Market‐Implied Spread for Earthquake CAT Bonds: Financial Implications of Engineering Decisions

In the event of natural and man‐made disasters, owners of large‐scale infrastructure facilities (assets) need contingency plans to effectively restore the operations within the acceptable timescales. Traditionally, the insurance sector provides the coverage against potential losses. However, there are many problems associated with this traditional approach to risk transfer including counterparty risk and litigation. Recently, a number of innovative risk mitigation methods, termed alternative risk transfer (ART) methods, have been introduced to address these problems. One of the most important ART methods is catastrophe (CAT) bonds. The objective of this article is to develop an integrative model that links engineering design parameters with financial indicators including spread and bond rating. The developed framework is based on a four‐step structural loss model and transformed survival model to determine expected excess returns. We illustrate the framework for a seismically designed bridge using two unique CAT bond contracts. The results show a nonlinear relationship between engineering design parameters and market‐implied spread.     

Online Intermediary as a Channel for Selling Quality‐Differentiated Services

When deciding whether to utilize an online intermediary in addition to their own distribution channels, quality differentiated service providers face the trade‐off between the benefit of extended reach and the threat of increased competition. Using an analytical framework, we analyze when and how service providers may utilize an online intermediary to their advantage in the presence of advance selling (i.e., selling a service at an early date for future consumption). In general, when an online intermediary is used, the competition effect dominates the reach effect and leads to a falling price trend. Interestingly, we find that the negative effect of increased competition on profits, due to intermediary usage, can be reversed by committing to self‐imposed participation limits (i.e., selling only a predetermined amount of services through the online intermediary). This ensures that the service provider is better off selling through both its own site and the online intermediary, rather than selling exclusively using either channel.      

Intertemporal decision making with present biased preferences

I study the behavior of individuals with present biased preferences who are involved in costly, long-run projects. By using generic cost and reward functions, I characterize the behaviors of the sophisticated, partial naive and naive types. It is shown that there may arise cases where naives needlessly put effort on projects they never complete. Moreover, in endogenous total cost projects, the naive types always end up completing projects of lesser quality than originally intended. By introducing a bonus motive, it is shown that agents with higher self-control problems should be given a higher bonus to prevent inefficient procrastination. I, then, characterize the behavior of partially naives who potentially learn self-preferences. It is found that without learning self-preferences, partial naives behave either like sophisticates or naives depending on the level of naivete; with learning, if the learning pace is fast enough, procrastination until the deadline does not occur.     

Androgen deficiency in the adult male

Introduction. The purpose of this study was to investigate the association between severity of lower urinary tract symptoms (LUTS), erectile dysfunction (ED) and metabolic syndrome.

Methods. Our study population included a consecutive series of 190 patients with LUTS (International Prostate Symptom Score-IPSS >7) with or without manifestations of the metabolic syndrome. The diagnoses of diabetes mellitus and hypertension were obtained from the patient's medical history. Data on blood pressure, waist measure, body height and weight were collected and body mass index were calculated. Patients were assessed based on the International Index of Erectile Function (IIEF) for ED and IPSS and IPSS-Quality of Life for LUTS. Blood samples were drawn from fasting patients to determine, fasting blood glucose (FBG), triglycerides, HDL-cholesterol and serum total testosterone levels.

Results. In severe LUTS patient group, IIEF erectile function domain scores were significantly lower than moderate LUTS patient group (p < 0.05). Multiple logistic regression analysis confirmed that presence of ED was the most predictor of severe LUTS. The prevalence of metabolic syndrome was higher in patients with severe LUTS (26%vs. 46%, p = 0.009). The severe form of the LUTS was significantly correlated with waist circumference >102 cm (p < 0.05), blood pressure ≥130/85 mmHg (p < 0.05) and FBG >110 mg/dl (p < 0.01).

Conclusion. Obesity, high plasma level of FBG and hypertension constitute risk factors for the development of severe LUTS. Metabolic syndrome may play a key role in the pathogenesis in both ED and LUTS. Presence of ED is the most predictor of severe LUTS.     

Imperfect information processing in sequential bargaining games with present biased preferences

This paper studies an alternating-offers bargaining game between a time-consistent player and a time-inconsistent player who processes information on future self-preferences imperfectly. Time-inconsistency and information processing are modeled by using cognitive and mood state approaches, respectively. This model structure allows for the learning of the partially naive time-inconsistent agent. The results characterize the relationship among the level of naivete, the level of learning probability and the equilibrium. We find critical values of the model parameters that specify whether the agreement is delayed and characterize the probabilistic nature of the agreement. In addition, comparative static results are reported with respect to time preferences.     

Sampling refugee groups: The example of Syrians in Turkey

Quantitative surveys among refugees not only advance our scientific understanding of forced migration, but they also provide political and civil society actors with the information they need to take measures to improve their protection and living conditions. These actors often need to acquire such information within a short period of time. However, the methods to access and survey this group to gain valid findings are subject to scientific debates. Based on a survey among Syrian refugees in Turkey, this article demonstrates a study design that generated valid knowledge about this population within a limited amount of time and resources. As a unique feature of the article, we compare our sample with four other sources of information to scrutinize how well it resembles the target population. As we can show, although point estimations differ to some extent, the internal distributions of sample characteristics are comparable across sources confirming the success of our sampling method.