Arbitration systems and negotiations

We consider a model of bargaining by concessions where agents can terminate negotiations by accepting the settlement of an arbitrator. The impact of pragmatic arbitrators—that enforce concessions that precede their appointment—is compared with that of arbitrators that act on principle—ignoring prior concessions. We show that while the impact of arbitration always depends on how costly that intervention is relative to direct negotiation, the range of scenarios for which it has an impact, and the precise effect of such impact, does change depending on the behavior—pragmatic or on principle—of the arbitrator. Moreover the requirement of mutual consent to appoint the arbitrator matters only when he is pragmatic. Efficiency and equilibrium are not aligned since agents sometimes reach negotiated agreements when an arbitrated settlement is more efficient and vice versa. What system of arbitration has the best performance depends on the arbitration and negotiation costs, and each can be optimal for plausible environments.      

Measurement of power,probabilities, and alternative models of man

Starting from Max Weber’s definitions of power we discuss the meaning of his concept Chance and its relationships to the probabilistic notions that play a central role in definitions of indices of measuring voting power. Using Martin Hollis’s distinction between two models of man—plastic and autonomous—we argue that the common measures of voting power when interpreted in terms of probabilities seem to be in better conformity with the model of plastic man than with the model of autonomous man. The paper elaborates on the probability interpretation with applications to the modelling of power measures with a priori unions and to the concept of “real voting power” based on relative frequencies of historical events. Power as potential—which in our view is what Weber very likely meant—remains an elusive concept, but one that should be amenable to game-theoretic analysis.     

Targeted political advertising and strategic behavior by uninformed voters

We consider the case where political advertising is targeted to a subset of uninformed voters and show how pressure groups, candidates, and uninformed voters interact to achieve an equilibrium outcome. The paper accomplishes the following: (1) It derives the optimal behavior of those uninformed voters who do not received targeted campaign advertising. (2) It suggests that previous results may have exaggerated the power of pressure groups and political advertising—even when there is directed advertising, any negative effect is mitigated by strategic behavior of the uninformed. (3) In the limit, pressure group donations move the outcome toward the median voter, contrary to what much of the literature on pressure groups claims.      

Threshold uncertainty in discrete public good games: an experimental study

A discrete public good is provided when total contributions equal or exceed the contribution threshold. Recent theoretical work shows that an increase in threshold uncertainty will increase (decrease) equilibrium contributions when the public good value is sufficiently high (low). In an experiment designed to test these predictions, I find only limited verification of the prediction. Using elicited beliefs data to represent subjects’ beliefs, I find that behavior is not consistent with expected payoff maximization, however, contributions are increasing in subjects’ subjective pivotalness. Thus, wider threshold uncertainty will sometimes—but not always—hinder collective action.     

Dynamic institutional analysis: measuring corporatist intermediation

In this paper a framework for empirical analysis is introduced that allows for a dynamic analysis of the interactions between different types of actors and institutions. We elaborate our argument by focusing on a complex phenomenon—corporatism—to show how this concept can be developed into a measure that travels across nations and time. The heuristic framework we developed adequately captures the interactive behaviour of the relevant actors within a corporatist institutional context. We demonstrate the usefulness of this framework for the analysis of policy formation by applying it to Dutch incomes policy. We contend that this heuristic framework contributes to alleviating the often discussed methodological trade-off between single case studies and cross-national comparisons. We also argue that it can bridge the gap between qualitative and quantitative approaches. Lastly, we propose that it can be used for empirical analysis of policy-making processes in other policy areas.     

The Dirty Dozen: Common Problem Areas in Principal–Agent Relationships

The main purpose of the article is to educate managers about potential difficulties caused by breach of fiduciary duties on the part of agents/employees within their organization. Managers will learn how to recognize common problem situations so they can take steps to avoid, or at least mitigate, any resulting damage. This article highlights 12 frequent situations—the “dirty dozen”—that pose dangers for business organizations.     

Speculating on presidential success: exploring the link between the price–earnings ratio and approval ratings

Stock markets and politics are enduring staples of dinner party conversations but surprisingly little is known about the interaction between the two. Here we present evidence for a robust relationship between a key financial measure—the aggregate Price–Earnings ratio—and surveyed approval of the incumbent president. We argue, following the finance literature, that the price–earnings ratio is a composite measure of investors’ hopes and fears. The partially prospective nature of this ratio enables us to shed new light upon the controversy surrounding how the electorate attends to economic circumstances in judging its presidents.     

