Common Conjecture Research Articles

Retirement Patterns and Income Inequality

How do social policies shape life courses, and which consequences do different life course patterns hold for individuals? This article engages the example of retirement in Germany and Britain to analyze life course patterns and their consequences for income inequality. Sequence analysis is used to measure retirement trajectories. The liberal welfare state in Britain generates more unstable retirement trajectories (differentiated) that are more dissimilar across the population (de-standardized) than the conservative-corporatist welfare state in Germany. Contrary to common conjectures, this is not associated with higher income inequality among retirees in Britain. This study concludes that there is no simple straightforward link between life course patterns and income inequality.

Emotions and Chat in a Financial Markets Experiment

This paper examines experimentally two common conjectures in the popular literature on financial markets: that they are swayed by emotion and that they behave like a 'crowd'. We find consistent evidence that deviations of prices from fundamental value depend on the emotion of excitement and on the presence of independently identified 'irrational' traders. Other than through 'irrational' traders, there is no evidence, however, that non-price communication ('chat') influences prices. Subjects with an economics background make better traders.

Ranking Asymmetric Auctions

We compare the expected revenue in first- and second-price auctions with asymmetric bidders. We consider a close to uniform distributions with identical supports. In contrast to the common conjecture in the literature, we show that in the case of identical supports the expected revenue in second-price auction may exceed that in first-price auction. We also show that asymmetry over lower valuations has a higher negative impact on the expected revenue in first-price auction than in second-price auction. However, asymmetry over high valuations always increases the revenue in first-price auction.

FIN 48 and Tax Compliance

ABSTRACT: We develop a model to examine the effects of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), on the strategic interaction between publicly traded corporate taxpayers and the government. Several of our findings contradict conjectures voiced by members of the business community regarding the economic effects of implementing FIN 48. Specifically, taxpayers with strong facts obtain higher expected payoffs from uncertain tax benefits and some disclosed liabilities understate the expected tax liability. Consistent with the common conjectures, however, some taxpayers are more likely to be audited or are deterred from entering into transactions that generate uncertain tax benefits because of FIN 48.

Initial Day Return and Underpricing Cost in Advance Payment Initial Public Offerings

Hong Kong represents the second largest of the initial public offering (IPO) markets that adopt an advance payment subscription procedure. The lengthy process creates substantial financing costs to investors but interest earnings to issuers. Data from a sample of 386 IPOs listed between 2000 and 2007 reveals that interest cost can reduce the return to public subscribers by 44%; while the HIBOR-based interest earnings to issuers are estimated at 0.59% of funds raised, and at 6.27% of forecast earnings. Consistent with Agarwal, Liu, and Rhee (2008), the realized subscription rate strongly influences returns but the link weakens at higher interest rates. Interest earnings and underpricing are highly correlated, a finding in support of Chowdhry and Sherman’s (1996) proposition. However, the proposition is deemed irrefutable as both underpricing and interest earnings are highly related to the subscription rate. Moreover, regression results show that the relationship between the subscription rate and offer price of H-shares and red-chips are indistinguishable from other issues. These results cast doubt on the common conjecture that the management of China-related enterprises are more likely to underprice their offerings than the managers of other enterprises. The higher returns to H-shares and red-chips can be attributable to the higher public demand for large issues.

Challenging common myths about workplace flexibility: Research notes from the multi-organization database

Three common myths about workplace flexibility are examined using findings from WFD Consulting's multi-organization database. First, comparisons of engagement and stress levels reveal that part-time workers are not, as often assumed, less committed or less valuable to the business enterprise than their full-time colleagues. Second, comparisons of employee outcomes challenge the faulty assumption that flexibility for exempt workers offers greater benefit for employers than flexibility for non-exempt workers. Finally, findings suggest that, contrary to common conjecture, workplace flexibility is not incompatible with the growing work demands of a competitive economy. As illustrated by these research notes, data-driven examinations of flexibility myths lead to a better understanding of flexibility as a versatile organizational tool for sustaining employee engagement and productivity.

Value-at-risk: is lacking in sub-additivity just an annoying technicality?

