Ambiguity and risk taking in organizations

Kunreuther, Meszaros, and Hogarth (1993) argue that insurers are risk averse and ambiguity averse, and that they use cognitive reference points and constraints in making pricing decisions. They further claim that insurer ambiguity may be a factor that has a role in market failure at the industry level. Arguably, ambiguity may be an important aspect of decision behavior. In this article, research on managerial risk taking is reviewed with a focus on the relationship between ambiguity and risk taking. In particular, the effects of the organizational and institutional context are highlighted. It is argued that the political aspects of insurer decision behavior should be considered as well. Implications for further study and understanding of decision making are discussed.     

Decentralization of decision making: the case of payment policies for children's daycare

To bring about equality, the Nordic welfare states have provided a broad range of services with as homogenous eligibility criteria as possible. This homogeneity of social benefits has been obtained by centralized decision making and a high degree of statutory regulation. Recent trends in all welfare states veer towards greater local independence and decentralization. This article examines how the decentralization of decision making in Finland has affected the realization of basic welfare state principles. The specific aspect from which the topic is examined are user fee policies for children's daycare. The analysis gives a rather inconsistent picture of possible explanations for the differences between daycare payment policies. Municipal decision making is influenced by economic rather than political or structural factors. However, logical economic explanations are found only in large municipalities. This study highlights that decentralization of decision making has put families in very different economic positions in different municipalities - municipal traps are emerging. The relationship between welfare services and income redistribution has become ever more complicated as decision-making powers have been localized. A family may, for example, be paying the highest daycare fees but at the same time be entitled to social assistance.     

Is specialization desirable in committee decision making?

Committee decision making is examined in this study focusing on the role assigned to the committee members. In particular, we are concerned about the comparison between committee performance under specialization and non-specialization of the decision makers. Specialization (in the context of project or public policy selection) means that the decision of each committee member is based on a narrow area, which typically results in the acquirement and use of relatively high expertise in that area. When the committee members’ expertise is already determined, specialization only means that the decision of each committee member is based solely on his/her relatively high expertise area. This form of specialization is potentially inferior relative to non-specialization under which the decision of each committee member is based on different areas, not just his/her relatively high expertise area. Given that the expertise of the committee members is already determined but unknown, our analysis focuses on non-specializing individuals whose decision is based on a decision rule that does not require information on the decision-making skills. Under these realistic assumptions, non-specialization is shown to be preferable over specialization, depending on the aggregation rule applied by the committee. The significance of our approach is not limited to the specific results that we obtain. Rather, it should be viewed as a first step toward a deeper examination of the role of individual decision makers in enhancing the performance of collective decision making.     

Modeling compliance to environmental regulation: Evidence from manufacturing industries

We examine the demand for pollution control equipment from 1973 to 1991 by those U.S. manufacturing industries that are highly sensitive to environmental regulation. We also consider the political determinants of the U.S. Environmental Protection Agency (EPA) enforcement budget. Because, as we demonstrate, the EPA enforcement budget is an important determinant of the industries' investment in pollution control equipment, we are able to establish a relationship between political factors and economic decision making on the part of the industries. Thus, our analysis demonstrates that the demand for pollution control equipment is sensitive to both economic and political factors.     

The effects of urban socioeconomic and political context on support for business in the federal district courts

Despite an expansive literature relating the social and political characteristics of cities and states to the economic outputs of legislators and administrators, there has been no comparable study of the impact of local environmental factors on economic policy outcomes of either state or federal trial courts. Neglect of this topic is especially unfortunate, given that exploratory analysis of federal district court judges' decision making in an urban context has suggested a link between federal district court policies and those of other local government institutions (Dolbeare, 1969).This article begins to fill the research lacuna by examining the impact of local environments on federal district courts' economic policy making. Substantial variance in economic case outcomes among courts in cities serving as district court points is explained by certain characteristics of the courts' social and political environments. Patterns of support for business in the district courts is examined to illustrate possible consequences of environmental influences on trial court outcomes. Conclusions regarding the impact of environmental factors on district court policy outcomes are offered along with a comparison of this research with the larger and more developed body of state and local policy research.     

