Individual stability in Delphi studies

This article carries forward the work discussed in a recent article in this journal by Dajani, Sincoff, and Talley (Technol. Forecast. Soc. Change 13, 83, 1979) by investigating individual stability as opposed to group stability for successive Delphi rounds. It is demonstrated that individual stability implies group stability but that the converse does not hold. A χ² test is proposed for testing the stability of individual responses between consecutive Delphi rounds. Also, an estimation procedure is presented for measuring the extent of individual stability.     

Stability with regime switching

The purpose of this paper is to analyze the stability of systems of piecewise continuous differential equations, and to apply the results to a disequilibrium economic model. The discontinuity problem appears in disequilibrium models because of the so-called “short-side” rule. The concept of Filippov solution makes it possible to analyze the dynamic evolution of such a model. This paper demonstrates that (i) stability conditions for each subsystem are neither necessary nor sufficient for overall stability, except in special cases such as a system of linear differential equations in R² with two regimes separated by a linear boundary; (ii) several sufficient conditions for overall stability with many regimes are available; and (iii) stability theorems with regime switching are useful for disequilibrium economic models with several regimes.     

The absent-minded prisoner

If one of two rational players is absent-minded for at least three rounds, cooperation in a prisoners’ dilemma with a finite number of repetitions is possible. If both players are absent-minded, even two rounds of absent-mindedness can be enough for cooperation in these rounds and all rounds before. Sufficient conditions for the existence of a cooperative equilibrium are derived, a plausible interpretation of absent-mindedness in the case of many repetitions is given.     

Obtaining any Wald statistic you want

While the Wald test can be used to test a non-linear hypothesis in a linear or non-linear regression model it is known that a particular hypothesis can be written in many ways when non-linear forms are permitted. This paper illustrates that it is possible to obtain virtually any value of the Wald statistic at different significance levels. It is also shown that in small samples the use of the χ² or F approximation for the distribution of the Wald statistic can be misleading for some forms of the non-linear Wald test.     

A simplified method of calculating the score test for serial correlation in multivariate models

In this paper we derive the Lagrange Multiplier test for the error process in a multivariate regression model being a first-order vector autoregressive process and show it is asymptotically equivalent to nR² from an auxiliary regression.     

Keep up with the winners: Experimental evidence on risk taking,asset integration,and peer effects

The paper reports the result of an experimental game on asset integration and risk taking. We find some evidence that winnings in earlier rounds affect risk taking in subsequent rounds, but no evidence that real life wealth outside the experiment affects risk taking. Controlling for past winnings, participants receiving a low endowment in a round engage in more risk taking. We test a ‘keeping-up-with-the-Joneses’ hypothesis and find that subjects seek to keep up with winners, though not necessarily with average earnings. Overall, the evidence suggests that risk taking tracks a reference point affected by social comparisons.     

Infinitely repeated games in the laboratory: four perspectives on discounting and random termination

This paper compares behavior under four different implementations of infinitely repeated games in the laboratory: the standard random termination method [proposed by Roth and Murnighan (J Math Psychol 17:189–198, 1978)] and three other methods that de-couple the expected number of rounds and the discount factor. Two of these methods involve a fixed number of repetitions with payoff discounting, followed by random termination [proposed by Sabater-Grande and Georgantzis (J Econ Behav Organ 48:37–50, 2002)] or followed by a coordination game [proposed in (Andersson and Wengström in J Econ Behav Organ 81:207–219, 2012; Cooper and Kuhn in Am Econ J Microecon 6:247–278, 2014a)]. We also propose a new method—block random termination—in which subjects receive feedback about termination in blocks of rounds. We find that behavior is consistent with the presence of dynamic incentives only with methods using random termination, with the standard method generating the highest level of cooperation. Subject behavior in the other two methods display two features: a higher level of stability in cooperation rates and less dependence on past experience. Estimates of the strategies used by subjects reveal that across implementations, even when the discount rate is the same, if interactions are expected to be longer defection increases and the use of the Grim strategy decreases.     

Cooperative vs non-cooperative truels: little agreement, but does that matter?

It is well-known that non-cooperative and cooperative game theory may yield different solutions to games. These differences are particularly dramatic in the case of truels, or three-person duels, in which the players may fire sequentially or simultaneously, over one round or n rounds. Representative solution concepts (Nash and subgame-perfect equilibrium; two notions of core) are compared, and little agreement is found among them. Although it might be desirable to subsume these different solutions within a common framework, such unification seems unlikely since they are grounded in fundamentally different notions of stability.     

Power issues when testing the Markov switching model with the sup likelihood ratio test using U.S. output

The likelihood ratio (LR) test statistic for the test of a linear AR(1) model against the alternative of a Markov switching model does not possess the standard χ² distribution. Garcia (1998) derives the asymptotic distribution of the Sup LR test statistic under these non-standard conditions allowing the researcher to easily compare the two models. This paper examines the power properties of this test statistic using Monte Carlo experiments calibrated to U.S. output growth data. The results suggest a test of reasonable power. When the experiments are calibrated to annual data, power is 82% at 200 observations. When the experiments are calibrated to quarterly data power is 57% for the same sample size. First Version Received: March 2000/Final Version Received: March 2001     

Real Money Demand,Income, and Interest Rates in Senegal: Is there a Long-Run Stable Relation?

