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We model the interaction between a profit-maximizing firm and an activist using an infinite-horizon dynamic stochastic game. The firm enhances its reputation through “self-regulation”: voluntary provision of an abatement activity that reduces a negative externality. We show that in equilibrium the externality-reducing activity is subject to decreasing marginal returns, which can cause the firm to “coast on its reputation,” that is, decrease the level of externality-reducing activity as its reputation grows. The activist, which benefits from increases in the externality-reducing activity, can take two types of action that can harm the firm’s reputation: criticism, which can impair the firm’s reputation on the margin, and confrontation, which can trigger a crisis that may severely damage the firm’s reputation. The activist changes the reputational dynamics of the game by tending to keep the firm in reputational states in which it is highly motivated to invest in externality-reducing activity. Criticism and confrontational activity are shown to be imperfect substitutes. The more patient the activist or the more passionate it is about externality reduction, the more likely it is to rely on confrontation. The more patient the firm and the more important corporate citizenship is to firm’s brand equity, the more likely that it will be targeted by an activist that relies on confrontation.

To investigate if game theoretic reasoning may be used to explain a lack of cooperation in buyer‐supplier relationships within construction and facilities management. In order to make an empirical application of the prisoner's dilemma (PD) game, possible important variables are operationalized and empirically measured.

Empirical data concerning pay‐offs and the variables in the discount parameter formula (created in this paper) have been obtained through interviews with clients and contractors in the Swedish construction sector.

This paper suggests a way to operationalize pay‐offs and the discount parameter, making empirical measurements possible. Owing to differences in pay‐offs and the discount parameter, different forms of contracts will affect cooperation. Cumulative values of cooperation are much higher in lasting relationships than in occasional transactions. Thus, the best way to facilitate cooperation between rational players is long‐term contracts.

Since, the values used are based on empirical data collected from a few respondents, they should be viewed as illustrative empirical examples, rather than statistical generalizations.

From a game theoretic perspective the practice of project partnering may not solve problems regarding lack of cooperation. To increase the incentives for cooperation, the actors should work together in long‐term relationships instead of focusing on single projects. Long‐term strategic partnering is, therefore, beneficial for the construction and management of facilities.

This paper makes empirical application of the PD game possible by operationalizing and empirically measuring game theoretic variables that previously have been given values set by the researcher rather than by the players in the game.

The purpose of this paper is to suggest possible extensions of the baseline Rubinstein sequential bargaining structure – applied to the negotiation of stationary infinitely termed contracts – that incorporate a direct reference to the “ideal” utilities of the players. This is a feature of the Kalai‐Smorodinsky cooperative solution – even if not of the generalized Nash maximand; it is usually not encountered in non‐cooperative equilibria.

First, it is argued that different bargaining protocols than conventionally staged are able to incorporate temporary all‐or (and)‐nothing splits of the pie. Scenarios are advanced where such episodes are interpreted either as – out of bargaining – war or unilateral appropriation events, or free experience contracts. Second, some modifications to the Rubinstein infinite horizon paradigm are experimented with, allowing for mixed strategies under alternate offers, and matching or synchronous decisions in a simultaneous (yet, discrete) bargaining environment. Solutions are derived where the reference to the winner‐takes‐it‐all outcome arises as a parallel – out‐of‐the‐protocol – outside option to the status quo point. In some cases, the limiting maximand for instantaneous bargaining was derived.

Rubinstein's optimal periodic division in a closed contract remained robust to most of the settings.

Presents possible extensions of the baseline Rubinstein sequential bargaining structure.

George Loewenstein, a prominent behavioral economist, recalls thatIn 1994, when Thaler, Camerer, Rabin, Prelec and I spent the year at the Center for Advanced Study in the Behavioral Sciences, we had a meeting to make a kind of final decision about what to call what we were doing. Remarkably, at that time, the name behavioral economics was not yet well established. I actually advocated “psychological economics,” and Thaler was strong on behavioral economics. I'm kind of glad that he prevailed; I think it's a better, catchier, label, although it creates confusion due to association with Behaviorism. (G. Loewenstein, personal email to author, June 16, 2008)

A loyalty program might influence buyer behavior in several ways. Prior research offers evidence that buyers might increase the frequency of purchases and volume per occasion in a loyalty program; however, the effect on buyers' price tolerance has not been studied before. The aim of this paper is to examine buyers' willingness to pay a price premium for a firm offering a loyalty program reward.

An analytical model of dynamic consumer choice is developed, where one of the two selling firms offers a reward for a certain number of purchases. The maximum price premium that a normatively rational buyer should be willing to pay at each level of accumulated purchases is obtained. A price tolerance in controlled settings is obtained and these are compared with normative solutions.

Analytically, it is shown that the maximum price premium increases as purchases are accumulated; and the exact solutions can be found, given the price distributions and program design parameters. In the empirical studies it is found that individuals' maximum premiums are less than the normative levels. On the other hand, as buyers accumulate purchases from the reward offering firm, and get closer to the reward, maximum premiums paid increase – particularly when the reward is immediate.

