Eliciting Risk and Time Preferences

We design experiments to jointly elicit risk and time preferences for the adult Danish population. Since subjects are generally risk averse, we find that joint elicitation provides estimates of discount rates that are significantly lower than those found in previous studies and more in line with what would be considered as a priori reasonable rates. The statistical specification relies on a theoretical framework that involves a latent trade‐off between long‐run optimization and short‐run temptation. Estimation of this specification is undertaken using structural, maximum likelihood methods. Our main results based on exponential discounting are robust to alternative specifications such as hyperbolic discounting. These results have direct implications for attempts to elicit time preferences, as well as debates over the appropriate domain of the utility function when characterizing risk aversion and time consistency.     

Route‐Independent Analysis of Available Capacity in Flexible Manufacturing Systems

In a job shop, because of large setup times, each operation is assigned to only one machine. There is no alternative routing. In a flexible manufacturing system, each manufacturing operation can often be performed on several machines. Therefore, with automated equipment, the capacity of a machine to perform certain operations is not independent of the capacity of other machines. Often, however, operations managers can use a route‐independent answer to production planning questions. For example, how much can be produced of a certain part type and when are important capacity questions in business negotiations, when the detailed routing and scheduling are not yet of interest or cannot be known. This paper provides a mathematical model for the route‐independent analysis of the capacity of flexible manufacturing systems based on a concept of operation types. An example is provided both to illustrate the use of operation types and to highlight the differences between the traditional route‐dependent and the proposed route‐independent formulations of capacity constraints. Some computational results are also given. Finally, a sensitivity analysis is developed to analyze the feasibility of production plans when production requirements and machine capacities can change.     

Essence taxonomy of Brazilian family businesses and conceptual implications for governance strategy

Journal of Management and Governance - This study advances the discussion on the governance of family businesses in emerging markets by exploring a taxonomy based on the F-PEC model in order to...     

Lack of reciprocity among Dutch teachers: Validation of reciprocity indices and their relation to stress and well-being

This research presents the results of two related studies on the convergent and construct validity of three measures of reciprocity in exchange relationships at work. In Study 1, 71 Dutch teachers were interviewed about their specific investments and outcomes in the exchange relationships with their students, colleagues and school. ANOVA revealed that they reported significantly more investments than outcomes, and that the number of reported investments and outcomes mentioned varied as a function of the type of exchange relationship. Building on these results, multi-item scales were created to assess reciprocity at a detailed level for each of the three exchange relationships. Study 2 validated these specific reciprocity measures by relating them to two global assessments of reciprocity (convergent validity) as well as to measures of job stress and well-being (construct validity). LISREL-analysis of data obtained from a further sample of 224 teachers revealed that for each type of exchange relationship there were significant, consistent and meaningful relationships among the three reciprocity measures. Further, hierarchical regression analysis showed that the reciprocity measures were differentially related to job stressors and measures of well-being. Implications are discussed.     

Physician behavior at the e-technology/learning intersection: an interview with Elliott Masie. Interview by Richard L. Reece

Richard L. Reece, MD, interviewed Elliott Masie on January 16, 2001, to talk about the Internet learning world--that vast intersection of e-technology, learning, and human behavior. He describes how he looks beyond the hype of technology into how human beings behave and what they crave in social experiences. The real question, he says, is how do we have knowledge experiences and blend them with social experiences to achieve the optimal mix? Masie emphasizes, "The magic of learning is in the mix--what happens online and then what happens informally when we have a cup of coffee with a colleague." He continues, "Many of the capital market folks hate to hear about the human element, because they want to believe we'll be able to do everything from our PCs. But that's not how humans behave. It's the mixture that gets results. That's where the real excitement occurs."     