Leaving the Nordic Path? The Changing Role of Danish Trade Unions in the Welfare Reform Process

For a long period, Denmark has been labeled a ‘model country’ with a comprehensive welfare state and a successful model of corporatist policy‐making. Danish unions are considered amongst the strongest in the world, and they have for a long time been a distinct part of the political system, and as social partners, they were strongly integrated into decision‐making processes. The analysis of the Danish welfare and labour market policy during the last two decades documents a profound change in the arrangement and in the status of the social partners (especially unions) in the Danish political system. The results show that two important pillars of the Danish model – the social partner basis and the collective trust in partnership – are eroding. Unions are no longer part of the law‐making process and, since 2007, they are formally excluded from the organization of the decision‐making process. Recent developments point at weaker unions that operate more as lobbyists instead of being strong corporatist institutions or part of the decision‐making process. The results of the study are thought‐provoking and the basis for a revised thinking of the Danish and the Nordic model.     

Threats to Democracy: A Judgment and Decision-Making Perspective

Democracy as a political form of social organization offers humanity its best prospect for freedom and peace. Today, it faces deliberate threats from totalitarian movements that rely on terrorist tactics. Democracy also faces threats from its own leaders because of the consequential nature of their judgment and decision making. This article examines how threats to democracy are perceived and managed. It is proposed that perception and management of threats to democracy represent a case of judgment and decision making under uncertainty. Relevant factors that influence policy decision making as it pertains to safeguarding democracies from threat are highlighted.     

Civil society organizations and participatory local governance in Pakistan: An exploratory study

This paper analyses the extent to which the civil society organizations (CSOs) have influenced the decision‐making of the local government toward the needs and priorities of citizens. In development discourse, civil society organizations hold a significant importance as they are deemed to provide holistic and new ways to ensure participatory local governance. Therefore, their role against the backdrop of their involvement in mobilizing citizens’ involvement and influencing decision‐making in Pakistan calls for further research. This paper aims to fill this gap. Using qualitative research methods, the current paper appraises the role of CSOs in mobilizing public involvement in the decision‐making process of local government institutions of Punjab, Pakistan. The paper finds that the effectiveness of CSOs is very low due to various institutional and political constraints. Motivations for CSOs seeking citizen involvement have been instrumental in nature rather than motivated by participatory principles.     

Playing,Sitting Out,and Observing the Game: An Investigation of Faculty Members’ Perspectives on Political Behavior in Ethical Decision Making

Ethical dilemmas are inherently ambiguous, complex, and ill-defined. Additionally, these dilemmas involve multiple stakeholders. These characteristics may induce political behavior as a resolution tactic. Thus, the goal of the present effort was to investigate perspectives on politics among researchers in an ethical decision-making context. A qualitative analysis of interviews with university faculty members revealed that faculty members’ perspectives on political behavior in an ethical decision-making context fall into a number of categories, including positive, negative, and realistic views of political activity. The implications of these varying perspectives on ethical decision making are discussed.     

Decision settings analysis – a tool for analysis and design of human activity systems

The paper describes a methodology to be used for analysis and design of human activity systems. The methodology is based on an analysis of the decision settings whereas most other decision analysis methodologies are analysing the process. The decision concept is analysed and discussed. A distinction between programmed and programmable as well as non-programmed and non-programmable decisions is proposed. A classification of different information types for decision making is presented. A methodology based on a systemic and systematic analysis of the information requirements of an organization is proposed. This methodology also indicates organizational discrepancies and information imbalances. The methodology focuses the settings of the decisions on all levels of organizations. The methodology can be regarded as a dynamic, learning system. The author proposes further research on the individuals decision making abilities.     