This paper contributes to the loyalty programs literature by examining the price premium, or switching barrier, aspect of buyer response. Furthermore, the paper not only models and solves the normative strategy, but also obtains actual price tolerance in laboratory settings.

A boom in e-commerce in Korea has sparked off high daily-volume demand for small-sized home delivery services, which poses a great challenge to distribution networks, especially in urban areas where traffic congestion, accessibility, and pollution are serious problems. In addition, security issues for people who live in small townhouses and detached houses without security systems and guards have received increasing attention from the government and society. Thus, the introduction of a new alternative for home delivery services, unmanned parcel lockers, is urgent for residents living in these areas. This paper examines and compares potential socio-economic impacts in terms of costs and benefits when such lockers are installed at selected locations in residential areas. The results show that this policy is worthy of adoption, with several undeniable benefits to local communities. In addition, sensitivity analyses estimate the economic performance of this project at different social discount rates, and they check the sensitivity of economic performance based on variations in the variables. The value of travel time savings was identified as a critical and dominating factor directly affecting economic performance.

This paper aims to study the asset pricing implications for stock and bond markets in a long-run risks (LRR) model with regime shifts. This general equilibrium framework can not only generate sign-switching stock-bond correlations and bond risk premium, but also quantitatively reproduce various other salient empirical features in stock and bond markets, including time-varying equity and bond return premia, regime shifts in real and nominal yield curves, the violation of the expectations hypothesis of bond returns.

The researchers study the joint determinants of stock and bond returns in a LRR model framework with regime shifts in consumption and inflation dynamics. In particular, the means, volatilities, and the correlation structure between consumption growth and inflation are regime-dependent.

The model shows that the term structure of interest rates and stock-bond correlation are intimately related to business cycles, while LRR play a more important role in accounting for high equity premium than do business cycle risks.

This paper studies the joint determinants of stock and bond returns in a Bansal and Yaron (2004) type of LRR framework. This rational expectations general equilibrium framework can (1) jointly match the dynamics of consumption, inflation and cash flow; (2) generate time-varying and sign-switching stock and bond correlations, as well as generating sign-switching bond risk premium; and (3) coherently explain another long list of salient empirical features in stock and bond markets, including time-varying equity and bond return premia, regime shifts in real and nominal yield curves, the violation of the expectations hypothesis of bond returns.

Radon is a natural gas which can build up underneath buildings. The International Agency for Research on Cancer has found sufficient evidence to classify radon as harmful to human beings. The National Radiological Protection Board has identified areas in the United Kingdom where radon levels are above average. Northamptonshire is one such area, where the NHS was required to set up a radon mitigation programme to reduce the potential health hazard to its 11,189 employees, employed on 82 separate sites. Calculates the dose saving achieved and the associated costs and attempts to derive a value for the cost‐effectiveness of the programme, as compared to a programme recommended by the NRPB to reduce patient doses from dental X‐Rays in the UK. It also examines recent domestic remediation initiatives investigated by researchers in Spain, USA, Sweden and Canada. The methods used by Colgan and Gutiérrez to measure reductions in radon levels and to calculate associated annualised costs were used to analyse the results of the Northamptonshire NHS programme which produced an estimated cost of £680,000 per lung cancer saved. This paper reports on the costs and potential benefits delivered by the radon mitigation programme in Northamptonshire. It also discusses some of the wider policy implications for management, particularly in multi‐site public sector organisations where value for money in an environment of cash limited funding is an increasing pressure.

Radon is a natural gas which can build up underneath buildings. The International Agency for Research on Cancer has found sufficient evidence to classify radon as harmful to humans. The National Radiological Protection Board (NRPB) has identified areas in the UK where radon levels are above average. Northamptonshire is one such area, where the NHS was required to set up a radon mitigation programme to reduce the potential health hazard to its 11,189 employees, employed in 82 separate sites. Calculates the dose saving achieved and the associated costs and attempts to derive a value for the cost‐effectiveness of the programme, compared to a programme recommended by the NRPB to reduce patient doses from dental X‐rays in the UK. Also examines recent domestic remediation initiatives investigated by researchers in Spain, the USA, Sweden and Canada. The methods used by Colgan and Gutiérrez (1996) to measure reductions in radon levels and to calculate associated annualised costs were used to analyse the results of the Northamptonshire NHS programme which produced an estimated cost of £680,000 per lung cancer saved. Reports on the costs and potential benefits delivered by the radon mitigation programme in Northamptonshire. Also discusses some of the wider policy implications for management, particularly in multi‐site public sector organisations where value for money in an environment of limited funding is an increasing pressure.

The paper compares the Net Present Value and the Internal Rate of Return Methods paying particular attention to Mutually Exclusive Projects. In addition it looks into the reinvestment rate assumption concept. Using a different approach to those used to‐date, it is shown that the reinvestment assumption should not concern analysts, provided they use the Net Present Value Method.