpose, the empirical data were collected by means of a written survey instrument from customers who had previously visited an organic food restaurant. The hypotheses were analyzed with maximum-likelihood estimation. The findings revealed that PFQ positively influences PF and PV. The significant positive relationships were also confirmed between PF, PV, and CS. The findings were also supported that consumers’ behavioral intentions are influenced by CS. Furthermore, CS acts as a partial mediator among PFQ, PF, PV and behavioral intentions. Some significant theoretical and managerial insights are also presented.

This paper is pedagogic in nature, meant to provide researchers a single reference for learning how to apply the emerging literature on differential variational inequalities to the study of dynamic traffic assignment problems that are Cournot-like noncooperative games. The paper is presented in a style that makes it accessible to the widest possible audience. In particular, we apply the theory of differential variational inequalities (DVIs) to the dynamic user equilibrium (DUE) problem. We first show that there is a variational inequality whose necessary conditions describe a DUE. We restate the flow conservation constraint associated with each origin-destination pair as a first-order two-point boundary value problem, thereby leading to a DVI representation of DUE; then we employ Pontryagin-type necessary conditions to show that any DVI solution is a DUE. We also show that the DVI formulation leads directly to a fixed-point algorithm. We explain the fixed-point algorithm by showing the calculations intrinsic to each of its steps when applied to simple examples.

This paper analyzes the relation between different orders of the Lasserre hierarchy for polynomial optimization (POP). Although for some cases solving the semidefinite programming relaxation corresponding to the first order of the hierarchy is enough to solve the underlying POP, other problems require sequentially solving the second or higher orders until a solution is found. For these cases, and assuming that the lower order semidefinite programming relaxation has been solved, we develop prolongation operators that exploit the solutions already calculated to find initial approximations for the solution of the higher order relaxation. We can prove feasibility in the higher order of the hierarchy of the points obtained using the operators, as well as convergence to the optimal as the relaxation order increases. Furthermore, the operators are simple and inexpensive for problems where the projection over the feasible set is “easy” to calculate (for example integer {0, 1} and { − 1 , 1 } POPs). Our numerical experiments show that it is possible to extract useful information for real applications using the prolongation operators. In particular, we illustrate how the operators can be used to increase the efficiency of an infeasible interior point method by using them as an initial point. We use this technique to solve quadratic integer {0, 1} problems, as well as MAX-CUT and integer partition problems.

Many digital service providers have adopted gamification to promote customer engagement. Critical questions, however, remain about the most effective way to enhance customer engagement and increase sales by applying gamification. With a research design that combines qualitative and quantitative methods, including the use of objective sales data from a large field study and replication of the findings across different contexts, this study explores how gamification fosters customer engagement. Both field study results and a simulation study reveal gamification principles (i.e., social interaction, sense of control, goals, progress tracking, rewards, and prompts) that promote hope and consequently increase customer engagement and digital sales. Furthermore, we find that hope is more strongly associated with customer engagement than the psychological condition of compulsion, which even exerts a negative impact. This research thus explores how gamification creates value for customers and provides actionable insights for managers to foster hope through gamification as opposed to get customers hooked.

© 2019 Elsevier Ltd This paper introduces a steady-state, fixed (or inelastic) demand equilibrium model with explicit link-exit capacities, explicit bottleneck or queueing delays and explicit bounds on queue storage capacities. The model is a quasi-dynamic model. The link model at the heart of this quasi-dynamic equilibrium model is a spatial queueing model, which takes account of the space taken up by queues both when there is no blocking back and also when there is blocking back. The paper shows that if this quasi-dynamic model is utilised then for any feasible demand there is an equilibrium solution, provided (i) queue storage capacities are large or (ii) prices are used to help impose capacity restrictions; the prices either remove queueing delays entirely or just reduce spatial queues sufficiently to ensure that blocking back does not occur at equilibrium. Similar results, but now involving the P 0 control policy (introduced in Smith (1979a, 1987)) and two new variations of this policy (i.e., the spatial P 0 control policy, and the biased spatial P 0 control policy) are obtained. In these results, the control policies allow green-times to vary in response to prices as well as spatial queueing delays. These three policies are also tested on a small simple network. In these tests, the biased spatial version of P 0 is much the best in reducing equilibrium delays (on this simple network). The paper further illustrates how the spatial queueing model works on simple networks with different merge models; it is demonstrated that equilibrium may be prevented by certain (fixed ratio) merge models. It is also shown in this case that equilibrium may be imposed on just the controlled area itself by a variety of (merge model, gating strategy) combinations. Opportunities for developing such combined gating and merging control strategies are finally discussed. ispartof: TRANSPORTATION RESEARCH PART B-METHODOLOGICAL vol:122 pages:140-166 status: published