Following the final revision of Basel II, Value-at-Risk (VaR) is becoming one of the most used risk measures for managing market and operational risks. Nevertheless, in recent years, some undesirable drawbacks in its use have been pointed out by academics. One of them is the so-called 'lacking in sub-additivity', which turns out to be not only an annoying technicality, but also the 'real culprit' of VaR misleading guide in capital allocation strategy. A number of numerical examples prove the fallacy of some common conjectures. Eventually, a risk measure, which is a revised version of the Expected Shortfall (ES), is suggested as a sound alternative.

Efficiency and the Bear: Short Sales and Markets Around the World

ABSTRACTWe analyze cross‐sectional and time‐series information from 46 equity markets around the world to consider whether short sales restrictions affect the efficiency of the market and the distributional characteristics of returns to individual stocks and market indices. We find some evidence that prices incorporate negative information faster in countries where short sales are allowed and practiced. A common conjecture by regulators is that short sales restrictions can reduce the relative severity of a market panic. We find strong evidence that in markets where short selling is either prohibited or not practiced, market returns display significantly less negative skewness.

Normative comparisons of customs unions and other types of free trade association

In the present paper it is shown that the Kemp–Wan proposition concerning customs unions can be extended to cover free trade associations other than customs unions and that sense can be made of the common conjecture that a customs union is more beneficial or less harmful to the world economy than a comparable but distinct free trade association that is not also a customs union.

Unifying View on Min-Max Fairness, Max-Min Fairness, and Utility Optimization in Cellular Networks

We are concerned with the control of quality of service (QoS) in wireless cellular networks utilizing linear receivers. We investigate the issues of fairness and total performance, which are measured by a utility function in the form of a weighted sum of link QoS. We disprove the common conjecture on incompatibility of min-max fairness and utility optimality by characterizing network classes in which both goals can be accomplished concurrently. We characterize power and weight allocations achieving min-max fairness and utility optimality and show that they correspond to saddle points of the utility function. Next, we address the problem of the difference between min-max fairness and max-min fairness. We show that in general there is a (fairness) gap between the performance achieved under min-max fairness and under max-min fairness. We characterize the network class for which both performance values coincide. Finally, we characterize the corresponding network subclass, in which both min-max fairness and max-min fairness are achievable by the same power allocation.

Non-reciprocity between 1×n MMI Optical Dividers and n×1 MMI Combiners

A common conjecture is that a 1 xn (n>2) MMI optical divider is identical to an nx1 MMI combiner if one reverses them each other. But in this paper, our research shows that an nx1 MMI combiner can not be reversely utilized as a 1xn MMI divider. That is, the non-reciprocity exists between them. We also obtain an interesting theorem about the relation between the length of a 1 xn MMI optical divider and that of an nx 1 MMI combiner by 2D and 3D BPM simulations. It is found that the ratio of the length of an R x MMI combiner over that of a 1xn MMI divider is approximately equal to n-1 if they have the same width and refractive index distribution. As n increases, the difference between their respective lengths becomes larger. The mathematical relation can be utilized as a thumb rule of designing MMI dividers/combiners.

Real-time study of thin and bulk eutectic growth in succinonitrile–( d)camphor alloys

We study the directional-growth patterns of the transparent nonfaceted alloy succinonitrile–( d)camphor (SCN–DC) at eutectic concentration in thin and bulk samples using real-time observation methods. We measure in situ the minimum-undercooling spacing λ m and the small-spacing stability limit λ c of the thin, quasi-lamellar patterns. We find λ m 2 V ≈ 10.2 μ m 3 s - 1 and λ c ≈ 0.65 λ m . This last result is contrary to the common conjecture that λ c = λ m in lamellar patterns, but in agreement with previous experimental and numerical studies in the CBr 4–C 2Cl 6 eutectic. In bulk samples, we observe the growth of rod-like patterns in real time. We show that these patterns do not usually achieve long-range hexagonal order after long solidification times, although their average spacing reaches a constant value, which is close to λ m , after a relatively short transient.

Economic Benefits of Adopting IFRS or US‐GAAP – Have the Expected Cost of Equity Capital Really Decreased?

