A Stupidity‐Based Theory of Organizations

In this paper we question the one‐sided thesis that contemporary organizations rely on the mobilization of cognitive capacities. We suggest that severe restrictions on these capacities in the form of what we call functional stupidity are an equally important if under‐recognized part of organizational life. Functional stupidity refers to an absence of reflexivity, a refusal to use intellectual capacities in other than myopic ways, and avoidance of justifications. We argue that functional stupidity is prevalent in contexts dominated by economy in persuasion which emphasizes image and symbolic manipulation. This gives rise to forms of stupidity management that repress or marginalize doubt and block communicative action. In turn, this structures individuals' internal conversations in ways that emphasize positive and coherent narratives and marginalize more negative or ambiguous ones. This can have productive outcomes such as providing a degree of certainty for individuals and organizations. But it can have corrosive consequences such as creating a sense of dissonance among individuals and the organization as a whole. The positive consequences can give rise to self‐reinforcing stupidity. The negative consequences can spark dialogue, which may undermine functional stupidity.     

Some empirical results on the nature of the hedonic price function for the urban housing market

An attempt is made to develop a systematic statistical methodology for the analysis of the urban housing market The standard estimation procedures used for fitting hedonic price functions for the urban housing market are reviewed, and several potentially serious sources of bias are noted. An alternative estimator which capitalizes property values into flows and also searches for the appropriate functional form which avoids these biases is developed. The capitalization rate for owner-occupied housing in 1973 is found to be about 0.03. The magnitudes and seriousness of several of the estimation biases are examined within the context of inappropriate policy decisions which can result from the use of the standard estimators. The importance of neighborhood site characteristics in the determination of local site valuations is also examined and it is found that they explain between 15 and 50% of the standardized variation in site valuations. Further, it is found that these traits are capable of inducing valuation differentials as large as 100% between structurally identical sites.     

Local Times of Bernoulli Walk

The joint probability generating functions of local times of Bernoulli walk at various stopping times are determined by simple functional equations. The results can be interpreted by means of branching processes with immigration satisfying the same equations. One way of working with these results is to specialize and evaluate the derived equations, but a more elegant and efficient way is to compare these equations with corresponding functional equations for branching processes.     

On solving bias‐corrected non‐linear estimation equations with an application to the dynamic linear model

In a seminal paper, Mak, Journal of the Royal Statistical Society B, 55, 1993, 945, derived an efficient algorithm for solving non‐linear unbiased estimation equations. In this paper, we show that when Mak's algorithm is applied to biased estimation equations, it results in the estimates that would come from solving a bias‐corrected estimation equation, making it a consistent estimator if regularity conditions hold. In addition, the properties that Mak established for his algorithm also apply in the case of biased estimation equations but for estimates from the bias‐corrected equations. The marginal likelihood estimator is obtained when the approach is applied to both maximum likelihood and least squares estimation of the covariance matrix parameters in the general linear regression model. The new approach results in two new estimators when applied to the profile and marginal likelihood functions for estimating the lagged dependent variable coefficient in the dynamic linear regression model. Monte Carlo simulation results show the new approach leads to a better estimator when applied to the standard profile likelihood. It is therefore recommended for situations in which standard estimators are known to be biased.     

Numerical solution of dynamic equilibrium models under Poisson uncertainty

We propose a simple and powerful numerical algorithm to compute the transition process in continuous-time dynamic equilibrium models with rare events. In this paper we transform the dynamic system of stochastic differential equations into a system of functional differential equations of the retarded type. We apply the Waveform Relaxation algorithm, i.e., we provide a guess of the policy function and solve the resulting system of (deterministic) ordinary differential equations by standard techniques. For parametric restrictions, analytical solutions to the stochastic growth model and a novel solution to Lucas' endogenous growth model under Poisson uncertainty are used to compute the exact numerical error. We show how (potential) catastrophic events such as rare natural disasters substantially affect the economic decisions of households.     

Project Decision Chain

To add value to project performance and help obtain project success, a new framework for decision making in projects is defined. It introduces the project decision chain inspired by the supply chain thinking in the manufacturing sector and uses three types of decisions: authorization, selection, and plan decision. A primitive decision element is defined where all the three decision types can be accommodated. Each task in the primitive element can in itself contain subtasks that in turn will comprise new primitive elements. The primitive elements are nested together in a project decision chain.     

