Strategy

We develop a general equilibrium model of a production economy which has a risky production technology as well as a growth option to expand the scale of the productive sector of the economy. We show that when confronted with growth options, the representative consumer may sharply alter consumption rates to improve the likelihood of investment. This reduction in consumption is accompanied by an erosion of the option value of waiting to invest, leading to investment near the zero NPV threshold.

In a year without vaccine shortages, no fewer than 36,000 deaths - twelve times the number of September 11 victims - and 200,000 hospitalizations are attributed to influenza and its complications. In terms of productivity, between $11 and $20 billion is lost. The sudden elimination of one of only two manufacturers and half the national supply was hardly an unforeseeable or rare event, as numerous Senate testimonies and General Accounting Office reports have documented recurring supply problems with this and other critical vaccines.

The author discusses his work with the Conference Board's Council on Corporate Brand Management to develop a brand scorecard for monitoring the health of a brand.

Bayesian learning implies decreasing weights on prior beliefs and increasing weights on the accuracy of the analyst?s past forecast record, as the number of forecast errors comprising her forecast record (its length) increases. Consistent with this model of investor learning, empirical tests show that investors? reactions to forecast news are increasing in the product of the accuracy and length of analysts? forecast records. Moreover, the Bayesian learning predicted by our model is more descriptive of investor reactions than is a static model which predicts that investors?

Combining survey responses and trading records of clients of a German retail broker, this paper examines some of the causes for the apparent failure to buy and hold a well-diversified portfolio. The subjective investor attributes gleaned from the survey help explain the variation in actual portfolio and trading choices. Self-reported risk aversion is the single most important determinant of both portfolio diversification and turnover; other things equal, investors who report being more risk tolerant hold less diversified portfolios and trade more aggressively.

In this chapter, I'll lay out the principal facts and controversies surrounding international flows of capital and their attendant risks. I'll review the perspectives of economic historians and economists on the implications of capital mobility, both during the first wave of globalization (prior to World War I) and during the recent wave (since 1980). I'll emphasize changes over time - especially political changes - that have weakened the case for unfettered capital mobility and have made capital flows more controversial among economists today than in the past.

CASE SETTING: $250 million to $499 million in revenues; luxury goods; Netherlands, France At three o'clock in the morning of September 10, 2001, Thierry Hautillac, a risk arbitrageur, learns of the final agreement between Pinault-Printemps-Redoute SA (PPR) and LVMH Moet Hennessy Louis Vuitton SA (LVMH). After a contest for control of Gucci lasting more than two years, PPR has emerged as the winner.