On the Cycle-Transitivity of the Dice Model

We introduce the notion of a dice model as a framework for describing a class of probabilistic relations. We investigate the transitivity of the probabilistic relation generated by a dice model and prove that it is a special type of cycle-transitivity that is situated between moderate stochastic transitivity or product-transitivity on the one side, and ukasiewicz-transitivity on the other side. Finally, it is shown that any probabilistic relation with rational elements on a three-dimensional space of alternatives which possesses this particular type of cycle-transitivity, can be represented by a dice model. The same does not hold in higher dimensions.     

Tempered Regrets Under Total Ignorance

Several decision rules, including the minimax regret rule, have been posited to suggest optimizing strategies for an individual when neither objective nor subjective probabilities can be associated to the various states of the world. These all share the shortcoming of focusing only on extreme outcomes. This paper suggests an alternative approach of tempered regrets which may more closely replicate the decision process of individuals in those situations in which avoiding the worst outcome tempers the loss from not achieving the best outcome. The assumption of total ignorance of the probabilities associated with the various states is maintained. Applications and illustrations from standard neoclassical theory are discussed.     

On the Relative Strengths of Altruism and Fairness

Some researchers have attributed deviations from selfish behavior to fairness. Violations of fairness theories, however, are observed in experimental dictator games with transfer rates greater than 1 (a transfer of x from the dictator yields an income of tx for the beneficiary, where x < tx): the dictator’s final income is less than the beneficiary’s. We theoretically propose that dictator giving also involves altruism, further supporting our claim with empirical evidence from four separate samples of dictator game experiments. Our nonlinear specification allows the relative measurement of the independent motives in dictator behavior.     

Can cities be held responsible for early school leaving? Evidence from the Netherlands

This paper examines if ‘naming and shaming’ is an effective tool to increase accountability in school dropout for cities with disadvantaged student populations. It argues that a comparison with other cities might be unfair if regional and population characteristics differ. It discusses the example of two Dutch new towns. The new town policy deliberately attracted low- and medium-income households in the past, such that today the population of those cities differs from other cities. We use a matching analysis to account for observed differences in population and regional characteristics. The results point out that ‘naming and shaming’ may be a dangerous policy to increase accountability: early school leaving differences are driven, to a large extent, by observed differences in population and regional characteristics.     

The prospects for higher domestic savings rates in Latin America

This paper analyzes the prospects for raising domestic saving rates to permit increased investment and/or reduced dependence on foreign-capital inflow in Latin America. We analyze the question of rising saving rates by applying a random-coefficients approach: treating the parameters estimated in time-series analysis for individual countries as observations drawn from an international cross-section of savings behavior. Correlation analysis is then applied to clarify the conditions associated with international differences in savings parameters across a sample of 21 Latin American countries.     

On the predictive efficiency of the core solution in side-payment games

This paper reports the first cross-study competitive test of thecore solution in side-payment games where the core is nonempty and nonunique (i.e., larger than a single point). The core was tested against five alternative theories including the Shapley value, the disruption nucleolus, the nucleolus, the 2-center, and the equality solution. A generalized Euclidean distance metric which indexes the average distance between an observed payoff vector and the entire set of predicted payoff vectors (Bonacich, 1979) was used as the measure of goodness-of-fit. Analysis of data assembled from six previously reported studies (encompassing a total of 1,464 observations over 56 3-person and 4-person side-payment games) showed the core to predict less accurately than the Shapley value, disruption nucleolus, and nucleolus solutions (p < 0.01). These findings are consistent with previous empirical results that show the core to have a low level of predictive accuracy in side-payment games.This research was supported by grants SOC-7726932 and SES-8015528 from the National Science Foundation. Data analysis was performed at the Madison Academic Computing Center.