An alternative test of the hedonic theory of housing markets

In this paper the hedonic theory of housing markets is used to generate a multinomial logit model of household behavior in an urban housing market. Application of hedonic theory to housing markets is by now fairly familiar and a link to multinomial logit has also been established. However, by emphasizing more heavily the bid price interpretation of hedonic theory, this paper develops a new connection to econometric estimation that essentially involves running the usual logit equations in reverse. One advantage of this approach is that the link between the logit equations and hedonic theory involves bid price rather than utility functions, and this in turn permits the empirical results to be given an extremely clear interpretation. Furthermore, in contrast to the standard logit model, the extreme value distribution required to justify the estimation technique emerges endogenously as part of the analysis.     

Small asymmetric fractional factorial plans for main effects and specified two-factor interactions

Fractional factorial plans represented by orthogonal arrays of strength two are known to be optimal in a very strong sense under a model that includes the mean and all the main effects, when all interactions are assumed to be absent. When a fractional factorial plan given by an orthogonal array of strength two is not saturated, one might think of entertaining some two-factor interactions also in the model. In such a situation, it is of interest to examine which of the two-factor interactions can be estimated via a plan represented by an orthogonal array, as also to study the overall efficiency of the plan when some interactions are in the model alongwith the mean and all main effects. In this paper, an attempt has been made to examine these issues by considering some practically useful plans for asymmetric (mixed level) factorials with small number of runs.     

Het voorspellen van levertijden uit gegevens over de voort-gang van een project

Estimation of dates of delivery by extrapolation of progress-data for a project.
The problem can be put in mathematical form with the aid of some assumptions with regard to the occurrence of interruptions.
The progress of the project is supposed to be interrupted by time-intervals during which progress is fully stopped. These intervals start at irregularly distributed moments and have a variable size. The points on the time axis corresponding with the moments of stagnation will show a constant average density, if a constant average production capacity or development capacity is available. This means that the results are valid only if no alterations are made which influence the general progress of the project involved.
The application of probability theory to problems connected with promises of delivery may, in general, look unacceptable.
Many projects, however, have an experimental character and unforeseen technical and organisational troubles are unavoidable.
In such cases the theory makes it possible to obtain a maximum amount of information contained in the progress-data and may help management to make the best decisions.     

A general equilibrium urban location model with regional labor mobility

The model determines labor supply, land area, exports, imports, and land use intensity for an urban area. The rest-of-the-world is represented by summary supply and demand equations. General solution for first-degree homogeneous housing, export, and preference functions is given. Numerical solutions CES functions are presented.     

Problems in cross-functional sourcing decision processes

We identify problems encountered in a cross-functional sourcing decision process, founded on a longitudinal case study at a large manufacturing company. Ten problems are identified which affect the process negatively and which derive from three underlying factors: functional interdependency, strategy complications and misaligned functional goals. These factors are long-observed in literature on organizations but not specifically in the cross-functional sourcing decision process and we add an investigation into the effects these factors have on attempts to make better-founded sourcing decisions. Our findings indicate that the reality of making sourcing decisions is often more complex than is portrayed in previous research on sourcing decisions.     

