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Market Uncertainty (market + uncertainty)
Selected AbstractsMoney Market Uncertainty and Retail Interest Rate Fluctuations: A Cross-Country ComparisonGERMAN ECONOMIC REVIEW, Issue 2 2009Burkhard Raunig Interest rate pass-through; relationship banking; conditional volatility Abstract. This paper analyzes empirically the relationship between money market uncertainty and unexpected deviations in retail interest rates in a sample of ten OECD countries. We find that, with the exception of the United States, money market uncertainty has only a modest impact on the conditional volatility of retail interest rates. Even for the United States, we find that the effects of money market uncertainty are spread out over time. Our results also indicate that money market uncertainty tends to be passed on to retail rates to a lesser extent in countries where banking relationships play a substantial role. [source] Market Uncertainty and Socially Embedded ReputationAMERICAN JOURNAL OF ECONOMICS AND SOCIOLOGY, Issue 3 2009Harris H. Kim Both economists and sociologists generally recognize the importance of reputation in coordinating economic transactions. In a perfectly competitive and anonymous market characterized by faceless buyers and sellers, the issue of reputation would be irrelevant and unnecessary. In reality, however, markets are often filled with varying degrees of information asymmetry, which can threaten the very existence of the market system itself. In critical reaction to the standard neoclassical model, some economists, on the one hand, argue that when there is an information problem, reputation serves as a valuable source of market signal of quality. Sociologists of economic life similarly contend that reputation, along with trust, is critical in lowering transaction costs and thereby facilitating various economic activities among individual actors. The purpose of this article is to apply this broad theoretical observation to a specific empirical phenomenon. It does so by highlighting the role of social networks that connect actors on both demand and supply sides of the market. Specifically, this study examines how interpersonal networks in the market for legal services affect the duration of ties between buyers and sellers. Quantitative analysis based on a random sample of Chicago lawyers, a project funded by the American Bar Foundation, reveals that ceteris paribus the lawyer-client relations are significantly driven by social network factors. [source] Market risk and process uncertainty in production operationsNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 7 2006Bardia Kamrad Abstract By adopting a real options framework we develop a production control model that jointly incorporates process and market uncertainties. In this model, process uncertainty is defined by random fluctuations in the outputs' yield and market risk through demand uncertainty for the output. In our approach, production outputs represent commodities or items for which financial contracts do not trade. Outputs are also functionally linked to the level of input inventories. To extend the model's applicability to a wide range of production industries, inputs are modeled to reflect either renewable or partially renewable or non-renewable resources. Given this setting, techniques of stochastic control theory are employed to obtain value maximizing production policies in a constrained capacity environment. The rate of production is modeled as an adapted positive real-valued process and analogously evaluated as a sequence of complex real options. Since optimal adjustments to the rate of production also functionally depend on the outputs' yield, we optimally establish "trigger boundaries" justifying controlled variations to the rate of production over time. In this context, we provide closed form analytic results and demonstrate their robustness with respect to the stochastic (including mean reverting) processes considered. Using these results, we also demonstrate that the value (net of holding costs) accrued to the producer from having an inventory of the output is equivalent to the producer's reservation price to operationally curb its process yield. These generalizations extend the scope of model applicability and provide a basis for applying the real options methodology in the operations arena. The model is explored numerically using a stylized example that allows for both output and demand uncertainty and achieves greater realism by incorporating an element of smoothing into the sequence of production decisions. © 2006 Wiley Periodicals, Inc. Naval Research Logistics, 2006 [source] Strategic Decisions of New Technology Adoption under Asymmetric Information: A Game-Theoretic Model*DECISION SCIENCES, Issue 4 2003Kevin Zhu ABSTRACT In this paper we explore strategic decision making in new technology adoption by using economic analysis. We show how asymmetric information affects firms' decisions to adopt the technology. We do so in a two-stage game-theoretic model where the first-stage investment results in the acquisition of a new technology that, in the second stage, may give the firm a competitive advantage in the product market. We compare two information structures under which two competing firms have asymmetric information about the future performance (i.e., postadoption costs) of the new technology. We find that equilibrium strategies under asymmetric information are quite different from those under symmetric information. Information asymmetry leads to different incentives and strategic behaviors in the technology adoption game. In contrast to conventional wisdom, our model shows that market uncertainty may actually induce firms to act more aggressively under certain conditions. We also show that having better information is not always a good thing. These results illustrate a key departure from established decision theory. [source] Money Market Uncertainty and Retail Interest Rate Fluctuations: A Cross-Country ComparisonGERMAN ECONOMIC REVIEW, Issue 2 2009Burkhard Raunig Interest rate pass-through; relationship banking; conditional volatility Abstract. This paper analyzes empirically the relationship between money market uncertainty and unexpected deviations in retail interest rates in a sample of ten OECD countries. We find that, with the exception of the United States, money market uncertainty has only a modest impact on the conditional volatility of retail interest rates. Even for the United States, we find that the effects of money market uncertainty are spread out over time. Our results also indicate that money market uncertainty tends to be passed on to retail rates to a lesser extent in countries where banking relationships play a substantial role. [source] Value-centric framework and pareto optimality for design and acquisition of communication satellitesINTERNATIONAL JOURNAL OF SATELLITE COMMUNICATIONS AND NETWORKING, Issue 6 2009Joy Brathwaite Abstract Investments in space systems are substantial, indivisible, and irreversible, characteristics of high-risk investments. Traditional approaches to system design, acquisition, and risk mitigation are derived from a cost-centric mindset, and as such they incorporate little information about the value of the spacecraft to its stakeholders. These traditional approaches are appropriate in stable environments. However, the current technical and economic