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This paper studies how subsidies for solar systems can lead to second-degree moral hazard- the impulse of installers to increase prices and/or reduce labor input when customers receive subsidies. Employing an instrumental variable strategy using plausibly exogenous variation in the size of subsidy levels to address concerns about self-selection of installers into specific subsidy levels, I quantify the impact of subsidy levels on total costs and electricity output of solar systems in California. The results are consistent with hypothesized drivers of second-degree moral hazard. First, larger subsidy levels are associated with a cost increase when customers receive unconditional upfront subsidies as compared to output-based subsidies. Second, stricter verification rules reduce costs. Third, the association of lager subsidy levels and increased costs is particularly pronounced when third-parties own the solar system and thus receive the subsidy. Finally, costs are larger for government customers and lower for non-profit customers. [ABSTRACT FROM AUTHOR]

The complex and uncertain situation generated by socio-economic paradigm shifts, as is the case of the energy and ecological transition initiated in Spain, requires participatory processes of the population. The aim is for the residents of the affected territories to become appropriately and responsibly involved in the process of change, which requires, beforehand, the resolution of situations of asymmetric and incomplete information. As a management process, Public and City Marketing offers several ways to effectively solve challenges, such as benchmarking and social communication. [ABSTRACT FROM AUTHOR]

“The focus on efficient corporate governance has expanded exponentially over the last two decades, corporate governance reform now becoming a key global issue. Not only do factors such as the increasing globalisation of financial markets, the growth in multinational corporations and regional economic developments motivate the need for good corporate governance, but the recent spate of large corporate collapses clearly signals the urgency for significant improvements not only in corporate accountability, but also in the quality of audit reporting. The chosen topic for this paper finds its correspondent in the challenges and perspectives of the corporate governance quality – information asymmetry relationship, with a particular emphasis on the factors that influence the relationship of interdependence between effective corporate governance, information asymmetry and the (proactive!) role of the financial auditor. Thus, the undertaken scientific approach is an extra piece of play in the so difficult "puzzle" game of defining the concept of efficient corporate governance, namely the assessment of the opportunity of convergence of corporate governance systems, the necessity of such a universal model of corporate governance, given that in the specialty literature the theory pervades between the imminence of convergence and the presentation of its insurmountable impediments. On the other hand, this research aims to bring added value to the multitude of already existing research on the interdependence between good corporate governance and the quality of audit through a series of inputs. The evolution of corporate ownership structure, in particular the resolution of asymmetric information among shareholders and other stakeholders, such as managers and creditors requires very complex research. In this context, informational asymmetry determines the need for an external intermediary, ie the independent auditor, to verify and provide assurance on the financial reports prepared by the management. The study was built by using qualitative research methods. The decision to use qualitative methods at the expense of quantitative ones is because the latter would not provide an analysis and a review of the evolution of corporate governance principles and the scope of financial audit over time. Above all, we want to provide an understanding through a depth analysis on the interaction between the quality of the audit, the role of the financial auditor and what means (or should mean!) effective corporate governance – in the context of information asymmetry. Based on our research, we have concluded that the audit needs to evolve and expand to add value to users. Especially for quoted companies, it must be more than an opinion on historical financial statements. We believe, therefore, that auditors should be involved in issues such as the effectiveness of corporate governance, the assumptions on which an organization's business model is based and its risk management.” [ABSTRACT FROM AUTHOR]

This paper investigates coordination in a supply chain with contracts under bilateral asymmetric information. We study wholesale price, buy-back, revenue share, quantity discount and quantity flexibility contracts. Addressing how to allocate the total supply chain profit between retailer and supplier according to their advantages of information, we establish the bridge, transfer payment scheme, connecting the centralized solution and decentralized solution. In particular, all contracts are shown to coordinate the supply chain under bilateral asymmetric information except the wholesale price contract. Results are illustrated with numerical examples. [ABSTRACT FROM AUTHOR]

The article deals with the actual labor market problem of creating an effective recruitment mechanism. It presents the key parameters of recruitment strategies. The best solutions of the problemar are considered in the context of asymmetric information. The article presents alternative models of recruitment, the principal-agent problem in each type of model and considers the key features of each agent's behavior. In addition the opportunities of optimal contract between recruiter and employer and the optimal compensation scheme for recruiter are presented. Then the differences are identified in costs and efficiencies of the alternative recruitment models and the key conclusions are made on possible lower or higher effectiveness of optimal contract. The authors make the conclusion about choice of the optimal recruitment model in the labor market. The article can be useful for the researchers who specialize in the labor market and the asymmetric information models. [ABSTRACT FROM AUTHOR]

