Experts vs. Discounters: Consumer Free Riding and Experts Withholding Advice in Markets for Credence Goods

This paper studies the incentives for credence goods experts to invest effort in diagnosis if effort is both costly and unobservable, and if they face competition by discounters who are not able to perform a diagnosis. The unobservability of diagnosis effort and the credence characteristic of the good induce experts to choose incentive compatible tariff structures. This makes them vulnerable to competition by discounters. We explore the conditions under which honestly diagnosing experts survive competition by discounters; we identify situations in which experts misdiagnose consumers in order to prevent them from free-riding on experts' advice; and we discuss policy options to solve the free-riding consumers–cheating experts problem.

Approaches for calculation of holding costs in the context of greenfield residential development

There are increasing indications that the contribution of holding costs and its impact on housing affordability is very significant. Their importance and perceived high level impact can be gauged from considering the unprecedented level of attention policy makers have given them recently. This may be evidenced by the embedding of specific strategies to address burgeoning holding costs (and particularly those cost savings associated with streamlining regulatory assessment) within statutory instruments such as the Queensland Housing Affordability Strategy, and the South East Queensland Regional Plan. However, several key issues require further investigation. Firstly, the computation and methodology behind the calculation of holding costs varies widely. In fact, it is not only variable, but in some instances completely ignored. Secondly, some ambiguity exists in terms of the inclusion of various elements of holding costs and assessment of their relative contribution. Perhaps this may in part be explained by their nature: such costs are not always immediately apparent. They are not as visible as more tangible cost items associated with greenfield development such as regulatory fees, government taxes, acquisition costs, selling fees, commissions and others. Holding costs are also more difficult to evaluate since for the most part they must be ultimately assessed over time in an ever-changing environment based on their strong relationship with opportunity cost which is in turn dependant, inter alia, upon prevailing inflation and / or interest rates. This paper seeks to provide a more detailed investigation of those elements related to holding costs, and in so doing determine the size of their impact specifically on the end user. It extends research in this area clarifying the extent to which holding costs impact housing affordability. Geographical diversity indicated by the considerable variation between various planning instruments and the length of regulatory assessment periods suggests further research should adopt a case study approach in order to test the relevance of theoretical modelling conducted.

Yield-factor volatility models

The term structure of interest rates is often summarized using a handful of yield factors that capture shifts in the shape of the yield curve. In this paper, we develop a comprehensive model for volatility dynamics in the level, slope, and curvature of the yield curve that simultaneously includes level and GARCH effects along with regime shifts. We show that the level of the short rate is useful in modeling the volatility of the three yield factors and that there are significant GARCH effects present even after including a level effect. Further, we find that allowing for regime shifts in the factor volatilities dramatically improves the model’s fit and strengthens the level effect. We also show that a regime-switching model with level and GARCH effects provides the best out-of-sample forecasting performance of yield volatility. We argue that the auxiliary models often used to estimate term structure models with simulation-based estimation techniques should be consistent with the main features of the yield curve that are identified by our model.

Changes in accountancy costs for Tasmanian SMEs implementing computerised accounting systems

There have been powerful incentives for Tasmanian Small and Medium-sized Enterprises (SMEs) to adopt information technology to enable them to remain competitive and to comply with legislative regulations. This research study was undertaken to establish whether SMEs implementing computerised accounting systems have a subsequent change in their external accountancy fees. The research study employed a quantitative methodology using survey questionnaires. The study found that in less than 3% of cases SMEs reported a decrease in accountancy fees, in almost 45% of cases the organisation actually experienced a slight to substantial fee increase while 52% reported no change in accountancy fees.

The jump component of S&P 500 volatility and the VIX index

Much research has investigated the differences between option implied volatilities and econometric model-based forecasts. Implied volatility is a market determined forecast, in contrast to model-based forecasts that employ some degree of smoothing of past volatility to generate forecasts. Implied volatility has the potential to reflect information that a model-based forecast could not. This paper considers two issues relating to the informational content of the S&P 500 VIX implied volatility index. First, whether it subsumes information on how historical jump activity contributed to the price volatility, followed by whether the VIX reflects any incremental information pertaining to future jump activity relative to model-based forecasts. It is found that the VIX index both subsumes information relating to past jump contributions to total volatility and reflects incremental information pertaining to future jump activity. This issue has not been examined previously and expands our understanding of how option markets form their volatility forecasts.

