Assessing Preference Change on the US Supreme Court

The foundation upon which accounts of policy-motivated behaviorof Supreme Court justices are built consists of assumptionsabout the policy preferences of the justices. To date, mostscholars have assumed that the policy positions of Supreme Courtjustices remain consistent throughout the course of their careersand most measures of judicial ideology—such as Segal andCover scores—are time invariant. On its face, this assumptionis reasonable; Supreme Court justices serve with life tenureand are typically appointed after serving in other politicalor judicial roles. However, it is also possible that the worldviews,and thus the policy positions, of justices evolve through thecourse of their careers. In this article we use a Bayesian dynamicideal point model to investigate preference change on the USSupreme Court. The model allows for justices' ideal points tochange over time in a smooth fashion. We focus our attentionon the 16 justices who served for 10 or more terms and completedtheir service between the 1937 and 2003 terms. The results arestriking—14 of these 16 justices exhibit significant preferencechange. This has profound implications for the use of time-invariantpreference measures in applied work.     

Bargaining and Opinion Assignment on the US Supreme Court

We formulate a new game-theoretic model of bargaining on theUS Supreme Court. In the model, a degree of monopoly power overpolicy endogenously accrues to the assigned writer despite an"open rule" permitting other justices to make counteroffers.We assume justices are motivated ultimately by a concern forjudicial policy, but that the policy impact of an opinion dependspartly on its persuasiveness, clarity, and craftsmanship—itslegal quality. The effort cost of producing a high-quality opinioncreates a wedge that the assignee can exploit to move an opinionfrom the median without provoking a winning counteroffer. Weuse this bargaining model as the foundation for a formal analysisof opinion assignment. Both the bargaining and opinion assignmentmodels display rich and tractable comparative statics, allowingthem to explain well-known empirical regularities, as well asto generate new propositions, all within a unified and internallyconsistent framework.     

Influence of decision styles on use of decision models

This article discusses how the “decision style” of an administrator influences the adoption and use of particular decision models. Several “interactive” and “analytical” decision models often used to guide decision making are described and critiqued to point out their virtues and deficiencies. Propositions are suggested that contend that “systematic,” “judicial”, “speculative”, and “intuitive” styles have clear-cut preferences for a particular decision model. This model seems to be used, even when another would be more suitable. Effective decision makers are postulated to adapt their styles, or at least to see the benefits of different styles. Mixed-mode models are proposed that seem to simulate the behavior of successful decision makers.     

Confidence and decision

Many real-life decisions have to be taken on the basis of probability judgements of which the decision maker is not entirely sure. This paper develops a decision rule for taking such decisions, which incorporates the decision makerʼs confidence in his probability judgements according to the following maxim: the larger the stakes involved in a decision, the more confidence is required in a probability judgement for it to play a role in the decision. A formal representation of the decision makerʼs confidence is proposed and used to formulate a family of decision models conforming to this maxim. A natural member of this family is studied in detail. It is structurally simpler than other recent models of decision under uncertainty, which may make it easier to apply to practical decisions, whilst being axiomatically sound, permitting the separation of beliefs and tastes, and allowing comparative statics analysis of attitudes to choosing in the absence of confidence.     

Averting decision debacles

Half of the decisions made in organization fail, posing questions about the causes of failure and how to improve matters. My research shows that failure-prone decision-makers are victimized by three blunders: making premature commitments, spending time and money on the wrong things, and using failure-prone practices. The blunders create traps and the traps ensnare decision-makers to bring about failure. To dodge the traps, successful decision-makers were found to uncover hidden concerns, manage the social and political forces that can block them, identify desired results, search widely and encourage innovation, estimate benefits and the risks to realize them, voice ethical questions, and root out perverse incentives so learning can occur. Decision debacles drawn from Shell's disposal of the Brent Spar, Quaker's purchase of Snapple, and tax support for a sports arena are used to illustrate the blunders and traps, how they arise, and how to avoid them.     

The decision Delphi

If Delphi is used as a prognostic tool in the social sciences, it runs the danger of producing a self-fulfilling prophecy. In a Delphi application conducted at the Austrian Academy of Sciences about the present situation and future developments of the scientific-technical information and documentation system in Austria, an attempt was made to apply this principle intentionally.A group of actual decision makers in this field were included in a Delphi panel and were therefore confronted with problems and possible future developments in a field which is considerably influenced by their own actions. The Delphi method was therefore used to structure the decision-making process and to help to “create” the future in reality rather than just predicting it. In this way, an attempt was made to transfer an important field of socioeconomic development from a pattern of accidental development through uncoordinated decisions toward a pattern of broad discussion among all involved social groups and thus toward goal-oriented and well-considered management.It seems that this study represents a further variant of the well-known Delphi technique, a variant which has fundamental differences from the classical and the policy Delphi. For a Delphi application of this type the expression “Decision Delphi” is suggested.     

Participation, decision aggregation and internal information gathering in organizational decision making

This paper proposes a stylized theory that focuses on the determination of the structure of decision making within teams. This structure consists of two elements: the allocation of decisional power among the team members, and the degree of information acquisition on their quality. The suggested approach is applied in the special context of pairwise organizational choice for evaluating the performance of a class of decision rules, the value of participation in organizational decision making, the value of information on the quality of the available decision makers, and the efficiency loss associated with common restrictions on the design of the corporate's structure of decision making.     

