A STRATEGY FOR RISK REDUCTION IN INCENTIVE CONTRACTING*

An important question with respect to government incentive contracts that has received little attention is: What alternatives to the current practice of making single-stage choices of incentive sharing rates can lead to situations in which these sharing rates can be chosen under reduced risk or cost uncertainty? This paper provides a decision-theoretic framework that illustrates a possibility of reducing risk, from the viewpoints of both the contracting parties, given some negotiated estimate of costs to be incurred. It is shown that such a possibility can arise in a situation in which it is technically feasible to separate or partition the contractual work into closely related tasks or units. Specifically, it is demonstrated that for a given cost estimate (target cost) and target profit, a set of optimal sharing rates (one for each unit) yields a higher risk-adjusted value of the contract than the single-stage sharing rate for the entire contract.     

SPECTRAL ANALYSIS IN BUSINESS FORECASTING: THE WIENER-KOLMOGOROV METHOD *

The objective of this paper is to introduce the Wiener-Kolmogorov (WK) method to business researchers and to applied workers who have an interest in spectral techniques. It is seen that the advantage of the WK method is that it provides better forecasts than autoregressive regression analysis when the order of the true autoregressive process is large. The paper outlines the steps involved in the WK method. Also discussed is a labor-saving feature to guide one at the outset as to whether the WK algorithm should be used. A numerical example is given to illustrate the application of the method in time-series forecasting.     

EXPLORING MARKET PRICING STRATEGIES VIA DYNAMIC PROGRAMMING

Price determinants as well as strategies can be studies by use of simulation, particularly if cost and price relationships can be related to market activity [1] [9] [11]. But, through the use of dynamic programming, given the market conditions, one can extend the analysis to include an optimal strategy. This paper describes a dynamic programming approach to studying price strategy. A model is developed to show that in a market characterized by cost/volume and price/volume relationships, profitability can be extended beyond that resulting from a dominant market strategy to an optimal maximizing strategy. Extension of the model is suggested for studying (a) sensitivity of a strategy (solution) to price level and cost changes, (b) optimal timing of withdrawal, and (c) present value analysis.     

DECISION RULES IN PRODUCTION PLANNING UNDER CHANGE-CONSTRAINED SALES*

Alternative decision rules for aggregate production scheduling are specified here under chance-constrained sales and compared with the HMMS model. These rules are evaluated for their performance on the basis of simulated data on sales and it is found that the linear decision rules of the HMMS model can be considerably improved.     

EXPERIMENTAL RESULTS OF AN APPROACH FOR EVALUATING MULTIATTRIBUTE ALTERNATIVES

In this paper the results of an extensive simulation study are reported to provide empirical evidence on the Evaluation and Bound approach. Some rules for implementing the procedure interactively on a computer are also examined and compared experimentally. The results suggest that the Evaluation and Bound procedure, in conjunction with an appropriate strategy of implementing it, would reduce considerably the information requirement of the decision maker in the choice of a preferred multiattribute alternative.     

The Role of Giving and Receiving Emotional Support on Depressive Symptomatology among Older Couples: An Application of the Actor-Partner Interdependence Model

The present study investigated whether perception of receiving emotional support mediates the relationship between one partner's giving of emotional support and the other partner's depressive symptomatology using a population-based sample of 423 couples from the Changing Lives of Older Couples study. A path model was used guided by the Actor-Partner Interdependence Model. Results indicated that spouses' giving emotional support was related to the degree to which their spouse reported receiving emotional support. Perception of receiving emotional support, in turn, was related to lower depressive symptomatology of the support recipient. Both husbands and wives can benefit from emotional support through their perception of receiving emotional support, and spouses' perceptions, as well as their actions, should be considered in support transactions.     

When Adaptations Go Awry: Functional and Dysfunctional Aspects of Social Anxiety

Adaptations are psychological and behavioral mechanisms designed through evolution to serve specific purposes ultimately related to reproductive success. Although adaptations are inherently functional, in some cases their operation can nevertheless cause personal and social dysfunction. We describe a theoretical framework for understanding, predicting, and reducing the dysfunctional consequences of psychological adaptations. We discuss three general sources of dysfunction: a) the existence of adaptive tradeoffs, b) mismatches between current environments and ancestral environments, and c) individual differences. The paper applies this framework primarily to the topic of social anxiety, a psychological phenomenon marked by concerns pertaining to social rejection and embarrassment. Although social anxiety can serve useful functions, it can also involve excessive worry, negative affect, and avoidance of social situations, leading to significant distress and social impairment. We consider sources of dysfunction in social anxiety and discuss implications for policy, including recommendations for psychological, situational, and biological interventions. We also discuss broader applications of this theoretical framework to other areas of social life.     

Data skeletons: simultaneous estimation of multiple quantiles for massive streaming datasets with applications to density estimation

We consider the problem of density estimation when the data is in the form of a continuous stream with no fixed length. In this setting, implementations of the usual methods of density estimation such as kernel density estimation are problematic. We propose a method of density estimation for massive datasets that is based upon taking the derivative of a smooth curve that has been fit through a set of quantile estimates. To achieve this, a low-storage, single-pass, sequential method is proposed for simultaneous estimation of multiple quantiles for massive datasets that form the basis of this method of density estimation. For comparison, we also consider a sequential kernel density estimator. The proposed methods are shown through simulation study to perform well and to have several distinct advantages over existing methods.     

On Christensen's conjecture

In this paper we give solution to a conjecture appearing in Christensen (1997, p. 360) in relation to the definitions of standardized residuals in loglinear models. Work done when he was visiting as the Distinguished Lukacs Professor on leave from the Complutense University of Madrid. An erratum to this article is available at .