TWO-PIECE VON NEUMANN-MORGENSTERN UTILITY FUNCTIONS*

Thirty empirically assessed utility functions on changes in wealth or return on investment were examined for general features and susceptability to fits by linear, power, and exponential functions. Separate fits were made to below-target data and above-target data. The usual “target” was the no-change point. The majority of below-target functions were risk seeking; the majority of above-target functions were risk averse; and the most common composite shape was convex-concave, or risk seeking in losses and risk averse in gains. The least common composite was concave-concave. Below-target utility was generally steeper than above-target utility with a median below-to-above slope ratio of about 4.8. The power and exponential fits were substantially better than the linear fits. Power functions gave the best fits in the majority of convex below-target and concave above-target cases, and exponential functions gave the best fits in the majority of concave below-target and convex above-target cases. Several implications of these results for decision making under risk are mentioned.     

Population monotonic path schemes for simple games

A path scheme for a game is composed of a path, i.e., a sequence of coalitions that is formed during the coalition formation process and a scheme, i.e., a payoff vector for each coalition in the path. A path scheme is called population monotonic if a player’s payoff does not decrease as the path coalition grows. In this study, we focus on Shapley path schemes of simple games in which for every path coalition the Shapley value of the associated subgame provides the allocation at hand. Obviously, each Shapley path scheme of a game is population monotonic if and only if the Shapley allocation scheme of the game is population monotonic in the sense of Sprumont (Games Econ Behav 2:378–394, 1990). We prove that a simple game allows for population monotonic Shapley path schemes if and only if the game is balanced. Moreover, the Shapley path scheme of a specific path is population monotonic if and only if the first winning coalition that is formed along the path contains every minimal winning coalition. We also show that each Shapley path scheme of a simple game is population monotonic if and only if the set of veto players of the game is a winning coalition. Extensions of these results to other efficient probabilistic values are discussed.     

Demand for health risk reductions: A cross-national comparison between the U.S. and Canada

Using a large stated preference survey conducted across the U.S. and Canada, we assess differences in individual willingness to pay (WTP) for health risk reductions between the two countries. Our utility-theoretic choice model allows for systematically varying marginal utilities for avoided future time in different adverse health states (illness-years, recovered/remission years, and lost life-years). We find significant differences between Canadian and U.S. preferences. WTP also differs systematically with age, gender, education, and marital status, as well as a number of attitudinal and subjective health-perception variables. Age profiles for WTP are markedly different across the two countries. Canadians tend to display flatter age profiles, with peak WTP realized at older ages.     

Dynamic reasoning and time pressure: Transition from analytical operations to experiential responses

Based upon the Decision Field Theory (Busemeyer and Townsend 1993), we tested a model of dynamic reasoning to predict the effect of time pressure on analytical and experiential processing during decision-making. Forty-six participants were required to make investment decisions under four levels of time pressure. In each decision, participants were presented with experiential cues which were either congruent or incongruent with the analytical information. The congruent/incongruent conditions allowed us to examine how many decisions were based upon the experiential versus the analytical information, and to see if this was affected by the varying degrees of time pressure. As expected, the overall accuracy was reduced with greater time pressure and accuracy was higher when the experiential and analytical cues were congruent than when they were incongruent. Of great interest was the data showing that under high time pressure participants used more experiential cues than at other time pressures. We suggest that the dynamic reasoning paradigm has some future potential for predicting the effects of experiential biases in general, and specifically under time pressure.     

Two-sided intergenerational moral hazard,long-term care insurance,and nursing home use

Two-sided intergenerational moral hazard occurs (i) if the parent’s decision to purchase long-term care (LTC) coverage undermines the child’s incentive to exert effort because the insurance protects the bequest from the cost of nursing home care, and (ii) when the parent purchases less LTC coverage, relying on child’s effort to keep him out of the nursing home. However, a “net” moral hazard effect obtains only if the two players’ responses to exogenous shocks fail to neutralize each other, entailing a negative relationship between child’s effort and parental LTC coverage. We focus on outcomes out of equilibrium, interpreting them as a break in the relationship resulting in no informal care provided and hence high probability nursing home admission. Changes in the parent’s initial wealth, LTC subsidy received, and child’s expected inheritance are shown to induce “net” moral hazard, in contradistinction to changes in child’s opportunity cost and share in the bequest.     

