Managing a Low-Incidence Risk: The Example of Toxic Shock Syndrome

This article demonstrates a methodology that allows individuals to reach a personal decision on the use of products which carry very small risks to health and life but also offer considerable benefits. A combination of the principles of dominance, extended dominance, and various methods of direct risk-benefit tradeoffs are shown to reduce the number of possible decisions regarding product use to the one optimal for the value structure of a particular individual. An historical examination of toxic-shock syndrome identifies tampons as a product with risks too small to warrant public intervention but too sizeable to be ignored. The methodology described here can be applied for all such products.     

The 1991 Cholera Epidemic in Peru: Not a Case of Precaution Gone Awry

The precautionary principle calls on decisionmakers to take preventive action in light of evidence indicating that there is a potential for harm to public health and the environment, even though the nature and magnitude of harm are not fully understood scientifically. Critics of the precautionary principle frequently argue that unbridled application of the principle leads to unintended damage to health and ecosystems (risk tradeoffs) and that precautious decision making leaves us vulnerable to "false-positive" risks that divert resources away from "real risks." The 1991 cholera epidemic in Peru is often cited as an example of these pitfalls of the precautionary principle. It has been mistakenly argued that application of the precautionary principle caused decisionmakers to stop chlorinating the water supply due to the risks of disinfection byproducts (DBPs), resulting in the epidemic. Through analyses of investigations conducted in the cities of Iquitos and Trujillo, Peru, literature review, and interviews with leading Peruvian infectious disease researchers, we determined that the epidemic was caused by a much more complex set of circumstances, including poor sanitation conditions, poor separation of water and waste streams, and inadequate water treatment and distribution systems. The evidence indicates that no decision was made to stop chlorinating on the basis of DBP concerns and that concerns raised about DBPs masked more important factors limiting expansion of chlorination. In fact, outside of Peru's capital Lima, chlorination of drinking water supplies at the time of the epidemic was limited at best. We conclude that the Peruvian cholera epidemic was not caused by a failure of precaution but rather by an inadequate public health infrastructure unable to control a known risk: that of microbial contamination of water supplies.     

Separating marginal utility and probabilistic risk aversion

This paper is motivated by the search for one cardinal utility for decisions under risk, welfare evaluations, and other contexts. This cardinal utility should have meaningprior to risk, with risk depending on cardinal utility, not the other way around. The rank-dependent utility model can reconcile such a view on utility with the position that risk attitude consists of more than marginal utility, by providing a separate risk component: a probabilistic risk attitude towards probability mixtures of lotteries, modeled through a transformation for cumulative probabilities. While this separation of risk attitude into two independent components is the characteristic feature of rank-dependent utility, it had not yet been axiomatized. Doing that is the purpose of this paper. Therefore, in the second part, the paper extends Yaari's axiomatization to nonlinear utility, and provides separate axiomatizations for increasing/decreasing marginal utility and for optimistic/pessimistic probability transformations. This is generalized to interpersonal comparability. It is also shown that two elementary and often-discussed properties — quasi-convexity (aversion) of preferences with respect to probability mixtures, and convexity (pessimism) of the probability transformation — are equivalent.     

Differentiating conflicts in beliefs versus value tradeoffs in the domestic intelligence policy debate

Since the 9/11 terrorist attacks, there has been an increase in public discussion regarding U.S. domestic intelligence activities. Domestic intelligence activities focus on gathering information about potential threats from individuals within the United States, and completely rational members of the public can have different opinions about the acceptability of various alternatives depending on one's values toward privacy, civil liberty, and security. Past studies have demonstrated that construction of a multiobjective value model can help clarify public values in controversial risk debates. This research explores a range of domestic intelligence alternatives that vary on multiple objectives, and applies value-focused thinking to develop a multiattribute utility model to evaluate and compare the alternatives. The process demonstrates the feasibility of eliciting model parameters from individuals and provides a method for identifying the locus of possible disagreements among individuals. The development of the model is described first, followed by insights found from participants who provided both value tradeoffs and performance scores for six different domestic intelligence alternatives. The participants were two student groups and a group of police officers. The analysis showed differences among weights for an additive model for different stakeholder groups and differences among the performance scores. In particular, there is a "halo" effect for alternatives, such that its supporters ranked the alternative higher on all attributes compared to respondents who find the alternative unacceptable. This modeling approach and results offer organizations such as the Department of Homeland Security insights into the debate surrounding new policy initiatives, particularly those requiring sensitive value tradeoffs.     

The Effect of Forest Management Strategy on Carbon Storage and Revenue in Western Washington: A Probabilistic Simulation of Tradeoffs

The objectives of this study are to understand tradeoffs between forest carbon and timber values, and evaluate the impact of uncertainty in improved forest management (IFM) carbon offset projects to improve forest management decisions. The study uses probabilistic simulation of uncertainty in financial risk for three management scenarios (clearcutting in 45‐ and 65‐year rotations and no harvest) under three carbon price schemes (historic voluntary market prices, cap and trade, and carbon prices set to equal net present value (NPV) from timber‐oriented management). Uncertainty is modeled for value and amount of carbon credits and wood products, the accuracy of forest growth model forecasts, and four other variables relevant to American Carbon Registry methodology. Calculations use forest inventory data from a 1,740 ha forest in western Washington State, using the Forest Vegetation Simulator (FVS) growth model. Sensitivity analysis shows that FVS model uncertainty contributes more than 70% to overall NPV variance, followed in importance by variability in inventory sample (3–14%), and short‐term prices for timber products (8%), while variability in carbon credit price has little influence (1.1%). At regional average land‐holding costs, a no‐harvest management scenario would become revenue‐positive at a carbon credit break‐point price of $14.17/Mg carbon dioxide equivalent (CO₂e). IFM carbon projects are associated with a greater chance of both large payouts and large losses to landowners. These results inform policymakers and forest owners of the carbon credit price necessary for IFM approaches to equal or better the business‐as‐usual strategy, while highlighting the magnitude of financial risk and reward through probabilistic simulation.     

