Observing Unobservables: Identifying Information Asymmetries With a Consumer Credit Field Experiment

Information asymmetries are important in theory but difficult to identify in practice. We estimate the presence and importance of hidden information and hidden action problems in a consumer credit market using a new field experiment methodology. We randomized 58,000 direct mail offers to former clients of a major South African lender along three dimensions: (i) an initial “offer interest rate” featured on a direct mail solicitation; (ii) a “contract interest rate” that was revealed only after a borrower agreed to the initial offer rate; and (ii) a dynamic repayment incentive that was also a surprise and extended preferential pricing on future loans to borrowers who remained in good standing. These three randomizations, combined with complete knowledge of the lender's information set, permit identification of specific types of private information problems. Our setup distinguishes hidden information effects from selection on the offer rate (via unobservable risk and anticipated effort), from hidden action effects (via moral hazard in effort) induced by actual contract terms. We find strong evidence of moral hazard and weaker evidence of hidden information problems. A rough estimate suggests that perhaps 13% to 21% of default is due to moral hazard. Asymmetric information thus may help explain the prevalence of credit constraints even in a market that specializes in financing high‐risk borrowers.     

Computer experiment designs for accurate prediction

Computer experiments using deterministic simulators are sometimes used to replace or supplement physical system experiments. This paper compares designs for an initial computer simulator experiment based on empirical prediction accuracy; it recommends designs for producing accurate predictions. The basis for the majority of the designs compared is the integrated mean squared prediction error (IMSPE) that is computed assuming a Gaussian process model with a Gaussian correlation function. Designs that minimize the IMSPE with respect to a fixed set of correlation parameters as well as designs that minimize a weighted IMSPE over the correlation parameters are studied. These IMSPE-based designs are compared with three widely-used space-filling designs. The designs are used to predict test surfaces representing a range of stationary and non-stationary functions. For the test conditions examined in this paper, the designs constructed under IMSPE-based criteria are shown to outperform space-filling Latin hypercube designs and maximum projection designs when predicting smooth functions of stationary appearance, while space-filling and maximum projection designs are superior for test functions that exhibit strong non-stationarity.     

Imagined past,present and futures in Murray–Darling Basin communities

Over the past three decades, irrigation-dependent rural communities in Australia's Murray–Darling Basin have experienced profound economic, social and environmental changes, which they are attempting to accommodate through local government policy. As a contribution to participatory policy design research, in consultation with local governments we carried out focus groups to explore diversity of individuals’ imagined past and present in two rural communities. This was followed by group development of a diverse range of future scenarios and agreement to three likely scenarios. The research identified presence or absence of three underlying themes – irrigation, innovation and inflow of people – that plausibly drive change in these rural communities. These themes are likely to be common to many rural communities that have depended on irrigated agriculture. They provide an example of participatory policy-making, as distinct from the historically employed top-down policy development that has occurred in the Murray–Darling Basin. Because of the diversity of perceptions of past, present and futures, and the ultimate adoption of business-as-usual within the final local government plans, the research emphasises the need to put effort into community deliberations to build cohesion and share ownership of the process for delivering locally nuanced community policy.     

Reporting Rape in a National Sample of College Women

Abstract

Background: Studies indicate that a small percentage of rapes are reported to law enforcement officials. Research also suggests that rapes perpetrated by a stranger are more likely to be reported and that rapes involving drugs and/or alcohol are less likely to be reported. College women represent a unique and understudied population with regard to reporting rape. Methods: In the current study, the authors interviewed a national sample of 2,000 college women about rape experiences in 2006. Results: Only 11.5% of college women in the sample reported their most recent/only rape experience to authorities, with only 2.7% of rapes involving drugs and/or alcohol reported. Minority status (ie, nonwhite race) was associated with lower likelihood of reporting, whereas sustaining injuries during the rape was associated with increased likelihood of reporting. Discussion: Reporting, particularly for rapes involving drugs and alcohol, is low among college women. Implications for policy are discussed.     

Community College Health Service Programs: A Progress Report

Abstract

What progress has been made in improving the health service programs available to the millions of students attending the nation's public community colleges? This question was investigated by sending a follow-up survey to deans of students in 1977; the original study was done five years earlier and resulted in a national profile of health service programs at public two-year institutions.

Some of the significant findings were: the percent of colleges offering health service programs has increased from 41.5% to 51.3%; the campus nurse continues to be the most common health professionals available to students; facilities are considered to be adequate and accessible; and a broad range of student health needs are met. New elements in the survey covered health education and mental health services, and these were positively evaluated.

On the basis of survey results it was concluded that community colleges have made considerable progress in improving student health services, but there is still much to be done.     

