An Explicit Formula for the Risk of the Positive-Part James-Stein Estimator

When estimating a normal mean vector with variance known up to a multiplicative factor, it is well known that the positive-part James-Stein estimator is not admissible, but until now, no one has been able to exhibit a uniformly better estimator. We propose here an explicit formula for the risk of the positive-part James-Stein estimator.     

Does a Brochure About Pathological Gambling Provide New Information?

The purpose of the present study is to evaluate whether a brochure on pathological gambling provides new information and knowledge to the general population. A total of 115 randomly chosen people from shopping malls and municipal parks were randomly distributed to control and experimental groups. Results indicated that the brochure provided new information concerning problem gambling, at risk behaviors, and the availability of specialised help.     

Brief Communications Analysis of a Casino's Self-Exclusion Program

As gambling facilities become more available, the number of pathological gamblers increases. Effective therapeutic and preventive interventions should be developed and systematically evaluated. Self-exclusion programs may be a useful means to facilitate self-control among problem gamblers. This paper describes the characteristics of individuals who decided to bar themselves from a Canadian casino. Two hundred twenty individuals participated in the present study and completed a questionnaire including four sections: (1) socio-demographic data, (2) the South Oaks Gambling Screen, (3) gambling habits, and (4) prior experiences with the self-exclusion program. According to the SOGS, 95% of the participants were classified as severe pathological gamblers on the SOGS (Mean score = 9.87). Furthermore, based on self-reported observation, 30% of the participants completely stopped gambling once enrolled in this program. No one scored within the interval of non-problem gamblers. Suggestions to improve self-exclusion programs are discussed.     

Hans Georg Zilian, Unglück im Glück. Überleben in der Spaßgesellschaft

Ohne Zusammenfassung     

Horizon Length and Portfolio Risk

In this paper, we compare the attitude towards current risk of two expected-utility-maximizing investors who are identical except that the first investor will live longer than the second one. It is often suggested that the young investor should take more risks than the old investor. We consider as a benchmark the case of complete markets with a zero risk-free rate. We show that a necessary and sufficient condition to assure that younger is riskier is that the Arrow-Pratt index of absolute tolerance (T) be convex. If we allow for a positive risk-free rate, the necessary and sufficient condition is T convex, plus T(0) = 0. It extends the well-known result that rational investors can behave myopically if and only if the utility function exhibits constant relative risk aversion.     

Decision-Making Under Scientific Uncertainty: The Economics of the Precautionary Principle

The Precautionary Principle has provided the foundations for building a new risk regulatory pattern under scientific uncertainty. This paper investigates how classical economic theory may, or may not, justify the Precautionary Principle. It examines the link between irreversibility, the prospect of increasing information over time and risk management. In doing so, it brings closer the notion of option value to that of precaution. Using a general modelling framework, it identifies the conditions so that the Precautionary Principle is an efficient economic guideline. It also explains why precautionary policies are not likely to emerge in a competitive economy or in the presence of a global pollution problem.     

Aging With Rising Risk: Have Older Households Experienced Faster-Growing Risk Exposure Than Younger Ones Since the 1990s?

Financial markets have been characterized by boom and bust cycles since the 1980s, while the responsibility for managing retirement wealth has increasingly shifted onto individual households at the same time. Policy makers and experts have expressed concern over rising risk exposure among older householders, who appear to be increasingly exposed to the growing financial risks just as they near retirement. We consider household data from the Federal Reserve’s Survey of Consumer Finances from 1989 to 2010 to analyze the correlation between age and risk exposure. We test whether older householders’ risk exposure has indeed grown over time, whether it has increased more than that of younger householders, whether changes in the demographic composition of older householders have contributed to older households’ rising risk exposure, and the degree to which increases in risk exposure can be traced to a growing concentration of household assets held in stocks and housing and to rising householder indebtedness. Our results indicate that risk exposure has grown more for older householders than for younger ones, that demographic changes among older householders have contributed to additional increases in older householders’ risk exposure, and that the growth of older householders’ risk exposure is driven more by rising risky asset concentration and less by greater indebtedness.