In a decentralized channel supply chain, manufacturer often wants retailer to exert more sales efforts to increase the sale quantity. However, sales efforts are usually private information. Therefore, asymmetric information regularly exists between manufacturers and retailers. To improve the financial efficiency of the whole channel supply chain, reward-or-penalty inter-temporal pricing can be resorted to as a coordination mechanism. This mechanism allows manufacturer to take actions such as sharing costs of the retailers' sale efforts, subsidize retailers' markdown and passing the savings of production cost to the retailer to reward retailers who exert more sales efforts while penalizing those who do not. In return, manufacturer also benefit from the inter-temporal pricing. [ABSTRACT FROM AUTHOR]

This paper demonstrates that regulators can reduce systemic risk through leverage requirements even when exact information on individual bank risk is unavailable. We consider an environment with a large number of banks that issue risky loans and are financed through a combination of costly outside capital (equity) and insured deposits (debt). In the event of failure, banks impose externalities on society in proportion to their losses that are not internalized due to limited liability. The regulator cannot precisely control individual bank behaviour through risk-weighted capital requirements as individual bank risk is private information. Nevertheless, through a leverage requirement, the regulator can actually reduce systemic risk even when it allows riskier banks to be undercapitalized. [ABSTRACT FROM AUTHOR]

Signaling is an important topic in the study of asymmetric information in economic settings. In particular, the transparency of information available to a seller in an auction setting is a question of major interest. We introduce the study of signaling when conducting a second price auction of a probabilistic good whose actual instantiation is known to the auctioneer but not to the bidders. This framework can be used to model impressions selling in display advertising. We establish several results within this framework. First, we study the problem of computing a signaling scheme that maximizes the auctioneer's revenue in a Bayesian setting. We show that this problem is polynomially solvable for some interesting special cases, but computationally hard in general. Second, we establish a tight bound on the minimum number of signals required to implement an optimal signaling scheme. Finally, we show that at least half of the maximum social welfare can be preserved within such a scheme. [ABSTRACT FROM AUTHOR]

Price of custom software is very important for a user (end user company). However, there is very little information which helps the user judge the validity of the custom software price. So, one of our research goals is building price estimation model and showing its accuracy for the user to judge the validity of the custom software price. The other goal is how to get value for money custom software. In the analysis, we used 31 projects collected from Japanese organizations. First, we analyzed relationships of unit price of effort, unit price of FP (function point), and productivity. The analysis result showed productivity is more important variable than unit price of effort for the custom software price estimation. Next, relationships of other variables were analyzed to identify important variables for the price estimation. The result suggested some variables such as system architecture are important for that. At the end, the price was estimated based on FP and effort. In the analysis, when the price was estimated based on FP, the median balanced relative error (BRE) was 86.6%, and when it was estimated based on effort, median BRE was 20.2%. [ABSTRACT FROM PUBLISHER]

We develop the incentive mechanism for providing the interregional public goods under asymmetric information. On the basis of Laffont and Martimort, we not only showed how the information asymmetry influences the efficiency of cooperation through the budget balance, incentive constrictions and participation restrictions, but also develop the idea that the Central Government can organize the interregional cooperation to provide the public goods combined with China's basic national condition. In addition, we proved that the occurrence of information asymmetry can be reduced by introducing the government subsidies function. [ABSTRACT FROM PUBLISHER]

This paper considers the quality risk in supply chain outsourcing due to asymmetric quality cost information. With the growing trends of global sourcing, Buyers find it more difficult to observe suppliers' production processes or their capital investments in quality improvement technologies, both of which play a crucial role in determining the product quality. This situation makes quality risk management an even more challenging task. In this paper ,the asymmetric information between enterprises due to outsourcing in supply chain and the resulting effect of cheating on quality cost are studied. Based on the wholesale price contract a stylized contract menu is presented using third party inspection namely random quality cost audit strategy to establish an effective incentive mechanism. The conclusions demonstrate that the new contract can not only eliminate the effect of asymmetric information but also restrain the upriver enterprise from cheating on the quality cost . We also find that the downstream enterprise can improve quality level by raising wholesale price reasonably to stimulate the upriver enterprise to invest more on quality in the new contract. A numerical study is given to demonstrate the conclusions of the paper. [ABSTRACT FROM PUBLISHER]