Acclimation Effects on the Supreme Court of Canada: A Cross‐Cultural Examination of Judicial Folklore*

Objective. Few public law theories developed to understand the decision making of U.S. courts have been examined in different cultural settings. This study examines the applicability of the “freshman effects” theory in the context of the Canadian Supreme Court. Methods. The article uses analysis of variance tests to examine changes in the voting and authorship patterns of 15 Canadian Supreme Court Justices during the Laskin, Dickson, and Lamer Court periods (1973–1999). Results. We find very little evidence of acclimation effects on the Canadian Supreme Court. However, through the Chief Justice's power to compose decision panels, Canadian justices in their first full year of service are assigned significantly fewer cases than in subsequent years of their career. Thus, Canadian justices are given time to acclimate to the high court through a lower workload, a luxury not afforded to U.S. justices. Conclusions. Theories of public law adopted to understand U.S. courts may be limited in their generalizability beyond the U.S. setting because of the institutional and political forces that shape judicial decision making in other courts.     

An Experiment on Rational Insurance Decisions

We describe the results of an experiment on decision making in an insurance context. The experiment was designed to test for the underlying rationality of insurance consumers, where rationality is understood in usual economic terms. In particular, using expected utility as the preference function, we test for positive marginal utility, risk aversion, and decreasing absolute risk aversion, all of which are normal postulates for any microeconomic decision context under uncertainty or risk. We find that there the discrepancy from rational decision making increases with the sophistication of the rationality criteria, that irrationality concerning fair premium contracts is uncharacteristically high, and that the slope of absolute risk aversion seems to depend on the format of the insurance contract. This revised version was published online in June 2006 with corrections to the Cover Date.     

Local Government and the Politics of Decency*

Objective. Local government officials exhibit a variety of responses to morality issues involving “decency” (i.e., pornography, prostitution, sexually explicit businesses). The purpose of this research is to account for these differences. Methods. This research analyzes a subset of data from a larger study of morality policy making at the local level, that is, all cases of decision making on decency issues (e.g., pornography, prostitution, regulation of sexually explicit businesses, etc.) that occurred in the period 1994–2000 in 10 of the 52 largest cities in the United States. Results. In mayoral settings, decision making on decency cases is likely to evoke pro‐decency action from officials when a high level of issue salience is combined with high levels of church adherence, low levels of women's political empowerment, low levels of fundamentalist religious attachment, and higher levels of per capita income. Officials in city manager settings act more favorably toward decency activists if (1) higher levels of salience combine with a lower prevalence of fundamentalist religious adherents and higher levels of per capita income or (2) there is an interaction of salience and low levels of female political empowerment and high unemployment. Conclusions. Although exploratory in nature, the results confirm conventional expectations concerning the importance of salience and the prevalence of church affiliation; the results are counterintuitive with respect to the prevalence of fundamentalist forces and the extent of female political empowerment.     

Policy Style and Governing without Consensus: Devolution and Education Policy in Northern Ireland

Devolved government was established in Northern Ireland in 1999 at the same time as Scotland and Wales with a varying range of powers, particularly over the major areas of social policy including education. Devolution in Northern Ireland was set up on the basis of statutory power‐sharing in the core executive with a number of mechanisms to promote involvement by all sections of the community through their political representatives. This marked a departure from the traditional majoritarian and hierarchical model of UK government. The operation of devolved government in Northern Ireland requires a consensus on major policy items requiring legislation. The main aim of the article is to assess whether or not there is a devolved policy style in Northern Ireland and to compare this policy style with the findings of similar analysis in Scotland and Wales. Consideration is then given to the impact of both the distinctive policy processes which reflect the consociational nature of the Good Friday Agreement and wider social, political and administrative factors. Decision‐making on education policy is a totally devolved function and thus serves as an important example of autonomous policy formulation and policy‐making. The three main topics of current policy debate in education are selected for analysis to determine the nature of the decision‐making process and the existence of a distinct devolved policy style.     