conditions are distinctly uncertain and rapidly changing. Consequently, these traditional approaches have to be revisited and adapted to the current context. We propose that in uncertain environments, decision-making with respect to design and acquisition choices should be value-based. We develop a value-centric framework, analytical tools, and an illustrative numerical example for communication satellites. Our two proposed metrics for decision-making are the system's expected value and value uncertainty. Expected value is calculated as the expected NPV of the satellite. The cash inflow is calculated as a function of the satellite loading, its transponder pricing, and market demand. The cash outflows are the various costs for owning and operating the satellite. Value uncertainty emerges due to uncertainties in the various cash flow streams, in particular because of market conditions. We propagate market uncertainty through Monte Carlo simulation, and translate it into value uncertainty for the satellite. The end result is a portfolio of Pareto-optimal satellite design alternatives. By using value and value uncertainty as decision metrics in the down-selection process, decision-makers draw on more information about the system in its environment, and in making value-based design and acquisition choices, they ultimately make more informed and better choices. Copyright © 2009 John Wiley & Sons, Ltd. [source] Implied Standard Deviations and Post-earnings Announcement VolatilityJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 3-4 2002Daniella Acker This paper investigates volatility increases following annual earnings announcements. Standard deviations implied by options prices are used to show that announcements of bad news result in a lower volatility increase than those of good news, and delay the increase by a day. Reports that are difficult to interpret also delay the volatility increase. This delay is incremental to that caused by reporting bad news, although the effect of bad news on slowing down the reaction time is dominant. It is argued that the delays reflect market uncertainty about the implications of the news. [source] Building a Strong Foothold in an Emerging Market: A Link Between Resource Commitment and Environment Conditions*JOURNAL OF MANAGEMENT STUDIES, Issue 5 2004Yadong Luo ABSTRACT This study examines how MNEs align resource commitment with environmental conditions (challenges and opportunities) when they invest in a foreign emerging market. MNEs often face a dilemma in allocating resources to this environment: without this commitment, they cannot build a strong competitive foothold; yet with over-commitment, there is excessive economic exposure. Our analysis of MNEs in a major emerging market suggests that resource commitment is an inverse function of market uncertainty and this inverse link is stronger for less strategically proactive MNEs. Resource commitment is also an increasing function of market opportunities and this function is stronger for firms emphasizing demand-side (as opposed to cost-side) gains. In addition, in a highly volatile industry, resource commitment is negatively associated with cultural distance, but in a relatively stable industry, it is positively associated with cultural distance. And finally, as foreign subsidiaries become older, the influence of cultural distance on resource commitment is weakened. [source] Soft reliability: an interdisciplinary approach with a user,system focusQUALITY AND RELIABILITY ENGINEERING INTERNATIONAL, Issue 1 2009A. Koca Abstract A recent trend in technological innovation is towards the development of increasingly multifunctional and complex products to be used within rich socio-cultural contexts such as the high-end office, the digital home, and professional or personal healthcare. One important consequence of the development of strongly innovative products is a growing market uncertainty regarding ,if', ,how', and ,when' users can and will adopt such products. Often, it is not even clear to what extent these products are understood and interacted with in the intended manner. The mentioned problems have already become an evident concern in the field, where there is a significant rise in the numbers of seemingly sound products being complained about, signaling a lack of soft reliability. In this paper, we position soft reliability as a growing and critical industrial problem, whose solution requires new academic expertise from various disciplines. We illustrate potential root causes for soft reliability problems, such as discrepancy between the perceptions of users and designers. We discuss the necessary approach to effectively capture subjective feedback data from actual users, e.g. when they contact call centers. Furthermore, we present a novel observation and analysis approach that enables insight into actual product usage, and outline opportunities for combining such objective data with the subjective feedback provided by users. Copyright © 2008 John Wiley & Sons, Ltd. [source] Dimensions of uncertainty and their moderating effect on new product development project performanceR & D MANAGEMENT, Issue 5 2008Hélène Sicotte In this study, we measure the dimensions of uncertainty, starting from the definitions constructed for and generally used in innovation projects. We then evaluate their direct and indirect effects on the performance of product and service development projects. Four dimensions of uncertainty are delimited with satisfactory validity and reliability, suggesting a differential moderating effect of the four types of uncertainty (technical and project uncertainty, market uncertainty, fuzziness and complexity) depending on the performance dimension (effectiveness and efficiency) and co-moderator (project methods and human resource adequacy). Of the four dimensions explored, technical and project, and market uncertainty are true moderators and have the largest interactive effect, fuzziness has a strong direct effect on both performance dimensions whereas complexity weakly directly influences effectiveness. The latter two also influence the relations between performance and the factors related to human resources and project management methods. [source] Cancellation Strategies in Commercial Real Estate LeasingREAL ESTATE ECONOMICS, Issue 1 2000Robert M. Mooradian In a contractionary corporate environment, lease cancellation strategy becomes an important component of corporate real estate leasing decisions. This paper presents a leasing model in which less well-informed lessors offer leases with alternative lease cancellation options. The model demonstrates that a tenant's choice of cancellation option reveals his private information with respect to the likelihood of option exercise. Tenants who select a lease with a downsizing option are more likely to exercise the option. Given the higher likelihood of option exercise, the model suggests that the downsizing option will be priced higher. We examine a sample of 311 leases, and consistent with the model's prediction, we find that on average leases with a downsizing option have significantly higher contract rent. However, termination and sublet options are not associated with higher rent. The evidence suggests that market uncertainty, private information and adverse selection affect the pricing of alternative cancellation options and the choice of cancellation option. [source] | |||||||||||||