A Fuzzy Cognitive Map-Based Bi-Directional Inference Mechanism: An Application to Stock Investment Analysis

The objective of this paper is to apply fuzzy cognitive map (FCM)-related techniques to (1) extract causal knowledge from a specific problem-domain, (2) construct a hierarchical knowledge base, and (3) perform a bi-directional inference. The causal knowledge base built by FCM can be described as a matrix form, guaranteeing mathematically compact operation compared with a production (if–then) knowledge base. Based on the causal knowledge base, we can break down a given decision problem into a multi-leveled one. Then bi-directional (downward or upward) inference can be applied to the multi-leveled problem to find a more robust solution. We applied our method to a stock investment analysis problem which is typical of highly unstructured problems in OR/MS fields. © 1997 by John Wiley & Sons, Ltd.     

Older Self‐Employed Workers and Planning for the Future

This study examined retirement expectations of the older self‐employed utilizing two theories: the normative anticipation of retirement and cumulative advantage theory. Two‐thirds of the older self‐employed had no retirement plans. Multinomial logistic regression showed that those with no retirement plans were more likely to be unmarried, in poorer physical health, with few resources, and more obligations, but they expected to live a long time. Job skills programs and managerial training could improve the financial well‐being of the older self‐employed and enable them to plan for retirement.     

Wealth Distribution, Inflation Tax, and Societal Benefits of Illiquid Bonds

Illiquid nominal government bonds are shown to have two opposing effects on welfare. First, the relatively poor choose to top-up money balances for future consumption by purchasing nominal bonds at a discount. The wealth distribution becomes more centered with a smaller consumption deviation from the first best. Second, the higher inflation tax on monetary wealth to finance interest payments makes money less valuable, so that the quantity of output produced in exchange for money decreases. The trade-off between the welfare-enhancing effect on wealth distribution and the distortionary effect on output implies the socially optimal discount rate and liquidity.     

Race and Gender Differences in the Earnings of Black Workers

In addition to facing earnings penalties because of their race and additional penalties because of their gender, black women appear to suffer a small but additional penalty because of the intersection of their race and gender. Black women have larger gender than race penalties. Although black men have greater racial penalties than do black women, black women experience larger earnings losses because in addition to racial penalties they face gender and race–gender interaction penalties.     

Factors Influencing Organizational Performance in Gainsharing Programs

Using survey data from managers at 269 establishments in the United States and Canada, this article examines factors influencing outcomes of gainsharing. The ordered probit analyses generally indicated that these outcomes have significant associations with employee involvement, bonus payouts, employee bonus share, bonus group size, consultant involvement, the administration of employee votes, labor intensity, market situation, establishment's financial condition, the average seniority level of employees, union status, and union support.     

Positive and Negative Information Transfers from Management Forecasts

We examine positive and negative information transfers associated with management earnings and revenue forecasts. Positive information transfers are due to industry commonalities whereas negative information transfers are caused by competitive shifts. We argue that positive and negative intra-industry information transfers offset each other and lead to an overall finding of no information transfers even though they exist. We also conjecture that the type of information transfers from the same management forecast can be positive or negative based on the characteristics of the information receiver. We hypothesize positive information transfers to nonrival firms and negative information transfers to rivals. Consistent with our prediction, we find negative (positive) information transfers between forecasting firms and nonforecasting rival (nonrival) firms in the same industry. Through analyses using competitors identified by Hoover's and 10-K reports, we show more general evidence of negative information transfers to rival firms.     

Structural Error Correction Models: A System Method for Linear Rational Expectations Models and an Application to an Exchange Rate Model

This paper develops a system instrumental variable method to estimate the speed of adjustment coefficient in the long-run equilibrium of structural error correction models for a class of linear rational expectations models. This method is applied to an exchange rate model with sticky prices, in which the speed of adjustment coefficient governs the half-life of the real exchange rate. Compared to single equation methods, the system method gives smaller half-life estimates with sharper standard errors.     

Credit Granting: A Comparative Analysis of Classification Procedures

Financial classification issues, and particularly the financial distress problem, continue to be subject to vigorous investigation. The corporate credit granting process has not received as much attention in the literature. This paper examines the relative effectiveness of parametric, nonparametric and judgemental classification procedures on a sample of corporate credit data. The judgemental model is based on the Analytic Hierarchy Process. Evidence indicates that (nonparametric) recursive partitioning methods provide greater information than simultaneous partitioning procedures. The judgemental model is found to perform as well as statistical models. A complementary relationship is proposed between the statistical and the judgemental models as an effective paradigm for granting credit.     

Audit Misperception, Tax Compliance, and Optimal Uncertainty

The purpose of this paper is to shed light on the role of taxpayers’ misperceptions in determining compliance behavior. This paper also analyzes the effect of increased randomness on evasion, revenue, and welfare. Whether or not individuals choose to evade taxes depends on the perceived audit probability and on the fraction of honest taxpayers in the population. When individuals know the precise probability of audit, the model becomes in effect a game of coordination, a situation that gives rise to multiple equilibria. This paper incorporates audit misperception by introducing a small amount of uncertainty about the true audit probability. With the introduction of this uncertainty, we verify that there is a unique equilibrium cutoff point, such that each taxpayer evades if and only if his perceived signal falls below this cutoff. It is argued that this unique equilibrium outcome fares better than others in explaining empirical and experimental observations. We also find that, when reducing uncertainty has no cost, the optimal uncertainty is generally indeterminate, even when including zero uncertainty. Finally, we show that, when reducing uncertainty is costly, eliminating all uncertainty can never be optimal. In the limit as this cost vanishes, the optimal uncertainty is unique, meaning that introducing a small amount of enforcement cost resolves the indeterminacy problem.