Abstract: The question of whether the adoption of International Financial Reporting Standards (IFRS) results in measurable economic benefits is of special interest, particularly in light of the European Union's adoption of IFRS for listed companies. In this paper, I investigate the common conjecture that internationally recognised financial reporting standards (IAS/IFRS or US‐GAAP) reduce the cost of capital for adopting firms. Building on Leuz and Verrecchia (2000), I use a set of German firms that have adopted such standards and investigate the potential economic benefits of this reporting strategy by analysing their cost of equity capital through the use and customisation of available implied estimation methods. Evidence from the 1993–2002 period fails to document lower expected cost of equity capital for firms applying IAS/IFRS or US‐GAAP. During the transition period I analyse, the expected cost of equity capital in fact appear to have rather increased under non‐local accounting standards.

Processing of basic speech acts following localized brain damage: A new light on the neuroanatomy of language

We examined the effect of localized brain lesions on processing of the basic speech acts (BSAs) of question, assertion, request, and command. Both left and right cerebral damage produced significant deficits relative to normal controls, and left brain damaged patients performed worse than patients with right-sided lesions. This finding argues against the common conjecture that the right hemisphere of most right-handers plays a dominant role in natural language pragmatics. In right-hemisphere damaged patients, there was no correlation between location and extent of lesion in perisylvian cortex and performance on BSAs. By contrast, processing of the different BSAs by left hemisphere-damaged patients was strongly affected by perisylvian lesion location, with each BSA showing a distinct pattern of localization. This finding raises the possibility that the classical left perisylvian localization of language functions, as measured by clinical aphasia batteries, partly reflects the localization of the BSAs required to perform these functions.

The Laws of War, Common Conjectures, and Legal Systems in International Politics

The laws of war have a mixed record of limiting violence during war. I explain these treaties as the codification of the common conjecture of an equilibrium of a game theory model of war. These laws succeed only when the parties comply on their own or reciprocal sanctions dissuade parties who are willing to violate the agreement. Treaties support reciprocity by specifying when reciprocal sanctions are appropriate, by controlling the response to violations outside the control of state parties, and by screening out states that are unwilling to abide by a treaty through their refusal to ratify it. I discuss the design of the laws of war: why they are multilateral and general rather than bilateral and specific to each war, why treaties are separated by subject matter, why they devolve responsibility for individual violations, and the difficulties in determining how strict these laws should be.

Biomass and size structure of the scyphomedusa Aurelia aurita in the northwestern Black Sea during spring and summer

The abundance, biomass and size structure of the scyphomedusa, Aurelia aurita, was measured during two research cruises to the northwestern Black Sea (July-August 1995 and April-May 1997). Average biomass of Aurelia was relatively constant (132-179 g wwt m -2 ) through- out the investigation period and similar to previous years. Abundance and biomass at individual stations appeared to be unrelated to temperature and salinity when the latter exceeded ~13. Biomass was low at coastal stations in the plume of the Danube where depth was <20 m and salinity dropped to <11. The spring cruise (April-May) coincided with, or just followed the peak of strobilation. The summer cruise (July-August) took place near the beginning of planulae larvae release. The popu- lation size structure was dominated by small individuals in spring, while large medusae prevailed mainly in late summer. Aurelia was, on average, larger at deep water stations during summer, suggest- ing that per capita food supply was higher further offshore. The individual body mass increased from spring through summer. Accordingly, the volume (wet wt) to length (bell diameter) relation changed significantly. If all medusae measured throughout the seasons were pooled, volume (V, in cm3) was related to length (L, in cm) according to V = 0.08 L2.71, which is similar to measurements conducted in other coastal areas. In contrast to the common conjecture, we did not find inverse relations between biomasses of Aurelia and the combjelly Mnemiopsis leidyi. Preliminary feeding experiments indicate that Aurelia may feed upon small Mnemiopsis. The significance of indirect trophic relations and direct feeding interactions among the gelatinous zooplankton in the Black Sea has important consequences for the energy flow along the food web and, therefore, needs further study.

