The asymptotic distribution of the partial attributable risk in cross-sectional studies

The partial attributable risk (PAR) has been introduced as a tool for partitioning the responsibility for causing an adverse event between various risk factors. It has arisen from epidemiology, but it is also a valid general risk allocation concept, which can, for example, be applied to data from customer satisfaction surveys. So far, a variance formula for the PAR has been missing so that the confidence intervals were not directly available. This paper provides the asymptotic normal distribution for the PAR determined from a cross-sectional study.     

Estimation of the Proportion of Defective Units by Using Group Testing Under the Existence of a Threshold of Detection

Group testing procedures, in which groups containing several units are tested without testing each unit, are widely used as cost-effective procedures in estimating the proportion of defective units in a population. A problem arises when we apply these procedures to the detection of genetically modified organisms (GMOs), because the analytical instrument for detecting GMOs has a threshold of detection. If the group size (i.e., the number of units within a group) is large, the GMOs in a group are not detected due to the dilution even if the group contains one unit of GMOs. Thus, most people conventionally use a small group size (which we call conventional group size) so that they can surely detect the existence of defective units if at least one unit of GMOs is included in the group. However, we show that we can estimate the proportion of defective units for any group size even if a threshold of detection exists; the estimate of the proportion of defective units is easily obtained by using functions implemented in a spreadsheet. Then, we show that the conventional group size is not always optimal in controlling a consumer's risk, because such a group size requires a larger number of groups for testing.     

How managers’ risk perceptions affect their willingness to blame advisors as scapegoats

Managers spend considerable amounts of corporate money to hire consultants. The research proposes two potential benefits of consultants' advice: increasing decision accuracy and sharing responsibility with the advisor. In contrast to previous research, which has predominantly focused on factors influencing decisional accuracy, this paper evaluates the sharing of responsibility in the form of using an advisor as a scapegoat. We conduct an online experiment with 175 managers from German-speaking countries in an investment setting. We find that the presence of a potential scapegoat positively affects advice utilization in an economic boom but negatively affects such utilization in an economic crisis due to managers' varying risk perceptions. Managers' risk perceptions are the main drivers of scapegoating as a form of managerial blame avoiding decision-making. We contribute to management research and highlight managers’ opportunistic motives behind consulting (costly) advice.     

Childhood exposure to the Second World War and financial risk taking in adult life

Adverse childhood experiences might have long-lasting effects on decisions under uncertainty in adult life. Merging the European Survey on Health, Ageing and Retirement with data on conflict events during the Second World War, and relying on region-by-cohort variation in war exposure, we show that warfare exposure during childhood is associated with lower financial risk taking in later life. Individuals who experienced war episodes as children hold less – and are less likely to hold – stocks, but are more likely to hold life insurance, compared to non-exposed individuals. Effects are robust to the inclusion of potential mediating factors, and are tested for nonlinearity and heterogeneity. Moreover, we provide evidence of hedonic adaptation to war, as high and low intensity of war exposure have comparable long-term effects. We also document that war exposure in childhood increases sensitivity to financial uncertainty since exposed-to-war individuals are less likely to hold stocks after periods of high volatility. Finally, we shed light on the most likely mechanism in the relationship between war exposure and financial risk taking – i.e., enhanced sensitivity to uncertainty – and we show that preferences, and not beliefs, channel this relationship.     

Tornado warning: Understanding the National Weather Service’s communication strategies

This study explores the National Weather Service’s communication through a multi-sited rapid ethnography that extends the fully functioning society theory. National Weather Service field offices do not employ public information officers. Instead, forecasters predict the weather, craft messages, and build relationships with their publics. Scholars have called for public relations research that examines messages, including how crisis communication can help publics cope. Additionally, scholars have noted that all organizations need public relations, even if they do not employ formal public relations personnel. In our study, forecasters emphasized the need to build their publics’ tornado threat awareness and provided strategies to make weather science accessible. Forecasters discussed a variety of message strategies including avoiding fear appeals, humanizing the organization, and visualizing risks. Forecasters also built relationships with active publics through soliciting weather spotters and empowering them to prepare others for severe weather. Overall, findings expand knowledge about how organizations can employ strategic public relations to benefit society, thereby extending fully functioning society theory.     

