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The purpose of this paper is to use game theory and ambiguity theory to show how “economically rational” vendors will behave in a procurement process that runs over more…
The purpose of this paper is to use game theory and ambiguity theory to show how “economically rational” vendors will behave in a procurement process that runs over more than one period. In light of that behavior, we have proposed “economically rational” counter-strategies on the part of purchasers.
Based on a perception–expectation framework, a unique game-based approach is designed. The authors have proposed “economically rational” counter-strategies on the part of purchasers, which are premised on the theory of rational agency.
Ambiguity in the procurement process is a bane for procuring principals and a boon for suppliers – for the former, it is an issue to be managed, and for the latter it provides an opportunity to extract “insurance rents” from the principals. The authors show that, under certain conditions, the contracting principal can be exploited by a rational, rent-extracting vendor. In particular, they show that there is an incentive for a vendor to delay the resolution of ambiguities in the contract until late in the procurement process, when the insurance rents are at a maximum.
This study contributes to the current literature by highlighting an existing problem in the procurement process and describing it using decision theory under ambiguity in a game-like setting. Specifically, the authors use game theory in a unique way to deal with imperfect information coupled with ambiguity.
Purpose – This chapter aims to contribute to the policy debate on private sector involvement in traditionally core defence activities through rigorous economic analysis…
Purpose – This chapter aims to contribute to the policy debate on private sector involvement in traditionally core defence activities through rigorous economic analysis. Punishment and correction in the US military prisons have traditionally been considered as a core activity that has been governed, regulated and managed by the military service personnel. It has been shown however, that military facilities such as stockades and brigs have often failed to meet their correctional objectives – a quality issue.
Methodology – The chapter constructs a case study to illustrate the method of analysis. Well-trained and motivated military custodial personnel play an important correctional role but are not available in sufficient numbers in military prisons. It is therefore proposed to source these services through the private sector. Specifically, the chapter proposes that private sector providers should provide custodial personnel for stockades and brigs. Traditionally the private sector has been employed to reduce costs, rather than improve quality. This chapter adapts and applies the framework developed by Hart, Shleifer and Vishny (1997) to study the governance model and incentive regime that could enable the use of the private sector, reduce the risk of excessive cost cutting and enable quality outcomes to be achieved.
Findings – This chapter argues that private sector involvement could effectively increase the contestability of supply.
Implications – The chapter demonstrates the scope for private sector involvement to increase quality, rather than just decrease costs. It follows that the private sector can contribute to core national security outcomes. However, this implication needs significantly more exploration for specific contexts.
Value – The adopted mode of analysis provides a template for rigorous analysis of similar proposals in the future.
The purpose of this paper is to investigate the impact of scandal on investor valuation of sport by examining changes in share prices of three football clubs involved in…
The purpose of this paper is to investigate the impact of scandal on investor valuation of sport by examining changes in share prices of three football clubs involved in the 2006 Italian “Calciopoli” scandal.
Share price variation and volatility across 2006 is analysed for Juventus (the centre of the scandal), Lazio (also involved) and Roma (uninvolved) over different (qualitatively defined) phases of the scandal. Movements in share price are compared to three benchmark indices – FTSE MIB, DJ Stoxx Europe 600, and DJ Stoxx Europe Football – indexed from 2 Jan 2006. Unadjusted analysis of share price movement matched with events to inform the likely causes of variation.
Despite speculation and high volatility, the share price of all three clubs increased by 30 per cent in 2006, outperforming benchmark indices (15 per cent). This suggests the Calciopoli scandal increased the perceived value of the clubs.
Generalisation of these findings requires more sophisticated statistical and econometric analysis of the Calciopoli scandal, and application of the method to other instances of scandals in sport.
Intuitively, scandals in sport have a negative impact. This paper suggests that scandal could have a positive impact on a club's share price and therefore the overall financial value of sport.
There is a dearth of literature on the economic consequences of scandals in sport. This paper contributes to the development of that literature and investigates some economic consequences of a particular scandal in Italian football.
This paper uses the “planning” or “narrative” approach to agency – which has recently been developed by philosophers Bratman, Gauthier, McClennen and Velleman – to do two things. First, the paper criticises the standard, decision‐theoretic view of “rational” agent action and, second, it sketches a positive model of agency in which agents employ (quasi‐)Kantian maxims to guide their conduct.
In their chapter, ‘A method to compute a peace gross world product by country and by economic sector’, Jurgen Brauer and John Tepper Marlin present a novel method to assess the economic value of peace, in both the domestic and international realms. This is not only a tool for assessing and forecasting the potential benefits of reduced violence, but it is an example of best social science practice in that by design it incorporates the best existing knowledge on the effects of peace. This approach combining meta-analysis with a novel integrating framework is quite promising. For the purposes of the book, it sets the stage nicely for the subsequent chapters by highlighting the big picture of expected welfare gains from peace, within a rigorous scientific context, rather than one of advocacy. Estimating the potential economic benefits of internal and international peace is also fundamental in understanding the potential economic incentives which might drive political and business leaders to avoid deadly conflict, and pursue peace.
Aditya Agrawal is a scholarship graduate from Bond University (2006, first class honors in Management Science) and the 2007–2008 summer scholar at the Strategic and Defence Studies Centre, Australian National University. He commenced work at the University College, Australian Defence Force Academy in June 2008 and is currently reading for his doctorate in military outsourcing. Previously he has worked with both the corporate sector and the government departments. He has published in scholarly journals and peer-reviewed conferences and was awarded the Best Paper Prize at the national Australian Conference on Information Systems (ACIS 2007).