© 2019 The Society for Policy Modeling This paper describes and analyzes EU Member States’ progress towards the national EU2020 targets. To do so, this paper constructs a geometric composite index with Benefit-of-the-Doubt weights as a measure of a Member State's overall performance on the EU2020 headline indicators. A tripartite decomposition of Member State performance change is presented to explain and analyze performance change of the EU-region and the individual EU Member States during the period 2008–2014. The results reveal that all Member States are in general making progress towards their national targets. Member States generally moved forward in the areas of R&D, environmental and educational policy and moved backwards in terms of employment and poverty and social inclusion. As to the realization of the national targets, the majority of the Member States are still mostly lagging on R&D and social inclusion and poverty reduction. ispartof: JOURNAL OF POLICY MODELING vol:41 issue:2 pages:255-272 status: published

Collaboration in large-scale projects introduces challenges involving both coordination (the ability to collaborate) as well as cooperation (the willingness to do so). Existing research has shown how modular designs can improve coordination by locating interdependencies within rather than between different modules. Based on an in-depth case study of collaboration in a large-scale infrastructure project, our study highlights an effect of modularity on collaboration that previously has been overlooked. Specifically, we show that while modular designs may help overcome coordination challenges by reducing interdependencies between modules, they can in turn hamper collaboration by emphasizing specialization within modules. Therefore, though existing work typically perceives modularity and integration as opposites, we clarify how they can also act as complements. In particular, we show how firms need to complement modular designs with integrating practices that stimulate cooperation. Overall, we contribute to the literature on collaboration and modularity by explaining when and how organizations can combine modularity and integration.

Building on the social network and strategic entrepreneurship literature, we investigate the overall relationship between returnee entrepreneurs’ networks in different periods and locations, domestic resource acquisitions and firm performance. While the labor mobility literature emphasizes the “gone but not forgotten” networks in the prior location of migrants, other studies argue that returnees suffer from a lack of local networks. Our findings show that returnee entrepreneurs are different in the extent of their home country embeddedness while they are overseas, which indicates different degrees of enduring networks in the home countries. The effect of home country embeddedness improves the performance of returnee entrepreneurship via domestic resource acquisition, and this effect could be substituted by pre-overseas local ties and the presence of local top management team (TMT) members. This study extends returnee research by shedding light on the importance of network maintenance in determining whether the home country’s network endures or decays and by highlighting the interactions of ties in the different periods of pre-overseas, during overseas, and after return.

Identifying the effects of “flights to safety” on asset prices using pure time-series methods is difficult because crises are infrequent. We develop a new cross-sectional identification approach, motivated by the insight that investors may differ in their “preferred habitats” within a broad asset class. We apply the method to the question of whether foreign capital is responsible for residential real estate price movements in global cities such as London and New York, especially during crises. Using large data sets of housing transactions, we find that foreign risk strongly affects London house prices. The effects are long-lasting, and are associated with both safe-haven effects and immigration.

