Improving decision-making with scenario planning

Decision makers struggle with four important contributors to decision failure, namely, 1) bounded rationality, 2) a tendency to consider only external variables, 3) the stickiness and friction of information and knowledge, and 4) mental models that include decision premises or policies. Whether independent or combined, these decision problems can form the ultimate in decision error—folly. The four problems in decision-making are reviewed in detail and scenario planning is posited as a tool for preventing the impact of each, ultimately with an aim of avoiding folly.     

Linear versus process tracing approaches to judgment modelling: A new perspective on cue importance

For a bankruptcy prediction problem, the judgment formation process is studied using linear models and process tracing models. The linear models are constructed using traditional linear discriminant analysis techniques. The process tracing models are constructed using computer-generated algorithmically-based decision nets. All the models presented show good predictive accuracy. However, the linear models and process tracing models diverge widely on several measures of cue importance. This divergence, for a fairly straightforward problem, is intriguing since virtually all the evidence in the accounting literature about cue importance is based on linear models research. The importance of different information cues to decision-makers is clearly a critical issue in the design of effective accounting information systems. Thus, this study suggests the need for much more careful attention to the complex question of assessing cue importance.     

The Effects of Catholic Schooling on Civic Participation

The promotion of adult civic engagement is one of the primary goals of public schools. And the putatively negative effects of private schooling on civic engagement provide one of the most fundamental motivations for publicly provided schooling. In this study, I examine the comparative effects of Catholic and public high schools on adult voter participation and volunteering in the United States. I find that students who attended Catholic high schools are actually more likely to vote, though not volunteer, as adults. These estimated effects are robust to conditioning on a rich set of individual, family and community traits. I also present two-stage least squares estimates, which provide suggestive evidence that these results are not due to selection biases.JEL Code: I21, D72, H52     

Optimal foreign trade for the price-insensitive soviet-type economy

For a centrally planned economy in which the planners do not substitute among goods, either in production or consumption, in response to changes in relative prices, the short-run offer curve is in general backward-bending, and the planners will be indifferent as to whether the country is “small” or “large” in world markets as long as it faces an elastic foreign offer curve. The Soviet Union is found to have a backward-sloping offer curve in trade with the Western market economies. This suggests that systematic Soviet manipulation of this trade in order to earn monopoly profits is unlikely.     

Random coefficient regression and the long-run phillips curve for the U.S.

This research suggests that a random coefficient regression model is well-suited for analyzing long-run versus short-run movements in wages and unemployment and is an improvement over some empirical techniques typically used.     

A SPECIFICATION SEPARATING FAMILY SIZE AND INDIVIDUAL AGE EFFECTS ON SUBJECTIVE EQUIVALENCE SCALES: A NOTE

This paper analyses the Kapteyn and Van Praag method of estimating equivalence scales with respect to the way family size and age composition are incorporated into the scales according to rank and age of each family member. It becomes evident that the Kapteyn/Van Praag procedure fails to distinguish between household size and individual age effects with the result that personal weights can not be used for recomposition of household types other than wife and husband families, nor can they be interpreted as showing real age dependence of personal income equivalence. For these reasons another specification of the general approach, separating both effects, is outlined. This specification distinguishes between several consumption classes within each household. Within each class, economies of scale are attached to similar individuals while differences in individual need are obtained by comparing individuals with the same rank in the different classes.