High Stakes and Acceptance Behavior in Ultimatum Bargaining:

This paper presents the results of a within-subject experiment testing whether an increase in the monetary stakes by a factor of 50 – which had never been done before – influences individual behavior in a simple ultimatum bargaining game. Contrary to current wisdom, we found that lowest acceptable offers stated by the responder are proportionally lower in the high-stake condition than in the low-stake condition. This result may be interpreted in terms of the type of utility functions which characterize the subjects. However, in line with prior results, we find that an important increase of the monetary stakes in the ultimatum game has no effect on the offers made by the proposer. Yet, the present research suggests that the reasons underlying these offers are quite different when the stakes are high.     

A theoretical model of religiosity and drug use with reciprocal relationships: A test using structural equation modeling

Abstract

This study of 1093 adolescents from 6 public high schools was designed to test a hypothesized model formulated by theoretical elaboration of control theory with elements from social learning theory using structural equation modeling procedures. The primary purpose was to establish that religion is relevant to illicit drug use when its direct, indirect and reciprocal effects are tested within a more complete system of relationships than found in existing studies. Most aspects of the model were supported by data and religion had direct inverse effects on illegal drug use for all adolescents studied. However, the feedback effects of drug use on religion were significant only among younger adolescents and females. Other age and gender differences were observed when the hypothesized model was tested with structural equation modeling procedures. The implications of these findings were discussed in regard to future conceptual work and intervention.     

Fairness, Equality and Legitimacy: A Qualitative Comparative Study of Germany and the UK

The pressures of globalization and shifts towards post‐industrialism are producing policies that increasingly emphasize the common themes of activation and of individual responsibility for outcomes. Such approaches suggest normative principles of equality of opportunity rather than of outcome, and of individual rather than collective responsibility for the outcomes achieved. Does this imply a shift towards a common normative framework for European welfare states, with implications for future policy developments? This article reports a recent qualitative study examining ideas about fairness and social provision in the very different regimes of Germany and the UK. The analysis shows that while respondents in both countries value equality of opportunity as a normative principle, those in Germany are much more likely to argue that an equal opportunity approach requires government to guarantee equal access to basic services. They are also more likely to express concerns about market freedoms which allow those who can afford it better access to health care and education. Real differences in welfare values remain, loosely following differences of regime type, despite the greater emphasis on activation and individual responsibility across European welfare states.     

A bargaining model with players' perceptions on the retractability of offers

This paper studies a generalization of Rubinstein's bargaining model with retractable offers. The model incorporates and parameterizes the bargainers' perceptions on the retractability of offers. Our key result characterizes the limiting set of perfect equilibria as the time interval between two consecutive offers tends to zero. In this limit, for any possible players' perceptions on the retractability of offers such that at least one of the players perceives that there is at least a small chance that offers may be retractable, the bargaining game possesses a continuum of perfect equilibria.     

Risk aversion and expected-utility theory: A calibration exercise

Rabin (Econometrica 68(5):1281–1292, 2000) argues that, under expected-utility, observed risk aversion over modest stakes implies extremely high risk aversion over large stakes. Cox and Sadiraj (Games Econom. Behav. 56(1):45–60, 2006) have replied that this is a problem of expected-utility of wealth, but that expected-utility of income does not share that problem. We combine experimental data on moderate-scale risky choices with survey data on income to estimate coefficients of relative risk aversion using expected-utility of consumption. Assuming individuals cannot save implies an average coefficient of relative risk aversion of 1.92. Assuming they can decide between consuming today and saving for the future, a realistic assumption, implies quadruple-digit coefficients. This gives empirical evidence for narrow bracketing.

The Moral Economy of Intergenerational Redistribution in an Ageing Society: A Qualitative Analysis of Young Adults' Beliefs in the United States

In the USA, the largest generation, the Baby Boomers, is currently retiring and increasingly drawing from Old Age Social Security. In this context, young generations are said to be disadvantaged: they have to support a growing number of pensioners while expecting much lower pensions themselves. Drawing on 14 original semi‐structured interviews with young US citizens aged 20–36, this study analyzes the moral economy of intergenerational redistribution – defined as normative beliefs and justifications of a just distribution of contributions and benefits between generations. The qualitative content analysis resorts to the four constituent institutional principles of intergenerational redistribution: deservingness (being qualified to receive support), reciprocity (mutual support between generations), equity (relation between in‐ and outputs for one generation) and equality (corresponding conditions for different generations). The first main finding is that the young hold multiple normative beliefs in favour of intergenerational redistribution. The second main finding is that different normative beliefs and justifications can compensate for feelings of injustice attributable to the consequences of an ageing society. The qualitative findings' contributions to the field of study that is dominated by quantitative studies are concluded. Implications for public support for intergenerational redistribution in the ageing society of the USA and other countries are discussed.     