Quality and Quantity in Test Validity: How can we be Sure that Psychological Tests Measure what they have to?

During the twentieth century, many authors have offered their contributions to the controversial subject of test validity. Thus, the concept of validity seems to be quite a simple idea until one looks at the literature on the subject. Validity can be defined as “the degree to which the test actually measures what it purports to measure,” but the question of how to define validity and how to test it is both an old question and a never-ending story. We have to deal with it every time we are asked to use a test that already exists or to construct a new one. Therefore, the article aims at dealing with test validity in order to point out the different (qualitative and quantitative) aspects of validity, which have emerged from empirical research and theoretical reflections. It is thought as a critical review which can be useful both to theoretically oriented and practically inclined psychologists.     

A geometric property of indifference curves in the (mean-standard deviation) plane

We prove that the slope of the indifference curve through point (m σ) of the (meanstandard deviation) plane must be smaller than the ratio (1+m)/σ. We show that the indifference curves corresponding to a quadratic utility function do actually satisfy that inequality; and prove, by the way, that these curves are not quarters of circles (as it is usually asserted), but smaller parts of them.

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Riassunto Si prova che, nel piano (media-scarto quadratico medio), l'inclinazione della curva d'indifferenza per il punto (m, σ) deve essere minore del rapporto (1+m)/gs. Si mostra che le curve d'indifferenza corrispondenti ad una funzione d'utilià quadratica soddisfano di fatto tale limitazione; e si prova, a questo proposito, che tali curve non sono — come generalmente asserito — quarti di circonferenze, ma archi più piccoli delle medesime.

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The second part of this article was stimulated by an observation of E. Castagnoli. The author gratefully acknowledges this to him.     

Regression Revisited

Sir Francis Galton introduced median regression and the use of the quantile function to describe distributions. Very early on the tradition moved to mean regression and the universal use of the Normal distribution, either as the natural ‘error’ distribution or as one forced by transformation. Though the introduction of ‘quantile regression’ refocused attention on the shape of the variability about the line, it uses nonparametric approaches and so ignores the actual distribution of the ‘error’ term. This paper seeks to show how Galton's approach enables the complete regression model, deterministic and stochastic elements, to be modelled, fitted and investigated. The emphasis is on the range of models that can be used for the stochastic element. It is noted that as the deterministic terms can be built up from components, so to, using quantile functions, can the stochastic element. The model may thus be treated in both modelling and fitting as a unity. Some evidence is presented to justify the use of a much wider range of distributional models than is usually considered and to emphasize their flexibility in extending regression models.     

Una applicazione dell'approccio multistato ai fondi pensione

La modellistica multistato ha avuto recentemente significative applicazioni nelle assicurazioni di persone ed è stata impiegata anche nello studio di problemi connessi a schemi previdenziali (per questi ultimi si vedano ad esempio i lavori di Amsler, Wilkie, Linnemann). In questa nota si propone una applicazione di tale approccio all'assicurazione di invalidità — vecchiaia — superstiti nel tempo continuo, sia nel caso in cui si lavori con cause di eliminazione permanente che temporanea.

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Summary Recently the mathematics of multistate models has significantly been applied to the insurance of persons and has also been employed in the study of problems connected with pension schemes (e.g. papers written by Amsler, Wilkie, Linnemann). In this paper we suggest a time-continuous application of this approach to a pension scheme providing retirement, disability and death pensions, considering causes of permanent as well as temporary decrement and assuming the probabilistic structure is that of a time-inhomogeneous Markov process. Moreover, the paper presents the formulae of the expected present value of contributions and of benefits. In this regard, some approximate formulae are proposed for the above mentioned values.

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Ricerca finanziata con fondi 60% MURST. L'intero lavoro è frutto di una collaborazione che riguarda ogni parte del medesimo. I contributi personali di R. Pelessoni riguardano i paragrafi 2.2, 2.4, 2.5, quelli di M. Zecchin riguardano i paragrafi 1, 2.1, 2.3.     

Union Mergers: The New Interest and Some Old Questions

When the merged union UNITE HERE was recently torn apart by internal dissent, the labor movement’s attention turned to some longstanding questions about how union mergers are negotiated, why some fail and others succeed, how members are affected by merger, and how the big, diverse unions created by mergers—the super-unions—manage to stay intact. This article addresses these questions, arguing throughout that little is actually known about the union merger process and outcomes. In doing so, it also suggests that some union mergers, such as the one forming UNITE HERE, may not always make sense and that bigger unions created by mergers are not necessarily better unions.     

