Learning during audit tasks in the field: A model, methodology, and experiment

Learning during performance of auditing tasks in the field is modeled as a change in the state of an auditor's knowledge base that results from experience during performance of a task. Several hypotheses are proposed and, along with data obtained by means of behavior observation and concurrent verbal protocols, used to interpret the problem-solving behaviors of four first-year auditors who performed an unfamiliar but audit-related task in simulated auditing environments. Significant findings of learning during performance of the experimental task are reported. While the data show that the auditor-subjects continuously encountered new learning situations throughout the task, they are inconclusive regarding learning through improved knowledge content. On the other hand, significant evidence is found that the learning that did occur was manifest by a greater availability of the auditor-subjects' knowledge. The implications of these findings in terms of the nature of audit tasks and the development of more expert-like task behavior are discussed.     

Protection for sale with imperfect rent capturing

Abstract .  Grossman and Helpman (1994) explain tariffs as the outcome of a lobbying process. In most empirical implementations of this framework protection is instead measured using non-tariff barriers. Since tariffs allow the government to fully capture the rents from protection, while non-tariff barriers do not, the existing parameter estimates of the protection for sale model are likely to be biased. To address this problem, we augment the framework by considering instruments that allow partial capturing. Our specification is supported by the data, where we find that only 72–75% of the rent from protection is appropriated by the government.     

Competitive decision making: Two and a half frames

We argue that the study of competitive decision making has been heavily influenced by the frames of reference that are adopted by researchers. The dominant economic frame and the emergent behavioral frame describe largely separate phenomena and have little overlap. Drawing from examples of learning in games and markets, we show how each of these frames falls short of capturing some interesting elements in competitive decisions. We then describe how a coevolutionary perspective may be emerging as an integrative paradigm for the study of competitive decisions.This paper was prepared for the conference, Understanding Competitive Decision Making. Comments by the participants of that conference and Paul Shoemaker are gratefully acknowledged, as are discussions with Colin Camerer, Eldar Shafir, and Sharoni Shafir.     

The notion of equilibrium in economic theorizing

Presidential Address at the Thirty-First International Atlantic Economic Conference, March 15–22, 1991, Rome.     

Challenges in approximating the Black and Scholes call formula with hyperbolic tangents

Decisions in Economics and Finance - In this paper, we introduce the concept of standardized call function and we obtain a new approximating formula for the Black and Scholes call function through...     

Killing off cohorts: Forecasting mortality of non-extinct cohorts with the penalized composite link model

Mortality forecasting has crucial implications for insurance and pension policies. A large amount of literature has proposed models to forecast mortality using cross-sectional (period) data instead of longitudinal (cohort) data. As a consequence, decisions are generally based on period life tables and summary measures such as period life expectancy, which reflect hypothetical mortality rather than the mortality actually experienced by a cohort. This study introduces a novel method to forecast cohort mortality and the cohort life expectancy of non-extinct cohorts. The intent is to complete the mortality profile of cohorts born up to 1960. The proposed method is based on the penalized composite link model for ungrouping data. The performance of the method is investigated using cohort mortality data retrieved from the Human Mortality Database for England & Wales, Sweden, and Switzerland for male and female populations.     

Multi-stage real option evaluation with double barrier under stochastic volatility and interest rate

Annals of Finance - This paper focuses on valuing R&D projects using a twofold compound real option by including two knock-out barriers. However, the valuation of R&D projects is...     

Growth at the EU periphery: the next enlargement

In 2004, 75 million people are scheduled to become EU citizens, making this the largest round of expansion of the Western European club to date. Of the 10 new entrants, 8 are former socialist economies, for which membership in the EU represents the coronation of an effort began with the fall of the Berlin wall in 1989. Based on their recent economic performance, the Central and Eastern European countries appear to be well on their way to successfully integrate in the Western European club, while the Baltic Republics still lag behind. The gap between the two groups emerges when we consider the adjustment of the production structure, the composition of trade and FDI flows, and income distribution. The evidence we review appears to support the role of institutional quality to facilitate integration in the world market and overall economic performance.