On the <Emphasis Type="Italic">m</Emphasis>-clique free interval subgraphs polytope: polyhedral analysis and applications

In this paper we study the m-clique free interval subgraphs. We investigate the facial structure of the polytope defined as the convex hull of the incidence vectors associated with these subgraphs. We also present some facet-defining inequalities to strengthen the associated linear relaxation. As an application, the generalized open-shop problem with disjunctive constraints (GOSDC) is considered. Indeed, by a projection on a set of variables, the m-clique free interval subgraphs represent the solution of an integer linear program solving the GOSDC presented in this paper. Moreover, we propose exact and heuristic separation algorithms, which are exploited into a Branch-and-cut algorithm for solving the GOSDC. Finally, we present and discuss some computational results.     

Evaluating Time Streams of Income: Discounting What?

For decisions whose consequences accrue over time, there are several possible techniques to compute total utility. One is to discount utilities of future consequences at some appropriate rate. The second is to discount per-period certainty equivalents. And the third is to compute net present values (NPVs) of various possible streams and to then apply the utility function to these net present values. We find that the best approach is to first compute NPVs of various possible income streams and then take the utility of such NPVs. We show the drawbacks of other alternative models of evaluating income streams. The article discusses the advantages of the power and logarithmic forms in the modeling of time preference. These are the only forms for which utility of income and utility of consumption are strategically equivalent. Further, these forms permit the flexibility in the choice of a time period (e.g., monthly or quarterly) without modifying the utility function, thus simplifying analysis.     

Optimal designs to improve the power of multiresponse hypothesis tests

In this paper we develop a design criterion to improve the power of the multiresponse hypothesis tests, and give a sequential procedure for generating designs which satisfy the criterion.     

Common ratio using delay

We present an experiment in which we add a common delay in a choice between two risky prospects. The results show that delay produces the same change in preferences as in the well-documented common ratio effect in risky lotteries. The added common delay acts as if the probabilities were divided by some common ratio. Moreover, we show that there is a strong magnitude effect, in the sense that the effect of delay depends on the magnitude of the outcome. The results are consistent with the recently introduced probability time trade-off (PTT) model by Baucells and Heukamp. We present a parameterization of the model based on the experimental results, showing that the value function exhibits increasing relative risk aversion, the weighting function is s-shaped, and the intrinsic discount rate is decreasing.     

Stability of risk preferences and the reflection effect of prospect theory

Are risk preferences stable over time? To address this question we elicit risk preferences from the same pool of subjects at two different moments in time. To interpret the results, we use a Fechner stochastic choice model in which the revealed preference of individuals is governed by some underlying preference, together with a random error. We take cumulative prospect theory as the underlying preference model (Kahneman and Tversky, Econometrica 47:263–292, 1979; Tversky and Kahneman, Journal of Risk and Uncertainty 5:297–323, 1992). We observe that the aggregate pattern of preferences is very similar in both sessions, and it matches the results reported in the literature. Most subjects are risk averse for gains, and risk seeking for losses. However, the subjects that jointly agree with the reflection effect of prospect theory are around 50%. The percentage of individuals that change their responses across sessions is quite high, 63%. Estimating the stochastic choice model we find that 72% of the subjects have an underlying preference which agrees with the reflection effect of prospect theory. The remaining 28% are mainly classified as risk averse for both gains and losses. The results reinforce the empirical validity of the reflection effect. Deviations from the reflection effect can be attributed to noise, as well as to the existence of a fraction of risk averse subjects.     

Overconfidence and risk seeking in credit markets: an experimental game

Behavioral biases may influence bank decisions when granting credit to their customers. This paper explores this possibility in an experimental setting, contributing to the literature in two ways. First, we designed a business simulation game that replicates the basic decision-making processes of a bank granting credit to clients under conditions of risk and uncertainty. Second, we implemented a series of short tests to measure participants’ overconfidence and risk profile according to prospect theory and then conduct an experimental implementation of the simulation game. We find that higher levels of overprecision and risk seeking for gains (mostly attributable to distortion of probabilities) foster lower prices and higher volumes of credit, and reduce quality. The most consistent result is that distortion of probabilities affects the ability to discriminate between the quality of borrowers according to objective information, fostering strategies of lower loan prices to lower quality clients. The external validity of the results is also discussed.     

Influence of Communicative Openness on the Psychological Adjustment of Internationally Adopted Adolescents

This study evaluated the predictive relationship between the communicative openness and psychological adjustment of adopted adolescents, controlling for preplacement risk factors. One hundred Spanish international adoptees aged 12–18 took part in the study. Data were gathered with a structured interview, the Youth Self Report and the Adoption Communication Scale. A history of maltreatment prior to the adoption was associated with more closed communication between parents and children. Prenatal drug exposure shows a relationship with the presence of externalizing behaviors and attention problems in adolescents. Finally, a lower degree of communicative openness regarding the child's origins was significantly associated with the presence of all the adolescent behavioral problems studied.     

The effect of lockup on management earnings forecasts disclosure in French IPOs

Journal of Management and Governance - This study investigates the effect of lockup agreements on management earnings forecasts in initial public offering (IPO) prospectuses. Using a sample of 312...     

Approximation algorithms for the makespan minimization with positive tails on a single machine with a fixed non-availability interval

In this article, we consider the non-resumable case of the single machine scheduling problem with a fixed non-availability interval. We aim to minimize the makespan when every job has a positive tail. We propose a polynomial approximation algorithm with a worst-case performance ratio of 3/2 for this problem. We show that this bound is tight. We present a dynamic programming algorithm and we show that the problem has an FPTAS (Fully Polynomial Time Approximation Algorithm) by exploiting the well-known approach of Ibarra and Kim (J. ACM 22:463–468, 1975). Such an FPTAS is strongly polynomial. The obtained results outperform the previous polynomial approximation algorithms for this problem.