Economics Insights @ CBS

Most models of how perceivers infer the widespread attitudes and qualities of social groups revolve around either the self (social projection, false consensus) or stereotypes (stereotyping). I suggest people rely on both of these inferential strategies, with perceived general similarity moderating their use, leading to increased levels of projection and decreased levels of stereotyping.

Interest in the role of entrepreneurial entry in innovation raises the question of the extent to which tax policy encourages or discourages entry. We find that, while the level of the marginal tax rate has a negative effect in entrepreneurial entry, the progressivity of the tax also discourages entrepreneurship, and significantly so for some groups of households. These effects are principally traceable to the upside' or success' convexity of the household tax schedule.

This paper develops algorithms for the pricing of discretely sampled barrier, lookback and hindsight options and discretely exercisable American options. Under the Black-Scholes framework, the pricing of these options can be reduced to evaluation of a series of convolutions of the Gaussian distribution and a known function. We compute these convolutions efficiently using the double-exponential integration formula and the fast Gauss transform.

We consider a call center model with m input flows and r pools of agents; the m-vector [lamda] of instantaneous arrival rates is allowed to be time dependent and to vary stochastically. Seeking to optimize the trade-off between personnel costs and abandonment penalties, we develop and illustrate a practical method for sizing the r agent pools. Using stochastic fluid models, this method reduces the staffing problem to a multidimensional newsvendor problem, which can be solved numerically by a combination of linear programming and Monte Carlo simulation.