© 2018 A large number of empirical studies have investigated the link between social status and happiness; however, in observational data, identification challenges remain severe. This study exploits the fact that, in India, people are assigned a caste from birth. Two similar surveys of household heads (each with N=1000) in rural Punjab and Andhra Pradesh show an increasing pattern of economic welfare with caste hierarchy. This illustrates that, in the rural regions under study, one's caste is still an important determinant of opportunities in life. Subsequently, we find that the castes at the top are clearly more satisfied than the lower and middle castes. This result, which is in line with the predictions of all major social comparison theories, is robust across the two case studies. The pattern across low and middle castes, however, is less clear, reflecting the complex theoretical relationship between being of middle rank, on the one hand, and behaviour, aspirations, and well-being, on the other hand. In the Punjab sample, we even find a significant U-shaped pattern, with the middle castes being the least happy. Interestingly, these patterns resemble those found for Olympic medallists (first documented by Medvec et al., 1995). ispartof: JOURNAL OF BEHAVIORAL AND EXPERIMENTAL ECONOMICS vol:77 pages:62-71 status: published

We set up a stylized oligopoly model of uncertain product innovation to analyze the effects of a merger on innovation incentives and on consumer surplus. The model incorporates two competitive channels for merger effects: the “price coordination” channel and the internalization of the “innovation externality”. We solve the model numerically and find that price coordination between the two products of the merged firm tends to stimulate innovation, while internalization of the innovation externality depresses it. The latter effect is stronger in our simulations and, as a result, the merger leads to lower innovation incentives for the merged entity, absent cost efficiencies and knowledge spillovers. In our numerical analysis both overall innovation and consumer welfare fall after a merger.

© 2018 The Author(s) We perform a large-scale empirical study in order to compare the forecasting performances of single-regime and Markov-switching GARCH (MSGARCH) models from a risk management perspective. We find that MSGARCH models yield more accurate Value-at-Risk, expected shortfall, and left-tail distribution forecasts than their single-regime counterparts for daily, weekly, and ten-day equity log-returns. Also, our results indicate that accounting for parameter uncertainty improves the left-tail predictions, independently of the inclusion of the Markov-switching mechanism. ispartof: INTERNATIONAL JOURNAL OF FORECASTING vol:34 issue:4 pages:733-747 status: published

We investigate how UK bank business lending responded to the simultaneous use of quantitative easing, leverage ratio capital requirements, and government COVID lending support schemes. We find no evidence that the Brexit wave increased lending to nonfinancial businesses, compared to the previous waves, except for QE-banks subject to the UK leverage ratio, suggesting that the ratio incentivised QE-banks to lend to businesses. The government schemes helped expand lending especially to SMEs post the COVID wave, indicating that complementing QE with other credit easing programmes can reinforce its impact on lending to the real economy. During COVID-stress, changes to the UK leverage ratio supported better market-making in securities markets, and additional QE liquidity boosted stronger repo market intermediation.

A substantial acceleration in improving nutrition is required to eradicate malnutrition by 2030. Income growth and increased labor productivity are key to realize this, but some income sources and employment sectors might be more effective in reducing malnutrition than others. We investigate the link between income and nutrition in rural Tanzania, using two rounds of the Tanzania National Panel Survey. We use both monetary and non-monetary measures of food consumption, and analyze besides caloric intake also the intake of important micronutrients, such as iron, zinc and vitamin A, and nutrient deficiencies. We compare income by employment sectors and by gender of the earner. We find that income growth is important for improving household nutrition, both in terms of food quantity and quality. We find that a higher share of income from agricultural self-employment as well as jointly earned income is strongly correlated with caloric and micronutrient intake across households. We do not find evidence to support the assertion that a higher share of income earned solely by women is associated with improved nutrition. Our results imply that closing the labor productivity gap between agriculture and rural non-farm sectors, and raising rural incomes from within agriculture, is a more effective strategy to improve nutrition in rural Tanzania than diversifying income away from agriculture.

We revisit the fragility of the Eurozone which arises because the sovereigns in the Eurozone issue debt in a currency (the euro) over which they have no control. This prevents them from giving a guarantee to bond holders that they will always be repaid at maturity. This fragility can trigger self-fulfilling liquidity crises, such as those that erupted during 2010-12. We document how this fragility has evolved over time and how it has been affected by the reforms in the governance of the Eurozone since the sovereign debt crisis of 2010-12. This will allow us to analyze the most recent episode that started with the emergence of the pandemic in 2020. The latter has, up to now, not lead to a new debt crisis in the Eurozone, despite the fact that the shock produced by the pandemic was at least as large as the financial crisis of 2007-08. We document how during the pandemic the new governance of the Eurozone prevented this shock from leading to a new sovereign debt crisis. We end with a discussion of the prospects for the future and ask the question of whether the fragility of the Eurozone is a thing of the past.

