Credit card debt puzzles

Most US credit card holders revolve high-interest debt, often combined with substantial (i) asset accumulation by retirement, and (ii) low-rate liquid assets. Hyperbolic discounting can resolve only the former puzzle (Laibson et al., 2003). Bertaut and Haliassos (2002) proposed an 'accountant-shopper'framework for the latter. The current paper builds, solves, and simulates a fully-specified accountant-shopper model, to show that this framework canactually generate both types of co-existence, as well as target credit card utilization rates consistent with Gross and Souleles (2002). The benchmark model is compared to setups without self-control problems, with alternative mechanisms, and with impatient but fully rational shoppers.

The customer valuations game as a basis for revenue management

I describe the customer valuations game, a simple intuitive game that can serve as a foundation for teaching revenue management. The game requires little or no preparation, props or software, takes around two hours (and hence can be finished in one session), and illustrates the formation of classical (airline and hotel) revenue management mechanisms such as advanced purchase discounts, booking limits and fixed multiple prices. I normally use the game as a base to introduce RM and to develop RM forecasting and optimization concepts off it. The game is particularly suited for non-technical audiences.

The credit ratings game

The spectacular failure of top-rated structured finance products has broughtrenewed attention to the conflicts of interest of Credit Rating Agencies (CRAs). We modelboth the CRA conflict of understating credit risk to attract more business, and the issuerconflict of purchasing only the most favorable ratings (issuer shopping), and examine theeffectiveness of a number of proposed regulatory solutions of CRAs. We find that CRAs aremore prone to inflate ratings when there is a larger fraction of naive investors in the marketwho take ratings at face value, or when CRA expected reputation costs are lower. To theextent that in booms the fraction of naive investors is higher, and the reputation risk forCRAs of getting caught understating credit risk is lower, our model predicts that CRAs aremore likely to understate credit risk in booms than in recessions. We also show that, due toissuer shopping, competition among CRAs in a duopoly is less efficient (conditional on thesame equilibrium CRA rating policy) than having a monopoly CRA, in terms of both totalex-ante surplus and investor surplus. Allowing tranching decreases total surplus further.We argue that regulatory intervention requiring upfront payments for rating services (beforeCRAs propose a rating to the issuer) combined with mandatory disclosure of any ratingproduced by CRAs can substantially mitigate the con.icts of interest of both CRAs andissuers.

Under-achievement and the glass ceiling: Evidence from a TV game show

We use a Colombian TV game show to test gender differences in competitivebehavior where there is no opportunity for discrimination and females face no genderspecificexternal constraints. Each game started with six contestants who had toanswer general knowledge questions in private. There were five rounds of questionsand, at the end of each, one participant was eliminated. Despite equality in startingnumbers, women earn less than men and exit the game at a faster rate. In particular,there are more voluntary withdrawals by women than men. We draw an analogybetween the game and the process by which employees rise through the levels of acorporation. As such, we note that glass ceilings may result, in part, from women sown behavior and this raises the issue of how women are socialized to behave. At thesame time, our results illustrate that maintaining and promoting gender diversity at thelower/middle ranks of organizations is necessary to obtain gender diversity at the top.

Assinatura Digital Foco Smart Card

A assinatura digital é um processo de assinatura electrónica baseado no sistema criptográfico assimétrico composto por um algoritmo ou série de algoritmos, mediante o qual é gerado um par de chaves assimétricas exclusivas e complementares. Tal como a assinatura manuscrita, a assinatura digital não pode ser falsificada, pelo que se adiciona uma função hash ao valor da chave gerada, para garantir a segurança do sistema. A assinatura digital permite, ao mesmo tempo, a identificação positiva do autor de uma mensagem (ou do signatário de um documento) e a verificação da integridade da mesma. Refira-se, porém, que a assinatura digital pode ser anexa a qualquer mensagem, seja esta decifrada ou não, apenas para que o receptor tenha a certeza da identidade do emissor e de que a mensagem chegou intacta ao destino. Baseia-se na criptografia da chave pública, que usa um algoritmo de duas chaves, a privada e a pública, diferentes mas matematicamente associadas: a primeira cria a assinatura digital e decifra os dados; a segunda verifica a assinatura e devolve-a ao formato original. O autor da mensagem mantém secreta a sua chave privada e divulga a chave pública, e vice-versa. A identidade do dono da chave pública é atestada pelo certificado digital emitido por uma entidade certificadora (uma espécie de notário). Independentemente da forma que assume, a assinatura electrónica, e a digital em particular, deve cumprir três funções: a autenticação (tal como acontece com o habitual gatafunho a que chamamos assinatura, apenas o indivíduo deve ser capaz de a reproduzir); não repudiação (quando o indivíduo assina não pode voltar atrás); e integridade (é necessário assegurar que os documentos assinados não são alterados sem o consentimento dos signatários).

Bringing game theory to hypothesis testing: Establishing finite sample bounds on inference

Small sample properties are of fundamental interest when only limited data is avail-able. Exact inference is limited by constraints imposed by speci.c nonrandomizedtests and of course also by lack of more data. These e¤ects can be separated as we propose to evaluate a test by comparing its type II error to the minimal type II error among all tests for the given sample. Game theory is used to establish this minimal type II error, the associated randomized test is characterized as part of a Nash equilibrium of a .ctitious game against nature.We use this method to investigate sequential tests for the di¤erence between twomeans when outcomes are constrained to belong to a given bounded set. Tests ofinequality and of noninferiority are included. We .nd that inference in terms oftype II error based on a balanced sample cannot be improved by sequential sampling or even by observing counter factual evidence providing there is a reasonable gap between the hypotheses.

Consumer Advisory Bulletin, Gift Card Fact Sheet – and Tips for Consumers, December 2007

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Gift Card Fact Sheet – and Tips for Consumers

An experimental study of adaptive behavior in an oligopolistic market game

We consider an oligopolistic market game, in which the players are competing firm in the same market of a homogeneous consumption good. The consumer side is represented by a fixed demand function. The firms decide how much to produce of a perishable consumption good, and they decide upon a number of information signals to be sent into the population in order to attract customers. Due to the minimal information provided, the players do not have a well--specified model of their environment. Our main objective is to characterize the adaptive behavior of the players in such a situation.

Consumer Advisory Bulletin, Bank Credit Card Information, Fall 2003

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Bank Credit Card Information

Consumer Advisory Bulletin, More Sources on Students and Credit Card Debt, October 2007

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: More Sources on Students and Credit Card Debt Suggested by the Office of Attorney General Tom Miller

Consumer Advisory Bulletin, How to Deal With Credit Card Offers, August 2007

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: How to Deal With Credit Card Offers

Consumer Advisory Bulletin, Fair Debt Collection: Know Your Rights, March 2007

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Fair Debt Collection: Know Your Rights