The effect of fast and slow decisions on risk taking

We experimentally compare fast and slow decisions in a series of experiments on financial risk taking in three countries involving over 1700 subjects. To manipulate fast and slow decisions, subjects were randomly allocated to responding within 7 seconds (time pressure) or waiting for at least 7 or 20 seconds (time delay) before responding. To control for different effects of time pressure and time delay on measurement noise, we estimate separate parameters for noise and risk preferences within a random utility framework. We find that time pressure increases risk aversion for gains and risk taking for losses compared to time delay, implying that time pressure increases the reflection effect of Prospect Theory. The results for gains are weaker and less robust than the results for losses. We find no significant difference between time pressure and time delay for loss aversion (tested in only one of the experiments). Time delay also leads to less measurement noise than time pressure and unconstrained decisions, and appears to be an effective way of decreasing noise in experiments.     

Demande et emploi dans les chaînes d'approvisionnement mondiales

L'essor des chaînes d'approvisionnement mondiales (CAM) éloigne l'emploi de la demande, géographiquement et sectoriellement. Pour mieux comprendre le phénomène, les auteurs mesurent l'emploi lié aux CAM selon sa localisation et celle de la demande, en se fondant sur les données de la base WIOD et en complétant les estimations déjà présentées par le BIT. L'analyse porte sur la période 1995–2013 et sur 40 économies. Elle montre que la Chine, principale bénéficiaire de la demande liée aux CAM autrefois, contribue maintenant à l'alimenter, tout comme les relations de production entre économies émergentes. En outre, le poids des services liés à une demande manufacturière augmente.     

The managerial power approach: Is it testable?

Journal of Management and Governance - The central hypothesis of the managerial power approach (MPA) states that power is the main driver of executive compensation. The positive impact of power on...     

Adaptive designs for single‐arm phase II trials in oncology

Clinical phase II trials in oncology are conducted to determine whether the activity of a new anticancer treatment is promising enough to merit further investigation. Two‐stage designs are commonly used for this situation to allow for early termination. Designs proposed in the literature so far have the common drawback that the sample sizes for the two stages have to be specified in the protocol and have to be adhered to strictly during the course of the trial. As a consequence, designs that allow a higher extent of flexibility are desirable. In this article, we propose a new adaptive method that allows an arbitrary modification of the sample size of the second stage using the results of the interim analysis or external information while controlling the type I error rate. If the sample size is not changed during the trial, the proposed design shows very similar characteristics to the optimal two‐stage design proposed by Chang et al. (Biometrics 1987; 43:865–874). However, the new design allows the use of mid‐course information for the planning of the second stage, thus meeting practical requirements when performing clinical phase II trials in oncology. Copyright © 2012 John Wiley & Sons, Ltd.     

Die Bedeutung der Zinsschranke

The German Corporate Tax Reform Act of 2008 requires an adjustment of classic valuation concepts because it limits interest deduction from taxable income depending on the operating performance of the company. By using time- and state-contingent discount rates in a risk-neutral valuation with predetermined debt levels, a theoretically sound valuation result is obtained. However, a modified APV-concept which assumes deterministic debt over the planning horizon and constant leverage in the terminal value phase also yields consistent valuation results when two types of tax shields with different levels of risk are distinguished.     

Affine LIBOR models driven by real-valued affine processes

The class of affine LIBOR models is appealing since it satisfies three central requirements of interest rate modeling. It is arbitrage-free, interest rates are nonnegative, and caplet and swaption prices can be calculated analytically. In order to guarantee nonnegative interest rates affine LIBOR models are driven by nonnegative affine processes, a restriction that makes it hard to produce volatility smiles. We modify the affine LIBOR models in such a way that real-valued affine processes can be used without destroying the nonnegativity of interest rates. Numerical examples show that in this class of models, pronounced volatility smiles are possible.     

Multiple hypothesis tests based On conditional differences in means

Many hypothesis tests are univariate tests and cannot cope with multiple hypothesis without an auxiliary procedure as e. g. the Bonferroni-Holm-procedure. At the same time, there is an urgent need for testing multiple hypothesis due to the very simple existing methods as the Bonferroni-correction or the Bonferroni-Holm-procedure, which suffers from a very small local significance level to detect statistical inferences or the drawback that logical and statistical dependencies among the test statistics are not used, whereby its detection is NP-hard. In honour of this occasion, we present a multiple hypothesis test for i.i.d. random variables based on conditional differences in means, which is capable to cope with multiple hypothesis and does not suffer on such drawbacks as the Bonferroni-correction or the Bonferroni-Holm-procedure. Thereby, the computation time can be neglected.