Intention as a cognitive antecedent to international entrepreneurship��understanding the moderating roles of knowledge and experience

While International Entrepreneurship has attracted scholars’ attention during the last two decades, the impact cognitive aspects exert has been studied on cursory level only. The purpose of this paper was to apply the Theory of Planned Behavior (TPB) to the very field of International Entrepreneurship in order to examine whether this theory contributes to clarify what influences Small and Medium-sized Enterprises’ (SME) decision-makers’ intention—an important cognitive antecedent to behavior—to play an active part in internationalization. In particular, it had to be clarified whether or not International Entrepreneurship—due to its contextual specificities—deserves to be extended by further elements, i.e. experience and knowledge. Based on more than 100 responses from German SME executives, the study yielded several interesting results. First, TPB indeed helps explain how intentions to actively participate in international business are built. Second, an extension of the theory’s basic model seems to make sense, probably due to the specificities of international entrepreneurial behavior. As for the extensions, direct and moderating effects have been observed. Furthermore, cognitive elements seem to be key entrepreneurial resources which serve as sort of enablers. From these results several conclusions can be drawn. Cognitive aspects are a promising starting point for understanding decision-making in SME. Thus, the intersection of international entrepreneurship and entrepreneurial cognition deserves further attention—several examples for possible future studies are presented. Policies supporting SME should be extended: pure resource-based approaches seem to be insufficient. Furthermore, entrepreneurship courses and curricula should reflect the relevance of cognitive aspects.     

Christmas cards,Easter bunnies,and Granger-causality

This paper takes a closer look at the conceptual grounds of the notion of causality in Granger’s sense. We start with the often jokingly made remark that ‘Christmas card sales Granger-cause Christmas’. Then, we extend the example to the more challenging case of chocolate Easter bunny sales and Easter. We show that any references to Granger-causality in these cases are due to the misinterpretation of the concept. Moving further on methodological grounds, we argue that the concept of Granger-causality calls for a multivariate framework of analysis. This is because taking all available relevant information into account is indeed required in Granger’s definition of causality. This is also in line with rational behaviour and learning under imperfect and incomplete information. The implications of employing a multivariate framework of analysis is discussed in terms of the additional insights it brings; namely, direct, indirect, and spurious cases of Granger-causality. Finally, we examine the semantics of the definition of causality in Granger’s sense.      

Demutualization,outsider ownership,and stock exchange performance: empirical evidence

We employ a balanced panel data set of 28 stock exchanges to disentangle the effects of demutualization and outsider ownership on the operative performance of stock exchanges. For this purpose we calculate in a first step individual efficiency and factor productivity values via Data Envelopment Analysis. In a second step we regress the derived values on variables that—amongst others—represent the different governance regimes of exchanges in order to examine technical efficiency and factor productivity differences between (1) mutuals, (2) demutualized but customer-owned exchanges, and (3) publicly listed and thus at least partly outsider-owned exchanges. We find evidence that demutualized exchanges exhibit higher technical efficiency than mutuals. However, they perform relatively poor as far as productivity growth is concerned. Furthermore, we find no evidence that publicly listed exchanges possess higher efficiency and productivity values than demutualized exchanges with a customer-dominated structure.      

Innovation ecosystems: A critical examination

Publications pushing the “innovation ecosystem” meme have added valuable dimensions to the economic development discussion. The phrase has captured the imagination of policy makers and has motivated public initiatives of substantial magnitude. This paper reviews the concept of innovation ecosystems as it is set forth in the academic and trade literature, and asks, “What is gained from adding ‘eco-’ to our treatment of national and regional innovation systems?”The answer is, “Very little, and the risks outweigh the benefits.” Innovation ecosystem is not yet a clearly defined concept, much less a theory. Moreover, the idea carries pitfalls, notably its over-emphasis on market forces, and its flawed analogy to natural ecosystems.The prospect that the phrase “innovation ecosystem” is here to stay, in investment and economic development circles, implies a research gap, and indicates caution in using the phrase in rigorous research. The paper describes the gap, indicates directions for bridging it, and offers recommendations for prudent use of “ecosystem” terminology.     