Predicting restaurant financial distress using decision tree and AdaBoosted decision tree models

The restaurant industry has been facing tough challenges because of the recent economic turmoil. Although different industries face different levels of competition and therefore the likelihood of financial distress can differ for firms in different industries, scant attention has been paid to predicting restaurant financial distress. The primary objective of this paper is to examine the key financial distress factors for publicly traded U.S. restaurants for the period from 1988 to 2010 using decision trees (DT) and AdaBoosted decision trees. The AdaBoosted DT model for the entire dataset revealed that financially distressed restaurants relied more heavily on debt; and showed lower rates of increase of assets, lower net profit margins, and lower current ratios than non-distressed restaurants. A larger proportion of debt in the capital structure ruined restaurants' financial structure and the inability to pay their drastically increased debt exposed restaurants to financial distress. Additionally, a lack of capital efficiency increased the possibility of financial distress. We recommend the use of the AdaBoosted DT model as an early warning system for restaurant distress prediction because the AdaBoosted DT model demonstrated the best prediction performance with the smallest error in overall and type I error rates. The results of two subset models for full-service and limited-service restaurants indicated that the segments had slightly different financial risk factors.     

Economics and the Supreme Court: The Case of the Minimum Wage

In the United States, laissez-faire has been the policy advocated in good times, while social legislation has been called for during crises. One instance of this dichotomy concerns the transformation of the American understanding of minimum wage laws during the early 20^th century. During this time, the view of minimum wage laws changed from one that viewed such laws as theft, to one that saw such laws as being required for distributional justness. We examine the legal-historical debate concerning whether the Supreme Court renounced its policy of laissez-faire individualism in its 1937 ruling finding the minimum wage law constitutional, arguing that it did not. We investigate the free market standard that the Court used to find minimum wage laws unconstitutional in 1923. We demonstrate how the economic conditions of the Depression, coupled with the development of economic theory, explain how the Court eventually found the minimum wage law constitutional.     

Promises in group decision making

We assess in the laboratory the effect of promises on group decision-making. The gift-exchange game provides the testing ground for our experiment. When the game is played between groups, inter-group cooperation and reciprocity represent a condition for increasing total earnings as a measure of social efficiency. Our findings show that promises have positive effect on aggregate payoffs and that effect is reinforced when a group member is randomly selected as proposer to set forth an effort/transfer level that other group members can approve or reject. Promises and proposers elicit social conformity leading groups to exhibit more desirable social behavior.     

Redistribution under general decision rules

We study the political economy of redistribution over a broad class of decision rules. We suggest a simple and elegant procedure to select a robust equilibrium from the multiplicity in the core. Equilibrium policy depends on the full income profile, and, importantly, the preferences of two decisive voters. We show that the effect of increasing inequality depends on the decision rule and the shape of the income distribution; redistribution will increase if both decisive voters are “relatively poor,” and decrease if at least one is sufficiently “rich.” Additionally, redistribution decreases as the polity adopts increasingly stringent super-majority rules.     

Irrational diversification in multiple decision problems

The paper deals with multiple decision problems, which are similar to the task of guessing the color outcomes of five independent spinnings of a roulette wheel, 60% of whose slots are red and 40% white. Each correct guess yields a prize of $1. The guess of 5 Reds clearly first order stochastic dominates any other strategy. In contrast, subjects diversify their choices when facing a multiple decision problem in which the choice is between lotteries with clear objective probabilities. The diversification is stronger when the subjects face uncertainty without objective probabilities and weaker when the choice problem involves real life actions.     

Knightian decision theory and econometric inferences

An uncertainty averse Knightian decision maker has a set of probability distributions over outcomes and chooses something other than the status quo only if the change increases the expected payoff according to all the distributions. It is possible to define a standardized degree of uncertainty aversion. To each such degree, there corresponds a set of prior distributions over the parameters of a Gaussian linear regression model, these priors being centered on a uniform prior. The set of posterior means corresponding to this set of priors has the same properties as a standard confidence region.     

Act similarity in case-based decision theory

Summary Case-Based Decision Theory (CBDT) postulates that decision making under uncertainty is based on analogies to past cases. In its original version, it suggests that each of the available acts is ranked according to its own performance in similar decision problems encountered in the past.The purpose of this paper is to extend CBDT to deal with cases in which the evaluation of an act may also depend on past performance of different, but similar acts. To this end we provide a behavioral axiomatic definition of the similarity function over problem-act pairs (and not over problem pairs alone, as in the original model).We propose a model in which preferences are context-dependent. For each conceivable history of outcomes (to be thought of as the context of decision) there is a preference order over acts. If these context-dependent preference relations satisfy our consistency-across-contexts axioms, there is an essentially unique similarity function that represents these preferences via the (generalized) CBDT functional.We are grateful to Akihiko Matsui for the discussions that motivated this work. We also thank Enriqueta Aragones, Roger Myerson, Zvika Neeman, Ariel Rubinstein, Peyton Young, and an anonymous referee for their comments. Partial financial support from the Alfred Sloan Foundation is gratefully acknowledged.