A Test of the Principle of Optimality

This paper reports on an experimental test of the Principle of Optimality in dynamic decision problems. This Principle, which states that the decision-maker should always choose the optimal decision at each stage of the decision problem, conditional on behaving optimally thereafter, underlies many theories of optimal dynamic decision making, but is normally difficult to test empirically without knowledge of the decision-maker's preference function. In the experiment reported here we use a new experimental procedure to get round this difficulty, which also enables us to shed some light on the decision process that the decision-maker is using if he or she is not using the Principle of Optimality - which appears to be the case in our experiments.     

The Experiences of Reciprocity among Filipino Older Adults in Canada: Intergenerational,Transnational, and Community Considerations

ABSTRACT

This article illustrates the concept of reciprocity in the context of immigrant families. It recommends that definition of reciprocity account for exchanges beyond the immediate family, and render visible the simultaneous location of older people as care recipients and providers, and care arrangements across generations, borders, community, and time. Adopting a critical ethnographic study on the aging and care experiences of older Filipinos in Canada, this article analyzes data from extended observations and in-depth semi-structured interviews with 18 older people, 6 adult children, and 13 community stakeholders. Findings highlight the unique configurations of care among the Filipino community whereby older people engage in care exchange as active participants across intergenerational, transnational, and fictive kin networks.     

Reflections on gains and losses: A 2 × 2 × 7 experiment

What determines risk attraction or aversion? We experimentally examine three factors: the gain-loss dichotomy, the probabilities (0.2 vs. 0.8), and the money at risk (7 amounts). We find that the majority display risk attraction for small amounts of money, and risk aversion for larger amounts. Yet the frequency of risk attraction varies according to the gain-loss dichotomy and the probabilities. Kahneman and Tversky studied gain-loss reflections. We submit that a reflection can be decomposed into a translation and a probability switch. We find significant translation and switch effects, which are of comparable magnitude, a result that is equidistant from the diverging two popular views inspired by Prospect Theory: the gain-loss asymmetry, and the fourfold pattern.     

One-reason decision-making: Modeling violations of expected utility theory

People violate expected utility theory and this has been traditionally modeled by augmenting its weight-and-add framework by nonlinear transformations of values and probabilities. Yet individuals often use one-reason decision-making when making court decisions or choosing cellular phones, and institutions do the same when creating rules for traffic safety or fair play in sports. We analyze a model of one-reason decision-making, the priority heuristic, and show that it simultaneously implies common consequence effects, common ratio effects, reflection effects, and the fourfold pattern of risk attitude. The preferences represented by the priority heuristic satisfy some standard axioms. This work may provide the basis for a new look at bounded rationality.

My life in care: experiences of non-participation in decision-making processes

The extent to which young people are involved in legal decision‐making depends on assumptions and perceptions about their ability to participate in decision‐making in general. This paper draws on research with four young people, looking at their experiences of involvement in a variety of decision‐making processes whilst in the care of the local authority. Through narratives, games and other activities, the thoughts and emotions of the four young people are explored, identifying the development of feelings of helplessness, low self‐esteem and poor confidence that have followed the lack of opportunities made available to them to make decisions about their own lives. The efficacy and tension of corporate parenting is also explored with suggestions from the participants on how the care system could be constructed differently to facilitate their voice and that of much younger children than themselves. Thus, the debate becomes one of adult ability and preparedness to involve young people in decisions about their own lives, rather than whether they are able to participate effectively.     

Adjusting risky situations: A theoretical framework and empirical test

Experienced executives frequently try to modify the risky situations they face in order to make them more favorable rather than simply choosing from among available decision options. This article investigates several types of risk adjustments such as trying to influence the situation through bargaining and spending resources, gathering information, developing new options, and consulting one's superiors. A theoretical framework is presented that characterizes different types of adjustments and relates them to variables such as perceived risk, perceived control, perceived responsibility, decisiveness, and risky choice. The framework is tested using experienced decision makers who respond to four simulated risky business decisions.University of British Columbia     

A test of the gambler's fallacy: Evidence from pari-mutuel games

The “gambler's fallacy” is the belief that the probability of an event is decreased when the event has occurred recently, even though the probability is objectively known to be independent across trials. Clotfelter and Cook (1991, 1993) find evidence of the gambler's fallacy in analysis of data from the Maryland lottery's“Pick 3” numbers game. In the Maryland lottery, the payout to all numbers is equal at $250 on a winning fifty-cent bet, so the gambler's fallacy betting strategy costs bettors nothing. This article looks at the importance of the gambler's fallacy in the New Jersey lottery's three-digit numbers game, a pari-mutuel game where a lower amount of total wagering on a number increases the payout to that number. Results indicate that the gambler's fallacy exists among bettors in New Jersey, although to a lesser extent than among those in Maryland.     

