Contracting for infrastructure projects as credence goods

Large infrastructure projects are a major responsibility of urban and regional governments, who usually lack expertise to fully specify the demanded projects. Contractors, typically experts on such projects due to experience with similar projects elsewhere, advise of the needed design in their bids. Producing the right design is nevertheless costly. We model such infrastructure projects taking into account their credence goods feature and the costly design effort they require and examine the performance of commonly used contracting methods. We show that when building costs are homogeneous and public information, multi-stage competitive bidding involving shortlisting of two contractors and contingent compensation of both contractors on design efforts outperforms sequential search and the traditional Design-and-Build approach. If building costs are private information of the contractors and are revealed to them after design cost is sunk, sequential search may be superior to the other two methods.

Contracting for infrastructure projects as credence goods

Large infrastructure projects are a major responsibility of urban and regional governments, who usually lack expertise to fully specify the demanded projects. Contractors, typically experts on such projects due to experience with similar projects,advise of the needed design as well as the cost of construction in their bids. Producing the right design is costly. We model such infrastructure projects taking into account their credence goods feature and the costly design effort they require and examine the performance of commonly used contracting methods. We show that when building costs are homogeneous and public information, simultaneous bidding involving shortlisting of two contractors and contingent compensation of both contractors on design efforts outperforms sequential search. If building costs are private information of the contractors and are revealed to them after design cost is sunk,sequential search may be superior to simultaneous bidding.

A simple model of two-stage choice

I provide choice-theoretic foundations for a simple two-stage model, called transitive shortlist methods, where choices are made by sequentially by applying a pair of transitive preferences (or rationales) to eliminate inferior alternatives. Despite its simplicity, the model accommodates a wide range of choice phenomena including the status quo bias, framing, homophily, compromise, and limited willpower. I establish that the model can be succinctly characterized in terms of some well-documented context effects in choice. I also show that the underlying rationales are straightforward to determine from readily observable reversals in choice. Finally, I highlight the usefulness of these results in a variety of applications.

Low-cost momentum strategies

This paper analyses the impact of trading costs on the profitability of momentum strategies in the United Kingdom and concludes that losers are more expensive to trade than winners. The observed asymmetry in the costs of trading winners and losers crucially relates to the high cost of selling loser stocks with small size and low trading volume. Since transaction costs severely impact net momentum profits, the paper defines a new low-cost relative-strength strategy by shortlisting from all winner and loser stocks those with the lowest total transaction costs. While the study severely questions the profitability of standard momentum strategies, it concludes that there is still room for momentum-based return enhancement, should asset managers decide to adopt low-cost relative-strength strategies.

Critique of "cultural fit" in relation to the recruitment of Indian information technologists for the Y2K project in Australia

In this study of intercultural communication, I investigate the multi-faceted meaning of the expression " cultural fit " in the sense that it is used by recruiters when shortlisting Indian information technologists to fill skills shortages for the Y2K project in Australia. The data is in the form of ten videotaped interviews in Bangalore and the recruiter commentary on those tapes in Melbourne. A crucial decision to be made by recruiters in any shortlisting process is " How will the candidate fit into the workplace?" This question becomes more problematical when applied to overseas-trained professionals. I take a critical approach, drawing principally on the research traditions of linguistics where studies of intercultural communication and workplace interaction intersect, employing chiefly the tools of Critical Discourse Analysis and Interactional Sociolinguistics and the more abstract notions of Bourdieu. A bridge between these different discourse approaches is provided by Sarangi & Roberts < 1999 < who show the connection between the larger institutional order and interactional routines, through an elaboration of frontstage talk and backstage talk following Goffman < 1959 < . An analysis of the interviews < frontstage talk < reveals "cultural fit" to involve a knowledge of institutional talk, in particular, directness. The recruiter commentary < backstage talk < draws attention to issues of intelligibility, body language, technical expertise and workplace values. the study shows that Indian Information Technologists have "partial fit" in that they possess technical fit but do not demonstrate, or lack the opportunity to demonstrate in the interview, Australian workplace values such as small talk, humour and informality. The recruiter judgments were fleeting and apart from checking for intelligibility, were made on the basis of candidates' body language thus highlighting its importance and its relative absence from the discourse approaches mentioned above. This study shows clearly that there is room for more communicative flexibility on the part of all the stakeholders.