The FastHCS algorithm for robust PCA

Principal component analysis (PCA) is widely used to analyze high-dimensional data, but it is very sensitive to outliers. Robust PCA methods seek fits that are unaffected by the outliers and can therefore be trusted to reveal them. FastHCS (high-dimensional congruent subsets) is a robust PCA algorithm suitable for high-dimensional applications, including cases where the number of variables exceeds the number of observations. After detailing the FastHCS algorithm, we carry out an extensive simulation study and three real data applications, the results of which show that FastHCS is systematically more robust to outliers than state-of-the-art methods.     

Can Corruption Erode Confidence in Political Institutions Among European Countries? Comparing the Effects of Different Measures of Perceived Corruption

The purpose of this study is to analyze the effects of corruption on institutional confidence through testing alternative perceptions-based indexes of corruption. Scholars who have investigated this topic have often employed only indicators of corruption based on experts’ surveys. In this article we also consider a new index of corruption developed aggregating citizens’ perceptions. The first part of the paper explores the levels of corruption perceived by the citizens of EU member states, stressing the differences with the experts’ opinions. The second part tests, through a multivariate analysis, the impact of citizens’ and experts’ perceptions-based indexes of corruption on institutional confidence. The main results show that experts and citizens tend to express similar opinions on the extent of corruption in EU member states though, especially in some countries, these actors present some noticeable differences. Nevertheless, irrespective of the indexes used, more corrupt countries are characterized by lower levels of confidence in parliament and government. This relationship holds even controlling for the presence of reverse causality between corruption and confidence.     

Wird die Relevanz von Ertragsteuern für die Unternehmensrechnung nach rechtlichen oder ökonomischen Kriterien beurteilt?

Textbooks in the areas of Management Accounting, Finance and Valuation treat taxes very differently. Finance and Valuation increasingly consider tax effects. Management Accounting considers taxes only if they meet certain legal “cost” criteria. These criteria follow tax law rules, but not economic rules and primarily consider tax effects of the local business tax only. This view is also reflected in recent cost accounting regulations. We present evidence from a survey of managers and chambers of commerce, according to which practitioners’ views of whether the local business tax is a cost are heterogeneous. The majority of managers do not consider the local business tax as a cost and do not pass it on to customers. The chambers of commerce however still consider the local business tax as a cost.     

Decomposition of Changes in Korean Wage Inequality, 1998–2007

South Korea experienced a steep increase in wage inequality between the Asian financial crisis in 1997 and the global financial crisis in 2008. This paper investigates the causes of the sharp change during that time period by looking at the contributions of changes in the distributions of schooling and unionization. The effects are estimated applying two robust distributional function based decomposition methods on Korean Labor and Panel Survey data for the time period 1998–2007. The results suggest changes in the distribution of schooling can explain about 10 % of the changes in the 90/50 percentile wage gap. The declining unionization rate does not have much impact on the upward trend of Korean wage inequality. In addition, aggregate decomposition results suggest that changes in labor force composition can explain a significant proportion of the total wage changes in the upper-tail of the distribution. Based on our findings we provide a list of policy recommendations to address the wage inequality issue in Korea.     

Toddlers Help Anonymously

Young children are extremely motivated to help others, but it is not clear whether they do so in anonymous situations without social recognition. In two studies, we found that 18‐month‐old toddlers provided help equally in situations where an adult recipient was present and in situations where an adult recipient was not present. We included several control conditions to rule out that toddlers were simply unaware of their anonymity or were merely motivated to restore the physical order of things. Together, these findings suggest that early in ontogeny children are motivated to help others in need regardless of whether they can immediately be recognized for their prosocial intentions.     

