Pleasure in decision‐making situations: politics and gambling

This work investigates whether pleasure influences political and gambling decisions. Participants received two questionnaires. On Questionnaire 1, they rated the pleasure/displeasure of a series of items: social and political issues in Experiment 1, winning bets in Experiment 2, and losing bets in Experiment 3. On Questionnaire 2, they indicated the items that they would actually choose in real life. Their choices were then compared with their hedonic ratings on Questionnaire 1. Results showed that participants tended to choose those items they had most highly rated for pleasure on Questionnaire 1. In all cases, the selected outcomes were higher than chance, and thus tended to maximize pleasure, but were significantly lower than the maximum possible, indicating the presence of non‐hedonic criteria. The tendency to maximize pleasure was independent of age, gender, political opinions, and gambling propensity in real life. The results of all three experiments support the hypothesis that decisions are made predominantly, though not exclusively, in the hedonic dimension of conscious experience. A fourth experiment was set to answer a methodological question: a delay of 77 ± 3 days was placed between Questionnaires 1 and 2. The results were similar to those of Experiments 1–3, thus answering the concern.     

Diversification of infrastructure projects for emergent and unknown non‐systematic risks

Allocating resources to competing large‐scale infrastructure projects involves multiple objectives. Traditional decision‐aiding methodologies focus on the trade‐offs among performance and resource objectives. Existing methodologies may fail to account for unknown and emergent risks that are typical of large‐scale infrastructure investment allocation problems. In modern portfolio theory, it is well known that a diversified portfolio can be very effective to reduce non‐systematic risks. The approach of diversification is equally important in choosing robust portfolios of infrastructure projects that may be subject to emergent and unknown risks. In this paper, we demonstrate a methodology to analyze and compare the diversification of portfolios of large‐scale infrastructure projects. We classify and explore several metrics of diversification and integrate them with risk and other performance objectives in a multiobjective approach. We test the new metrics and the methodology in a case study of hundreds of millions of dollars of infrastructure investments. The results suggest that the solutions that consider diversification are more robust to emergent risks, thus, identifying an opportunity to incorporate diversification‐based optimization methodologies to support a variety of problems involving large‐scale infrastructure investments.     

Functional‐dynamic public participation in technological decision‐making: site selection processes of nuclear waste repositories

This study employs the ordered lottery selection approach with field experiment to measure risk attitude of two distinct population groups in China – farmers in Wuhan and freelancers in media and advertising in Beijing. A comparative design was used to reveal the cross-population difference in risk attitude and its affecting factors. The results showed that both groups exhibited constant partial risk aversion and decreasing absolute risk aversion, while the farmers were more risk-averse than the freelancers. The farmer and freelancer respondents demonstrated very different sensitivity to the warming-up games types involving ‘gain-only’ or ‘gain-loss’ while extremely risk-averse respondents in the warming-up games possessed the consistent attitudinal behavior in the formal tests. The comparative experiment revealed that gender and income were two statistically significant factors affecting risk attitude and they appeared to be consistent across the two distinct groups. Surprisingly, respondents’ perceived frequency of risk occurrence was not correlated to their risk attitude. Moreover, the factors of leisure and investment behavior were significantly linked to the freelancers’ risk attitude but not the farmers’. The experiment also found a non-linear relationship between risk attitude and education, and receiving college education was found to be a critical switching point that was significantly linked to respondents’ risk choices. While further research is needed to better understand the governing mechanism in risk attitude, perception, and behavior, this paper tried to link the experimental results to the natural disaster insurance practice in China and discussed their implication to the policy design.     

A review and comparison of medical expenditures models: two neural networks versus two‐part models

This paper compares the two‐part model (TPM) that distinguishes between users and non‐users of health care, with two neural networks (TNN) that distinguish users by frequency. In the model comparisons using data from the National Health Research Institute (NHRI) in Taiwan, we find strong evidence in favor of the neural networks approach. This paper shows that the individuals in the self‐organizing map (SOM) network clusters can be described as several different forms of frequency distributions. The integration model of SOM and back propagation network (BPN) proposed by this paper not only permits policymakers to easily include more risk adjusters besides the demographics in the traditional capitation formula through the adaptation and calculation power of neural networks, but also reduces the incentives for cream skimming by decreasing estimation biases.     

Book-to-market and size effects: compensations for risks or outcomes of market inefficiencies?

We employ the optimal orthogonal portfolio approach to investigate if the size and book-to-market effects in US data are related to risk factors beside the market risk. This method enables us to estimate the upper limit of the risk premium, due to observed as well as all possible unobserved factors, which can be derived from a linear asset pricing model. As a corollary, it is possible to divide the observed average asset return into three parts: one explained by the market factor, one due to the unobserved factors, and finally the non-risk-based (NRB) component. Our empirical results confirm the existence of latent risk factors, which cannot be captured by the market index. In particular, the size effect is related to some other background risk factors than the market portfolio, but a large part of observed book-to-market effect has a NRB explanation.     