An Analysis of Verbal Stimulus Control in Intraverbal Behavior: Implications for Practice and Applied Research

A common characteristic of the language deficits experienced by children with autism (and other developmental disorders) is their failure to acquire a complex intraverbal repertoire. The difficulties with learning intraverbal behaviors may, in part, be related to the fact that the stimulus control for such behaviors usually involves highly complex verbal stimuli. The antecedent verbal control of intraverbal behavior may involve discriminative stimuli (i.e., discriminated operants), conditional stimulus control, and/or control by compound stimuli. Distinctions among these different types of antecedent control are presented, along with recommendations for intervention procedures that may facilitate the acquisition of intraverbal behavior.     

Developing a Low‐Cost Technique for Parallel Cross‐Cultural Instrument Development: The Question Appraisal System (QAS‐04)

Many approaches are used to prepare instruments for multicultural administration, depending on the scope, schedule and budget of the study. Sequential questionnaire development, the most common approach to developing cross‐cultural instruments, is also the most affordable. Designers formulate and pretest an instrument in the source language, then translate it into the target language(s) using culture‐specific tailoring. In contrast, parallel development incorporates target cultures throughout the design and pretesting process. The disadvantages to parallel development are that it is expensive, time‐consuming and subject to version control problems. Question Appraisal System (QAS) is a coding tool for pretesting instruments. The QAS is supported by an item taxonomy of the cognitive demands of a question and documents the features that may lead to response error. Results of the appraisal are used to revise question wording, response wording, questionnaire format and question ordering. This article describes research conducted to update the QAS to identify problems due to cross‐cultural and cross‐linguistic application of questions.     

Organizational Linkages among the Inner Group of the Capitalist Class

Abstract

This study investigates the non-corporate organizational linkages among the inner group of the capitalist class, defined as those who are interlocked with three or more corporations. To the extent that persons already linked through corporate ties also are connected through common memberships in business organizations, social clubs, and other voluntary organizations, the likelihood of a national cohesive power elite is increased. The corporate data used are from the 1976 government study of the 130 major companies in the United States, controlling collectively 25 percent of all assets. The biographical data on the 66 individuals found to sit on three or more boards among these 130 companies were taken from Who's Who. Several key organizations were found where the members of the elite were especially interconnected. A cluster of 15 individuals with 13 or more common memberships within the 66 were identified as having the greatest linkages. The analysis of the number of common links for each possible pair among these 15 individuals revealed an average of 2.76. Moreover, one-third of the 15 had four links or more, with at least five persons among this inner circle, revealing the nucleus of the inner group. These data show that there is a social network, national in scope, which provides a basis for unity among leaders of the capitalist class.     

“Want to Stay Over?” Demographic,Intrapersonal, and Relational Differences Among Those Who Date,Stay-Over,and Cohabit

This study explored the potential uniqueness of staying over, or spending the night with a romantic partner, as a relationship status. Using a recent sample of 2,304 individuals in romantic relationships, we explored how staying over might be associated with demographic, intrapersonal, and relational characteristics. Results suggested that individuals in “stay-over relationships” were similar to those in dating relationships and that cohabiters, defined as those who lived with a romantic partner in the same residence, were the most likely to differ from those in other types of relationships on demographic, intrapersonal, and relational assessments. Staying over in the absence of cohabitation was not associated with differences in relationship outcomes once controls were taken into account, but cohabiters who were not spending the night together did report lower relationship satisfaction compared with cohabiters spending most nights together.     

On Causal Inferences for Personalized Medicine: How Hidden Causal Assumptions Led to Erroneous Causal Claims About the D-Value

Abstract

Personalized medicine asks if a new treatment will help a particular patient, rather than if it improves the average response in a population. Without a causal model to distinguish these questions, interpretational mistakes arise. These mistakes are seen in an article by Demidenko that recommends the “D-value,” which is the probability that a randomly chosen person from the new-treatment group has a higher value for the outcome than a randomly chosen person from the control-treatment group. The abstract states “The D-value has a clear interpretation as the proportion of patients who get worse after the treatment” with similar assertions appearing later. We show these statements are incorrect because they require assumptions about the potential outcomes which are neither testable in randomized experiments nor plausible in general. The D-value will not equal the proportion of patients who get worse after treatment if (as expected) those outcomes are correlated. Independence of potential outcomes is unrealistic and eliminates any personalized treatment effects; with dependence, the D-value can even imply treatment is better than control even though most patients are harmed by the treatment. Thus, D-values are misleading for personalized medicine. To prevent misunderstandings, we advise incorporating causal models into basic statistics education.