Government planning, with and without the cooperation of industry

Conclusions In the last section it was argued that the government should regularly prepare a medium-term plan of the development of the whole economy. This plan should, in its outward aspect, bear considerable resemblance to the National Plan: it should be both comprehensive and detailed. Such a plan would serve as a framework for coordinating all government policy decisions having a medium-term impact — that is not only public expenditure, investment (and pricing) in the nationalised industries, but also taxation and transfer payments. This would meet four criticisms of the present planning procedures: firstly, that the formal procedures for assessing tax and transfer policies are virtually confined to the short-term issues, so that the longer-term implications tend to be neglected; secondly, that public expenditure decisions are taken in the context of arbitrary and unrealistic assumptions about future tax rates; thirdly, that micro-economic considerations are considered only in a partial equilibrium framework; fourthly, that the forecasting activities of the nationalised industries and other public bodies are insufficiently coordinated.This would be planning by the government, for the government, an extension of present procedures. The final plan would embody public sector decisions and incorporate forecasts of private sector behaviour. The private sector would not however be directly involved.It was further argued that as a general rule, these plans (which would at the same time be forecasts) should be published. The information contained is not only necessary for public participation in policy choice, but useful for decision-making in the private sector. Moreover, since information is a collective good, there is a strong case for extending this forecasting service somewhat beyond those items justified solely by their importance in public sector decision-making.If this type of planning is adopted, then, apart from the impact of these published forecasts, influence on the private sector is confined to traditional controls, mostly fiscal and monetary. In Section II we considered the possibility of involving the private sector more directly in the planning process, as indeed was done in drawing up the ill-fated National Plan. We found the role of a cooperative medium-term plan (drawn up by government and industry in partnership) to be distinctly limited.Firstly, among those decisions which are relevant to the focus year, only those that are just about to be taken are of strategic importance, and these are small in number; the tâtonnement process should be confined to these decisions — this at least represents a considerable simplification. There are, besides these, two groups of decision: Those aleady taken (these should be even smaller in number and relatively simple to ascertain) and those not to be taken for some time. As far as this last group is concerned, and the bulk of decisions will be in this group, there is little to be gained from an approach to decision-makers; plans do not exist and forecasts may be obtained from experts whose advice is at once informed and disinterested. Such forecasts may be expected to be conditional on the decisions evolved in the tâtonnement process; thus provision must be made for the mutual interaction of decisions and forecasts.Secondly, there is the problem, to which we have frequently referred, of conflicting objectives. Can those enterprises which are to be involved in the tâtonnement process be persuaded to pursue the national interest or at least to obey some minimal rules of the game? It is important in this context to notice that the firms involved will be ones with long gestation lags, and these will be, almost exclusively, large corporations. It is precisely these firms that may most easily be persuaded to pursue the national interest.The character of such firms should also be borne in mind in considering the impact of planning on competition. The kind of competition characteristic of large firms operating in oligopolistic industries is certainly very different from competition in more fragmented industries. It manifests itself not in prices (as of course traditional theory assumes) but in escalating sales campaigns, which might well be condemned as wasteful or worse, and product differentiation. Some might think this kind of competition not worth preserving. But those who think this might well go one step further and suggest that such enterprises should be nationalised on the grounds that it is only thus that the full advantages of cooperation can be secured.It would seem indeed that cooperative planning is an uneasy half-way house, a curiously British compromise (strange that it should have originated in France!). Such a compromise might have been valuable in as far as cooperative planning did not generate the same emotional hostility as nationalisation. Indeed the planning movement united both the major parties. But whatever advantages cooperative planning may once have had in this respect have been dissipated by the mishandling of the National Plan. It would, however, be much more tragic if this unfortunate episode were to inhibit the development of the kind of mechanism for government planning discussed in the second half of this paper.     

Structural information in recursive VAR orderings

This paper investigates structural models that will permit a Cholesky decomposition of the covariance matrix of VAR residuals to identify some structural impulse response functions. Cholesky decompositions are found to be useful identification tools for the set of partially recursive structural models. A partially recursive structure is defined as any block recursive system where the equations in one block can be recursively ordered and where the structural shocks are uncorrelated. Using this class of models, we derive necessary and sufficient conditions for the moving average representation from a Cholesky decomposition to identify structure. The paper concludes by discussing implications of these results for empirical research.     

Simultaneous equations models in applied search theory

This paper shows how standard simultaneous equations models arise in the analysis of survey data on wages and unemployment durations in the light of job search theory. Log-linear approximations to the key functional relations lead to ordinary log-linear simultaneous equations in which, moreover, specification error or heterogeneity terms are absorbed into the structural form error terms. Identifiability of structural parameters by exclusion restrictions can then be examined. An illustrative application of the method to data on elapsed durations and asking wages is given with results not inconsistent with search theory.     