Determinants of risk behaviour: effects of perceived risks and risk attitude on farmer’s adoption of risk management strategies

The importance of risk perception and risk attitude for understanding individual’s risk behaviour are independently well described in literature, but rarely combined in an integrated approach. In this study, we propose a model assuming the choice to implement certain risk management strategies to be directly driven by both perceptions of risks and risk attitude. Other determinants influence the intention to apply different risk strategies mainly indirectly, mediated by risk perception and risk attitude. This conceptual model is empirically tested, using structural equation modelling, for understanding the intention of farmers to implement different common risk management strategies at their farms. Data are gathered in a survey completed by 500 farmers from the Flanders region in Belgium, investigating attitudes towards farming, perceived past exposure to risk, socio-demographic characteristics, farm size, perceptions of the major sources of farm business risk, risk attitudes and the intention to apply common risk management strategies. Our major findings are: (i) perception of major farm business risks have no significant impact on the intention of applying any of the risk strategies under study, (ii) risk attitude does have a significant impact. Therefore, rather than objective risk faced and the subjective interpretation thereof, it is the general risk attitude that influence intended risk strategies to be implemented. A distinction can be made between farmers willing to take risk, who are more inclined to apply ex-ante risk management strategies and risk averse farmers who are less inclined to implement ex-ante risk management strategies but rather cope with the consequences and diminish their effects ex-post when risks have occurred.     

The role of creative strategy,ad disclosure and regulatory focus in investors’ decision making: An experimental investigation

This study examines the effects of creative strategy and ad disclosure in financial services advertising (FSA) and individual differences in regulatory focus on retail investors’ attitudes and behavioral intentions. Results from a between-subject experiment indicate that investors’ regulatory focus (promotion focus versus prevention focus) moderates the effects of FSA related to creative strategy and ad disclosure. Specifically, prevention-focused investors (promotion-focused investors) had more favorable attitudes towards and showed greater purchase intentions of a financial product when exposed to informational ads and ads with disclosures (transformational ads and ads without disclosures). The authors offer theoretical, managerial and public policy implications.     

High‐risk Technology,Legitimacy and Science: The U.S. Search for Energy Policy Consensus

Since the 1980s, a growing body of social scientific research has focused on the organizational character of the institutions that are responsible for the management and functioning of high‐risk technological systems. While there are differences among the social theories of risks that have developed on both sides of the Atlantic, much of the work offers warnings that are relevant to public policy. The warnings have largely been ignored in recent U.S. policy decisions, as illustrated most clearly by the U.S. Energy Act of 2005, which largely overlooks important questions regarding the environmental and technological risks of the technologies favored by the Act. Sociological work suggests that the scientific systems that have been instrumental in the legitimization process of high‐risk technological options of energy, more broadly, should be examined in connection with the societal institutions having responsibility for transparency, safety, and environmental protection.     

Analysis of variance based instruments for Ornstein–Uhlenbeck type models: swap and price index

In this paper a couple of variance dependent instruments in the financial market are studied. Firstly, a number of aspects of the variance swap in connection to the Barndorff-Nielsen and Shephard model are studied. A partial integro-differential equation that describes the dynamics of the arbitrage-free price of the variance swap is formulated. Under appropriate assumptions for the first four cumulants of the driving subordinator, a Ve?e?-type theorem is proved. The bounds of the arbitrage-free variance swap price are also found. Finally, a price-weighted index modulated by market variance is introduced. The large-basket limit dynamics of the price index and the “error term” are derived. Empirical data driven numerical examples are provided in support of the proposed price index.     

Accounting for People: A real step forward or more a case of wishing and hoping?

In principle, the Accounting for People initiative announced by the UK government in January 2003 held out the possibility of a real step forward in promoting the interests of employees. Despite its distinctly managerialist discourse, the initiative acknowledged that having now recognised that ‘people are our greatest asset’, employers should begin to consider how to report on their people management activities in financial statements. After more than three and a half years of consultation, debate and deliberation, larger UK quoted companies are now charged with providing only a minimal level of general information on their employees. Whatever promise may have been evident to wishful thinkers in the early months of the initiative, this outcome confirms that there is little possibility for progressively ‘accounting for people’ as long as such practices are shaped by powerful sectional interests. The purpose of this paper is to subject the initiative to critical scrutiny. The paper seeks to document how the Accounting for People initiative was quickly and effectively emasculated as a consequence of the power and influence wielded by the UK accountancy profession, identified as a key agent of capital. Additionally, attention is drawn to a number of contemporary developments, largely and perhaps knowingly ignored in the course of the Accounting for People debate, that may yet inform and energise a more radical approach to accounting for people.     

Under threat. Lay thinking about terrorism and the three‐dimensional model of personal involvement: a social psychological analysis

Global ‘standards’ in social security are set by the UN Specialist Agency, the International Labour Organization (ILO). The ILO ‘Standards’ prioritize one model of social security system in particular; namely, contributions‐financed social insurance. Specifically, social insurance systems are designed to mitigate the negative impacts of formal labour market risks. Accordingly, social security systems typically fail to address adequately many informal labour market and nonlabour market risks. The inherently limited focus of social protection provided by many social security systems is recognized to be of major concern for least developed countries (LDCs) in particular for whom western‐centric definitions of life‐cycle risk remain largely inappropriate for the majority. This realization has led the World Bank to experiment with a reconceptualized definition of social protection; Social Risk Management (SRM). Seeking to encourage wider debate across the multidisciplinary field of risk management research, this article outlines critically the tenets underpinning SRM and highlights the policy limitations of this innovative World Bank venture in two key respects. First, by outlining the likely policy implications of World Bank approaches to social protection for global social security standards and practice. Second, by questioning the short‐term contribution that SRM can make to poverty reduction, not least amongst the elderly poor.