The Dynamic Nature of Risk Perceptions After a Fatal Transit Accident

In 2009, two trains of Washington, DC's Metrorail system collided, resulting in nine deaths and 50 serious injuries. Based on a multiwave survey of Metrorail users in the months after the crash, this article reports how the accident appears to have (1) changed over time the tradeoffs among safety, speed, frequency of service, cost, and reliability that the transit users stated they were willing to make in the postaccident period and (2) altered transit users’ concerns about safety as a function of time and distance from the accident site. We employ conditional logit models to examine tradeoffs among stated preferences for system performance measures after the accident, as well as the influence that respondent characteristics of transit use, location, income, age, and gender have on these preference tradeoffs. As expected, respondents appear averse to longer headways between trains, longer travel durations, higher travel costs, a higher number of late trains, and a higher number of fatalities. The models also show evidence of higher aversion to fatalities from transit system operation among females compared to males. In addition, respondents less experienced with Metrorail travel and those with lower household incomes show higher aversion to fatalities, and this aversion increases as a subject's psychological distance from the accident site decreases. Contrary to expectations shaped by previous studies, aversion to fatalities appears to have increased between the early months after the accident and the end of the survey period, and the expected relationship between age and aversion to fatalities is not statistically significant.     

Positive Emotions,Instrumental Resources,and Organizational Network Evolution: Theorizing via Simulation Research

In the workplace, people seek positive emotional experiences as well as instrumental resources while doing their work. Yet we know little about how affective micro-dynamics drive the evolution of organizational networks, influence network trajectories, and determine macro outcomes such as collective affect and overall network structure. Given the lack of theory on affective micro-dynamics and network evolution, we propose a model that includes both affective and instrumental micro-mechanisms and use simulation methods to explore evolutionary dynamics and develop new theory. The core of our model is the empirically observed tendency for people to forego the acquisition of instrumental resources to avoid a decrease in positive emotion when choosing interaction partners. We conduct “experiments” with the simulation, considering the effects of the tradeoff, dispositional affect, resource inequality, and ingroup favoritism. The results show that dispositional affect and the tradeoff have considerable effects on network trajectories, collective affect, and resource transfer. We provide new theoretical propositions about affect in organizations.     

Secondary Risk Theory: Validation of a Novel Model of Protection Motivation

Protection motivation theory states individuals conduct threat and coping appraisals when deciding how to respond to perceived risks. However, that model does not adequately explain today's risk culture, where engaging in recommended behaviors may create a separate set of real or perceived secondary risks. We argue for and then demonstrate the need for a new model accounting for a secondary threat appraisal, which we call secondary risk theory. In an online experiment, 1,246 participants indicated their intention to take a vaccine after reading about the likelihood and severity of side effects. We manipulated likelihood and severity in a 2 × 2 between‐subjects design and examined how well secondary risk theory predicts vaccination intention compared to protection motivation theory. Protection motivation theory performed better when the likelihood and severity of side effects were both low (R² = 0.30) versus high (R² = 0.15). In contrast, secondary risk theory performed similarly when the likelihood and severity of side effects were both low (R² = 0.42) or high (R² = 0.45). But the latter figure is a large improvement over protection motivation theory, suggesting the usefulness of secondary risk theory when individuals perceive a high secondary threat.     

Tradeoffs in Manufacturing? A Meta‐Analysis and Critique of the Literature

An ongoing, important question in the operations strategy literature pertains to tradeoffs: Can manufacturers focus on multiple priorities simultaneously or achieve strength on multiple capabilities without sacrificing performance of another? In this paper, we accumulate, integrate, and examine the wide spectrum of conclusions reached in the literature concerning tradeoffs using modified meta‐analysis methods. Based on two decades of empirical research in operations strategy, we find that the evidence in the literature indicates manufacturers, on average, do not report experiencing tradeoffs among the competitive dimensions of quality, delivery, flexibility, and cost as suggested by the classical tradeoffs model. Our meta‐analysis also reveals that the way variables are operationalized, whether initiatives are implemented, and the unit of analysis are all related to the degree and nature of the evidence a paper contains with respect to the tradeoffs issue. We interpret our meta‐analysis results in the context of the prevailing model of manufacturing strategy and the theory of performance frontiers. We also discuss how the research designs used in this literature, which are predominantly cross‐sectional, affect the nature of the evidence generated and the conclusions that can be drawn. We go on to suggest research designs that more directly assess the tradeoffs issue.     

Individual and Crossover Effects of Work Schedule Fit: A Within‐Couple Analysis

A couple‐level analysis with a sample of 105 female reduced‐hours physicians and their full‐time–employed husbands found individual and spouse crossover effects: Each spouse's ratings of own schedule fit predict own job‐role quality; wives' ratings of partner/family schedule fit predict their marital‐role quality, with a similar trend for husbands; husbands' ratings of own schedule fit predict wives' marital‐role quality; and husbands' ratings of partner/family schedule fit and wives' ratings of own schedule fit predict husbands' psychological distress. These findings highlight the interdependence of couple members' experiences and illustrate potential costs of wives' trading off time at work for time at home.