BUSINESS COMBINATION DECISIONS: A U.S./CANADA STUDY*

The purpose of this paper is to clarify the motives behind business combination decisions. Twenty-one favorable characteristics associated with the motivations for business combinations were selected to serve as the basis for an empirical survey. Our analysis revealed that there are seven motivational variables of varying import and that the motivations underlying business combination decisions are similar for U.S. and Canadian executives.     

TWO-PIECE VON NEUMANN-MORGENSTERN UTILITY FUNCTIONS*

Thirty empirically assessed utility functions on changes in wealth or return on investment were examined for general features and susceptability to fits by linear, power, and exponential functions. Separate fits were made to below-target data and above-target data. The usual “target” was the no-change point. The majority of below-target functions were risk seeking; the majority of above-target functions were risk averse; and the most common composite shape was convex-concave, or risk seeking in losses and risk averse in gains. The least common composite was concave-concave. Below-target utility was generally steeper than above-target utility with a median below-to-above slope ratio of about 4.8. The power and exponential fits were substantially better than the linear fits. Power functions gave the best fits in the majority of convex below-target and concave above-target cases, and exponential functions gave the best fits in the majority of concave below-target and convex above-target cases. Several implications of these results for decision making under risk are mentioned.     

A LABORATORY STUDY OF INDIVIDUAL SEARCH PATTERNS IN A DECISION-MAKING SITUATION

This study investigates the effects of time and probability constraints on the search process in a decision-making situation. The setting was a behavioral laboratory in which subjects were asked to choose one art print from a selection of 260 prints. The prints were in sets of five for convenience in showing. In the nonconstraint condition, subjects were able to set their own pace in viewing prints and could obtain any print in the whole set that was desired. Under the constraint condition, the time and probability constraints were both operative. Under the time constraint, viewing additional sets required increasing amounts of time. Under the probability constraint, there was a constantly reducing probability—down to a minimum of ten percent—of obtaining an earlier print as more prints were viewed. In comparison to unconstrained subjects, constrained subjects viewed fewer prints and did more rechecking in total while the search was in process.     

TEACHING EFFECTIVENESS IN THE DECISION SCIENCES: THE USE OF STUDENT EVALUATIONS

This article presents the results of an AIDS-sponsored investigation of teaching effectiveness in the decision sciences. Two national samples were employed in the study: a sample of 247 business school deans and a sample of 3,292 students from 32 different business schools. Included among the findings are that 87 percent of the deans responding indicate they require some sort of faculty teaching effectiveness evaluation, and that great care must be exercised when interpreting student ratings of an individual instructor's teaching effectiveness.     

SENSITIVITY ANALYSIS WITH INTERACTION EFFECTS

The purpose of this paper is to extend the sensitivity analysis methodology as it applies to linear programming. The methodology developed herein is concerned with those changes in a technological coefficient that cause simultaneous changes in the relevant cost coefficients of the objective function. By proceeding from the definitions of feasibility and optimality, the authors develop formulas for determining bounds on the extent to which a technological coefficient, which has a predetermined effect on the corresponding cost coefficient, can vary without changing the optimal set of activities. After the formulas are developed, their use is demonstrated on a product-mix problem. This technique is of interest because changes in the rate at which an input is utilized can be expected to change the cost per unit of a resulting product. This interdependence should be recognized whenever a sensitivity analysis is performed on a technological coefficient of either a cost minimization or a contribution margin maximization problem.     

THE DETAIL SCHEDULING OF A PART-TIME WORK FORCE: A CASE STUDY OF TELLER STAFFING

This paper presents a comparison of two heuristic methods for assigning a part-time work force to meet varying daily work loads. The authors use actual operating data from Purdue National Bank, Lafayette, Indiana, to make teller staffing decisions. The performance criteria for comparison of the two heuristics is the minimum number of workers employed, minimum number of interbranch transfers, and computer time necessary to attain a solution.     

The Politics of Hope and Despair: The Effect of Presidential Election Outcomes on Suicide Rates*

Objectives. This article examines the effect of election outcomes on suicide rates by combining the theory of social integration developed by Durkheim with the models of rational choice used in economics. Methods. Theory predicts that states with a greater percentage of residents who supported the losing candidate would tend to exhibit a relative increase in suicide rates. However, being around others who also supported the losing candidate may indicate a greater degree of social integration at the local level, thereby lowering relative suicide rates. We therefore use fixed‐effects regression of state suicide rates from 1981 to 2005 on state election outcomes during presidential elections to determine which effect is stronger. Results. We find that the local effect of social integration is dominant. The suicide rate when a state supports the losing candidate will tend to be lower than if the state had supported the winning candidate—4.6 percent lower for males and 5.3 percent lower for females. Conclusion. Social integration works at many levels; it not only affects suicide risk directly, but can mediate other shocks that influence suicide risk.     

Simple methods for evaluating and comparing binary experiments

We consider a confidence parametrization of binary information sources in terms of appropriate likelihood ratios. This parametrization is used for Bayesian belief updates and for the equivalent comparison of binary experiments. In contrast to the standard parametrization of a binary information source in terms of its specificity and its sensitivity, one of the two confidence parameters is sufficient for a Bayesian belief update conditional on a signal realization. We introduce a confidence-augmented receiver operating characteristic for comparisons of binary experiments for a class of “balanced” decision problems, relative to which the confidence order offers a higher resolution than Blackwell’s informativeness order.

Where observation is concerned, Chance favors only the prepared mind. —Louis Pasteur (1822–1895).