Paying to improve your chances: Gambling or insurance?

Will a more risk-averse individual spend more or less to improve probabilities, say on marketing efforts that enhance the chance of a sale? For any two payoffs and starting probabilities, the answer is unfortunately indeterminate. However, interpreting gambling as increasing small chances of good outcomes and insurance as reducing small chances of bad outcomes, the more risk-averse individual will pay less (more) to gamble (insure). We find a critical switching probability that depends on the individuals and outcomes involved. If the good outcome is less (more) likely than this critical value, the expenditures represent gambling (insurance).     

Neoliberalism,Inequality and Politics: The Changing Face of Australia

Since the early 1980s Australian public policy has undergone the most major transformation since Federation. This transformation has been underwritten by two key principles: liberalism – the view that citizens are autonomous individual actors whose interests are best served when they are free from coercive government interventions into individual action; and marketisation – the belief that free markets are arenas which best enable individual autonomy and produce efficient economic outcomes. These principles define ‘neoliberalism’ or ‘hard liberalism‘. After summarising the major policy changes identified with neoliberalism in Australia, the paper introduces a new research project that examines its impact on socioeconomic inequality, gender inequality and politics and culture. Inspection of relevant data indicates that there are important trends in inequality, public opinion and political behaviour that warrant this investigation.     

Bridging the Researcher-Practitioner Divide in Intergroup Relations

Editors' introduction: Walter Stephan's interest in intergroup relations grew from his early involvement in intercultural relations. He spent substantial time in Latin America as well as Vietnam during his college years. These experiences influenced his choice to study social psychology at the University of Minnesota. His first foray into intergroup relations came with his move to Austin, Texas, in 1971. A Court mandate ordered schools to be desegregated, and Stephan examined the effects of school desegregation there on students' self-esteem and intergroup attitudes. His field research on the effects of desegregation as well as classroom interventions to improve intergroup relations was complemented by his laboratory research on intergroup biases, intergroup threat, intergroup anxiety, and empathy. Stephan brings this lifetime of involvement in both basic and applied research, and deep concern for effective practice and humanistic philosophy, to his commentary. He opens the commentaries with an elucidation of the difficulties in, and benefits of, the central thrust of this volume: the researcher-practitioner collaboration. He paints portraits of practitioners, researchers, and practitioner-researchers, and classifies articles in this issue accordingly. He notes the difficulties among the various parties interested in improving intergroup relations, spanning from simple lack of knowledge to lack of contact to lack of meaningful ways to interact. However, potential benefits of collaboration are abundant for all parties, and Stephan proposes a number of ways in which such partnerships could be actualized.     

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.     

Risk reduction or risk compensation? The case of mandatory safety-belt use laws

The technological approach to risk regulation seeks to lessen the incidence of mortality and morbidity by modifying environmental conditions. Insofar as risk-taking behavior is purposive, social scientists have predicted that technological progress may be negated by various forms of risk compensation. The validity of this hypothesis is tested in the transportation sector with data from the U.S. on the effects of new mandatory safety-belt-use laws. A fixed-effects model of traffic fatality counts is estimated using pooled data from 50 states during the 1975–1987 period. Results suggest that such laws have reduced mortality among car occupants to a degree that is compatible with the predictions of technologists. However, there is weak evidence of increased mortality among some nonoccupants, a pattern predicted by risk-compensation theorists. The lifesaving effects of belt-use laws are largest in states that permit primary police enforcement and appear to be somewhat larger for front-seat occupants age 21 and under. Although offsetting behavior appears to be small relative to lifesaving effects, it may take several more years for any compensatory behavior to achieve a new equilibrium.This research was supported in part by a grant from the Centers for Disease Control to the New England Injury Prevention Research Center.