How do risk attitudes affect pro-social behavior? Theory and experiment

Theory and Decision - We explore how risk preferences affect pro-social behavior under uncertainty. We analyze a modified dictator game in which the dictator can, by reducing her own sure payoff,...     

Coordination in Games with Strategic Complementarities: An Experiment on Fixed vs. Random Matching

In this article, we study behavior in a series of two‐player supply chain game experiments. Each player simultaneously chooses a capacity before demand is realized, and sales are given by the minimum of realized demand and chosen capacities. We focus on the differences in behavior under fixed pairs and random rematching. Intuition suggests that long‐run relations should lead to more profitable outcomes. However, our results go against this intuition. While subjects' capacity choices are better aligned (i.e., closer together) under fixed pairs, average profits are more variable. Moreover, learning is slower under fixed pairs—so much so that over the last five periods, average profits are actually higher under random rematching. The underlying cause for this finding appears to be a “first‐impressions” bias, present only under fixed matching, in which the greater the misalignment in initial choices, the lower are average profits.     

Socioeconomic status, neighborhood disadvantage, and poverty-related stress: Prospective effects on psychological syndromes among diverse low-income families

Living with persistent poverty is toxic for one’s psychological health. This study examined SES, income, neighborhood disadvantage, and poverty-related stress as predictors of a wide range of psychological problems including anxiety, depression, aggression, relationship problems, physical problems, and trouble with the law. Longitudinal analyses were conducted with a low-income multiethnic sample of 98 families recruited from the greater Denver, CO metropolitan area (300 family members: 136 adults, 82 preadolescents, 82 adolescents) using hierarchical linear modeling to predict all eight ASEBA narrow band syndromes. Analyses showed that poverty-related stress was directly related to anxious/depressed symptoms and social problems and interacted with prior symptoms, contributing to worsening symptoms for delinquency, attention problems, somatic complaints, and anxious/depressed symptoms. Hollingshead SES also had direct predictive effects for certain syndromes, though these effects were in the opposite direction predicted. In contrast, lower income-to-needs predicted more problems as expected. Neighborhood disadvantage also predicted psychological syndromes. Developmental differences are discussed. Our data show that parents are not the only family members who are affected by stress from living in poverty. SES, neighborhood disadvantage and poverty-related stress take a toll on children, adolescents, and adults.     

Promoting behavioral change towards lower energy consumption in the building sector

Climate change and environmental issues have been increasingly in the forefront of the media and government agendas. However, despite much discussion and fanfare, little has been done in the way of serious commitment and clear course of actions since the adoption of the UN Framework Convention on Climate Change in 1992 to bring carbon emissions to sustainable levels. To tackle the immensity of the climate change challenge, a paradigm shift in understanding is necessary to balance the course of global human development with energy demand and consumption patterns. Accounting for over 40% of global energy demand and more than 30% of greenhouse gas emissions, the building sector offers the greatest mitigation potential for reducing carbon emissions in both the short and long term, with positive implications for a range of associated sectors and industries. Promoting behavioral change among end-users for reduced energy consumption as well as encouraging the building industry to embrace sustainable design, low-carbon construction practices and materials, and renewable technologies, is fundamental to mitigating the impact of the built environment on planetary biospheres and preserving quality of life for generations to come. This paper starts by drawing attention to the building sector and related EU policy, outlining the challenges and opportunities for reducing energy consumption and carbon emission levels. Such policy provides the essential framework to engage stakeholders and allow supporting factors to foster progress in the sector. The paper contends that information on climate change has not led to significant improvements in meeting global targets and that what is needed is behavioral change among individuals and society as a whole. On the basis of research project experiences and literature review, it puts forth and explores five key elements contributing to behavioral change for reduced energy consumption and lower carbon emissions in the building sector, focused on: information and education; financial incentives and energy services; modern technologies and sustainable design; social and community norms; and biophilia (contact with the natural environment). The paper suggests opportunities for further research and concludes with recommendations for policy-makers and related stakeholders.     

A new diagnostic tool for VARMA(p,q) models

A new diagnostic method for VARMA(p,q) time series models is introduced. The procedure is based on a statistic that generalizes to a multivariate setting the properties of the usual univariate ARMA(p,q) residual correlations. A multiple version of the cumulative periodogram statistic is also suggested. Simulation studies and one real data application are presented.     

A Note on Collinearity Diagnostics and Centering

The usual approach for diagnosing collinearity proceeds by centering and standardizing the regressors. The sample correlation matrix of the predictors is then the basic tool for describing approximate linear combinations that may distort the conclusions of a standard least-square analysis. However, as indicated by several authors, centering may eventually fail to detect the sources of ill-conditioning. In spite of this earlier claim, there does not seem to be in the literature a fully clear explanation of the reasons for this bad potential behavior of the traditional strategy for analyzing collinearity. This note studies this issue in some detail. Results derived are motivated by the analysis of a well-known real dataset. Practical conclusions are illustrated with several examples.     

Percentiles of sums of heavy-tailed random variables: beyond the single-loss approximation

A perturbative approach is used to derive approximations of arbitrary order to estimate high percentiles of sums of positive independent random variables that exhibit heavy tails. Closed-form expressions for the successive approximations are obtained both when the number of terms in the sum is deterministic and when it is random. The zeroth order approximation is the percentile of the maximum term in the sum. Higher orders in the perturbative series involve the right-truncated moments of the individual random variables that appear in the sum. These censored moments are always finite. As a result, and in contrast to previous approximations proposed in the literature, the perturbative series has the same form regardless of whether these random variables have a finite mean or not. For high percentiles, and specially for heavier tails, the quality of the estimate improves as more terms are included in the series, up to a certain order. Beyond that order the convergence of the series deteriorates. Nevertheless, the approximations obtained by truncating the perturbative series at intermediate orders are remarkably accurate for a variety of distributions in a wide range of parameters.     

What Is Different about the Profile of the Social Entrepreneur?

In recent years, the term social entrepreneur has become increasingly common in academic and business circles. Social entrepreneurs engage in a variety of activities, but always with the intention of solving social problems. Social entrepreneurs are not merely people who perform acts of charity; they have an evident desire to improve social well‐being and develop projects with long‐term vision. The creation of sustainable social value is a key characteristic that differentiates them from well‐meaning individuals who simply engage in charitable works. There are, however, significant gaps in our understanding of social entrepreneurs and few empirical studies on the subject. This present study attempts to identify the characteristics of more socially oriented entrepreneurs, using sociodemographic variables and the theory of universal values toward work. Analysis of a sample of approximately 400 people shows that more than half of entrepreneurial orientation can be explained through the possession of the values of self‐enhancement (with an inverse relationship in this case), self‐transcendence, and conservation. The theory of universal values has proved extraordinarily useful for studying the characteristics of social entrepreneurs.