Consistent estimation in the bilinear multivariate errors-in-variables model

A bilinear multivariate errors-in-variables model is considered. It corresponds to an overdetermined set of linear equations AXB=C, A∈ℝ^m×n, B∈ℝ^p×q, in which the data A, B, C are perturbed by errors. The total least squares estimator is inconsistent in this case.  An adjusted least squares estimator is constructed, which converges to the true value X, as m →∞, q →∞. A small sample modification of the estimator is presented, which is more stable for small m and q and is asymptotically equivalent to the adjusted least squares estimator. The theoretical results are confirmed by a simulation study. Acknowledgements. We thank two anonymous reviewers for their suggestions and corrections.? A. Kukush is supported by a postdoctoral research fellowship of the Belgian office for Scientific, Technical and Cultural Affairs, promoting Scientific and Technical Collaboration with Central and Eastern Europe.? S. Van Huffel is a full professor with the Katholieke Universiteit Leuven.? I. Markovsky is a research assistant with the Katholieke Universiteit Leuven.? This paper presents research results of the Belgian Programme on Interuniversity Poles of Attraction (IUAP V-22), initiated by the Belgian State, Prime Minister's Office – Federal Office for Scientific, Technical and Cultural Affairs of the Concerted Research Action (GOA) projects of the Flemish Government MEFISTO-666 (Mathematical Engineering for Information and Communication Systems Technology), of the IDO/99/03 project (K.U. Leuven) “Predictive computer models for medical classification problems using patient data and expert knowledge”, of the FWO projects G.0078.01, G.0200.00, and G0.0270.02.? The scientific responsibility is assumed by its authors.     

Innovation-oriented transformation of industry in Ukraine and Russia

This paper presents an expert assessment of the present state of cooperation of Ukraine and Russia in the innovation sphere, outlines its main stages and analyzes the quality of the process of formation of legislative framework in state regulation of innovation-oriented transformations in the economy of the two countries. A comparative study is made and a quantitative estimate of the level of innovation activities in industrial production and the degree of innovation shifts in the technological structure of manufacturing in Russia and Ukraine is given.     

MEASURING THE OPERATIONAL EFFICIENCY OF COMMERCIAL BANKS IN NAMIBIA

This paper examines the efficiency of commercial banks in Namibia using the standard econometric frontier approach. Although two aspects of efficiency (scale and scope) receive our attention, the emphasis is on the latter which pertains to whether a firm produces as efficiently as it possibly can, given its size. Our results indicate that substantial economies of scale exist in commercial banking in Namibia. This will tend to suggest that commercial banks in Namibia can increase their efficiency by increasing their current scale of operation. The results for scope economies show that the current level of input combination does not make for maximum efficiency as sufficient scope exists for a more efficient combination of inputs. We believe this will reduce operating costs in the industry and stimulate efficiency.     

Decomposition of Fraud‐Risk Assessments and Auditors' Sensitivity to Fraud Cues*

Practitioners and regulators are concerned that when auditors perceive management's attitude or character as indicative of low fraud risk, they are not sufficiently sensitive to high levels of incentive or opportunity risks in their overall fraud‐risk assessments. In this study, we examine whether a fraud‐triangle decomposition of fraud‐risk assessments (that is, separately assessing attitude, opportunity, and incentive risks prior to assessing overall fraud risk) increases auditors' sensitivity to opportunity and incentive cues when perceptions of management's attitude suggest low fraud risk. In an experiment with 52 practicing audit managers, we find that auditors who decompose fraud‐risk assessments are more sensitive to opportunity and incentive cues when making their overall assessments than auditors who simply make an overall fraud‐risk assessment. However, this increased sensitivity to opportunity and incentive cues appears to happen only when those cues suggest low fraud risk. When opportunity and incentive cues suggest high fraud risk, auditors are equally sensitive to those cues whether they use a decomposition or a holistic approach. We discuss and examine potential explanations for this finding.     

Endogenous Group Formation

While the rules governing the formation of groups engaging in collective action may have significant impact on group size and behavior of members, most experiments on public goods have been conducted with the subjects in exogenously fixed groups or of fixed sizes. We study endogenous formation of groups in a public‐goods provision game by allowing subjects to change groups under three sets of rules: free entry/exit, restricted entry with free exit, and free entry with restricted exit. We find that the rules governing entry and exit do have a significant impact on individual behavior and group‐level outcomes.     

Generalized piecewise linear histograms

We extend the concept of piecewise linear histogram introduced recently by Beirlant, Berlinet and Györfi. The disadvantage of that histogram is that in many models it takes on negative values with probability close to 1. We show that for a wide set of models, the extended class of estimates contains a bona fide density with probability tending to 1 as the sample size n increases to infinity. The mean integrated absolute error in the extended class of estimators decreases with the same rate n^–2/5 as in the original narrower class.     

Ex ante assessment of the returns to livestock disease control in Indonesia

Agriculture's importance in the process of economic growth highlights the role of sustained advances in farm production practices by improving the quantity and quality of farm products. In this context, investment in improved agricultural technology continues to be an important avenue of assistance to the developing countries. However, the increased resource pressures facing both aid donors and recipients have emphasised the need for the prior assessment of the potential benefits of aid projects to assist effective aid planning and management. Here, the main requirements are to establish viable project goals for translation into effective programmes, to predict the likely project impacts, and to evaluate the potential benefits and costs of adopting the project's outcomes. An ex ante assessment of assistance in controlling a major livestock disease in Indonesia's eastern islands is described in this paper. The annual net benefits from controlling this disease ranged between $A0.45 and $A2.5 million according to the mortality rate reduction achieved. The benefits were shared between beef producers and consumers according to the market elasticity conditions assumed.     

Preference adjustment and opportunities for agreement: Decision modeling to assess negotiating flexibility at UNCED

This paper develops a conceptual framework and applies it to analyze the dynamics of national interests in prenegotiation. The study's goals are to develop a systematic approach for analyzing prenegotiation processes and provide results that will have practical utility for negotiators. Specifically, the approach is applied to the prenegotiation process of the 1992 United Nations Conference on Environment and Development (UNCED), examining the financial resources issue, in particular. Decision analytic models were built to account for three key negotiation actors, and sensitivity analyses were performed to evaluate the incremental modifications to issue preferences required to achieve mutually acceptable compromises. Conclusions are drawn that indicate the extent of flexibility required of key negotiation actors to take advantage of the opportunities for agreement in the financial resources issue area. The conceptual framework and methodological approach explored in this paper can provide practical assistance as a planning tool for negotiators, helping them to diagnose the situation and plan strategies for future environmental and other multilateral negotiations. The approach can suggest specific opportunities for compromise and the degree and type of flexibility needed to achieve a convergence of interests on the issue.