Counterintuitive behavior of social systems

This paper addresses several issues of broad concern in the United States: population trends; the quality of urban life; national policy for urban growth; and the unexpected, ineffective, or detrimental results often generated by government programs in these areas.The author does attempt to indicate how multiloop feed-back systems (to which our social systems belong) mislead us because our intuition and judgement have been formed to expect behavior different from that actually possessed by such systems. At times programs cause exactly the reverse of desired results.It is now possible to explain how such contrary results can happen. There are fundamental reasons why people misjudge the behavior of social systems. There are orderly processes at work that frequently lead people to wrong decisions when faced with complex and highly interacting systems. Until we come to a much better understanding of social systems, we should expect that attempts to develop corrective programs will continue to disappoint us.     

Insurer ambiguity and market failure

A series of studies investigate the decision processes of actuaries, underwriters, and reinsurers in setting premiums for ambiguous and uncertain risks. Survey data on prices reveal that all three types of these insurance decision makers are risk averse and ambiguity averse. In addition, groups appear to be influenced in their premium-setting decisions by specific reference points such as expected loss and the concern with insolvency. This behavior is consistent with a growing analytical and empirical literature in economics and decision processes that investigates the role that uncertainty plays on managerial choices. Improved risk-assessment procedures and government involvement in providing protection against catastrophic losses may induce insurers to reduce premiums and broaden available coverage.This article is part of a larger effort supported by the National Science Foundation on The Role of Insurance, Compensation, Regulation, and Protective Behavior in Decision Making about Risk and Misfortune. We greatly appreciate the many helpful comments and suggestions by our colleagues on the project: Jon Baron, Colin Camerer, Neil Doherty, Jack Hershey, Eric Johnson, and Paul Kleindorfer. Support from NSF Grant #SES8809299 is gratefully acknowledged.     

Two-person sequential bargaining behavior with exogenous breakdown

We examine bargaining behavior in a noncooperative game in which players alternate in making and responding to proposals over the division of a given surplus. Although the number of bargaining periods is unlimited and time is not discounted, the bargaining is subject to exogenous breakdown at each period with a fixed probability which is common knowledge. We manipulate three probabilities of break-down in a between-subjects design that allows comparison with previous studies of two-person bargaining with time discounting. Assuming that subjects maximize expected utility, and this utility is measured by monetary payoffs, our results reject both the subgame perfect equilibrium and equal split solutions. Data analyses reveal that a substantial percentage of subjects behave adaptively in that they systematically search for the highest acceptable demands.     

The value circle. A profile of J. Richard Gaintner, MD.

This article describes how the arrival of CEO J. Richard Gaintner, MD, at Shands HealthCare signaled a time for refocusing the organization's direction and helping physicians to cope with the changes buffeting the industry. He saw angst and disenfranchisement, sentiments that characterized not only Shands and the University of Florida Health Science Center, but also the entire establishment of American scientific medicine. Gaintner believes--and continually preaches--that practicing medicine in a cost-effective manner will improve, not harm, the quality of care. His willingness to face reality objectively is perhaps his greatest asset in helping physicians deal with managed care. He conveys heartfelt empathy with the day-to-day conflicts they face. But he does not allow himself the temporary luxury of cynicism, and he refuses to accept negativity and pessimism in others. Rather, he asks that physicians and managers understand the system and develop the capacity to work within it and take responsibility for improving it. Beyond exhorting physicians to be accountable for the success of the enterprise, Gaintner creates mechanisms for meaningful physician participation in enterprise management.     

The Gamma Distribution as a Mixture of Exponential Distributions

A gamma distribution with arbitrary scale parameter θ and shape parameter r < 1 can be represented as a scale mixture of exponential distributions.     

Estimable functions in the nonlinear model

When the method of least squares is used to estimate the parameters in a general model and the generated system of normal equations is linearly dependent, the estimate of the vector of parameters which satisfies the criterion is not unique. However, there exist certain functions of the estimated vector of parameters which are invariant to the least squares solution obtained from the normal equations. We define those invariant functions to be estimable, and present a technique to determine the functions of the parameters which are estimable for the general model. The method results in solving either a linear first order partial differential equation or a system of linear first order partial differential equations corresponding, respectively, to a single or multiple dependency between columns of the Jacobian matrix of the mean of the model. The usual results concerning estimability for linear models are a special case of the general results developed.     

The Function of Avoidance in Improving the Understanding of Disaster Recovery

Functional avoidance as an intermittent coping mechanism is a necessary component in disaster recovery. By temporarily avoiding losses after disaster, survivors can secure basic needs and begin rebuilding. It is not until recovery projects are completed that mental health outcomes become apparent. Many individuals begin a healthy grieving process; however, for others, where avoidance extends past the completion of normalizing tasks it becomes pathological. This study presents the concept of functional avoidance and investigates the point at which it becomes dysfunctional using case examples and data from a mental health clinic. Findings suggest increased emotional distress, depression, and posttraumatic stress disorder over 3 years after Hurricane Katrina.     

Premarital Sex,Premarital Cohabitation,and the Risk of Subsequent Marital Dissolution Among Women

Using nationally representative data from the 1995 National Survey of Family Growth, I estimate the association between intimate premarital relationships (premarital sex and premarital cohabitation) and subsequent marital dissolution. I extend previous research by considering relationship histories pertaining to both premarital sex and premarital cohabitation. I find that premarital sex or premarital cohabitation that is limited to a woman's husband is not associated with an elevated risk of marital disruption. However, women who have more than one intimate premarital relationship have an increased risk of marital dissolution. These results suggest that neither premarital sex nor premarital cohabitation by itself indicate either preexisting characteristics or subsequent relationship environments that weaken marriages. Indeed, the findings are consistent with the notion that premarital sex and cohabitation limited to one's future spouse has become part of the normal courtship process for marriage.     

Development and Consideration of Global Policies for Managing the Future Risks of Poliovirus Outbreaks: Insights and Lessons Learned Through Modeling

The success of the Global Polio Eradication Initiative promises to bring large benefits, including sustained improvements in quality of life (i.e., cases of paralytic disease and deaths avoided) and costs saved from cessation of vaccination. Obtaining and maintaining these benefits requires that policymakers manage the transition from the current massive use of oral poliovirus vaccine (OPV) to a world without OPV and free of the risks of potential future reintroductions of live polioviruses. This article describes the analytical journey that began in 2001 with a retrospective case study on polio risk management and led to development of dynamic integrated risk, economic, and decision analysis tools to inform global policies for managing the risks of polio. This analytical journey has provided several key insights and lessons learned that will be useful to future analysts involved in similar complex decision-making processes.