Although e-shopping is increasingly adopted, it remains unclear (1) how e-shopping varies geographically, and (2) how this relates to physical and virtual accessibility. This paper presents a combined study of both issues focusing on the case of China, arguably one of the emerging e-shopping hotspots. Drawing on Alibaba's Online Shopping Index, we use a general spatial model (SAC) to explore the role of virtual and physical accessibility in the spatial distribution of e-shopping across 276 prefecture-level cities in China. The results suggest that both physical accessibility (proxy-ed by the relative number of shopping malls and the relative number of buses) and virtual accessibility (proxy-ed by the percentage of broadband subscribers and the relative number of delivery points) increase e-shopping, with both effects complementing each other. We discuss how findings contribute to our understanding of the geography of e-shopping, and outline implications for policymakers and e-retailers alike.

We consider a stochastic game between a trader and a central bank in a target zone market with a lower currency peg. This currency peg is maintained by the central bank through the generation of permanent price impact, thereby aggregating an ever increasing risky position in foreign reserves. We describe this situation mathematically by means of two coupled singular control problems, where the common singularity arises from a local time along a random curve. Our first result identifies a certain local time as that central bank strategy for which this risk position is minimized. We then consider the worst-case situation the central bank may face by identifying that strategy of the strategic investor that maximizes the expected inventory of the central bank under a cost criterion, thus establishing a Stackelberg equilibrium in our model., 16 pages, 5 figures

In this paper, we gauge the degree of interconnectedness and quantify the linkages between global and other systemically important institutions, and the global financial system. We document that the two groups and the financial system become more interconnected during the global financial crisis when linkages across groups grow. In contrast, during tranquil times linkages within groups prevail. Global systemically important banks (G-SIBs) contribute most to system-wide distress but are also most exposed. There are more links coming from G-SIBs to other systemically important institutions (O-SIIs) than the other way around, confirming the role of G-SIBs as major risk transmitters in the financial system. The two groups and the global financial system tend to co-vary for periods up to 60 days Prior to their official designation as G-SIBs or O-SIIs, the prevalent news sentiment about these institutions (we measure with a textual analysis) was negative. Importantly, the systemic importance and exposure of G-SIBs and O-SIIs is perceived differently by the Financial Stability Board (FSB) and the European Banking Authority (EBA).

To shed light on the effects of individual choice on pension wealth, we study a policy change to the management fees of pension funds implemented by Peru's government in 2013. The reform established a new balance fee as a default option; this fee is calculated as a percentage of the pension balance. Each individual had the initial option of keeping the previous management fee, a load factor fee calculated as a percentage of the individual's salary. We use administrative data to simulate pension balances based on the individual's choice of fee and the corresponding counterfactual. Our results indicate that the reform has been potentially adverse to 63.1 percent of individuals, of whom 41.4 percent were assigned to the default option and 21.7 percent voluntarily chose the load fee. These results reflect both the potentially negative unintended effects of the policy and an alarming lack of financial literacy among citizens. We also detect heterogeneity in the intensity of the losses and gains due to the reform, which caused greater losses than gains. In particular, younger and poorer individuals, as well as those automatically assigned to the balance fee, experienced higher losses. Moreover, the new fee scheme is also associated with increasing inequality between individuals' pension wealth.

In a growing body of literature on categorization in organization theory, researchers are exploring the stabilizing role of categories and the processes by which they emerge. Because the literature focuses mainly on categories that emerge successfully or are already established, we know much less about why categories fall out of use or fail to emerge. Rather than viewing declining usage or failed emergence as different processes, we argue that they are two aspects of the single problem of understanding what makes a category viable. Focusing on the coherence of the items included in a category and how distinct they are compared to items in other categories, we develop the concept of category viability and argue that viable categories are those found useful for sensemaking, analysis, and coordination because they balance both coherence and distinctiveness to fall within what we call a zone of viability. To illustrate how category viability helps explain both change and continuity of categories, we also offer a framework to describe the process by which categories move in or out of the zone of viability with deliberate actions or with shifting circumstances that change their members or positions relative to other categories.