African Americans and municipal employment: A test of two perspectives

A survey of the extant literature addressing the factors that drive African American municipal employment offers two broad types of explanations: (1) Black political power and (2) institutional. A comparative assessment of the performance of each of these explanations fills a gap in the literature by illuminating the differences of these distinct perspectives when it comes to employment of Blacks in the public sector. Focusing on six Florida cities from 1960 to 2000, this study tests the predictive power of each of these explanations comparatively for four city departments. The findings indicate that the Black political power explanation performs better than the institutional explanation as a predictor of Black employment.     

Exploring Neglected Dimensions of Social Policy: The SDW, Fiscal Welfare and the Exemplar of Local Taxation in England

Titmuss's Social Division of Welfare (SDW) thesis is a vitally important but much neglected element of social policy analysis. This article seeks to explore the SDW, with a particular focus on fiscal welfare. Fiscal welfare has been described as forming a hidden welfare state, and while taxation is one of the main ways in which governments affect the lives of citizens, studies of welfare pay remarkably little attention to its impact. Fiscal welfare is examined by using, as an exemplar, local taxation in England, a subject that itself is neglected within social policy. Local taxation in England is of interest because it illustrates the impact of a system of taxation on different groups of citizens, and how this can operate to the benefit of rich over poor citizens. This is because the current system is highly regressive, meaning that those on low and middle incomes spend proportionately more of their income paying the tax than do those on high incomes. What is of further interest is how within the debate about reform of local taxation, concern with regressivity becomes obscured and ceases to be the focus of attention. We are thus provided with an example of how fiscal welfare remains a hidden issue. The article concludes by arguing that social policy analysis needs to move beyond the narrow confines of social welfare and develop a broader understanding of welfare, based on the SDW.     

A model of the Canadian global exchange rate: A test of the 1970s

A review of the literature indicates that no single exchange rate model has been able to track successfully the movements of the Canadian dollar for both the 1970–1976 period and the period thereafter. The purchasing power parity model, irrespective of whether based on relative wholesale prices, unit labor costs, GNP deflators, or export prices performs very poorly; the monetarist models collapse because of their strict adherence to the purchasing power parity and interest rate parity assumptions; the portfolio demand models require a significant adjustment for the post-1976 period. This paper presents a medium-term eclectic model of the global exchange rate of the Canadian dollar and examines a spectrum of broad issues that reflect on the efficiency of the foreign exchange market of Canada. These issues are basically related to the interest parity assumption, the role of speculation, and the test of rational expectations. The global exchange rate is defined as the value of the Canadian dollar measured in terms of a unit of basket of currencies comprising currencies of France, West Germany, Japan, the U.K., and the USA. The model belongs to the same genre of balance of payments structural models that explain the exchange rates by balancing demand and supply of foreign currencies. The model simultaneously explains both spot and forward rates, and it has been estimated and tested by using the quarterly data for 1971–1981.     

A model of the Canadian global exchange rate: A test of the 1970s

This comment points out some methodological weaknesses in the Canadian global exchange rate model and the associated efficiency tests of Marwah and Bodkin. The model is found to be inadequate for policy analysis.     

Children's participation in post-divorce decision-making: The role of conflict and attachment

Increased child participation in decision-making about custody and visitation when parents separate is an explicit political goal. This study delineates central family processes associated with child participation in post-divorce decision-making, both in mediation and in the home. Children recruited to the Dynamics of Family Conflict Study at Norwegian family counselling centres (7–15 years, n = 554) completed surveys about interparental conflict, attachment security and whether they had been invited to participate in mediation and share their views at home. Results showed a strong correlation between the two decision-making arenas as children who were invited to participate in mediation were also more likely to have been asked about their views at home, and vice versa. Mixed-effects logistic regression analyses indicated that attachment security to mothers predicted that children were invited to participate in mediation. Older children were more likely to have been invited to participate both at home and in mediation. More child-related interparental conflicts predicted that children did not know if they had been consulted at home. The study points to the need for developing better practices for including younger children.     

A test of generalized expected utility theory

In two experiments we test Machina's Hypothesis II (fanning-out). In each experiment we analyze patterns of responses to hypothetical lottery choice questions within a Marschak-Machina triangle. One set of questions involves lotteries on the border of the triangle, an the other set of questions involves lotteries in the interior of the triangle (off the border). Our results show that a large proportion of the observed patterns in the on-border treatment support Hypothesis II, with a considerable amount of fanning-out behavior observed. The patterns observed in the off-border treatment are significantly different from those in the on-border treatment. Hypothesis II performs well in the off-border treatment because expected utility theory itself, which satisfies the restrictions of Hypothesis II, performs well.This is an expanded version of a paper originally prepared for presentation at the Fifth International Conference on the Foundation and Applications of Utility, Risk, and Decision Theories, held June 9–13, 1990 at Duke University, Durham, NC. We acknowledge helpful comments made by participants at that conference, especially those of Mark Machina.