Inventory Signals

How does operational competence translate into market value, when firms cannot credibly communicate their competence to the market? I consider the example of inventory and fill rates. When the market sees a high-inventory firm, it cannot tell whether the inventory is due to incompetence or a strategy to enhance fill rate. Firms might decide to signal their competence to the market by carrying less inventory. I show conditions for separating and pooling perfect Bayesian equilibria. I also provide empirical evidence for this theory that inventory has a signaling role. The theory could potentially provide a framework that describes one way in which a range of operational competences such as purchasing and outsourcing, translate to market value. Practically, it has implications for firms, such as how to strategically communicate to the market, reward managers, or even whether to go public and be subject to market pressures

The role of verbal behavior in human learning: II. Developmental differences

When children in four different age ranges operated a response device, reinforcers were presented according to fixed-interval schedules ranging in value from 10 to 70 seconds. Only the behavior of the subjects in the youngest of the four groups, the preverbal infants, resembled that of other animal species. The children in age ranges 5 to 6½ and 7½ to 9 years exhibited either the low-rate or high-rate response patterns typical of human adults. Those who showed the low-rate pattern reported a time-based formulation of the contingencies and some of them were observed to occasionally count out the interval before responding. The performance of children aged 2½ to 4 years differed from that of both infants and older children, though containing some patterning elements similar to those produced by the older and younger subjects. The predominant response pattern of the infants consisted of a pause after reinforcement followed by an accelerated rate of responding that terminated when the next reinforcer was delivered. Analysis of postreinforcement-pause duration and response rate showed that infant performance, but not that of the older children, consistently exhibited the same kinds of schedule sensitivity observed in animal behavior. The evidence supports the suggestion that the development of verbal behavior greatly alters human operant performance and may account for many of the differences found between human and animal learning