© 2018 Elsevier B.V. Several firms preannounce their price increases with the expectation that such announcements will be evaluated favorably by investors. However, little is known about the actual effect they have on shareholder value. Accordingly, the authors present the first systematic empirical examination of investors’ evaluations of 274 price-increase preannouncements (PIPs). Results show that whereas the average increase in abnormal returns following a PIP is 0.51%, almost 41% of the PIPs result in negative abnormal returns. To explore this heterogeneity, the authors propose a conceptual framework that focuses on three key pieces of information that investors can use when evaluating a PIP: information on the nature (time to implementation and magnitude) of the preannounced price increase, the stated attribution for the preannounced price increase (demand and/or cost based), and information on prior PIP occurrences by the firm and its competitors. Results indicate that PIPs with greater time to implementation, higher own precedence and greater competitive precedence result in lower abnormal returns, while PIPs with higher magnitude and PIPs with an explicit demand attribution result in greater abnormal returns. ispartof: INTERNATIONAL JOURNAL OF RESEARCH IN MARKETING vol:35 issue:3 pages:359-377 status: published

Shifting to a low-carbon electricity future requires up-to-date information on the energetic, environmental and socio-economic performance of technologies. Here, we present a novel comprehensive bottom-up process chain framework that is applied to 19 electricity generation technologies, consistently incorporating 12 life-cycle phases from extraction to decommissioning. For each life-cycle phase of each technology the following 4 key metrics were assessed: material consumption, energy return ratios, job requirements and greenhouse gas emissions. We also calculate a novel global electricity to grid average for these metrics and present a metric variability analysis by altering transport distance, load factors, efficiency, and fuel density per technology. This work quantitatively supports model-to-policy frameworks that drive technology selection and investment based on energetic-economic viability, job creation and carbon emission reduction of technologies. The results suggest energetic-economic infeasibility of electricity generation networks with substantial shares of: i) liquefied natural gas transport, ii) long distance transport based hard and brown coal and pipeline natural gas, and iii) low-load factor solar-photovoltaic, concentrated solar power, onshore and offshore wind. Direct sector jobs can be expected to double in renewable-majority scenarios. All combustion-powered technologies without natural (biomass) or artificial carbon capture (fossil fuels) are not compatible with a low carbon electricity generation future.

It is well established that people are more likely to act in a self-serving manner towards those dissimilar to themselves. Less well understood is how people actively shape perceptions of dissimilarity towards victims in order to minimize their own discomfort. In this paper, we introduce the concept of Motivated Dissimilarity Construal (MDC) – the act of purposely and proactively distancing oneself psychologically from the victim of one’s own self-serving behavior. In doing so, we challenge the notion that potential victims of self-serving acts are perceived objectively and independently of a decision maker’s motivation, as traditional rationalist models of decision making might suggest. Across three experiments, we demonstrate how, why and when MDC is likely to occur, and discuss implications of these findings for theory and research on behavioral ethics and interpersonal similarity.

The purpose of this paper is to investigate, using both theoretical and numerical analysis, the impact of agglomeration externalities on short-run policy decisions in public transport, i.e. socially optimal pricing, frequency setting, and subsidisation. We develop a simple two-mode model in which commuters can opt for car or public transport use; car use leads to congestion, and public transport is subject to crowding. Allowing for agglomeration externalities, we show the following results. First, if car use is correctly priced for congestion, agglomeration benefits imply substantially lower public transport fares and higher frequencies. They neutralise to some extent the pressure to increase fares to correct the crowding externality. Second, as a consequence, agglomeration benefits justify low cost recovery ratios in public transport. Assuming an agglomeration elasticity of 1.04, a value well within the range of reported elasticities, numerical implementation of the model finds that cost-recovery ratios are 35.8% lower than in the absence of the productivity externality. Third, interestingly, the effect of agglomeration benefits on fares and frequency is much smaller if road use is exogenously under-priced. In this case, any modal shift induced by lower public transport fares has opposing agglomeration effects on the two modes, since agglomeration benefits are not mode-specific.