Realistic Free-Spins Features Increase Preference for Slot Machines

Despite increasing research into how the structural characteristics of slot machines influence gambling behaviour there have been no experimental investigations into the effect of free-spins bonus features—a structural characteristic that is commonly central to the design of slot machines. This series of three experiments investigated the free-spins feature using slot machine simulations to determine whether participants allocate more wagers to a machine with free spins, and, which components of free-spins features drive this preference. In each experiment, participants were exposed to two computer-simulated slot machines—one with a free-spins feature or similar bonus feature and one without. Participants then completed a testing phase where they could freely switch between the two machines. In Experiment 1, participants did not prefer the machine with a simple free-spins feature. In Experiment 2 the free-spins feature incorporated additional elements such as sounds, animations, and an increased win frequency; participants preferred to gamble on this machine. The Experiment 3 “bonus feature” machine resembled the free spins machine in Experiment 2 except spins were not free; participants showed a clear preference for this machine also. These findings indicate that (1) free-spins features have a major influence over machine choice and (2) the “freeness” of the free-spins bonus features is not an important driver of preference, contrary to self-report and interview research with gamblers.     

Partitioned log-rank tests for the overall homogeneity of hazard rate functions

In survival analysis, it is routine to test equality of two survival curves, which is often conducted by using the log-rank test. Although it is optimal under the proportional hazards assumption, the log-rank test is known to have little power when the survival or hazard functions cross. To test the overall homogeneity of hazard rate functions, we propose a group of partitioned log-rank tests. By partitioning the time axis and taking the supremum of the sum of two partitioned log-rank statistics over different partitioning points, the proposed test gains enormous power for cases with crossing hazards. On the other hand, when the hazards are indeed proportional, our test still maintains high power close to that of the optimal log-rank test. Extensive simulation studies are conducted to compare the proposed test with existing methods, and three real data examples are used to illustrate the commonality of crossing hazards and the advantages of the partitioned log-rank tests.     

Trend smoothness achieved by penalized least squares with the smoothing parameter chosen by optimality criteria

This work presents a study about the smoothness attained by the methods more frequently used to choose the smoothing parameter in the context of splines: Cross Validation, Generalized Cross Validation, and corrected Akaike and Bayesian Information Criteria, implemented with Penalized Least Squares. It is concluded that the amount of smoothness strongly depends on the length of the series and on the type of underlying trend, while the presence of seasonality even though statistically significant is less relevant. The intrinsic variability of the series is not statistically significant and its effect is taken into account only through the smoothing parameter.     

Bayesian and Robust Bayesian analysis under a general class of balanced loss functions

For estimating an unknown parameter θ, we introduce and motivate the use of balanced loss functions of the form L_{r, w, d0}(q, d)=wr(d₀, d)+ (1-w) r(q, d){L_{\rho, \omega, \delta_0}(\theta, \delta)=\omega \rho(\delta_0, \delta)+ (1-\omega) \rho(\theta, \delta)}, as well as the weighted version q(q) L_{r, w, d0}(q, d){q(\theta) L_{\rho, \omega, \delta_0}(\theta, \delta)}, where ρ(θ, δ) is an arbitrary loss function, δ ₀ is a chosen a priori “target” estimator of q, w ? [0,1){\theta, \omega \in[0,1)}, and q(·) is a positive weight function. we develop Bayesian estimators under L_{r, w, d0}{L_{\rho, \omega, \delta_0}} with ω > 0 by relating such estimators to Bayesian solutions under L_{r, w, d0}{L_{\rho, \omega, \delta_0}} with ω = 0. Illustrations are given for various choices of ρ, such as absolute value, entropy, linex, and squared error type losses. Finally, under various robust Bayesian analysis criteria including posterior regret gamma-minimaxity, conditional gamma-minimaxity, and most stable, we establish explicit connections between optimal actions derived under balanced and unbalanced losses.     

The effect of fast and slow decisions on risk taking

We experimentally compare fast and slow decisions in a series of experiments on financial risk taking in three countries involving over 1700 subjects. To manipulate fast and slow decisions, subjects were randomly allocated to responding within 7 seconds (time pressure) or waiting for at least 7 or 20 seconds (time delay) before responding. To control for different effects of time pressure and time delay on measurement noise, we estimate separate parameters for noise and risk preferences within a random utility framework. We find that time pressure increases risk aversion for gains and risk taking for losses compared to time delay, implying that time pressure increases the reflection effect of Prospect Theory. The results for gains are weaker and less robust than the results for losses. We find no significant difference between time pressure and time delay for loss aversion (tested in only one of the experiments). Time delay also leads to less measurement noise than time pressure and unconstrained decisions, and appears to be an effective way of decreasing noise in experiments.