In this paper, I examine the stability of the long-run relationship between real money demand, income, and interest rates in Senegal. Using advances in unit root and co-integration, I test for co-integration between M1 velocity, output, and the interest rate. By virtue of the fixed exchange rate regime, I used both the three months French Treasury bill and the deposit rate to proxy the opportunity cost of holding money. I used Stock and Watson (1993) DOLS in addition to an ECM. Quarterly data ranging from 1970:Q4 to 2006:Q4 is used in the analysis, and the results reveal evidence of co-integration between real money demand, income, and the interest rate. For this study, I used both an ECM co-integration test and Johansen (Journal of Economic Dynamics and Control 12(2/3), 231-254, 1988) co-integration method.     

Do practice rounds affect experimental auction results?

Researchers use practice rounds to familiarize participants with experimental auction mechanisms. We find a positive correlation between practice bids and bids submitted in later rounds. We consider three explanations for this correlation: a behavioral anchoring effect, a tendency for some auction participants to be more free-spending, and misconception of the experimental auction’s demand revealing qualities.     

Testing deontological warm glow motivation for carbon abatements

Do people contribute to CO₂ abatements even when these contributions are completely crowded out by a third party? This study reports from an experimental test of contributions to carbon abatements when the contributions are completely crowded out by the experimenter. Contributions are determined to decline by 44% compared to a policy in which the contributions are spent directly on carbon abatements. Still, contributions remain at 18% of endowments and are relatively stable over six rounds of the crowding-out policy. These results support previous psychological findings that a deontological warm glow is important for motivating environmentally friendly behavior.     

For those about to talk we salute you: an experimental study of credible deviations and ACDC

We test the Average Credible Deviation Criterion (ACDC), a stability measure and refinement for cheap talk equilibria introduced in De Groot Ruiz et al. (Equilibrium selection in cheap talk games: ACDC rocks when other criteria remain silent, Working paper, University of Amsterdam 2012a). ACDC has been shown to be predictive under general conditions and to organize data well in previous experiments meant to test other concepts. In a new experimental setting, we provide the first systematic test of whether and to which degree credible deviations matter for the stability of cheap talk equilibria. Our principal experimental result is that in a setting where existing concepts are silent, credible deviations matter and matter gradually, as predicted by ACDC.     

Can biased polls distort electoral results? Evidence from the lab

We introduce a new methodological approach for studying the effect of biased polls on election outcomes and apply it to a set of new experiments with 375 participants. Voters may observe and learn about the bias by playing multiple voting rounds. While in control conditions, polls are unbiased, in treatment conditions, participants view only poll results where a particular candidate’s vote share is the largest. This candidate is consistently elected more often in the treatments than in the controls, because biased polls robustly distort voters’ expectations about vote shares. This effect holds after eighteen election rounds, out of which the first three are practice rounds, but somewhat more weakly in our main treatment where voters are explicitly informed about the bias.     

Two Experiments to Test a Model of Herd Behaviour

We carry out two experiments to test a model of herd behaviour based on the work of Banerjee (Quarterly Journal of Economics, CVII, 797–817, 1992). He shows that herding occurs as a result of people observing the actions of others and using this information in their own decision rule. In our experiments herding does not occur as frequently as Banerjee predicts. Contrary to his results, the subjects' behaviour appears to depend on the probabilities of receiving a signal and of this signal being correct. Furthermore, Banerjee finds that the pattern of decision making over a number of rounds of the game is volatile whereas we find that decision making is volatilewithin rounds.     

Is diversity in Delphi panelist groups useful? Evidence from a French forecasting exercise on the future of nuclear energy

This paper further enhances the analytical power of Delphi methodology by identifying the advantages, disadvantages and challenges presented by increasing diversity among panel groups. Using Delphi survey data on the future of nuclear energy in France, we analyze the origins of the variety of judgments within and between two panels: one of experts and one of laypeople. We investigate the determinants of the stability of those opinions both in one given round and over several rounds of opinion-formation. We reach an apparently paradoxical conclusion: that non-expert judgment is less stable, but not necessarily less accurate, than that of experts, judgments on the part of experts sometimes being clouded by self-interest. Apart from highlighting some factors underlying the controversy over nuclear power, our paper calls for greater participatory democracy in Delphi panels, but also demonstrates the limits of such an extension.     

Conflict among testing procedures?

This paper demonstrates that under certain conditions the Lagrange Multiplier test provides a better approximation to the asymptotic X² distribution than the more familiar Wald and Likelihood Ratio tests.     

The price stability under inflation targeting regime: An analysis with a new intermediate approach

This paper analyzes the relevance of the inflation targeting (IT) policy in achieving its primary goal of medium-term price stability. Contrary to previous studies, we propose, in this work, a new approach; an intermediate approach that consists in conducting a time-series analysis (employed in the literature under unilateral cases-absolute approach) with a comparison of inflation performance of IT countries and those of non-IT countries (comparison made in literature under the relative approach). Empirically, we employ a frequency analysis based on evolutionary spectral theory of Priestley (1965–1996) in order to distinguish between different inflation horizons; short-run and the medium-run inflation rates. To check the stability of spectral density functions for inflation series for each country under studied frequencies, we apply a Bai and Perron (2003a,b) test. Our results show that after IT framework implementation, there is no break point in inflation series in short and medium terms. This result is not verified for non-IT countries. Therefore, IT is more relevant in achieving price stability and consequently more effective on inflation expectation anchoring than other monetary policies.     

How to suppress a lead

According to the findings of Schöler (1994)¹ the “Business Climate” developed by the ifo Institute for Economic Research, Munich, cannot be used as a leading indicator for business cycle forecast. This paper shows that this result is due to Schöler's choice of statistical methods applied: apart from generating stationary time series, Schöler's filter systematically suppresses the business cycle components and amplifies the irregular components. It impairs the basis for the causality test.