The employment contract: A test of the transaction cost theory

This paper tests some predictions derived from Williamson's transaction cost theory of the organization of work, which holds that the form of the employment relationship is determined largely by the idiosyncrasy of work—that is, the nature of skills and knowledge used in production. It examines the occurrence of theoretically relevant provisions in collective bargaining agreements in the United States and finds they are related to a contract-level proxy for idiosyncrasy (based on bargaining structure) as predicted by the theory. An analysis of an individual-level variable, the difficulty of finding a comparable job, provides some additional support. Finally, several alternative explanations of the results are considered, and it is argued that none are consistent with the evidence. The analysis thus finds strong, if necessarily provisional, support for the theory.     

The prevalence rates of pathological gambling: A look at methods

Planning the gambling environment requires protection of the public's health, safety and welfare. Whereas most public gaming provisions and statutes address the public's fears of organized crime as well as some welfare needs, rarely do they safeguard the public's health regarding the spread of the mental disease known as pathological gambling. Measurement of the prevalence and incidence of this disease would enable policy planners to evaluate both the state's responsibility for an epidemic and the adequacy of publicly funded treatment programs. The purpose of this paper is to examine the methods which underlie three different estimates of the prevalence rate of pathological gambling and to critique them in the light of sound epidemiological procedure. In 1975, the Institute for Social Research (ISR) of the University of Michigan conducted a national survey and a survey of the state of Nevada on behalf of the U.S. Commission on a National Policy Toward Gambling. Using discriminant function analysis coupled with subjective inspection of cases in the at-risk pool, the researchers estimated rates of probable and potential pathological gamblers. In 1984 and 1985, this author surveyed residents in the Delaware Valley and the state of Ohio using the cumulative clinical signs method which also posited rates of probable and potential pathological gamblers. In 1986, researchers at the Office of Mental Health for the State of New York employed a formal screening device to survey residents and proposed a rate of probable pathological gamblers and a rate of problem — although not pathological — gamblers. All three approaches produced different estimates. The utility of prevalence and incidence rate research in this field is threatened by a lack of consensus about the proper epidemiological procedure to be employed in arriving at these estimates. There is also confusion about the distinction between a probable and a potential pathological gambler. The planning purpose, method, validity and reliability of prevalence rate research about pathological gambling are addressed in this paper.     

A relation for the covariances of order statistics from n independent and non-identically distributed random variables

We derive a simple relation satisfied by the covariances of order statistics in the i.i.d. case and then generalize it to the case when the variables are independent and non-identically distributed. This relation could be employed successfully either to check the calculations or to reduce the amount of direct computations involved in evaluating the covariances of order statistics from an outlier model.     

Some quantitative concepts of value and utility from a utilitarian point of view

This paper clarifies and interprets some basic quantitative concepts of value, utility and utility function from a utilitarian point of view. First, I discuss the question as to whether value is objective or subjective. I hold that value is subjective and statistical in nature (although from the various subjective values of a certain object a norm can usually be obtained). Second, I emphasize the distinction between use value and exchange value in relation to utility. Third, I propose a law of diminishing incremental interest, which refers to the incremental (marginal) utility of money. Fourth, I identify the utility of money with the von Neumann-Morgenstern utility. Fifth, I question the necessity of the usual normalization of utility functions and the restricted linear transformation (and the consequent concept of strategic equivalence). Sixth, I discuss in detail the terminal values and utilities of a utility function from a philosophical rather than mathematical point of view, particularly the boundedness of a utility function and the magnitudes of V ₀ and U ₀. Finally, I conclude that, in order to be able to have interpersonal comparisons of utility, utility should have the same dimension as value rather than no dimension, and the normalization problem should be reconsidered in the light of terminal values and utilities.     

Retrospective on the utility theory of von Neumann and Morgenstern

This article offers an exegesis of the passages in von Neumann and Morgenstern (1944, 1947, 1953) that discuss their conception of utility. It is occasioned by two factors. First, as we approach the semicentennial of the publication of Theory of Games and Economic Behavior, its immense impact on economic thought in the intervening years encourages serious reflection on its authors' ideas. Second, misleading statements about the theory continue to appear. The article will have accomplished its purpose if it helps others appreciate the genius and spirit of the theory of utility fashioned by John von Neumann and Oskar Morgenstern.     

A review of research on the happiness measures: A sixty second index of happiness and mental health

Eighteen years of research using the Happiness Measures (HM) is reviewed in relation to the general progress of well-being measurement efforts. The accumulated findings on this remarkably quick instrument, show good reliability, exceptional stability, and a record of convergent, construct, and discriminative validity unparalleled in the field. Because of this, the HM is offered as a potential touchstone of measurement consistency in a field which generally lacks it.     

Demographics: people and markets

The basics of demography are now basic to us business as well. Demographics combine demographic data with socioeconomic and geographic factors to help business and other managers know the market for their goods and services. This pamphlet explains market, product, and site analyses, discusses data sources and resources, and includes case studies involving major corporations. Post-war population trends have had an enormous impact on consumer and labor markets, bringing home to business the importance of taking advantage of demographic shifts. Advances in computerized access to data describing changes and increased consciousness of their economic significance has spurred the application of demographic knowledge by managers and the growth of the demographics information industry. The pamphlet describes the resources and methods of demographics including the creation and use of demographic data products.     

Ordinal utility models of decision making under uncertainty

This paper studies two models of rational behavior under uncertainty whose predictions are invariant under ordinal transformations of utility. The quantile utility model assumes that the agent maximizes some quantile of the distribution of utility. The utility mass model assumes maximization of the probability of obtaining an outcome whose utility is higher than some fixed critical value. Both models satisfy weak stochastic dominance. Lexicographic refinements satisfy strong dominance.The study of these utility models suggests a significant generalization of traditional ideas of riskiness and risk preference. We define one action to be riskier than another if the utility distribution of the latter crosses that of the former from below. The single crossing property is equivalent to a minmax spread of a random variable. With relative risk defined by the single crossing criterion, the risk preference of a quantile utility maximizer increases with the utility distribution quantile that he maximizes. The risk preference of a utility mass maximizer increases with his critical utility value.     

The dependency ratio and optimum population growth

This paper examines the effects of introducing a variable dependency ratio in Dasgupta's (1969) model. We consider a case in which the probability of dying as well as the rate of participation in the labor force change with age. It is shown that the inclusion of those realistic demographic features slows down the optimal rate of population growth and increases the rate of consumption. In spite of the reduction in the rate of population growth, this rate can still be positive. The sensitivity of the solutions to changes in the demographic parameters of the model is examined.