nep-knm New Economics Papers
on Knowledge Management and Knowledge Economy
Issue of 2007‒03‒03
five papers chosen by
Emanuele Canegrati
Catholic University of the Sacred Heart

  1. Age, Human Capital and the Geography of Innovation By Katharina Frosch; Thusnelda Tivig
  2. Business Intelligence: towards a new concept in economic analysis? (In French) By Gabriel COLLETIS (LEREPS-GRES)
  3. Anticipated Fiscal Policy and Adaptive Learning By George W. Evans; Seppo Honkapohja; Kaushik Mitra
  4. Corporate governance e società della conoscenza. Tra teoria e prassi By Luciano PILOTTI; Enzo RULLANI
  5. A fast and accurate FFT-based method for pricing early-exercise options under Lévy processes By Lord, Roger; Fang, Fang; Bervoets, Frank; Oosterlee, Kees

  1. By: Katharina Frosch (Rostock Centre for the Study of Demographic Change, Germany); Thusnelda Tivig (University of Rostock and Rostock Centre for the Study of Demographic Change, Germany)
    Abstract: An aging labor force is often associated with a decreasing innovative performance on aggregate, firm or individual level. Using a regional knowledge production function to explain patenting activity in German districts, we propose to include the effect of age in a twofold specification: First, we account indirectly for age by including the aggregate, age-heterogeneous human capital available in each district and estimating its effect on patenting performance. Second, we assume that there is an age effect that is independent of human capital and therefore include the age structure of the districts' labor force directly, too. Possible explanations for an independent age-effect are age-dependent differences in the ability to exploit innovation-relevant human capital or age-specific motivation to lead creative ideas to successful inventions. Departing from these conceptualizations provided by economics and I-O psychology, we estimate a negative binomial regression model appropriate for count data. Results on German district level indicate that engineering knowledge in the younger as well as the prime age group significantly enhances patenting performance, whereas we do not find any efect for the age group 50+. However, for older ages, the stock of experience has a positive influence. On aggregate level, we find a positive independent age effect.
    Keywords: knowledge production function, regional innovation analysis, human capital, aging, demographic change, patents
    JEL: O31 J24
    Date: 2007
    Abstract: Two questions are the core of business intelligence: coordination and cooperation. Both, coordination and cooperation, are simultaneously resources and the result of strategies of change. The combination of knowledge and know-how is oriented towards the solution of new problems and serves the aim of creating resources and value. This aim occurs more than the one concerning a more efficient information circulation. The topic of this article is to define the notion (rather than the concept) of business intelligence in consideration of other fields or analytical categories : coordination of activities, information and knowledge, organisational and relational learning.
    Keywords: Business Intelligence, coordination, resources creation, information, knowledge
    JEL: L14 M21 O32 O33
    Date: 2007
  3. By: George W. Evans (University of Oregon Economics Department); Seppo Honkapohja (University of Cambridge); Kaushik Mitra (University of St Andrews)
    Abstract: We consider the impact of anticipated policy changes when agents form expectations using adaptive learning rather than rational expectations. To model this we assume that agents combine limited structural knowledge with a standard adaptive learning rule. We analyze these issues using two well-known set-ups, an endowment economy and the Ramsey model. In our set-up there are important deviations from both rational expectations and purely adaptive learning. Our approach could be applied to many macroeconomic frameworks.
    Keywords: Taxation, expectations, Ramsey model
    JEL: E62 D84 E21 E43
    Date: 2007–02–18
  4. By: Luciano PILOTTI; Enzo RULLANI
    Abstract: In this work we redefine governance in a way that goes beyond the traditional separation between power and control in a multi-stakeholders model setting. Governance is defined as a sustainable/ecological process of power sharing and legitimacy acquisition both within and outside the company. Our major focus in this paper is on the sustainability of such a process. We argue that there are two major neg-entropic and self-organizing forces, which have found only little room in the current debate, and that, according to our perspective, change profoundly the way the problem of governance has been traditionally faced: knowledge and ethics. Considering these two main forces leads us to two major conclusions about reflexive firms as process-engine to consolidate cooperation and altruism between agents not always self-interested also if often interested to make huge quantity of money and high profits. A new meta-Corporation where management can’t be a simple neutral technical function but an emotional intelligence, a motivational resource of organization to rebuilding an evolutionary sharing identity. The first is that the sustainability of this ecological process of governance requires stakeholder sharing a common set of goals and values ex-ante rather than ex-post, when this value has been already defined. The second is to draft the elements of meta-corporation that is capable to do both as sense making like sharing interests of stakeholders and management, or facing and manage multidimensional complexity of “personal capitalismâ€, peer production, emergent systems, extreme events, hyper extended networks. In a simple word a great or small network company able to building sustainable ecologies of value.
    Keywords: Governance, corporation, knowledge, multistakeholders, ecologies of value
    JEL: M21 M14 L21 L17
    Date: 2007–02
  5. By: Lord, Roger; Fang, Fang; Bervoets, Frank; Oosterlee, Kees
    Abstract: A fast and accurate method for pricing early exercise and certain exotic options in computational finance is presented. The method is based on a quadrature technique and relies heavily on Fourier transformations. The main idea is to reformulate the well-known risk-neutral valuation formula by recognising that it is a convolution. The resulting convolution is dealt with numerically by using the Fast Fourier Transform (FFT). This novel pricing method, which we dub the Convolution method, CONV for short, is applicable to a wide variety of payoffs and only requires the knowledge of the characteristic function of the model. As such the method is applicable within exponentially Lévy models, including the exponentially affine jump-diffusion models. For an M-times exercisable Bermudan option, the overall complexity is O(MN log(N)) with N grid points used to discretise the price of the underlying asset. It is shown how to price American options efficiently by applying Richardson extrapolation to the prices of Bermudan options.
    Keywords: Option pricing; Bermudan options; American options; convolution; Lévy Processes; Fast Fourier Transform
    JEL: G13 C63
    Date: 2007–02–28

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