The Poisson Approximation to the Binomial Distribution

Econometrics textbooks make use of the assumption of a fixed regressor matrix, although it is nearly always unrealistic for economic data. For developing the properties of the general linear model, this is a convenient simplification. But this assumption is retained when examining model specification. This practice has generated results that, if not erroneous, are certainly incomplete and thus deceptive. In particular, the omission of a variable or the imposition of any incorrect restriction may well increase the variance of estimated parameters rather than reduce it, as stated in the textbooks.     

THE CONSEQUENCES OF (DE)REGULATION ON EMPLOYMENT DURATION AND EFFICIENCY: AN EXPERIMENTAL STUDY

If the future market wage is uncertain, engaging in long‐term employment is risky, with the risk depending on how regulated the labor market is. In our experiment long‐term employment can result either from offering long‐term contracts or from repeatedly and mutually opting for rematching. Treatments differ in how regulations restrict the employer's flexibility in adapting the employment contract. All treatments allow for longer contract duration as well as for mutually opting to be rematched. Effort is chosen by employees after a contract is concluded. Treatments vary from no contract flexibility to no restriction at all. Will more (downward) flexibility be used in ongoing employment but reduce labor market efficiency? And will regulation crowd out long‐term employment, in the form of long‐term contracts or voluntary rematching? (JEL C72, C90, F16, J21, J24, L10)     

Intelligence and family size

This paper describes the results obtained in administering a modified Terman intelligence test to 327 Greek children aged from 7 to 12 years. A negative correlation between intelligence and family size was obtained. The results are compared with those obtained in similar inquiries in Britain and the U.S.A.     

SATISFICING AND PRIOR‐FREE OPTIMALITY IN PRICE COMPETITION

We apply a model of satisficing to oligopoly markets with price competition. Sellers have profit aspirations reflecting their conjectures about their competitors' behavior and search for a price guaranteeing these aspirations. Because it seems implausible that people have detailed priors on the others' actions, we postulate that sellers entertain multiple conjectures to which no probabilities can be assigned. This allows us to propose a theory of “prior‐free” optimality and to examine experimentally whether people comply with it. We find that decision makers have difficulties in making prior‐free optimal choices. Most are content to just satisfice, although ways to aspire to more ambitious profits were obviously available. (JEL C92, C72, D43)     

REPUTATION EFFECTS IN THE MARKET OF CERTIFIERS: EVIDENCE FROM THE AUDIT INDUSTRY

Certifiers verify unobserved product characteristics for buyers and thereby alleviate informational asymmetries and facilitate trade. When sellers pay for the certification, however, certifiers can be tempted to bias their opinion to favor sellers. Indeed, accounting scandals and inflated credit ratings suggest sellers may prefer to select dishonest certifiers. I test this proposition by estimating the effect of adverse quality signals on audit demand. Exploiting the natural experiment of Arthur Andersen's demise, I find that auditors with worse quality signals experience a fall in demand. This suggests that reputation effects are at work even in the presence of conflicts of interest. (JEL L15, L8, M4)     

The Relationship Between Personality,Supportive Transactions and Support Satisfaction,and Mental Health of Patients with Early Rheumatoid Arthritis. Results from the Dutch Part of the Euridiss Study

The relationships between two personality characteristics (neuroticism, extraversion), three types of supportive transactions (emotional support, social companionship, instrumental support) and satisfaction with these transactions, and two aspects of mental health (feelings of anxiety and depressive mood) were studied among 280 patients with early rheumatoid arthritis. Structural equation modeling of the relevant variables showed that people with a more neurotic personality profile showed more anxiety and depressed feelings. Extraversion had no direct effect on depression or anxiety. Companionship, both transactions and satisfaction, had an independent positive effect on depression but not on anxiety. The effect of emotional support ran via social companionship: more emotional support (both transactions and satisfaction) was expressed in companionship leading to a less depressed mood. Finally, more depressed people received more instrumental supportive transactions while more satisfaction with this type of supportive transactions was related to less anxiety.  Apart from the disturbing effect of a neurotic personality profile on mental health, the results once more underscore the importance of social companionship as a multi-functional activity for people’s mental health. Maintaining this type of relationships despite a disabling condition gives people the opportunity to derive rewards that otherwise could not or only with more difficulty be achieved.     

ON THE SOCIAL DIMENSION OF TIME AND RISK PREFERENCES: AN EXPERIMENTAL STUDY

When explaining risk taking, intertemporal allocation, and distributing behavior, economists rely on risk, time, and other-regarding preferences but offer no guidance on how these three crucial aspects are interrelated. We report on an experiment exploring such interrelation. For this sake, we compare evaluations of several prospects, each of which allocates certain or risky and immediate or delayed payoffs to the actor and to another participant. We find that individuals are self-oriented as to social allocation of risk and delay and other-regarding with respect to expected payoffs . ( JEL C91, D63, D81)     

Sex and family planning in Denmark and in Danish communes

Sexual activity and family planning practice in the general Danish society and in Danish communes were examined. Denmark has a sexually active population which practices effective and consistent family planning and which has an impressively low abortion level. Effective methods of contraception - especially IUDs and the pill - are known and practiced by all socioeconomic classes in Danish society. Denmark's steadily falling birthrate is due to: 1) a liberal attitude toward sex and procreation, 2) an effective and early system of sex education in the schools, and 3) available and reasonably priced contraceptive methods. Sexual and family planning practices in Danish communes are similar to those in the general society. Most pregnancies in the communes are not accidental and most would not end in abortion. The sexual attitudes and practices in the communes are influenced by the general society.