The price of risk with incomplete knowledge on the utility function*

When a risk is exchanged, the exact value for the minimum price (positive or negative) that the purchaser (investor, or insurer) is willing to pay is given by the certainty equivalent wealth level, which in turn depends on his specific utility function. When this utility function is unknown, then only a sufficient condition on the price can ever be found. This paper provides methods for calculating such a sufficient condition, when only limited information on the utility function is known.     

DECRIMINALISATION OF PUBLIC DRUNKENNESS IN WESTERN AUSTRALIA: THE PROCESS EXPLAINED

Two alternative models of service provision are associated with decriminalisation of public drunkenness – the medical or sickness model and the social welfare model. In the development of alternative strategies to accompany decriminalisation, Australian jurisdictions have largely followed the latter welfare approach. In Western Australia, decriminalisation of public drunkenness was spurred by the recommendations of the Muirhead Interim Report on Aboriginal Deaths in Custody. A community development approach was used to establish local management structures for sobering-up programs in areas of greatest need. Three sobering-up centres are now operating in the State with a fourth centre due to open in mid 1993. Some preliminary evaluation of the Western Australian program has been carried out but a more comprehensive research and evaluation program is being conducted to assess the impact of decriminalisation and the development of alternative responses.     

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).     

An experimental evaluation of the descriptive validity of lottery-dependent utility theory

This article compares the performance of the expected utility (EU) and lottery-dependent expected utility (LDEU) models in predicting the actual choices of experimental subjects among risky options. In the process, we present two approaches for calibrating the LDEU model for an individual decision maker. The results indicate that while LDEU exhibits a higher potential for correctly predicting choice, the version of the model calibrated by indifference judgments does not outperform EU. We suggest a functional form for the parametric functions that defines the LDEU model, and discuss ways in which this function can be incorporated into choice-based assessment approaches to improve predictions.This research was supported in part by the Business Associates Fund at the Fuqua School of Business, Duke University.     

The Long-Term Effects of Parental Divorce in Childhood on Adult Adjustment

Relationships between experiencing a parental divorce or separation prior to age 16 and a variety of measures of adult adjustment and psychological functioning are examined using data from two national cross-sectional surveys conducted nearly 20 years apart. Although few differences between adults from parentally-divorced and intact family backgrounds persist when controls for contemporary life circumstances and other social background factors were included, two modest trends are still evident. First, although associations between psychological distress and early experience with parental divorce have weakened somewhat over the past two decades, coming from a non-intact family of origin still has some significance for adult psychological well-being. Second, men and women from non-intact families of origin display different patterns of adjustment to and valuation of the major life roles of spouse and parent. Nevertheless, because such relationships are not very powerful, it is concluded that contrary to much of the literature and popular thought, these early experiences have, at most, a modest effect on adult adjustment.     

Conspicuous conservatism in risk choice

We analyze the risk levels chosen by agents who have private information regarding their quality, and whose performance will be judged and rewarded by outsiders. Assume that risk choice is observable. Agents will choose risk strategically to enhance their expected reputations. We show that conspicuous conservatism results: agents of different qualities choose levels below those that would be chosen if quality were observable. This happens because bad agents must cloak their identity by choosing the same risk level as good agents, and good agents are more likely to distinguish themselves if they reduce the risk level. Our results contrast starkly with those for the case when risk choice cannot be observed.

Creating sacred scenarios: opportunities for new rituals and sacred aging

Population studies within all communities have confirmed the rise of what has been referred to as a revolution in longevity. With the first wave of the baby boom generation about to join the existing over sixty-five generations, new life stages and experiences are being created in ways that will challenge religious communities. An important aspect of this revolution will be the opportunity to create new religious rituals that will respond to and reflect these new life stages and experiences. This growing multi-generational cohort will increasingly seek that their religious communities respond to their changing life experiences in ways that infuse their lives with meaning.     

Is deviance “Deadℍ? The decline of a sociological research specialization

Colin Sumner has declared that the sociology of deviance as a research specialty was “dead? by 1975; later influential studies on norm-violating behavior appeared only in the specific area of criminology. We subjected this argument to empirical test through an analysis of the most-cited scholars and works in 263 textbooks, articles, and research notes appearing in the sociology of deviance from 1993 to 1999. We found some support for Sumner's claims: The majority of the most-cited scholars in devi-ance today conduct research in other areas, primarily in criminology. Furthermore, among the 31 most-cited works in our analysis, only two of 15 studies classified in the sociology of deviance appeared after 1975. We conclude with some thoughts about the factors that contribute to the rise and fall of research specializations in sociology.     

Diffusion of an Economic Development Policy Innovation: Explaining the International Spread of Casino Gambling

This study uses an event history analysis to examine the factors that lead to the adoption of casino gambling among 13 nations around the world. Specifically, measures of fiscal stress, economic development, tourism, religiosity, and income levels are tested for their relationship to national decisions to legalize casino gambling. This study found that economic development needs, as measured by general unemployment rates, were associated with the casino legalization decisions of national governments. Higher unemployment rates were more likely in the years that nations legalized casino gambling. Religiosity, measured by frequency of church attendance, was also found to be a significant barrier in legalization decisions. Measures of fiscal stress, tourism, and income levels were not found to have significant relationships with the legalization decisions. This is interesting because these factors are often cited in case studies, media reports, and the statements of politicians during legalization processes. This study points to the need for further research in several areas. Further exploration of potential explanatory variables and more appropriate measures of currently theorized factors is warranted. Another area for further research is the seeming contradictory findings of multiple statistical analyses and multiple anecdotal findings of the impacts of fiscal stress on the casino legalization decision.     

Parent and Peer Attachment in Minority Males at High Risk for Delinquency

Juvenile delinquency and high risk behaviors have been linked to disturbances in attachment. The present study examined parent and peer attachment in 67 African American males and 97 Latinos (ages 12–17, M = 14.7 ± 1.3) attending an alternative school. The Inventory of Parent and Peer Attachment was used to identify 3 attachment style groups: “Isolated,” “Disconnected,” and “Connected.” Controlling for age, attachment group membership predicted differences in delinquent behaviors, as did ethnicity. Further, on the Youth Self-Report of the Child Behavior Checklist, attachment group membership predicted differences in both the Internalizing and Externalizing Scales. Implications for interventions with each identified attachment group are discussed.