Understanding Cumulative Risk Perception from Judgments and Choices: An Application to Flood Risks

Catastrophic events, such as floods, earthquakes, hurricanes, and tsunamis, are rare, yet the cumulative risk of each event occurring at least once over an extended time period can be substantial. In this work, we assess the perception of cumulative flood risks, how those perceptions affect the choice of insurance, and whether perceptions and choices are influenced by cumulative risk information. We find that participants' cumulative risk judgments are well represented by a bimodal distribution, with a group that severely underestimates the risk and a group that moderately overestimates it. Individuals who underestimate cumulative risks make more risk‐seeking choices compared to those who overestimate cumulative risks. Providing explicit cumulative risk information for relevant time periods, as opposed to annual probabilities, is an inexpensive and effective way to improve both the perception of cumulative risk and the choices people make to protect against that risk.     

Measuring autonomy freedom

In the measurement of autonomy freedom, the admissible potential preference relations are elicited by means of the concept of ‘reasonableness’. In this paper we argue for an alternative criterion based on information about the decision maker’s ‘awareness’ of his available opportunities. We argue that such an interpretation of autonomy fares better than that based on reasonableness. We then introduce some axioms that capture this intuition and study their logical implications. In the process, a new measure of autonomy freedom is characterized, which generalizes some of the measures so far constructed in the literature.We thank Martin van Hees, Robert Sugden, Prasanta Pattanaik, the participants at workshops at the CPNSS, London School of Economics, and at the University of Caen and an anonymous referee for their suggestions. The support of the CPNSS is gratefully acknowledged. This paper is part of a research project on “The Analysis and Measurement of Freedom” funded by the Ministero dell’Istruzione, Università e Ricerca (Italy). Its financial support is gratefully acknowledged.     

产业集群:提升天津滨海新区竞争力的战略选择

产业集群的研究已经成为地区或国家竞争力研究以及区域经济研究的热点.在发达国家,基于产业集群而形成的集群经济早已成为区域经济的重要板块和亮点.本文通过对产业集群理论的回顾以及对产业集群竞争优势的研究,深入思考天津滨海新区所特有的经济条件和发展优势,提出了为提升区域竞争力、加快实施产业集群的经济发展战略.     

Bayesian Estimation and Model Choice in Item Response Models

Item response models are essential tools for analyzing results from many educational and psychological tests. Such models are used to quantify the probability of correct response as a function of unobserved examinee ability and other parameters explaining the difficulty and the discriminatory power of the questions in the test. Some of these models also incorporate a threshold parameter for the probability of the correct response to account for the effect of guessing the correct answer in multiple choice type tests. In this article we consider fitting of such models using the Gibbs sampler. A data augmentation method to analyze a normal-ogive model incorporating a threshold guessing parameter is introduced and compared with a Metropolis-Hastings sampling method. The proposed method is an order of magnitude more efficient than the existing method. Another objective of this paper is to develop Bayesian model choice techniques for model discrimination. A predictive approach based on a variant of the Bayes factor is used and compared with another decision theoretic method which minimizes an expected loss function on the predictive space. A classical model choice technique based on a modified likelihood ratio test statistic is shown as one component of the second criterion. As a consequence the Bayesian methods proposed in this paper are contrasted with the classical approach based on the likelihood ratio test. Several examples are given to illustrate the methods.     

A Theory of Rational Choice under Ignorance

This paper contributes to a theory of rational choice for decision-makers with incomplete preferences due to partial ignorance, whose beliefs are representable as sets of acceptable priors. We focus on the limiting case of `Complete Ignorance' which can be viewed as reduced form of the general case of partial ignorance. Rationality is conceptualized in terms of a `Principle of Preference-Basedness', according to which rational choice should be isomorphic to asserted preference. The main result characterizes axiomatically a new choice-rule called `Simultaneous Expected Utility Maximization'. It can be interpreted as agreement in a bargaining game (Kalai-Smorodinsky solution) whose players correspond to the (extremal) `acceptable priors' among which the decision maker has suspended judgment. An essential but non-standard feature of Simultaneous Expected Utility choices is their dependence on the entire choice set. This is justified by the conception of optimality as compromise rather than as superiority in pairwise comparisons.     

Choice Functions: Rationality re-Examined

On analyzing the problem that arises whenever the set of maximal elements is large, and a selection is then required (see Peris & Subiza 1998), we realize that logical ways of selecting among maximals violate the classical notion and axioms of rationality. We arrive at the same conclusion if we analyze solutions to the problem of choosing from a tournament (where maximal elements do not necessarily exist). So, in our opinion the notion of rationality must be discussed, not only in the traditional sense of external conditions (Sen 1993), but in terms of the internal information provided by the binary relation.     

A Probabilistic Dealing Strategy

A probabilistic dealing strategy is proposed which allows all premium brands in an established market to earn nonnegative profits without cooperation. Following the strategy, brands take turns attracting deal-responsive customers. Relative to a reactive competitive strategy, the proposed strategy improves the positions of all premium brands. With use of the strategy, average deal sizes are positively related to a brand's market share, the proportion of quality conscious customers, the proportion of informed customers, the span of regular prices in a market, and the range of customers' acceptable prices.     

Rhetoric or reality? An economic analysis of the effects of religion in Sweden

On the basis of simple rational-choice theory, it is argued that Christian religious involvement influences the divorce, abortion, non-payment, and children-born-out-of-wedlock rates negatively. This influence stems from an expectation that a god punishes certain forms of action and from social reprimands of devotees. Regression analysis is then used to test the theory in the case of Sweden in the year 1990, and the importance of religion, in its negative effect on all of these rates, is strongly confirmed. A particularly interesting result: the marginal effect on three of these rates of increasing the fraction of people active in the Church of Sweden is clearly larger than the marginal effect of increasing the fraction of more conservative free-church members.     

The effects of information form and domain-specific knowledge on choice deferral

Three studies examined the effect of information form on choice deferral in consumer choice and explored the moderating role of knowledge about the product domain. Two theoretical approaches were contrasted: (1) The process approach predicting that choice deferral varies as a function of information form, and (2) the communication approach predicting an interaction of information form and domain-specific knowledge. Participants were presented with different laptops described in an absolute (e.g. ‘300 GB hard disc’), evaluative-numerical (e.g. ‘hard disc with 30 out of 100 points in an expert rating’) or evaluative-verbal (e.g. ‘bad hard disc’) information form, and they could choose to buy one of the laptops or defer. Domain-specific knowledge was also assessed. In Study 1, evaluative-numerical and evaluative-verbal values led to more deferral in people with high domain-specific knowledge. The pattern for evaluative-numerical and evaluative-verbal values was replicated for a different information organization in Study 2. Study 3 showed that absolute values led to more deferral the less knowledgeable participants were and demonstrated that domain-specific knowledge and deferral were unrelated when absolute and evaluative-verbal values were presented in combination. In sum, the results support the communication approach and have methodological implications for decision research and theoretical implications for understanding choice deferral in real-life decisions.