Can we count on each other? Reciprocity and conflicts in financial support in Sweden

Espvall M, Dellgran P. Can we count on each other? Reciprocity and conflicts in financial support in Sweden
Int J Soc Welfare 2010: 19: 84–94 © 2008 The Author(s), Journal compilation © 2008 Blackwell Publishing Ltd and the International Journal of Social Welfare. This article explores the experiences of reciprocity and conflicts in social relationships, and how these experiences are related to financial support (loans and gifts) in the wider social network. The balance of exchange within the social network as a whole is considered in relation to socio‐demographic features, financial conditions and the availability of social relationships. The data are drawn from a study of financial support exchange in Sweden based on a representative survey among Swedish citizens (n= 500). The results reveal that people living in economic hardship and who have more problematic life circumstances appear to be at risk of receiving more limited informal financial support and experience more feelings of conflict and nonreciprocal social relations.     

Semiparametric Bayesian classification with longitudinal markers

Summary.  We analyse data from a study involving 173 pregnant women. The data are observed values of the β human chorionic gonadotropin hormone measured during the first 80 days of gestational age, including from one up to six longitudinal responses for each woman. The main objective in this study is to predict normal versus abnormal pregnancy outcomes from data that are available at the early stages of pregnancy. We achieve the desired classification with a semiparametric hierarchical model. Specifically, we consider a Dirichlet process mixture prior for the distribution of the random effects in each group. The unknown random-effects distributions are allowed to vary across groups but are made dependent by using a design vector to select different features of a single underlying random probability measure. The resulting model is an extension of the dependent Dirichlet process model, with an additional probability model for group classification. The model is shown to perform better than an alternative model which is based on independent Dirichlet processes for the groups. Relevant posterior distributions are summarized by using Markov chain Monte Carlo methods.     

Violent civic nationalism versus civil ethnic nationalism: Contrasting Indonesia and Malay(si)a

In 1963 the Federation of Malaya, Singapore, Sarawak, and Sabah formed the Federation of Malaysia. In the same year Indonesia gained control over West Papua. In the first case the integration was accomplished participatory and peacefully, in the second violence reigned supreme. I argue that different visions of community, nation and state, developed during the decades of decolonisation and the early years of state- and nation-building, are responsible for the different outcomes. Contrary to the expectations of the predominant theories on nationalism the ethno-cultural variant of nation-building in Malaysia proved to be much more integrative than the civic variant espoused by the Indonesian nation-builders.     

State versus Market: Contending Interests in the Struggle to Control French Accounting Standardisation

The paper concerns the struggle between different interest groups to control or significantly influence the objectives, institutional arrangements and processes of French accounting standardisation. Its particular focus of interest is the state agency established to deal with standardisation, namely the National Accounting Council, the Conseil National de la Comptabilité (CNC), and its predecessors. The period addressed spans from 1941 to the present, marked by the first attempt to implement a national accounting code, adoption of the initial post-war code in 1947 and subsequent revisions.The paper identifies and examines the role played by the French state in establishing an institutional structure for accounting standardisation and in seeking to influence operation of that structure as a means to achieve a concertation of diverse social and economic interest groups with an interest in accounting standards. The objective for the process from the viewpoint of the state has been seen as the intended dominance of certain interests of state over other interests, whether public sector or otherwise. In the course of time, the dominant interests of the state have changed in the face of changing expectations about the role of financial accounting and reporting in the financial life of France. The role of the state is seen to have come under increasing pressure from private sector interests in France and externally. Particular attention is given to the 1996–8 major reforms to the CNC and associated new regulatory structure.The possibility is assessed of whether and under what terms the French approach to accounting standardisation can be sustained, grounded as it is in a profound attachment by the state to the values of the Etat colbertiste.