Building a mutually beneficial partnership to ensure backup supply

In today׳s complex global environment, it is very important for a firm to possess backup supply resource when facing unpredictable disruptions from its primary supply resource. To ensure the actual arrival of backup supply in cases of primary supply disruptions, a purchasing firm needs to work with its backup supplier to forge a strong partnership that not only protects itself, but also assures the backup supplier׳s economic benefit. In this research, we establish the structure of such a partnership based on real business practices. The interactions between the purchasing firm and the backup supplier are examined through a decision-tree approach that takes disruption situations at all levels into consideration. We then design the backup supply contract, find the Nash equilibrium contract parameters, and identify the critical conditions under which such a contractual partnership will be valuable. The contract parameters we find are functions of the moments of the demand distribution, which are independent of specific demand distributions and are easy to be estimated in practice. Our numerical tests support our theoretical results and demonstrate the robustness of the contract with respect to various demand distributions.     

An evolutionary explanation for risk aversion

Recent models of the evolution of preferences have provided profound new insights into the origins of risk attitudes. In most of these models the evolutionary “objective function” is the maximization of the expected number of offspring, or alternatively, the maximization of the geometric-mean growth rate. We suggest that careful consideration should also be given to the objective of maximizing the probability of Having Descendants Forever, p(HDF). We show that the p(HDF) criterion implies risk aversion. Moreover, it leads to preferences that are very closely approximated by the constant relative risk aversion preferences. Thus, constant relative risk aversion can be viewed as an evolutionary-developed heuristic aimed to maximize the probability of having descendants forever.     

Understanding Gaps Between the Risk Perceptions of Wildland–Urban Interface (WUI) Residents and Wildfire Professionals

Research across a variety of risk domains finds that the risk perceptions of professionals and the public differ. Such risk perception gaps occur if professionals and the public understand individual risk factors differently or if they aggregate risk factors into overall risk differently. The nature of such divergences, whether based on objective inaccuracies or on differing perspectives, is important to understand. However, evidence of risk perception gaps typically pertains to general, overall risk levels; evidence of and details about mismatches between the specific level of risk faced by individuals and their perceptions of that risk is less available. We examine these issues with a paired data set of professional and resident assessments of parcel‐level wildfire risk for private property in a wildland–urban interface community located in western Colorado, United States. We find evidence of a gap between the parcel‐level risk assessments of a wildfire professional and numerous measures of residents’ risk assessments. Overall risk ratings diverge for the majority of properties, as do judgments about many specific property attributes and about the relative contribution of these attributes to a property's overall level of risk. However, overall risk gaps are not well explained by many factors commonly found to relate to risk perceptions. Understanding the nature of these risk perception gaps can facilitate improved communication by wildfire professionals about how risks can be mitigated on private lands. These results also speak to the general nature of individual‐level risk perception.     

A Note on Estimation of a Distribution Function in a Nonparametric Set-up Using Stein’s Shrinkage Estimation Technique

Based on Stein’s famous shrinkage estimation of a multivariate normal distribution, we propose a new type of estimators of the distribution function of a random variable in a nonparametric setup. The proposed estimators are then compared with the empirical distribution function, which is the best equivariant estimator under a well-known loss function. Our extensive simulation study shows that our proposed estimators can perform better for moderate to large sample sizes.     

Dynamic Risk Management Systems: Hybrid Architecture and Offshore Platform Illustration

This paper describes and illustrates the architecture of computer-based Dynamic Risk Management Systems (DRMS) designed to assist real-time risk management decisions for complex physical systems, for example, engineered systems such as offshore platforms or medical systems such as patient treatment in Intensive Care Units. A key characteristic of the DRMSs that we describe is that they are hybrid, combining the powers of Probabilistic Risk Analysis methods and heuristic Artificial Intelligence techniques. A control module determines whether the situation corresponds to a specific rule or regulation, and is clear enough or urgent enough for an expert system to make an immediate recommendation without further analysis of the risks involved. Alternatively, if time permits and if the uncertainties justify it, a risk and decision analysis module formulates and evaluates options, including that of gathering further information. This feature is particularly critical since, most of the time, the physical system is only partially observable, i.e., the signals observed may not permit unambiguous characterization of its state. The DRMS structure is also dynamic in that, for a given time window (e.g., 1 day or 1 hour), it anticipates the physical system's state (and, when appropriate, performs a risk analysis) accounting for its evolution, its mode of operations, the predicted external loads and problems, and the possible changes in the set of available options. Therefore, we specifically address the issue of dynamic information gathering for decision-making purposes. The concepts are illustrated focusing on the risk and decision analysis modules for a particular case of real-time risk management on board offshore oil platforms, namely of two types of gas compressor leaks, one progressive and one catastrophic. We describe briefly the DRMS proof-of-concept produced at Stanford, and the prototype (ARMS) that is being constructed by Bureau Veritas (Paris) based on these concepts.