Search results for "microeconomics"
showing 10 items of 442 documents
Transaction Costs and Returns to a Trading Strategy
2017
This chapter starts with a review of transaction costs in capital markets. Then it demonstrates how to simulate the returns to a moving average trading strategy in the presence of transaction costs. The following two cases are considered when a trading indicator generates a sell signal: case one where the trader switches to cash, and case two where the trader alternatively sells short a financial asset.
Efficient analytic approximation of the optimal hedging strategy for a European call option with transaction costs
2006
One of the most successful approaches to option hedging with transaction costs is the utility-based approach, pioneered by Hodges and Neuberger [Rev. Futures Markets, 1989, 8, 222–239]. Judging against the best possible trade-off between the risk and the costs of a hedging strategy, this approach seems to achieve excellent empirical performance. However, this approach has one major drawback that prevents the broad application of this approach in practice: the lack of a closed-form solution. We overcome this drawback by presenting a simple yet efficient analytic approximation of the solution. We provide an empirical testing of our approximation strategy against the asymptotic and some other …
A reconsideration of the link between vertical externality and managerial incentives
2018
Previous research revealed that the strategic role of delegation contracts disappears if two quantity†setting firms outsource input production to a monopolistic supplier. I show that this role is restored if the assumption of a downstream duopoly is relaxed. Thus, delegation contracts allow downstream profit†maximizing owners to commit their firms to a behavior that differs from their preferences. This behavior varies nonmonotonically with the number of firms in the downstream market. Corresponding deviations from profit maximization are larger if the upstream monopolist makes a price precommitment. But little to no deviation occurs if the number of firms is large.
Agglomeration without trade: how non-traded goods shape the space-economy
2004
Abstract We develop a spatial general equilibrium model in which the absence of interregional trade is an endogenous outcome. Extending the model developed by Ottaviano, Tabuchi, and Thisse (Int. Econ. Rev. 43 (2002) 409), we show that equilibria without trade differ significantly from those obtained in the presence of trade, which suggests that the presence of non-traded goods has a significant impact on spatial structures. Somewhat surprisingly, equilibrium structures without trade are richer than those with trade because partial agglomeration becomes a feasible outcome. Equilibria now depend on the ratio of mobile to immobile factors and an increase in that ratio triggers a process of sp…
The whip and the Bible : punishment versus internalization
2021
First published online: 27 August 2021 A variety of experimental and empirical research indicate that prosocial behavior is important for economic success. There are two sources of prosocial behavior: incentives and preferences. The latter, the willingness of individuals to “do their bit” for the group, we refer to as internalization, because we view it as something that a group can influence by appropriate investment. This implies that there is a trade-off between using incentives and internalization to encourage prosocial behavior. By examining this trade-off we shed light on the connection between social norms observed inside the laboratory and those observed outside in the field. For ex…
Development and validation of the Perceived Investment Value (PIV) scale
2013
This study aims to develop a complementary and more comprehensive measurement to assess the nature of investment value affecting consumers’ investment behavior. Recent research suggests that consumers may desire and obtain certain outcomes from investments that have not been anticipated in mainstream finance and economics literature. These benefits might be hedonistic or altruistic, self-expressive or emotional and experiential. Yet, while an increasing amount of attention has been paid to this topic, little effort has been made to develop an appropriate measurement scale for the subjective consumer perceptions of investments. To address this gap in the literature, this study introduces the…
The Multi-Faceted Concept of Transparency
2014
Transparency has become a catchword and in the economic-political debate is often seen as a universal remedy for all sorts of problems. In this paper, we analyze and discuss the meaning and use of the concept of transparency in economic research. We look for common denominators across different areas where the concept is used, and find that transparency in essence is about reductions in information asymmetries, and therefore entails the transfer of information from a sender to a receiver. Transparency goes beyond mere information disclosure in that it has a demand-side dimension: the information transferred should be trustworthy and have a value to the receiver. We emphasize the distinction…
How BATNAs perception impacts JVs negotiations
2013
PurposeIn light of the inconclusive findings in literature, the aim of this paper is to answer the question: how can negotiation behavior be explained in a situation of power imbalance?Design/methodology/approachBased on Kim et al., the paper proposes a theoretical model that is empirically studied through a case study.FindingsPower relationship is a key contextual factor in determining negotiation behavior in joint ventures (JVs), but it has to be defined more in terms of the perceived value of the alternatives rather than the amount of available better alternatives to a negotiation agreement (BATNAs). Thus, when a partner looks to gain access to knowledge (market, technology, etc.) about …
Alternative Definitions of the Strategic Group and Explaining Value of Differences in Results
2010
The relationship between strategic groups and firm performance has been recurrently analysed for more than three decades. As can be confirmed by this work, the evidence found supports as well as refutes the significance of belonging to a specific strategic group in order to explain performance differences. Hence, in this work we have tried to review previous literature to provide a reasonable explanation to unevenness found in the empirical findings. This aim obliges us, firstly, to review previous literature taking into account alternative definitions of strategic group proposed by studies rooted in different theoretical traditions, strategic positioning approach, resource-based theory and…
Twitter sentiment as a weak signal in venture capital financing
2021
Abstract How do venture capitalists (VCs) incorporate weak and strong signals in the valuation of technology-based startups? Based on a sociocognitive perspective of signaling theory, we introduce Twitter sentiment as a novel and weak signal, which we juxtapose with patents as a traditional, strong signal. While we find a positive association between both signals and VCs' venture valuations, our results reveal that Twitter sentiment does not correlate with actual long-term investment success, whereas patents do. Additionally, we identify and test novelty and experience characteristics (i.e., startup age and VC firm experience) as boundary conditions for our proposed signal-valuation relatio…