Theatre-going in Rotterdam, 1802–1853. A Statistical Analysis of Ticket Sales

Today, Rotterdam is best known as the largest port in the world. Around 1800, although the second city in the Dutch Republic, it was still a minor trade centre. A group of its merchants built a standing theatre in 1773, which was sold in 1851 and largely demolished in 1853. The very rich archives of the stock-holders' company, which exploited this theatre, permit us an insight into the patterns of theatre-going in the first half of the nineteenth century, and the record helps test the common conjecture about the decline of the theatre in those decades.

Failure of neutralizing gp120 monoclonal antibodies to prevent HIV infection of choriocarcinoma-derived trophoblasts

Although placental trophoblasts, the only fetal cells in direct contact with infectious maternal blood, can be infected with HIV, the precise cause for the low transmission rate of virus across the placental barrier is unknown. One of the most common conjectures is that maternal anti-HIV antibodies (Abs) contribute to the protection of the fetus. This hypothesis has been tested in vitro by infecting the CD4-negative placental trophoblast line, BeWo, with HIV-1(IIIB) in the presence of serial dilutions of neutralizing monoclonal Abs against the V3 loop (No. 694) or CD4-binding conformational domain (No. 588). The results, based on measurement of p24 production from virus-exposed cells, reveal that the titers of Abs, adequate in preventing the infection of control MT-4 T lymphocytes, were less effective in protecting trophoblasts. Furthermore, PCR analysis of HIV DNA formed after a single round of infection has shown no significant decrease in the number of viral copies in Ab-protected BeWo cells. An anti-HIV serum from a pregnant woman did also have no effect. Although our in vitro observations do not necessarily apply to the in vivo situation, the results suggest that the humoral immune response sustained by neutralizing Abs may be able to protect T lymphocytes, but not placental trophoblasts. The findings are consistent with recent clinical studies demonstrating a lack of correlation between the presence of neutralizing anti-HIV Abs in pregnant women and HIV transmission in utero. Copyright 1997 S. Karger AG, Basel

Linear approximation of shortest superstrings

We consider the following problem: given a collection of strings s 1 ,…, s m , find the shortest string s such that each s i appears as a substring (a consecutive block) of s . Although this problem is known to be NP-hard, a simple greedy procedure appears to do quite well and is routinely used in DNA sequencing and data compression practice, namely: repeatedly merge the pair of (distinct) strings with maximum overlap until only one string remains. Let n denote the length of the optimal superstring. A common conjecture states that the above greedy procedure produces a superstring of length O(n) (in fact, 2 n ), yet the only previous nontrivial bound known for any polynomial-time algorithm is a recent O(n log n ) result. We show that the greedy algorithm does in fact achieve a constant factor approximation, proving an upper bound of 4 n . Furthermore, we present a simple modified version of the greedy algorithm that we show produces a superstring of length at most 3 n . We also show the superstring problem to be MAXSNP-hard, which implies that a polynomial-time approximation scheme for this problem is unlikely.

HMO marketing and selection bias: are TEFRA HMOs skimming?

The research evidence indicates that health maintenance organizations (HMOs) participating in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) At-Risk Program tend to experience favorable selection. Although favorable selection might result from patient decisions, a common conjecture is that it can be induced by HMOs through their marketing activities. The purpose of this study is to examine the relationship between HMO marketing strategies and selection bias in TEFRA At-Risk HMOs. A purposive sample of 22 HMOs that were actively marketing their TEFRA programs was selected and data on organizational characteristics, market area characteristics, and HMO marketing decisions were collected. To measure selection bias in these HMOs, the functional health status of approximately 300 enrollees in each HMO was compared to that of 300 non-enrolling beneficiaries in the same area. Three dependent variables, reflecting selection bias at the mean, the low health tail, and the high health tail of the health status distribution were created. Weighted least squares regressions were then used to identify relationships between marketing elements and selection bias. Subject to the statistical limitations of the study, our conclusion is that it is doubtful that HMO marketing decisions are responsible for the prevalence of favorable selection in HMO enrollment. It also appears unlikely that HMOs were differentially targeting healthy and unhealthy segments of the Medicare market.