Do financial professionals behave according to prospect theory? An experimental study

Prospect theory is increasingly used to explain deviations from the traditional paradigm of rational agents. Empirical support for prospect theory comes mainly from laboratory experiments using student samples. It is obviously important to know whether and to what extent this support generalizes to more naturally occurring circumstances. This article explores this question and measures prospect theory for a sample of private bankers and fund managers. We obtained clear support for prospect theory. Our financial professionals behaved according to prospect theory and violated expected utility maximization. They were risk averse for gains and risk seeking for losses and their utility was concave for gains and (slightly) convex for losses. They were also averse to losses, but less so than commonly observed in laboratory studies and assumed in behavioral finance. A substantial minority focused on gains and largely ignored losses, behavior reminiscent of what caused the current financial crisis.     

The architectural form and landscape as a harmonic entity in the vernacular settlements of Southwestern Saudi Arabia

The paper aims to describe the architectural form and landscape as a harmonic entity in vernacular settlements of southwestern Saudi Arabia. The qualities of vernacular settlements and their integration and responsiveness to the physical, social, economic and cultural environment are demonstrated in this study. The socio-economic activities and customs in southwestern Saudi Arabia are presented as part of the historical process. The paper looks at the major elements of the vernacular villages and landscape as cultural-specific images. While appreciating this, the author laments the way this harmony has been disrupted not least aesthetically as a consequence of modernism which had an impetus on changing life style and social expectation. The cultural-specific images involve direct relationships between the architectural and urban forms as systems and events that are taking place in or around that form. One thesis is that each element of the vernacular village and landscape is linked to an image that shapes and influences human behavior and appreciation, thereby helping to shape larger environmental patterns. Beyond the meaning that specific elements inherit, they have functional and economic values. As a result, their visual qualities are believed to be effective in enhancing behavior through their visual attributes. One of the most important conclusions is that, there are many features of modern village extensions and landscape elements that enhance the interaction with the physical environment that ordinary citizens value, and there are elements of the vernacular villages and landscape that people regret to lose, such as ‘qasabahs', weekly markets, cultivation of terraces, etc. This is inspite of today's, modern planning and design techniques that are being sought to produce new architectural forms and landscape elements. Any attempt to substitute vernacular forms without taking into account the values that the older forms held is considered a failure of adopted modernist attitudes.     

Estimation based on progressive first-failure censoring from exponentiated exponential distribution

In this paper, point and interval estimations for the parameters of the exponentiated exponential (EE) distribution are studied based on progressive first-failure-censored data. The Bayes estimates are computed based on squared error and Linex loss functions and using Markov Chain Monte Carlo (MCMC) algorithm. Also, based on this censoring scheme, approximate confidence intervals for the parameters of EE distribution are developed. Monte Carlo simulation study is carried out to compare the performances of the different methods by computing the estimated risks (ERs), as well as Akaike's information criteria (AIC) and Bayesian information criteria (BIC) of the estimates. Finally, a real data set is introduced and analyzed using EE and Weibull distributions. A comparison is carried out between the mentioned models based on the corresponding Kolmogorov–Smirnov (K–S) test statistic to emphasize that the EE model fits the data with the same efficiency as the other model. Point and interval estimation of all parameters are studied based on this real data set as illustrative example.     

