Winston T. H. Koh

The vehicle quota system in Singapore: An assessment☆

This paper reviews the developments since the vehicle quota system was introduced in Singapore in May 1990. We discuss the bidding strategies for the certificates of entitlement (COE) under both the transferable and nontransferable auctions, as well as the equity of the present system and the desirability of transferable COEs. We argue that the COE auction should be made discriminatory and propose an alternative system of COE auction that we feel is both equitable and at the same time politically acceptable. We also survey developments in market competition in the car industry.

Human fallibility and sequential decision making: Hierarchy versus polyarchy

Abstract Decisions in organizations are often jointly made by individuals whose interests need not coincide. Even if they do, the quality of the decision depends crucially on the manner in which individual opinions are aggregated. This paper develops a model to analyse joint decision-making in large organizations under the key assumption that perfect information is impossible, so that human fallibility is present. The aim of the paper is to formalise some of the intuition associated with sequential decision-making in two stylised decision structures, namely: hierarchy and polyarchy. Incentive problems in the presence of human fallibility are also considered.

Making decisions in committees a human fallibility approach

Abstract Collective decision-making, a reflection of limited individual rationality, is an effective way to overcome judgement errors due to human fallibility. Fallibility arises because individuals have different limited capacity to absorb, process and communicate information. This paper analyzes collective decision-making in committees. Using the project-selection framework, we analyze in detail how evaluation standards and the minimum size of the acceptance consensus should vary with the environment. We also discuss conditions under which the fifty-percent majority rule is optimal or close to the optimal decision rule.

CONTROL OF VEHICLE OWNERSHIP AND MARKET COMPETITION: THEORY AND SINGAPORE'S EXPERIENCE WITH THE VEHICLE QUOTA SYSTEM

This paper studies the impact of vehicle quota system on the market structure of Singapores car distributorship industry. Using recently available data, we analyzed the populations and new registrations of different brands of passenger car and motorcycle. We found an increase in market concentration in the car distributorship industry, as the market shares of the top distributors have increased steadily, even though the annual growth rate of vehicle population is capped at 3% per annum. We also found that average dealership markups for passenger cars for the period August-September 2002 are similar to those reported in earlier studies. We relate these empirical findings to a theoretical model of a differentiated-good oligopoly operating under an industry sales constraint.

Variable evaluation costs and the design of fallible hierarchies and polyarchies

Abstract We show that when there are variable evaluation costs, the optimal screening standards in a hierarchy (polyarchy) should become less (more) stringent at higher levels. Also, simple reorganization of the optimal hierarchy or polyarchy may not improve net profits, although results from information theory show that gross profits can be increased.

Optimal Sequential Decision Architectures and the Robustness of Hierarchies and Polyarchies

This paper studies collective decision making in the context of a project selection model. We derive the optimal decision architecture in the presence of marginal decision costs, and investigate the circumstances under which the hierarchy and polyarchy emerge as optimal sequential architectures. Our analysis extends previous results on optimal organizational decision-making to a sequential setting, and further demonstrates the fragility of the hierarchy and polyarchy as optimal architectures.

Corporate Divestitures and Spinoffs in Singapore

This paper discusses the different forms of corporate divestitures, the motives for this corporate activity and the empirical findings about their economic outcomes. A sample of corporate divestitures is also used to identify the main motivations in the Singapore context. We conclude that divestitures are carried out to achieve operational efficiency, gain incremental profitability and liquidity. Using share price data around the event-dates, we show that announcements of divestitures generally lead to significant increases in the returns of the parent company. The positive abnormal returns are related to the relative size of the divestitures and the computed accounting gains. Overall, corporate divestiture is a value-increasing activity for Singapore companies.

Profiting from Mean-Reverting Yield Curve Trading Strategies

This article studies a set of yield curve trading strategies that are based on the view that the yield curve mean reverts to an unconditional curve. These mean-reverting trading strategies exploit deviations in the level, slope, and curvature of the yield curve from historical norms. Some mean-reverting strategies were found to have significant positive profits. Furthermore, the profitability of one of these strategies significantly outperforms, on a risk-adjusted basis, alternative strategies of an investment bond or equity index.

Lottery Rather than Waiting-line Auction

This paper investigates the allocative efficiency of two non-price allocation mechanisms – the lottery (random allocation) and the waiting-line auction (queue system) – for the cases where consumers possess identical time costs (the homogeneous case), and where time costs are correlated with time valuations (the heterogeneous case). We show that the relative efficiency of the two mechanisms depends critically on a scarcity factor (measured by the ratio of the number of objects available for allocation over the number of participants) and on the shape of the distribution of valuations. We show that the lottery dominates the waiting-line auction for a wide range of situations, and that while consumer heterogeneity may improve the relative allocative efficiency of the waiting-line auction, the ranking on relative efficiency is not reversed.

First-mover advantage and organizational structure

Abstract This paper looks at first-mover advantage and its effects on organizational structure and size. The framework is the project-selection model and the key assumption is that managers are fallible so that decision-making is imperfect. The analysis suggests that when there is a first-mover advantage, decentralized and smaller organizations, such as the polyarchy and the committee, are preferable since they are speedier in making decisions despite the reduced accuracy in selecting projects.