Mixed Logit Model Performance and Distributional Assumptions: Preferences and GM foods

Using mixed logit models to analyse choice data is common but requires ex ante specification of the functional forms of preference distributions. We make the case for greater use of bounded functional forms and propose the use of the Marginal Likelihood, calculated using Bayesian techniques, as a single measure of model performance across non nested mixed logit specifications. Using this measure leads to very different rankings of model specifications compared to alternative rule of thumb measures. The approach is illustrated using data from a choice experiment regarding GM food types which provides insights regarding the recent WTO dispute between the EU and the US, Canada and Argentina and whether labelling and trade regimes should be based on the production process or product composition.

Weight of evidence needed to substantiate a health effect for probiotics and prebiotics: regulatory considerations in Canada, EU, and US

Successful and responsible introduction of probiotic and prebiotic products into the worldwide marketplace requires labelling for health benefits that meets consumer needs, adheres to regulatory standards and does not overextend scientific evidence. Regulations differ among countries, but underlying all is an emphasis on scientific credibility of any statements of health benefits. This paper considers the value of different types of evidence offered in substantiation of efficacy and reviews different regulatory approaches to labelling for health claims. Limitations of in vitro, animal and different types of human studies used for efficacy substantiation for probiotics and prebiotics are discussed.

When does ignorance make us smart? Additional factors guiding heuristic inference

“Fast & frugal” heuristics represent an appealing way of implementing bounded rationality and decision-making under pressure. The recognition heuristic is the simplest and most fundamental of these heuristics. Simulation and experimental studies have shown that this ignorance-driven heuristic inference can prove superior to knowledge based inference (Borges, Goldstein, Ortman & Gigerenzer, 1999; Goldstein & Gigerenzer, 2002) and have shown how the heuristic could develop from ACT-R’s forgetting function (Schooler & Hertwig, 2005). Mathematical analyses also demonstrate that, under certain conditions, a “less-is-more effect” will always occur (Goldstein & Gigerenzer, 2002). The further analyses presented in this paper show, however, that these conditions may constitute a special case and that the less-is-more effect in decision-making is subject to the moderating influence of the number of options to be considered and the framing of the question.

Ownership Advantages in Cross-border Real Estate Development: Some Evidence from European Markets

Drawing upon European industry and country case studies, this paper investigates the scope and drivers of cross-border real estate development. It is argued that the real estate development process encompasses a diverse range of activities and actors. It is inherently localised, the production process is complex and emphermal, and the outputs are heterogeneous. It analyses a transactions database of European real estate markets to provide insights into the extent of, and variations in, market penetration by non-domestic real estate developers. The data were consistent with the expectation that non-domestic real estate developers from mature markets would have a high level of market penetration in immature markets. Compared to western European markets, the CEE real estate office sales by developers were dominated by US, Israeli and other EU developers. This pattern is consistent with the argument that non-domestic developers have substantial Dunning-type ownership advantages when entering immature real estate markets. However, the data also suggested some unexpected patterns. Relative to their GDP, Austria, Belgium, Denmark, Sweden, Netherlands and Israel accounted for large proportions of sales by developers. All are EU countries (except Israel) with small, open, affluent, highly traded economies. Further, the data also indicate that there may be a threshold where locational disadvantages outweigh ownership advantages and deter cross-border real estate development.

The impact of cross-border real estate investment on commercial real estate capitalisation rates

This study examines the impact of foreign real estate investment on the US office market capitalization rates. The geographic unit of analysis is MSA and the time period is 2001-2013. Drawing upon a database of commercial real estate transactions provided by Real Capital Analytics, we model the determinants of market capitalization rates with a particular focus on the significance of the proportion of market transactions involving foreign investors. We have employed several econometric techniques to explore the data, potential estimation biases, and test robustness of the results. The results suggest statistically significant effects of foreign investment across 38 US metro areas. It is estimated that, all else equal, a 100 basis points increase in foreign share of total investment in a US metropolitan office market causes about an 8 basis points decrease in the market cap rate.