Housing supply in Australia : the impact of the availability of development finance

Before the Global Financial Crisis many providers of finance had growth mandates and actively pursued development finance deals as a way of gaining higher returns on funds with regular capital turnover and re-investment possible. This was able to be achieved through high gearing and low presales in a strong market. As asset prices fell, loan covenants breached and memories of the 1990’s returned, banks rapidly adjusted their risk appetite via retraction of gearing and expansion of presale requirements. Early signs of loosening in bank credit policy are emerging, however parties seeking development finance are faced with a severely reduced number of institutions from which to source funding. The few institutions that are lending are filtering out only the best credit risks by way of constrictive credit conditions including: low loan to value ratios, the corresponding requirement to contribute high levels of equity, lack of support in non-prime locations and the requirement for only borrowers with well established track records. In this risk averse and capital constrained environment, the ability of developers to proceed with real estate developments is still being constrained by their inability to obtain project finance. This paper will examine the pre and post GFC development finance environment. It will identify the key lending criteria relevant to real estate development finance and will detail the related changes to credit policies over this period. The associated impact to real estate development projects will be presented, highlighting the significant constraint to supply that the inability to obtain finance poses.

The 4th International Network of Indigenous Health Knowledge and Development Conference

The International Network of Indigenous Health Knowledge and Development (INIHKD) Conference was held from Monday 24 May to Friday 28 May 2010 at Kiana Lodge, Port Madison Indian Reservation, Suquamish Nation, Washington State, United States of America. The overall theme for the 4th Biennial Conference was ‘Knowing Our Roots: Indigenous Medicines, Health Knowledges and Best Practices’. This article details the experience of participants who were at the INIHKD Conference. It concludes with an encouragement to people to attend the 5th INIHKD Conference in Australia in 2012.

Room for improvement : hotel giant resorts to Six Sigma to improve operations

Six Sigma provides a framework for quality improvement and business excellence. Introduced in the 1980s in manufacturing, the concept of Six Sigma has gained popularity in service organizations. After initial success in healthcare and banking, Six Sigma has gradually gained traction in other types of service industries, including hotels and lodging. Starwood Hotels and Resorts was the first hospitality giant to embrace Six Sigma. In 2001, Starwood adopted the method to develop innovative, customer-focused solutions and to transfer these solutions throughout the global organization. To analyze Starwood's use of Six Sigma, the authors collected data from articles, interviews, presentations and speeches published in magazines, newspapers and Web sites. This provided details to corroborate information, and they also made inferences from these sources. Financial metrics can explain the success of Six Sigma in any organization. There was no shortage of examples of Starwood's success resulting from Six Sigma project metrics uncovered during the research.

Managing illegal street racing and associated risky driving behaviour : An Australian perspective

Illegal street racing has received increased attention in recent years from the media, governments and road safety professionals. At the same time, there has been a shift from treating illegal street racing as a public nuisance issue to a road safety problem in Australia, as this behaviour now attracts a penalty of increased periods of vehicle impoundment leading to permanent vehicle forfeiture for repeat offences. This severe vehicle sanction is typically applied to repeat drink driving offenders and drivers who breach suspensions and disqualifications in North American jurisdictions, but was first introduced in Australia to deal with illegal street racing and associated risky driving behaviours, grouped together under the label of ‘hooning’ in Australian jurisdictions. This paper describes how Australian jurisdictions are dealing with this issue. The research described in this paper drew on multiple data sources to explore illegal street racing and the management of this issue in Australia. First, the paper reviews the relevant legislation in each Australian state to describe the cross-jurisdictional similarities and differences in approaches. It also describes some results from focus group discussions and a quantitative online survey with drivers who self-report engaging in illegal street racing and associated behaviours in Queensland, Australia. It was found that approaches to dealing with illegal street racing and associated risky driving behaviours in each Australian state are similar, with increasing periods of vehicle impoundment (leading to vehicle forfeiture) applied to repeat hooning offences within prescribed periods. Participants in the focus groups and respondents to the questionnaire generally felt these penalty periods were severe, with perceptions of severity increasing with the length of the penalty period. It was concluded that there is a need for each jurisdiction to objectively evaluate the effectiveness of their vehicle impoundment and forfeiture programs for hooning. These evaluations should compare the relative costs of these programs (e.g., enforcement, unrecovered towing and storage fees, and court costs) to the observed benefits (e.g., reduction in target behaviours, reduction in community complaints, and reduction in the number and severity of associated crashes).

