Measurement error, skewness, and risk analysis: coping with the long tail of the distribution.

Probabilistic risk analyses often construct multistage chance trees to estimate the joint probability of compound events. If random measurement error is associated with some or all of the estimates, we show that resulting estimates of joint probability may be highly skewed. Joint probability estimates based on the analysis of multistage chance trees are more likely than not to be below the true probability of adverse events, but will sometimes substantially overestimate them. In contexts such as insurance markets for environmental risks, skewed distributions of risk estimates amplify the "winner's curse" so that the estimated risk premium for low-probability events is likely to be lower than the normative value. Skewness may result even in unbiased estimators of expected value from simple lotteries, if measurement error is associated with both the probability and pay-off terms. Further, skewness may occur even if the error associated with these two estimates is symmetrically distributed. Under certain circumstances, skewed estimates of expected value may result in risk-neutral decisionmakers exhibiting a tendency to choose a certainty equivalent over a lottery of equal expected value, or vice versa. We show that when distributions of estimates of expected value are, positively skewed, under certain circumstances it will be optimal to choose lotteries with nominal values lower than the value of apparently superior certainty equivalents. Extending the previous work of Goodman (1960), we provide an exact formula for the skewness of products.     

Qualitätsmanagement: Entwicklung,Problemfelder und ein integrativer Lösungsvorschlag

Quality Management: History, problems and an integrative modelStarting with a critical examination of the history and the commonly known concepts and systems of Quality Management, the paper discusses a broader understanding of quality in a genuinely managerial perspective. This is shown by generating and applying five basic dimensions of the quality concept. An integrative concept of Quality Management is presented.     

When parties and candidates collide: citizen perception of house candidates' positions on abortion

When candidates assume issue positions opposite those of their sponsoring political party do citizens recognize these positions? Relatedly, what role do candidates' actual issue positions play in citizens' perceptions of their issue positions? Examining citizens' perceptions of 1996 and 1998 House candidates' position on abortion, this research finds that citizens' perceptions are shaped largely by partisan and, to a lesser extent, gender stereotypes. However, candidates' individuating positions on abortion influence perceptions of the candidates' position, but the effects are considerably stronger for perceptions of Republican candidates. Democratic candidates are likely to adopt anti-abortion positions in districts characterized by lower than average levels of political awareness and education, reducing the likelihood their party-contradicting position is accurately perceived. In contrast, Republican candidates adopt a pro-choice position in districts characterized by high education and political awareness, increasing the likelihood their position is accurately perceived.     

GAMES AND TRUTHS: Learning To Construct Social Problems In High School Debate

Although social constructionists have taken the process by which people learn to present social problems for granted, these skills are acquired in the course of socialization. Through high school debate, adolescents acquire techniques for making arguments, using evidence, and presenting claims to multiple audiences. In the process, they learn that taking a public position does not necessarily require a deeply held commitment. This model resonates with the institutional structure of politics and law in the United States in which adversaries battle each other in a rule-governed "game,'a contest ultimately evaluated by judges assumed to be impartial. To understand the process by which adolescents gain the skills to construct social problems, I conducted an ethnographic study of debate teams at two high schools. The ability to take both sides of an argument, express ideas with which one does not personally agree, and present powerful, if questionable, evidence, constrained by time, teaches teenagers how to engage in social problem discourse and provides a training ground for moral entrepreneurs.     

Deterrence, expected cost, uncertainty and voting: Experimental evidence

We conduct laboratory experiments to investigate the effects of deterrence mechanisms under controlled conditions. The effect of the expected cost of punishment of an individual’s decision to engage in a proscribed activity and the effect of uncertainty on an individual’s decision to commit a violation are very difficult to isolate in field data. We use a roadway speeding framing and find that (a) individuals respond considerably to increases in the expected cost of speeding, (b) uncertainty about the enforcement regime yields a significant reduction in violations committed, and (c) people are much more likely to speed when the punishment regime for which they voted is implemented. Our results have important implications for a behavioral theory of deterrence under uncertainty.     

A comparative analysis of public sector restructuring in the U.S., Canada, Mexico, and the Caribbean

We examine public sector restructuring in North America and selected Commonwealth Caribbean nations. Although all the countries studied experienced significant restruc-turing in response to public debt pressures, there were major differences across coun-tries in the magnitude, pace, form, and the manner in which restructuring decisions were made. These differences reflect the state of economic development and institu-tional characteristics, e.g., the role of the state and the industrial relations system. In developing countries, international lending institutions played a major role in trans-forming the role of the state. In developed countries, the inherent stability of the eco-nomic systems and institutional pressures led to a gradualist approach to restructuring.     

A New Model of Trend Inflation

This article introduces a new model of trend inflation. In contrast to many earlier approaches, which allow for trend inflation to evolve according to a random walk, ours is a bounded model which ensures that trend inflation is constrained to lie in an interval. The bounds of this interval can either be fixed or estimated from the data. Our model also allows for a time-varying degree of persistence in the transitory component of inflation. In an empirical exercise with CPI inflation, we find the model to work well, yielding more sensible measures of trend inflation and forecasting better than popular alternatives such as the unobserved components stochastic volatility model. This article has supplementary materials online.