Corporate governance and pay for performance: evidence from Germany

This paper investigates how two distinctive features of the German corporate governance system—concentrated ownership structure and representation of employees on firm supervisory boards—influence the sensitivity of managerial pay to firm profitability. There is a positive, though very small, link between pay and profitability for widely held firms. The presence of a largest owner seems hardly to affect this link in any economically significant way. However, the link between pay and profitability is smaller and indeed not significantly different from zero in firms whose largest owner is a German financial institution. This suggests that large owners tend to act as a substitute for rather than a complement to performance related pay in Germany. We thank Dennis Leech for allowing us to use his algorithms for computing voting power indices, and Brian Cheffins, Tim Guinnane, Andrew Harvey, Dennis Leech, Hamish Low, Sheilagh Ogilvie, Melvyn Weeks and two anonymous referees for helpful comments. The research reported in this paper was started during a joint visit to CES, University of Munich, and completed during visits of Edwards and Weichenrieder to the University of Konstanz and the ifo Institute for Economic Research in Munich. We thank the three institutions for their hospitality, especially Bernd Genser and Hans-Werner Sinn. A previous version of this paper was circulated under the title “The Measurement of Firm Ownership and its Effect on Managerial Pay”.     

Examining Turkey and member states of European Union in terms of health perspectives of millennium development goals

Development is related not only to production and increase in per capita income but also to social, cultural and political improvements. The purpose of development is that individuals would live long, healthy and happy lives thanks to economic development of society. From this perspective, it is obvious that the human factor is fundamental to the concept of development. This study examines the most important element in human development—health. As health indicators, it uses the health perspectives in the United Nations millennium development goals that are “reduce child mortality”, “improve maternal health” and “combat HIV/AIDS, malaria and other diseases”. In the study, European Union (EU) member states and candidate country Turkey are compared in terms of health related goals among millennium development goals by using Multidimensional scaling and Cluster analysis. Initially, countries with similar and dissimilar health indicators are mapped in multidimensional space by multidimensional scaling analysis. Further, the same method is used to reveal similar and dissimilar health indicators among countries. Then, the findings are compared using Cluster analysis and are identified to be similar.     

Antisemitism research using methodological triangulation: a case study in Germany

In research on antisemitism related to Germany generally four subdimensions of hatred towards Jews are differentiate: (a) the anti-Judaism related to the Christian religion, (b) the biologically argued racial antisemitism, (c) secondary Antisemitism, and (d) antisemitism presented as antizionism. The central question in relation to the shift in how antisemitic attitudes are articulated in the German population is the dispute over whether this shift consists merely in a change in how a continuing, fundamental antisemitic attitude is articulated, and whether antisemitic attitudes have merely found another avenue of communication. The overall object of the study is to explore the structures, contexts, and dynamics of antisemitism and to focus on aspects of political psychology, hence looking at mainly collective identification, defense, and projection patterns. In terms of methodology the intention is to study the project as part of a qualitative supplementary study, based on the integration concept described by Christian Seipel and Peter Rieker of a sequence of quantitative and qualitative empirical research. The supplementary study will have as its base a sub-sample extracted from the overall results of the GMF Survey 2005. An especially suitable method for this is the Structured Depth Interview since it makes possible revealing non-communicated motives—whether consciously kept quiet or unconsciously suppressed. The main goal here is to penetrate the surface structure of antisemitism, to decipher its political-psychological dynamics, and to elaborate its associative contexts.     

The Bell Curve in Psychological Research and Practice: Myth or Reality?

The expression “the bell curve” designs both a kind of statistical distribution and the title of a famous and controversial book by Herrnstein and Murray. The first is so attractive that the second refers to it to give more credibility to its questionable theories on intelligence. The point is that, during the 20th century, the bell curve has assumed a more and more important role in psychological research and practice and have become both a reality and a myth. In the first case (reality) we can assist to appropriate applications of a real useful statistical concept. In the second (myth) we can have two kinds of attitudes: one attitude is typical of those researchers who search for normality in all their data and variables, just as Parsifal used to search for the Holy Graal (we call this “the Parsifal attitude”); the other is typical of those researchers who give normality for granted and act as if it were a Platonic Idea (we call this “the Plato attitude”). The article discusses the role of the normal distribution in psychological research and practice and shows how it can be dangerous to treat the bell curve as a God or an Idol.