This paper investigates the joint decisions on inventory and pricing for a dual-channel supply chain with the general discrete asymmetric information, where the channel system consists of one traditional channel which is operated by a retailer and one online channel which is operated by a manufacturer. Some interesting insights are found that the joint decision model with the general discrete asymmetric information is the extension of the asymmetric information with two-point distribution form, and he optimal selling price of E-channel determined by the manufacturer when the retailer has the pricing right of traditional channel is higher than that when the manufacturer owns the pricing right of traditional channel. [ABSTRACT FROM PUBLISHER]

In order to control credit guarantee risk, it has built a credit guarantee financial contract model under the condition of risk limitation. The strategy of credit guarantee institution may be decided by its risk limit. There are many factors that decide critical risk of credit guarantee institution together. The analysis result has shown that credit guarantee institution may agree to guarantee or refuse to guarantee for SME according to the interval of retained earnings of SME. When the retained earnings of SME is in the interval, credit guarantee institution can make the optimal strategy, otherwise, it can't. The conclusion can direct credit guarantee practice effectively. [ABSTRACT FROM PUBLISHER]

There are a lot of tourism support systems to help travelers make a reservation of hotels and ticket. Also, they have normally a rating function to evaluate the services regarding the quality, price, and several other items. In this paper, we propose an evaluation method to make service providers disclose their information. For example, when users make a hotel room reservation on the website, they see some detailed information of the hotel and compare the multiple hotels on the attributes. However, most of users compare the hotel on a few information because the quantities of disclosed information are difference between hotels. Some hotels may be passive to disclose their information, otherwise they show the only photo that is looking good. In the hotel reservation website like agoda.com, hotels.com and others, travelers can give their opinion after staying there. However, the provided information may not be enough for travelers who are choosing a hotel. In this paper, we discuss the evaluation system in hotel reservation website. Then, to avoid asymmetric and incomplete information to the travelers, we design a mechanism of hotel evaluation. After that, we give some experiments to show the rate of incentives to make a reservation in our proposed mechanism. [ABSTRACT FROM PUBLISHER]

The article presents abstracts on business policy and strategy topics which include the complexities of top management team (TMT) composition, insights about dynamic capabilities observed from simulated evolving competition, and venture capital syndication in China.

This paper examines investment timing by the manager in a decentralized firm in the presence of asymmetric information. In particular, we extend the agency problem in a real options model to incorporate an audit technology which allows the owner, at a cost, to verify private information. The implied investment triggers include those in three related papers: standard full information model (e.g., McDonald and Siegel, 1986); Grenadier and Wang (2005); Shibata (2009). An increase in the penalty for the manager’s false report always reduces inefficiency in the investment triggers, while it does not necessarily reduce inefficiency in the total social welfare. Most importantly, however, the full information investment triggers and total social welfare can be approximated arbitrarily closely by making the penalty sufficiently large. [ABSTRACT FROM AUTHOR]

Maintaining good ratings increases the profits of sellers on online platforms. We analyze the role of strategic pricing for ratings management in a setting where a monopolist sells a good of unknown quality. Higher prices reduce the value for money, which on average worsens reviews. However, higher prices also induce only those consumers with a strong taste for the product to purchase, which on average improves reviews. We provide conditions under which the latter effect dominates so that ratings management leads to an upward pressure on prices. This upward pressure increases in the sensitivity of the aggregate rating to incoming reviews. As a consequence, recent changes to rating systems may have harmed consumers by increasing long-run price levels. [ABSTRACT FROM AUTHOR]