© 2017 Elsevier B.V. The environmental efficiency of 96 Tuscan (Italian) wastewater treatment plants (WWTPs) is investigated taking into account the quality of the outgoing water in terms of pollutant. In this regard, the presence of the residual nitrogen in the outgoing treated water is considered as undesirable output. The efficiency analysis is performed by applying a novel integrated Analytic Hierarchy Process/Non-radial Directional Distance Function (AHP/NDDF) approach, combining the benefits of the two techniques. Similarly to the standard NDDF approach, the suggested model allows to include simultaneously inputs, desirable and undesirable outputs and not to overestimate the efficiency scores. At the same time, the AHP inclusion gives the possibility to directly take into account the decision maker preferences in the weighting system and to encompass some existing directional distance function models as special cases. The obtained results are then used to identify the efficiency explanatory variables: among them, the facilities’ capacity, the percentage of wastewater discharged by the industrial and agricultural activities and the level of compliance with the pollutant concentration threshold set by the legislator have a significant impact on the WWTP performance. The integrated performance assessment allows the water authorities to combine the WWTP efficiency together with the environmental sustainability issue and it has the potential for further promising environmental inspections. ispartof: EUROPEAN JOURNAL OF OPERATIONAL RESEARCH vol:269 issue:1 pages:24-34 status: published

We set up a stylized oligopoly model of uncertain product innovation to analyze the effects of a merger on innovation incentives and on consumer surplus. The model incorporates two competitive channels for merger effects: the “price coordination” channel and the internalization of the “innovation externality”. We solve the model numerically and find that price coordination between the two products of the merged firm tends to stimulate innovation, while internalization of the innovation externality depresses it. The latter effect is stronger in our simulations and, as a result, the merger leads to lower innovation incentives for the merged entity, absent cost efficiencies and knowledge spillovers. In our numerical analysis both overall innovation and consumer welfare fall after a merger.

© 2017 Elsevier B.V. We study the Net Present Value (NPV) of a project with multiple stages that are executed in sequence. A cash flow (positive or negative) may be incurred at the start of each stage, and a payoff is obtained at the end of the project. The duration of a stage is a random variable with a general distribution function. For such projects, we obtain exact, closed-form expressions for the moments of the NPV, and develop a highly accurate closed-form approximation of the NPV distribution itself. In addition, we show that the optimal sequence of stages (that maximizes the expected NPV) can be obtained efficiently, and demonstrate that the problem of finding this optimal sequence is equivalent to the least cost fault detection problem. We also illustrate how our results can be applied to a general project scheduling problem where stages are not necessarily executed in series. Lastly, we prove two limit theorems that allow to approximate the NPV distribution. Our work has direct applications in the fields of project selection, project portfolio management, and project valuation. ispartof: EUROPEAN JOURNAL OF OPERATIONAL RESEARCH vol:267 issue:3 pages:835-848 status: published

© 2018 Elsevier B.V. The behavioural model of De Grauwe and Macchiarelli (2015) is extended to include financial frictions on the (aggregate) supply side. The result is a tight and sustained feedback loop between animal spirits on one hand, and supply of credit, capital purchase and production on the other. During phases of optimism, credit is abundant, access to production capital is easy, the cash-in-advance constraint is lax, risks are undervalued, and production is booming. Upon reversal in market sentiment, the contraction is quick and deep. Moreover, the model is capable of replicating the stylized fact of a long and sustained simultaneous growth in credit, production and asset prices observed in the US since mid1990's. Lastly, the behavioural model does a decent job in matching US data including multiple supply-side relations including capital-firm credit and inflation-interest rate. ispartof: JOURNAL OF ECONOMIC DYNAMICS & CONTROL vol:91 pages:206-236 status: published