Dynamic Choice, Independence and Emotions

From the viewpoint of the independence axiom of expected utility theory, an interesting empirical dynamic choice problem involves the presence of a “global risk,” that is, a chance of losing everything whichever safe or risky option is chosen. In this experimental study, participants have to allocate real money between a safe and a risky project. Treatment variable is the particular decision stage at which a global risk is resolved: (i) before the investment decision; (ii) after the investment decision, but before the resolution of the decision risk; (iii) after the resolution of the decision risk. The baseline treatment is without global risk. Our goal is to investigate the isolation effect and the principle of timing independence under the different timing options of the global risk. In addition, we examine the role played by anticipated and experienced emotions in the choice problem. Main findings are a violation of the isolation effect, and support for the principle of timing independence. Although behavior across the different global risk cases shows similarities, we observe clear differences in people’s affective responses. This may be responsible for the conflicting results observed in earlier experiments. Dependent on the timing of the global risk different combinations of anticipated and experienced emotions influence decision making.      

公众对转基因作物的接受度及其影响因素:基于六城市调查数据的社会学分析

本文利用一项大规模的入户抽样调查数据,分析了中国公众对转基因作物的接受度问题。与以往基于“消费者行为研究”框架而采取“个体决策行为模型”的研究不同,本文从风险社会学的理论视角出发,试图发展一个“社会行动模型”的理论框架,以解释个体在“风险社会”中面对一项新技术时的决策行动受到哪些社会性因素的影响。结果显示,中国公众对推广种植转基因大米的接受度不高,与2002年相比有明显下降;传统的“个体决策行为模型”有一定的解释力,但其决策行为是基于有限知识基础上的“有限理性选择”,大众媒体的影响、对“专家系统”的制度性信任都是重要的影响因素。     

Education and anomalies in decision making: Experimental evidence from Chinese adult twins

We estimate the effects of education on two dimensions of decision making behavior—risk and time—beyond those considered to be normal-ranged to encompass behavioral anomalies with respect to expected utility as well as time consistency. We conduct a number of incentivized choice experiments on Chinese adult twins to measure decision making behavior, and use a within-twin-pair fixed-effects estimator to deal with unobservable family-specific effects. The estimation results show that a higher education level tends to reduce the degree of risk aversion towards moderate prospects, moderate hazards, and longshot prospects. For anomalies under risk and uncertainty, college graduates exhibit significantly more Allais-type behavior compared to high school dropouts, while high school graduates exhibit more ambiguity aversion as well as a familiarity preference relative to high school dropouts. For decision making involving time, a higher education level tends to reduce the degree of impatience, and to reduce behavioral anomalies including hyperbolic discounting, dread, and hopefulness. The experimental observations suggest that people with a higher education level tend to exhibit more behavioral anomalies in risk attitudes but fewer behavioral anomalies involving time, hence implying that education has multi-functions in preference formation and human capability building. This study contributes to the understanding of the nature of these behavioral anomalies and the roles of education in human decision making.     

Sequential decision making without independence: a new conceptual approach

This paper presents a critical reflection on dynamic consistency as commonly used in economics and decision theory, and on the difficulty to test it experimentally. It distinguishes between the uses of the term dynamic consistency in order to characterize two different properties: the first accounts for the neutrality of individual preferences towards the timing of resolution of uncertainty whereas the second guarantees that a strategy chosen at the beginning of a sequential decision problem is immune to any reevaluation and will effectively be implemented from then on in the decision problem. Although these two properties are equivalent under expected utility (EU), this is not the case under non-EU. Building on the possible characteristics of individual dynamic preferences under risk, this paper proposes a conceptual categorization, that is experimentally testable, of possible sequential decision making behaviors of non-EU maximizers.     

微观公共领域与中国社区自治实践

微观公共领域与宏观公共领域的分野为公共领域理论的发展注入了新的活力,也使理论对现实更具解释力。微观公共领域通过强调参与主体互通信息,强调公共责任和有效治理,强调政治教育和培养政府官员、市民的公民道德、政治技巧与政治责任,来解决微观层面的政治争论,以此推动宏观公共领域的发展。微观公共领域的存在使得即使在远离国家政治中心的基层社区中,广泛的社会大众参与公共事务决策成为可能;通过微观公共领域的存在和发挥作用可以制定有利于社区发展的决策,并能为国家公权争取某种合法性,进而减少民众对于公共决策的不理解。强调微观公共领域的特征和功能对于指导我国的社区建设,乃至对社区治理模式的创新性探索具有重要的实践意义。