Automatic speaker recognition under adverse conditions

Speaker verification is the process of verifying the identity of a person by analysing their speech. There are several important applications for automatic speaker verification (ASV) technology including suspect identification, tracking terrorists and detecting a person’s presence at a remote location in the surveillance domain, as well as person authentication for phone banking and credit card transactions in the private sector. Telephones and telephony networks provide a natural medium for these applications. The aim of this work is to improve the usefulness of ASV technology for practical applications in the presence of adverse conditions. In a telephony environment, background noise, handset mismatch, channel distortions, room acoustics and restrictions on the available testing and training data are common sources of errors for ASV systems. Two research themes were pursued to overcome these adverse conditions: Modelling mismatch and modelling uncertainty. To directly address the performance degradation incurred through mismatched conditions it was proposed to directly model this mismatch. Feature mapping was evaluated for combating handset mismatch and was extended through the use of a blind clustering algorithm to remove the need for accurate handset labels for the training data. Mismatch modelling was then generalised by explicitly modelling the session conditions as a constrained offset of the speaker model means. This session variability modelling approach enabled the modelling of arbitrary sources of mismatch, including handset type, and halved the error rates in many cases. Methods to model the uncertainty in speaker model estimates and verification scores were developed to address the difficulties of limited training and testing data. The Bayes factor was introduced to account for the uncertainty of the speaker model estimates in testing by applying Bayesian theory to the verification criterion, with improved performance in matched conditions. Modelling the uncertainty in the verification score itself met with significant success. Estimating a confidence interval for the "true" verification score enabled an order of magnitude reduction in the average quantity of speech required to make a confident verification decision based on a threshold. The confidence measures developed in this work may also have significant applications for forensic speaker verification tasks.

A ‘cost-per-wear’ model based on contact lens replacement frequency

Purpose: The aim was to construct and advise on the use of a cost-per-wear model based on contact lens replacement frequency, to form an equitable basis for cost comparison. ---------- Methods: The annual cost of professional fees, contact lenses and solutions when wearing daily, two-weekly and monthly replacement contact lenses is determined in the context of the Australian market for spherical, toric and multifocal prescription types. This annual cost is divided by the number of times lenses are worn per year, resulting in a ‘cost-per-wear’. The model is presented graphically as the cost-per-wear versus the number of times lenses are worn each week for daily replacement and reusable (two-weekly and monthly replacement) lenses.---------- Results: The cost-per-wear for two-weekly and monthly replacement spherical lenses is almost identical but decreases with increasing frequency of wear. The cost-per-wear of daily replacement spherical lenses is lower than for reusable spherical lenses, when worn from one to four days per week but higher when worn six or seven days per week. The point at which the cost-per-wear is virtually the same for all three spherical lens replacement frequencies (approximately AUD$3.00) is five days of lens wear per week. A similar but upwardly displaced (higher cost) pattern is observed for toric lenses, with the cross-over point occurring between three and four days of wear per week (AUD$4.80). Multifocal lenses have the highest price, with cross-over points for daily versus two-weekly replacement lenses at between four and five days of wear per week (AUD$5.00) and for daily versus monthly replacement lenses at three days per week (AUD$5.50).---------- Conclusions: This cost-per-wear model can be used to assist practitioners and patients in making an informed decision in relation to the cost of contact lens wear as one of many considerations that must be taken into account when deciding on the most suitable lens replacement modality.