We consider a procurement auction, where each supplier has private costs and submits a stepped supply function. We solve for a Bayesian Nash equilibrium and show that the equilibrium has a price instability in the sense that a minor change in a supplier’s cost sometimes result in a major change in the market price. In wholesale electricity markets, we predict that the bid price of the most expensive production unit can change by 1-10% due to price instability. The price instability is reduced when suppliers have more steps in their supply functions for a given production technology. In the limit, as the number of steps increases and the cost uncertainty decreases, the Bayesian equilibrium converges to a pure-strategy NE without price instability, the Supply Function Equilibrium (SFE).

Major cities like London, New York, and Tokyo are served by several airports, effectively creating a Multi-Airport System (MAS), or Metroplex. The operations of individual Metroplex airports are highly interdependent, rendering their efficient management rather difficult. This paper proposes a framework for the design of dynamic arrival and departure routes in MAS Terminal Maneuvering Areas, which fundamentally changes the operation in MAS airspaces for much improved efficiency when compared to the current situation. The framework consists of three components. The first presents a new procedure for characterizing dynamic arrival and departure routes based on the spatio-temporal distributions of flights. The second component is a novel Analytic Hierarchy Process (AHP) model for the prioritization of the dynamic routes, which takes into account a set of quantitative and qualitative attributes important for MAS operations. The third component is a priority-based method for the positioning of terminal waypoints as well as the design of three-dimensional, conflict-free terminal routes. Such a method accounts for the AHP-derived priorities while satisfying the minimal separation and aircraft maneuverability constraints. The developed framework is applied to a case study of the New York Metroplex, using aircraft trajectories during a heavy traffic period on typical day of operation in the New York Terminal Control Area in November 2011. The proposed framework is quantitatively assessed using the AirTOp fast-time simulation model. The results suggest significant improvements of the new design over the existing one, as measured by several key performance indicators such as travel distance, travel time, fuel burn, and controller workload. The operational feasibility of the framework is further validated qualitatively by subject matter experts from the Port Authority of New York and New Jersey, the operator of the New York Metroplex.

This paper investigates multi-period public transport supply, i.e. networks in which capacity cannot be differentiated between links and time periods facing independent but nonidentical demand conditions. This setting is particularly relevant in public transport, as earlier findings on multi-period road supply cannot be applied when the user cost function, defined as the sum of waiting time and crowding costs, is nonhomogeneous. The presence of temporal, spatial and directional demand imbalances is unavoidable in a public transport network. It is not obvious, however, how the magnitude of demand imbalances may affect its economic and financial performance. We show in a simple back-haul setting with elastic demand, controlling for total willingness to pay in the network, that asymmetries in market size reduce the attainable social surplus of a service, while variety in maximum willingness to pay leads to higher aggregate social surplus and lower subsidy under efficient pricing. The analysis of multi-period supply sheds light on the relationship between urban structure, daily activity patterns, and public transport performance.

While some organizations swear by the benefits of transparency and are eager to know how to implement it, many managers are still reluctant or even afraid to use it. Our research reveals that only a few innovative companies have taken steps to leverage a potentially useful form of transparency: the provision of accessible and objective information to customers (e.g., by sharing unbiased benchmark data, publishing unfiltered customer comments, or providing candid product reviews that may praise but also criticize the company’s products). Our study also shows that that many companies remain wary and view greater calls for transparency as a challenge to be managed rather than an opportunity to be traded upon. This is partly due to limited research into the performance benefits of giving customers access to objective information, and lack of practical guidelines on how to actually implement it. The current study addresses these shortcomings: first, by investigating whether performance transparency leads to customer outcomes that can be profitable for an organization; and second, by analyzing the characteristics of successful transparency initiatives in a wide range of industries. The research shows that customers exhibit more trust and are willing to pay a premium to deal with transparent businesses. Also, it uncovers seven effective approaches to implementing transparency. The key contributions of the study are therefore the provision of convincing empirical evidence about the benefits of performance transparency and ways in which management may implement it successfully.