Reconsidering the common ratio effect: the roles of compound independence,reduction, and coalescing

Common ratio effects should be ruled out if subjects’ preferences satisfy compound independence, reduction of compound lotteries, and coalescing. In other words, at least one of these axioms should be violated in order to generate a common ratio effect. Relying on a simple experiment, we investigate which failure of these axioms is concomitant with the empirical observation of common ratio effects. We observe that compound independence and reduction of compound lotteries hold, whereas coalescing is systematically violated. This result provides support for theories which explain the common ratio effect by violations of coalescing (i.e., configural weight theory) instead of violations of compound independence (i.e., rank-dependent utility or cumulative prospect theory).     

Bertrand competition with asymmetric costs: a solution in pure strategies

Theory and Decision - We consider a Bertrand duopoly with homogeneous goods and we allow for asymmetric marginal costs. We derive the Myopic Stable Set in pure strategies as introduced by Demuynck...     

Human Empowerment and Trust in Strangers: The Multilevel Evidence

This study aimed to develop a social cohesion index for understanding the social relation between residents in high-rise group housing complexes through a self-reported questionnaire. As a background of the study, literature on social cohesion and related literature on residents’ social relation in high-rise housing were reviewed. Later, we selected different high-rise group housings of Kolkata, a city in the eastern region of India. We conducted few focus group surveys involving the residents of those high-rises and also conducted expert opinion surveys to identify a context-specific list of statements for evaluating residential social cohesion. Finally, based on the responses of interviews from 652 residents of the identified high-rise housings from the same city, followed by confirmatory factor analyses, three factors of residential social cohesion were identified with adequate reliability and validity. This index holds huge potential to explore residential social relation in high-rise housing and carry out empirical studies, across various disciplines, in other cities in the country and outside the country of similar socio-economic and cultural context.     

Working Life Expectancy at Age 50 in the United States and the Impact of the Great Recession

A key concern about population aging is the decline in the size of the economically active population. Working longer is a potential remedy. However, little is known about the length of working life and how it relates to macroeconomic conditions. We use the U.S. Health and Retirement Study for 1992–2011 and multistate life tables to analyze working life expectancy at age 50 and study the impact of the Great Recession in 2007–2009. Despite declines of one to two years following the recession, in 2008–2011, American men aged 50 still spent 13 years, or two-fifths of their remaining life, working; American women of the same age spent 11 years, or one-third of their remaining life, in employment. Although educational differences in working life expectancy have been stable since the mid-1990s, racial differences started changing after the onset of the Great Recession. Our results show that although Americans generally work longer than people in other countries, considerable subpopulation heterogeneity exists. We also find that the time trends are fluctuating, which may prove troublesome as the population ages. Policies targeting the weakest performing groups may be needed to increase the total population trends.