Highbrow Films Gather Dust: A Study of Dynamic Inconsistency and Online DVD Rentals

We report on a field study demonstrating systematic differences between the preferences people anticipate they will have over a series of options in the future and their subsequent revealed preferences over those options. Using a novel panel data set, we analyze the film rental and return patterns of a sample of online DVD rental customers over a period of four months. We predict and find that people are more likely to rent DVDs in one order and return them in the reverse order when should DVDs (e.g., documentaries) are rented before want DVDs (e.g., action films). This effect is sizeable in magnitude, with a 2% increase in the probability of a reversal in preferences (from a baseline rate of 12%) ensuing if the first of two sequentially rented movies has more should and fewer want characteristics than the second film. Similarly, we also predict and find that should DVDs are held significantly longer than want DVDs within-customer. Finally, we find that as the same customers gain more experience with online DVD rentals, their "dynamic inconsistency" is attenuated. We interpret our results as evidence that myopia has a meaningful impact on decisions in the field and that people learn about their myopia with experience, allowing them to curb its influence.want/should, intrapersonal conflict, dynamic inconsistency, myopia

Japan's Corporate returns on value and cost: a comprehensive look.

The paper documents that for 1974-95 the Japanese non-financials' return on cost, a measure of return on (direct) investment, is consistently higher than their return on value (an estimate of the expected return or cost of capital). Against conventional wisdom, when translated into USD terms, the Japanese cost of capital is actually higher than the U.S. counterpart. The paper further shows that as of the 90s the main-bank centered keirestu firms, with their internally disciplined corporate governance system, lost their traditional advantage of lower cost of capital, compared to the non-keiretsu firms. Examining corporate earnings, investment, and forms of financing reveals that, in recent years, keiretsu firms have become more liquidity constrained than non-keiretsu firms. Their investment drops dramatically, and while (also much reduced) retained cash earnings provide most of the financing, debt financing is replaced by more expensive new equity as the major source of outside financing. Non-keiretsu firms are suffering as well, but to a lesser degree, and are still able to finance their investment even with substantial short-term debts. The main-bank system seems starting to crumble following an over-investment episode in late-80s.Value;

Portfolio Performance Gauging in Discrete Time Using a Luenberger Productivity Indicator

This paper proposes a pragmatic, discrete time indicator to gauge the performance of portfolios over time. Integrating the shortage function (Luenberger, 1995) into a Luenberger portfolio productivity indicator (Chambers, 2002), this study estimates the changes in the relative positions of portfolios with respect to the traditional Markowitz mean-variance efficient frontier, as well as the eventual shifts of this frontier over time. Based on the analysis of local changes relative to these mean-variance and higher moment (in casu, mean-variance-skewness) frontiers, this methodology allows to neatly separate between on the one hand performance changes due to portfolio strategies and on the other hand performance changes due to the market evolution. This methodology is empirically illustrated using a mimicking portfolio approach (Fama and French 1996; 1997) using US monthly data from January 1931 to August 2007.shortage function, mean-variance, mean-variance-skewness, efficient portfolios, Luenberger portfolio productivity indicator

Tackling disinvestment in health care services

Rising levels of demand due to ageing populations and increases in long term conditions (White 2007), increased levels of expectation amongst patients and inflationary pressure caused by the rising cost of new technologies are amongst the explanations for the funding shortfalls in government funded health systems across the world (Newhouse 1992). The challenge facing these health systems has also been intensified by the worldwide economic downturn. Within health systems, efforts have been made to increase productivity and efficiency and to control costs without reducing quality (Garner and Littlejohns 2011) but the scale of the task necessitates further action (Donaldson et al. 2010). Beyond productivity and efficiency gains the next logical step for decision makers is disinvestment in cost-ineffective services, prioritisation of funding for one service over another or what Prasad (2012) refers to as ‘medical reversal’. The aims of this study were to explore the experiences of budget holders within the English National Health Service (NHS) in their attempts to implement programmes of disinvestment, and to consider factors which influence the success (or otherwise) of this activity. This paper begins with clarification of terminology and a summary of the current state of knowledge with regard to health service disinvestment, before presenting and discussing findings. The research suggests that disinvestment activity is varied across organisations and ranges from ‘invest to save’ schemes through to ‘true disinvestment.’ Although the majority of interviewees accept that disinvestment is necessary most had made little progress at the time of interview beyond ‘picking the low hanging fruit’. Interviewees identify a number of determinants of disinvestment such as: local/national relationships, co-ordination/ collaboration and; professional understanding and support

Taiwan's Democracy: Towards a liberal democracy or authoritarianism?

This paper examines how Taiwan moved from being viewed as a model Asian democracy to one allegedly suffering from democratic reversal. The reasons for the declining domestic and international reputa- tion of Taiwan’s democracy are discussed. Lastly, some key political challenges facing Taiwan’s democracy are outlined

Expectations, Liquidity, and Short-term Trading

We consider a two-period market with persistent liquidity trading and risk averse privately informed investors who have a one period horizon. With persistence, prices reflect average expectations about fundamentals and liquidity trading. Informed investors engage in “retrospective” learning to reassess the inference about fundamentals made at the early stage of the trading game. This introduces strategic complementarities in the use of information and can yield two stable equilibria which can be ranked in terms of liquidity, volatility, and informational efficiency. We establish the limits of the beauty contest analogy for financial markets and derive a rich set of implications to explain market anomalies, and empirical regularities.price speculation, multiple equilibria, average expectations, public information, momentum and reversal, Beauty Contest