An Intelligent Distributed System for Strategic Decision Making

The decision-making process in strategic planning is often too complex to be handled by conventional methods. Strategic planning problems (building new plans, new product planning, etc.) belong to the class of problems called ill-structured by H. Simon. They involve a decomposition of the main problem into a set of subproblems, a reasoning process at the subproblem level, and then a coordinated and aggregated process to build a global solution. Because partial solutions are generated without having a complete view of the global objective, this type of decision-making process very often generates incoherent and contradictory hypotheses and actions. Therefore, the main problem is to find a way to achieve coherence and coordination among decisions made locally by different agents, at different levels.Recent advances in Artificial Intelligence, particularly in the field of multi-agent theory, offer great promises in modeling strategic planning processes. In this article we present a general framework called 'A Coherent Plan of Coordinated Actions (CPCA)' for building intelligent distributed strategic decision making systems which integrates advances in both distributed decision making and Distributed Artificial Intelligence. We then describe a multi-blackboard system, ARISTOTE, which is aimed at helping corporate managers address the feasibility and coherence of a plan of actions.     

The myths and realities of structural change in the UK labour market

Recent discussion of developments within the UK labour market has highlighted the growth of more 'flexible' types of employment: part-time work, temporary jobs, and self-employment. The structure of employment has also been shifting – away from manufacturing and manual employment and towards the service sector and non-manual employment. In this article, Peter Robinson argues that these are not new developments and in some respects the pace of structural change in the labour market has slowed down. Together with evidence that the labour market is now adapting successfully to earlier structural changes, this bodes well for the prospect of further gradual reductions in unemployment.     

Implications of rural settlement patterns for development: A historical case study in Qaukeni,Eastern Cape,South Africa

Successive administrative policies, overlaid on the traditional communal land tenure system in the Qaukeni area of the Eastern Cape, have had the effect of tying people to the land and creating an environment that severely constrains opportunities for development. This article traces the influence of administrative changes on land allocation over the last century. It assesses the impact of the settlement pattern in the early 1980s on accessibility to basic facilities, services and development opportunities. In view of the severe conditions in the study area (internal push factors), coupled with reduced restrictions on movement to South African cities and a general urbanisation trend (external pull factors), population movements could have been expected both out of the region and to more accessible places within it. Primary research, using districts and administrative areas as the units of analysis, revealed that few of the expected changes had occurred in the period between 1982 and 1993. However, recent evidence shows that several of the anticipated changes are taking place. The article concludes that, notwithstanding recent trends, a combination of the land tenure system (in both rural and urban areas), a variety of place-related factors in rural areas, together with risk-spreading strategies on the part of households, continue to exert a strong influence in keeping people on the land, even though their existence is not subsistence based, but linked to the urban economy.     

SERIAL ISSUE EVIDENCE FOR THE RELATION BETWEEN THE RISK STRUCTURE AND MATURITY: A DECOMPOSITION METHODOLOGY

The risk structure of the interest rates literature shows that coupon effects can cause changes in yield spreads as maturity lengthens. These effects make it difficult to empirically isolate the default risk component of the spread for coupon-paying bonds. Attempts to calculate zero-coupon risk structures suffer from the relative scarcity of zero-coupon corporate bonds. We show that yield spreads for coupon-paying bonds that are identical except for default risk decompose into a relative duration component, a premium discount coupon component, and a default component. We present closed-form solutions for measuring the first two components so that the default risk portions can be isolated as residuals. We further present an empirical application of the decomposition metrics for sixteen exchange-traded serial issues and nonparametrically examine the relation between the default premia and maturity. We find various maturity relations.     

WORLD OUTLOOK

At the end of 1982 output in the world economy was still falling, although there were signs that the decline had very nearly run its course. We expect a radual recovery to begin in the first half o f 1983. Unlike the recovery which began in the late summer of 1980, when inflation was still in double figures, any upturn in 1983 would be set against a background of declining inflationary expectations and weak oil prices. IJ. as we expect, a falling inflation rate proves a decisive factor in keeping interest rates on a downward path, we forecast that the output will gather pace in I983 and rise reasonably strongly in 1984. Of the 4 per cent rise in industrial production which we foresee in 1984. a large part is due to the fall in real oil prices.     

Sample selection bias with multiple selection rules: An application to student aid grants

This paper extends the sample selection bias correction procedure, developed by James J. Heckman, to the case of multiple selection rules. Estimators are presented for independent selection rules and a consistent estimator for the variance-covariance matrix is derived. The methodology is applied to the problem of estimating the financial aid available to U.S. highschool students for college education. In order to be observed in receipt of financial aid, a student has to be both enrolled in college and to have had an expected value of aid in excess of the costs of applying. Both of these sources of selection bias were found to be important.     

Tax reform: Analyzing a comprehensive income tax

This paper includes an analysis of the general costs and benefits associated with the introduction of a comprehensive income tax. The introduction of a comprehensive income tax may result in such benefits as simplicity, horizontal equity, and neutrality that may, in turn, be offset by the costs in vertical equity, implementation losses, and efficiency losses. The solution to the question of the desirability of the comprehensive income tax may turn upon the nature of these costs and benefits as well as the philosophy of tax reform that is adopted.     

Political foundations of the resource curse

In this paper we argue that the political incentives that resource endowments generate are the key to understanding whether or not they are a curse. We show: (1) politicians tend to over-extract natural resources relative to the efficient extraction path because they discount the future too much, and (2) resource booms improve the efficiency of the extraction path. However, (3) resource booms, by raising the value of being in power and by providing politicians with more resources which they can use to influence the outcome of elections, increase resource misallocation in the rest of the economy. (4) The overall impact of resource booms on the economy depends critically on institutions since these determine the extent to which political incentives map into policy outcomes. Countries with institutions that promote accountability and state competence will tend to benefit from resource booms since these institutions ameliorate the perverse political incentives that such booms create. Countries without such institutions however may suffer from a resource curse.     

Hidden risks of hedge accounting in financial institutions: A study of Franklin Savings Association

The hedge accounting standards for financial institutions stipulated in SFAS No. 80 impose ambiguous guidelines whose enforcement can produce detrimental effects on the financial condition of institutions. Combining these standards with the interpretive authority of regulatory agencies can subject institutions to regulatory risk-the risk of an adverse regulatory ruling resulting from disparate interpretations of the accounting standards. The accounting regulations specified in SFAS No. 80 permit financial institutions to defer derivative-contract losses over the life of the underlying asset or liability. If the hedge designation is misused, however, the capital position of the institution may potentially be misstated prior to maturity of the derivative contracts. Further, when a hedging program goes awry, the current hedge accounting standards may actually encourage the shift to what is actually a speculation program by permitting a larger asset base on which to “earn back” a portion of the hedging losses. Thus, institutional programs initially designed to mitigate interest-rate risk can instead become risk-increasing, separate profit centers. Events leading to the RTC conservatorship of Franklin Savings Association are used to illustrate the opportunities and regulatory threats inherent in hedge accounting. Subsequent analysis indicates that similar ordeals could be avoided by a clarification of hedge accounting standards, the consistent application of standards by regulators, or by increasing capital requirements for those institutions that use derivatives as separate profit centers as opposed to hedging risk exposures.