Most of the practical and theoretical debate about the firms' organizational structure in vertically related markets has focused on two extreme alternatives: full vertical integration and separation. However, it is quite common to observe partial vertical integration, namely, partial ownership agreements in which a firm acquires less than 100% of shares in a vertically related firm. Moreover, partial acquisitions have recently received great attention in antitrust control. Despite the practical relevance of this phenomenon, relatively little theoretical research has been devoted so far to partial vertical acquisitions. The aim of this paper is to investigate the strategic incentives of vertically related firms to partially integrate and their competitive effects. We address this question in a setting where two manufacturer-retailer hierarchies engage in differentiated good price competition and retailers are privately informed about their production costs. A manufacturer exclusively deals with its retailer, which is reasonable in the presence of product-specific investments that have to be sunk before production decisions take place. Moreover, bilateral contracting within a supply hierarchy is secret. This reflects the natural idea that the trading rules specified in a contractual relationship are not observed by competitors and therefore cannot be used for strategic purposes. We find that partial vertical integration emerges in equilibrium as the trade-off between two opposite effects. In line with the successive monopoly framework, a partial vertical ownership agreement entails an information vertical effect: the partial misalignment between the profit objectives of the manufacturer and the retailer leads to a higher retail price than under full integration in order to reduce the informational rents to the retailer. For a given price of the competitor, this form of double marginalization from asymmetric information reduces the hierarchy's profitability relative to full integration. In a competitive environment, however, the information vertical effect translates into an opposite competition horizontal effect: the partially integrated hierarchy's commitment to a higher price induces an accommodating behavior of the rival that increases its price as well. Therefore, partial vertical integration is profitable since it constitutes a strategic device to relax competition. The trade-off between the benefits of softer competition and the informational costs drives the equilibrium degree of vertical integration. Our analysis provides support for the antitrust scrutiny in vertically related markets. Moreover, it offers theoretical corroboration for the empirical evidence that partial equity stakes are more likely to be preferred to full integration in industries requiring relationship-specific investments, such as vertically related markets. The predictions of our model may serve as guidance for the empirical work on the competitive effects of partial vertical integration. [ABSTRACT FROM AUTHOR]

The existing literature has proposed several reasons for income smoothing by banks. Among them, tax incentives, managerial self-interest, concerns about financial fragility triggered by worsening investor perceptions, meeting capital requirements, and avoiding supervisory scrutiny. With the exception of the first, these reasons rely upon the asymmetry of information between bank insiders and outsiders. Hence, reducing the level of asymmetric information is expected to weaken the incentives and leeway of bank-managers for income-smoothing and, thus, to be associated with smaller smoothing. Which is the subject of this research. To test for this, we estimate typical income-smoothing equations in which loan-loss provisions, as share of total loans or total assets, is regressed on several bank-specific and economy-wide variables. The existence and extent of income-smoothing is judged from the sign and size of a bank-specific variable, i.e., earnings - also as share of total loans or total assets. A positive sign of this variable is consistent with income smoothing: higher earnings are associated with higher provisions, and vice-versa. The estimated equation also includes time dummies. The sample consists of 543 US bank holding companies and covers the period 1999 - 2011. Using US banks only controls for time-invariant country-specific variables which have been explored in the literature, such as, regulations, supervisory power, creditor rights, quality of institutions and financial development. The time dummies additionally take into account the effect of time-varying country-specific variables. To account for the degree of asymmetric information, we use a dummy that takes the value 1 for the years for which a mutual fund that is a member of USSIF has invested in the shares of a particular bank. USSIF stands for US Sustainability Investment Forum, US's membership association for socially and environmentally responsible investment professionals, firms, institutions and organizations. USSIF funds base their investment decisions on firms' ESG (Environment, Social, Governance) performance. The USSIF funds compensate for the lack of readily available and reliable ESG data and ratings with an intrusive screening and monitoring process. During this process there is active engagement of the top management of the funds and the firms --here, banks--, with annual and, occasionally, quarterly meetings. Our identifying hypothesis is that this process, which amounts to stronger monitoring and, hence, stronger market discipline, is associated with lower asymmetric information. Thus, we expect that income smoothing will be smaller for the banks in which USSIF funds invest. To test for this, we use the interaction term between this dummy with the earnings variable. The preliminary results indicate that there is income smoothing. Yet, confirming our expectations, the negative coefficient of the interaction term indicates that income smoothing is smaller for the banks in which USSIF funds invest. [ABSTRACT FROM AUTHOR]

An abstract of the article "Disentangling the Effects of Asymmetric Information and Overconfidence in Goal Selection" by Erik B. Johnson and colleagues is presented.

An extensive game that uses imperfect, potentially asymmetric information and allows the intrusion of nature is presented. Both players are represented by neural network models. These models follow the approaches to decision-making delineated by H. Dreyfus and S. Dreyfus (1986) and the higher-order brain function proposed by Pribram. These views emphasize the fact that brains are inherently synthetic systems whose strengths are derived from parallelism, fault tolerance, and the ability to reconstruct beliefs on the basis of new data. The authors present threefold models of choice which involve automaticity, complex rule construction and rule following, and cortex sensitivity. Misconceptions and resulting distorted outcomes occur [ABSTRACT FROM PUBLISHER]