财务预算管理的作用

所谓财务预算管理(又称"预算控制"),是指在企业资本计划和运营计划的指导下,为企业各项业务以及执行各项业务的责任主体确定明确的目标,以此作为其工作开展和业绩评价的财务参照标准,从而实现公司战略、经营计划和日常业务执行紧密结合的有效管理工具。预算管理是一种非常有效的管理制度,在企业的经营管理中起到了积极作用。     

ARCH/GARCH with persistent covariate: Asymptotic theory of MLE

The paper considers a volatility model which introduces a persistent, integrated or near-integrated, covariate to the standard GARCH(1, 1) model. For such a model, we derive the asymptotic theory of the quasi-maximum likelihood estimator. In particular, we establish consistency and obtain limit distribution. The limit distribution is generally non-Gaussian and represented as a functional of Brownian motions. However, it becomes Gaussian if the covariate has innovation uncorrelated with the squared innovation of the model or the volatility function is linear in parameter. We provide a simulation study to demonstrate the relevance and usefulness of our asymptotic theory.     

INTRA‐HOUSEHOLD EXPERIMENTS: A SURVEY

Experiments with family groups are rare, but since many decisions are taken at the household level or occur within the household it is an important area to investigate. This paper provides a survey of the recent experimental work on intra‐household decision‐making. I discuss some of the challenges involved in doing experiments with couples and families and consider major areas that remain yet to be explored. While general themes from the research are still emerging, four results repeatedly occur: (1) the absence of efficiency in intra‐household decisions; (2) joint decisions that are not a convex combination of individual decisions; (3) individual behaviour is affected by opportunities for hiding actions from spouses and (4) deviations from standard models of microeconomics in line with those seen in the anomalies literature of individual decision‐making.     

Semiparametric Estimator for Binary‐outcome Sample Selection: Prejudice Matters in Election

a semiparametric estimator for binary‐outcome sample‐selection models is proposed that imposes only single index assumptions on the selection and outcome equations without specifying the error term distribution. I adopt the idea in Lewbel (2000) using a ‘special regressor’ to transform the binary response Y so that the transformed Y becomes linear in the latent index, which then makes it possible to remove the selection correction term by differencing the transformed Y equation. There are various versions of the estimator, which perform differently trading off bias and variance. A simulation study is conducted, and then I apply the estimators to US presidential election data in 2008 and 2012 to assess the impact of racial prejudice on the elections, as a black candidate was involved for the first time ever in the US history.     

Conditions for incentive compatibility in models with multidimensional allocation functions and one-dimensional types

We extend the conditions for incentive compatibility in mechanism design problems to a more general structure of preferences than that found in the literature, for the case where type is one-dimensional but the outcome function becomes multidimensional. This is so, at least, as long as preferences can be represented by means of sub-utility functions, it is adopted a weak single-crossing property and direct mechanisms turn out to be differentiable. When direct mechanisms are not differentiable, local incentive conditions still remain fully incentive compatible, provided utility is weakly separable in the outcome function, or else, it exhibits linearity in the type.     

Management turnover expectations: a variable to explain company readiness to engage in continuous management training

What makes companies give their support to Continuous Management Training (CMT) and why, on occasion, do they block its progress? If a company thinks its managers might leave in the near future, would there be reasons for it to provide continuous training of these professionals? Do companies interpret all likely resignations in the same way? We attempt to provide an answer to these questions, by analysing the behaviour of companies' vis-à-vis continuous management training in terms of their expectations of the appropriability of the benefits that stem from such training. Appropriability is in turn assessed with regard to firms' expectations that their managers will leave their organisation without it having had the chance to recover the outlay invested in training. The analysis of business behaviour also demands an understanding of how these turnover expectations are produced and, more specifically, of the variables on which turnover expectations depend or might depend. The empirical study we carried out with over 300 Spanish companies revealed that company projections for voluntary turnover of management employees are positively connected with earlier experiences of turnover, with markets prone to change, and with business risk situations, and negatively associated with developed social management networks, satisfied managers and their degree of specificity in relation to the company. Nevertheless, no significant relationship was observed between expected turnover and the intensity of continuous management training. In general, companies make their management training investment decisions independently of the overall turnover expectations they might have. Different causes might exist for this absence of a relationship, centred in particular on the need for management training and an associated sense of urgency, which takes precedence over the risk of not recovering the investment when the business decision is taken, and on the nature of the management turnover perceived by the company, which is more complex than a strictly economic one.