Effects of Outcome and Probabilistic Ambiguity on Managerial Choices

Information ambiguity is prevalent in organizations and likely influences management decisions. This study examines, given imprecise probabilities and outcomes, how managers make choices when they are provided with single-figure benchmarks. Seventy-nine MBA students completed two experiments. We found that, in a decision framed as a decision under certainty involving an ambiguous outcome, the majority of the subjects were ambiguity prone in the loss condition and switched to ambiguity aversion in the gain condition. However, in the presence of probabilistic ambiguity in a decision under risk, this expected switching pattern was shown only when the difference in riskiness between the two choice options (in the loss condition) was perceived to be relatively small. In a companion study, we used a written protocol approach to identify factors that affect decision makers' investment choices when faced with ambiguous outcomes. Protocols frequently mentioned that the ambiguous outcome option was risky, even in the case which was framed as a decision under certainty in the problem statement. In a decision under risk with ambiguous outcomes, the combination of probabilistic risk and outcome ambiguity was seen as even more risky.     

Hurricane Katrina: African American Children's Perceptions of Race, Class, and Government Involvement Amid a National Crisis

The devastation associated with Hurricane Katrina raised several issues related to race, class, and the government in the United States. We examined African American children's (a) knowledge of demographic characteristics of the victims, (b) beliefs about the role of race and class biases in the delayed relief efforts, and (c) views of the role and effectiveness of the government in response to the disaster. Overall, results indicated that older African American children were less likely to attribute the delayed relief to individual culpability, and slightly more likely to attribute it to racial discrimination, than were younger African American children. All youth believed in a strong, but nuanced, role of the government, but younger children were more likely to rate it as effective. Among those children who had discussed the disaster with a parent, children's attributions for the delayed relief were associated with their political views.     

Engaging Indigenous Communities: Towards a Policy Framework for Indigenous Community Justice Programmes

Community engagement has come to the fore as a policy and programme approach that seeks to connect citizens both with each other and with government in order to deliver improved social and economic opportunities and outcomes. This model has become a key aspect of the intervention approach within Indigenous communities and is seen to have particular application in addressing community justice issues. This article examines a suite of community justice initiatives being used in Indigenous communities in Australia with a view to ascertaining how the principles of community engagement are operationalized. The article draws on this information and argues that community engagement is only one aspect of a number of community‐oriented justice initiatives currently being applied. These initiatives range from concepts of community as a location, community as an interest group, and the leveraging of community capital so as to tap into and build better and stronger relationships. In so doing, the latter attempts to increase the social infrastructure, resources and capacity of communities. However, despite government attention in this area, there is a lack of a policy and programmatic framework to guide a coherent and apposite approach to issues of community in specific policy settings. The article contributes to the development of a framework that begins the process of differentiating and assessing justice administration interventions.     

The Greater Complexity of Lived Race: An Extension of Harris and Sim*

Objectives. Harris and Sim (2002) recently demonstrated the complexity of lived race by exploring patterns of racial self‐identification. They raised important sociological questions about the role of context in racial self‐identification, but offered an incomplete picture of ethnic fluidity by excluding Hispanics from their analyses. We address this limitation with data on Hispanics from the National Longitudinal Study of Adolescent Health (Add Health). Methods. Our social‐psychological approach, using compositional analysis, focuses on the lived experience of race and ethnicity as qualitatively similar conceptual categories. Results. Informed by the cognitive process of social categorization, we find that considerably more individuals show fluidity in racial and ethnic self‐identification across contexts than suggested by Harris and Sim. Conclusions. Harris and Sim's thesis is even more strongly supported by these findings than in their original analysis, and our findings reinforce their challenge to the assumed stability of racial and ethnic measurement in sociology. We conclude by proposing a change in the measurement of race/ethnicity in America.     

Asian‐Pacific Islander Adolescent Sexual Orientation and Defensive Aggression*

Objective. This study used the differential‐outcomes hypothesis as a theoretical guide to examine the association of Guam's same‐sex‐ and both‐sex‐oriented Asian‐Pacific Islander adolescents and their participation in defensive aggression. Methods. Using ordinary least squares multiple regression analysis we tested the hypothesis with a probability sample of Guam's Asian‐Pacific high school students. Results. The results of the study demonstrated that same‐sex‐oriented males were less likely to participate in physical aggression and that same‐sex‐oriented adolescent females were significantly more likely to report that they had participated in defensive aggression. Conclusions. Same‐sex‐oriented females are more likely than same‐sex‐oriented males to participate in defensive aggression, primarily because they may be more likely to experience threatening situations on Guam's high school campuses.     

The Becker-DeGroot-Marschak mechanism and generalized utility theories: Theoretical predictions and empirical observations

Karni and Safra [8] prove that the Becker-DeGroot-Marschak mechanism reveals a decision maker's true certainty equivalent of a lottery if and only if he satisfies the independence axiom. Segal [17] claims that this mechanism may reveal a violation of the reduction of compound lotteries axiom. This paper empirically tests these two interpretations. Our results show that the second interpretation fits better with the collected data. Moreover, we show by means of some nonexpected utility examples that these results are consistent with a wide range of functionals.     

Insurer ambiguity and market failure

A series of studies investigate the decision processes of actuaries, underwriters, and reinsurers in setting premiums for ambiguous and uncertain risks. Survey data on prices reveal that all three types of these insurance decision makers are risk averse and ambiguity averse. In addition, groups appear to be influenced in their premium-setting decisions by specific reference points such as expected loss and the concern with insolvency. This behavior is consistent with a growing analytical and empirical literature in economics and decision processes that investigates the role that uncertainty plays on managerial choices. Improved risk-assessment procedures and government involvement in providing protection against catastrophic losses may induce insurers to reduce premiums and broaden available coverage.This article is part of a larger effort supported by the National Science Foundation on The Role of Insurance, Compensation, Regulation, and Protective Behavior in Decision Making about Risk and Misfortune. We greatly appreciate the many helpful comments and suggestions by our colleagues on the project: Jon Baron, Colin Camerer, Neil Doherty, Jack Hershey, Eric Johnson, and Paul Kleindorfer. Support from NSF Grant #SES8809299 is gratefully acknowledged.     

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 Hollow Ring of Donor Commitment: Country Concentration and the Decoupling of Aid‐Effectiveness Norms from Donor Practice

The fragmentation of a donor's foreign aid across too many recipient countries is widely believed to be detrimental to aid effectiveness. This article explores the origins of a new norm – recipient concentration – and assesses the extent to which it can be expected to improve aid effectiveness. It also examines 23 donors' actual record of country concentration, and finds that, though there are some potential explanations for donors' behaviour, their collective failure to implement country concentration has very little consequence in theory or in practice.