Axiomatic Based Decomposition for Conceptual Product Design

This paper describes a structured methodology for decomposing the conceptual design problem in order to facilitate the design process and result in improved conceptual designs that better satisfy the original customer requirements. The axiomatic decomposition for conceptual design method combines Alexander's network partitioning formulation of the design problem with Suh's Independence Axiom. The axiomatic decomposition method uses a cross‐domain approach in a House of Quality context to estimate the interactions among the functional requirements that are derived from a qualitative assessment of customer requirements. These interactions are used in several objective functions that serve as criteria for decomposing the design network. A new network partitioning algorithm is effective in creating partitions that maximize the within‐partition interactions and minimize the between‐partition interactions with appropriate weightings. The viability, usability, and value of the axiomatic decomposition method were examined through analytic comparisons and qualitative assessments of its application. The new method was examined using students in engineering design capstone courses and it was found to be useable and did produce better product designs that met the customer requirements. The student‐based assessment revealed that the process would be more effective with individuals having design experience. In a subsequent assessment with practicing industrial designers, it was found that the new method did facilitate the development of better designs. An important observation was the need for limits on partition size (maximum of four functional requirements.) Another issue identified for future research was the need for a means to identify the appropriate starting partition for initiating the design.     

Does Transformational Leadership Better Predict Work-Related Outcomes Than Transactional Leadership in the NPO Context? Evidence from Italy

VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations - With limited studies on the relative effectiveness of different leadership styles in NPOs, the purpose of this paper is to...     

Procrustes shape analysis of triangulations of a two coloured point pattern

Consider a set of points in the plane with Gaussian perturbations about a regular mean configuration in which a Delaunay triangulation of the mean of the process is comprised of equilateral triangles of the same size. The points are labelled at random as black or white with variances of the perturbations possibly dependent on the colour. By investigating triangle subsets (with four sets of possible colour labels for the vertices) in detail we propose various test statistics based on a Procrustes shape analysis. A simulation study is carried out to investigate the relative merits and the adequacy of the approximations used in the distributional results, as well as a comparison with simulation methods based on nearest-neighbour distances. The methodology is applied to an investigation of regularity in human muscle fibre cross-sections.     

Hofstede's cultural dimensions in the GCC countries: An empirical investigation

Managerial values are not the same across the world. Therefore, Multinational Corporations may be making costly decisions if they assume that corporate policies will receive the same attention, understanding or acceptance in their branches over the world. This paper applies Hofstede's four cultural dimensions to the Gulf Cooperation Council (GCC) countries. It also compares Hofstede's results with regard to these four cultural dimensions with our findings. The results of this study show that countries change. They reemphasize the concept that ethnocentric management theories have been untenable. This implies the necessity that Multinational Corporations should study the culture of the country they plan to do business with before starting the negotiations process that precedes the operations in that country and also to monitor changes in the life style of these countries over time. When Multinational Corporations become aware of the international workforce management and the differences between different cultures, they will save themselves costly troubles, loss of qualified personnel as well as loosing international customers. Therefore, it is important for Multinational Corporations to utilize management theories available to them through research and experience.The program leading to this article was supported in part by a grant from KFUPM.     

On Playing Fair: Professor Binmore on Game Theory and the Social Contract

This paper critically reviews Ken Binmores non- utilitarian and game theoretic solution to the Arrow problem. Binmores solution belongs to the same family as Rawls maximin criterion and requires the use of Nash bargaining theory, empathetic preferences, and results in evolutionary game theory. Harsanyi has earlier presented a solution that relies on utilitarianism, which requires some exogenous valuation criterion and is therefore incompatible with liberalism. Binmores rigorous demonstration of the maximin principle for the first time presents a real alternative to a utilitarian solution.     

Risk factors of coronary heart disease: a Bayesian model averaging approach

To analyse the risk factors of coronary heart disease (CHD), we apply the Bayesian model averaging approach that formalizes the model selection process and deals with model uncertainty in a discrete-time survival model to the data from the Framingham Heart Study. We also use the Alternating Conditional Expectation algorithm to transform the risk factors, such that their relationships with CHD are best described, overcoming the problem of coding such variables subjectively. For the Framingham Study, the Bayesian model averaging approach, which makes inferences about the effects of covariates on CHD based on an average of the posterior distributions of the set of identified models, outperforms the stepwise method in predictive performance. We also show that age, cholesterol, and smoking are nonlinearly associated with the occurrence of CHD and that P-values from models selected from stepwise methods tend to overestimate the evidence for the predictive value of a risk factor and ignore model uncertainty.