Leading beyond the bottom line, Part 4. The questions it has raised

The Leading Beyond the Bottom Line article series has received an overwhelming response from ACPE members, mostly in enthusiastic support of this new leadership concept. Some of the important questions raised by members are presented with answers from the authors. This article also explores the moral challenge of leadership and why health care is more than a business. In recent years, there's been confusion about the role of the health care enterprise, its leadership and its management. We have lost our way about the "moral" thing, the "right" thing, because we have no philosophy to guide us. To manage or lead in this "business" of health care, a philosophy is required that recognizes the multiple elements to which the leader has responsibility and obligations: the customers, community, employees, and, certainly, the financial assets.     

What is it like to work for a pharmaceutical company? Interview by Barbara J. Linney

Is working for a pharmaceutical company a career option you've thought about pursuing? In this column, Barbara Linney interviews physician executive Edward A. Kaufman, MD, about his 20-year experience working in the pharmaceutical industry. He talks about how he held a series of jobs for SmithKline Beecham's clinical labs business and lived in a number of places. He describes his background and how it made him an attractive candidate for the position, why he sought out the pharmaceutical industry, the nature of the work, and some of the projects that he has been involved in. He gives examples of physicians who have joined the executive ranks at GlaxoSmithKline and what made them such high-caliber candidates for top leadership positions.     

Estimation of Error and Bias in Bayesian Monte Carlo Decision Analysis Using the Bootstrap

Bayesian Monte Carlo (BMC) decision analysis adopts a sampling procedure to estimate likelihoods and distributions of outcomes, and then uses that information to calculate the expected performance of alternative strategies, the value of information, and the value of including uncertainty. These decision analysis outputs are therefore subject to sample error. The standard error of each estimate and its bias, if any, can be estimated by the bootstrap procedure. The bootstrap operates by resampling (with replacement) from the original BMC sample, and redoing the decision analysis. Repeating this procedure yields a distribution of decision analysis outputs. The bootstrap approach to estimating the effect of sample error upon BMC analysis is illustrated with a simple value-of-information calculation along with an analysis of a proposed control structure for Lake Erie. The examples show that the outputs of BMC decision analysis can have high levels of sample error and bias.     

Property Loss Estimation for Wind and Earthquake Perils

This article describes the development of a generic loss assessment methodology, which is applicable to earthquake and windstorm perils worldwide. The latest information regarding hazard estimation is first integrated with the parameters that best describe the intensity of the action of both windstorms and earthquakes on building structures, for events with defined average return periods or recurrence intervals. The subsequent evaluation of building vulnerability (damageability) under the action of both earthquake and windstorm loadings utilizes information on damage and loss from past events, along with an assessment of the key building properties (including age and quality of design and construction), to assess information about the ability of buildings to withstand such loadings and hence to assign a building type to the particular risk or portfolio of risks. This predicted damage information is then translated into risk-specific mathematical vulnerability functions, which enable numerical evaluation of the probability of building damage arising at various defined levels. By assigning cost factors to the defined damage levels, the associated computation of total loss at a given level of hazard may be achieved. This developed methodology is universal in the sense that it may be applied successfully to buildings situated in a variety of earthquake and windstorm environments, ranging from very low to extreme levels of hazard. As a loss prediction tool, it enables accurate estimation of losses from potential scenario events linked to defined return periods and, hence, can greatly assist risk assessment and planning.     

Poliovirus Surveillance by Examining Sewage Water Specimens: Studies on Detection Probability Using Simulation Models

Efficiency of environmental surveillance of poliovirus circulation was studied using simulation models. First, three transmission models were defined for describing different scenarios of poliovirus infections in a large unstructured population. Second, environmental factors, such as the total volume of the sewage network and losses of viruses, were modeled for computing the virus output at the sewage sampling site. Third, the effect of sampling and laboratory procedures was accounted for in the probability of detection, given the amount of polioviruses in a specimen. The simulation model can be used for theoretical assessments of the likely efficiency of environmental surveillance, compared with acute flaccid paralysis (AFP) surveillance. Under reasonable assumptions in a vaccinated population, the AFP surveillance can be outperformed if the poliovirus outbreak is not large. However, this depends on the assumed case-to-infection ratio and on the sampling frequency of the sewage water specimens. Increasing the latter will lead to a higher detection probability, which will further enhance the method based on environmental surveillance.