Ordinal independence in nonlinear utility theory

Individual behavior under uncertainty is characterized using a new axiom, ordinal independence, which is a weakened form of the von Neumann-Morgenstern independence axiom It states that if two distributions share a tail in common, then this tail can be modified without altering the individual's preference between these distributions. Preference is determined by the tail on which the distributions differ. This axiom implies an appealing and simple functional form for a numerical representation of preferences. It generalizes the form of anticipated utility, and it explains some well-known forms of behavior, such as the Friedman-Savage paradox, that anticipated utility cannot.     

Compact labelings for efficient first-order model-checking

We consider graph properties that can be checked from labels, i.e., bit sequences, of logarithmic length attached to vertices. We prove that there exists such a labeling for checking a first-order formula with free set variables in the graphs of every class that is nicely locally clique-width-decomposable. This notion generalizes that of a nicely locally tree-decomposable class. The graphs of such classes can be covered by graphs of bounded clique-width with limited overlaps. We also consider such labelings for bounded first-order formulas on graph classes of bounded expansion. Some of these results are extended to counting queries.     

Auswirkungen von Macht auf das ��berleben in Extremsituationen: Ein Vergleich der Titanic und Lusitania Schiffskatastrophen

Comparing the Titanic and Lusitania disaster the impact of financial and physical power as well as the emergence of social norms on survival during life-and-death situations is analyzed. Despite the fact that some maritime disasters have become famous, a quantitative understanding of survival in life-and-death situations is still lacking. In a quasi-natural experiment multivariate probit estimations are conducted based on publicly available data. The paper suggests that in life-and-death situations differences in time restrictions are crucial. When time is scarce individual self-interested fight-or-flight behavior will predominate and result in a stronger competition for survival. In contrast, altruism and adherence to social norms emerge when there is sufficient time to reflect on the event and circumstances: Social norms require time to evolve, and they loose against physical strength in a shorter window of opportunity.     

A note on new confidence intervals for the difference between two proportions based on an Edgeworth expansion

Zhou and Qin [2004. New intervals for the difference between two independent binomial proportions. J. Statist. Plann. Inference 123, 97–115; 2005. A new confidence interval for the difference between two binomial proportions of paired data. J. Statist. Plann. Inference 128, 527–542] “new confidence intervals” for the difference between two treatment proportions exhibit a severe lack of invariance property that is a compelling reason not to use them.     

Tests of serial independence based on Kendall's process

The authors propose new rank statistics for testing the white noise hypothesis in a time series. These statistics are Cramér‐von Mises and Kolmogorov‐Smirnov functionals of an empirical distribution function whose mean is related to a serial version of Kendall's tau through a linear transform. The authors determine the asymptotic behaviour of the underlying serial process and the large‐sample distribution of the proposed statistics under the null hypothesis of white noise. They also present simulation results showing the power of their tests.     

Shareholders Should Welcome Knowledge Workers as Directors

The most influential approach of corporate governance, the view of shareholders’ supremacy does not take into consideration that the key task of modern corporations is to generate and transfer firm-specific knowledge. It proposes that, in order to overcome the widespread corporate scandals, the interests of top management and directors should be increasingly aligned to shareholder’ interests by making the board more responsible to shareholders, and monitoring of top management by independent outside directors should be strengthened. Corporate governance reform needs to go in another direction altogether. Firm-specific knowledge investments are, like financial investments, not ex ante contractible, leaving investors open to exploitation by shareholders. Employees therefore refuse to make firm-specific investments. To gain a sustainable competitive advantage, there must be an incentive to undertake such firm-specific investments. Three proposals are advanced to deal with this dilemma: (1) The board should rely more on insiders. (2) The insiders should be elected by those employees of the firm who are making firm-specific knowledge investments. (3) The board should be chaired by a neutral person. These proposals have major advantages: they provide incentives for knowledge investors; they countervail the dominance of executives; they encourage intrinsic work motivation and loyalty to the firm by strengthening distributive and procedural justice, and they ensure diversity on the board while lowering transaction costs. These proposals for reforming the board may help to overcome the crisis corporate governance is in. At the same time, they provide a step in the direction of a more adequate theory of the firm as a basis for corporate governance.     

The Household Encyclopedia as Magic Kit: Medieval Popular Interest in Pranks and Illusions*

Each of us has wished at some time to send in three box tops andget a magic kit that contains itchingpowder to give to our enemies, instructions for tricks designed to baffle our friends, and potions to make us more desirable. Exactly so in the Middle Ages. Bruno Roy's delightful essay on medieval do-it-yourself magic reveals the strong popular interest in practical jokes, illusions and tricks. People in the Middle Ages were playful and high-spirited, waiting to entertain and be entertained. The transformative power implicit i n the tricks played by jugglers or entertainers appealed to all classes of society; these same jugglers not only dealt in illusory tricks but often used various chemicalpreparations, giving a “scientific” cast to their pranks. That so many of these tricks were related to the household in terms of the joke itself or the ingredients used suggests the widespread popularity of magic kits, a popularity that today perhaps resides only with the children who save the box tops.