Economics Insights @ CBS

In many industries, product design and manufacturing lead times are sufficiently long that both the quality level of a product and the amount of inventory produced must be determined before a firm knows what the actual demand will be. In this paper, we conduct a theoretical analysis of such a setting. We first consider a centralized channel and characterize the optimal decisions by establishing relationships that must hold between the elasticity of cost of quality and the elasticity of revenue and show that quality and inventory are strategic substitutes.

People are exposed to persuasive communication across many different contexts: Governments, companies, and political parties use persuasive appeals to encourage people to eat healthier, purchase a particular product, or vote for a specific candidate. Laboratory studies show that such persuasive appeals are more effective in influencing behavior when they are tailored to individuals' unique psychological characteristics. However, the investigation of large-scale psychological persuasion in the real world has been hindered by the questionnaire-based nature of psychological assessment.

In order for a patient to be discharged from a hospital unit, a physician must first perform a physical examination and review the pertinent medical information to determine that the patient is stable enough to be transferred to a lower level of care or be discharged home. Requiring an inspection of a patient's "readiness for discharge" introduces an interesting dynamic where patients may occupy a bed longer than medically necessary.

This article investigates the cost and feasibility of reducing U.S. greenhouse gas emissions by 80 percent from 2005 levels by 2050. The United States has stated in its Paris Conference of the Parties (COP) 21 submission that this is its aspiration. I suggest that this goal can be reached at a net cost in the range of $37 to $135 billion/year. I assume that the goal is to be reached by extensive use of solar photovoltaic and wind energy (66 percent of generating capacity), in which case the cost of energy storage will play a key role in the overall cost.

Human personality traits differ across geographical regions. However, it remains unclear what generates these geographical personality differences. Because humans constantly experience and react to ambient temperature, we propose that temperature is a crucial environmental factor that is associated with individuals' habitual behavioural patterns and, therefore, with fundamental dimensions of personality.