Changes in Task Uncertainty Induced by Zero-Base Budgeting: Using the Thompson and Hirst Models to Predict Dysfunctional Behaviour

Generic budgeting systems such as PPBS and Zero-Based Budgeting (ZBB) are criticized by academics for failing to give consideration to some of the key variables affecting behaviour in budgeting endeavours. Despite this criticism, the literature has devoted little attention to modifications that can be made to make the systems more responsive to different configurations of organizational variables. This paper addresses this oversight in regard to ZBB. In particular the paper discusses ZBB within the context of two variables: (a) the degree of task uncertainty engendered by the system and (b) the character of performance measures used to evaluate units that employ ZBB. The paper argues that ZBB materially increases the degree of task uncertainty. Configured with the type of performance measures used to evaluate departments employing ZBB, the paper maintains that the increase in task uncertainty creates incentives to engage in dysfunctional behaviour, largely in the form of invalid data reporting. It is hypothesized that this problem may be responsible for the general failure of ZBB to lead to large budget re-allocations.     

Half a Career: Discrimination & Railroad Internal Labor Markets

This paper examines the causes and consequences of the racial structure of railroad internal labor markets in the American South. By 1900, many southern railroads hired blacks almost exclusively for middle-level occupations on their trains but did not permit their promotion to top-level positions. This institutionalized bias in promotion helps explain the employment of whites and blacks at identical jobs but different wages. It also explains why it was impossible for some southern railroads to adopt the seniority-based promotion ladders that had become standard on railroads elsewhere in the United States.     

The Harmonic Mean and Other Necessary Conditions for Stochastic Dominance

In this paper a systematic procedure is developed to determine necessary conditions for all degrees of stochastic dominance. The previously known necessary conditions are specified as to which degrees of dominance they belong, and two new necessary conditions, a ranking of harmonic means and a ranking of algebraic combinations of the first three moments, are derived.     

ENERGY UTILITIES, CONSERVATION, AND ECONOMIC EFFICIENCY

Academic and policy debate has centered around an apparent "underinvestment in conservation." This paper outlines traditional explanations for underinvestment and presents a prospect theory analysis of individual conservation behavior. On the basis of investment criteria, individuals seem to discriminate against conservation investments. While these decisions might appear rational as life style decisions, individual choice across different household appliances shows little consistency. For policymaking purposes, understanding and modeling actual behavior is crucial to maximizing social welfare. The insight of certain positive models of human behavior supports economic efficiency arguments for marketplace intervention. This paper argues that because individuals making conservation investment decisions apparently do not act according to the dictates of utilitarian economics, utility sponsored conservation programs are justified on economic efficiency grounds. Finally, in light of prospect theory considerations, the paper suggests marketing guidelines for conservation investments sponsored by electric utilities.     

Comparaison empirique des méthodes d'inférence de probabilités subjectives*

Résumé. Les méthodes d'inférence de probabilités subjectives que sont l'amplitude directe et la bissection ont été comparées par l'auteur en ce qui a trait à l'exactitude, telle que déterminée par l'environnement (fréquence relative), des probabilités résultant de l'application de ces méthodes et à l'acceptabilité des méthodes d'inférence. Chaque participant à l'expérience a utilisé les deux méthodes et attribué à chacune d'elles une cote d'acceptabilité. L'auteur a mis à la disposition des sujets un logiciel d'inférence interactive, comprenant l'affichage graphique sous forme d'histogramme des probabilités selon les deux méthodes d'inférence, afin de les aider et d'assurer une comparaison plus raffinée des méthodes. Des étudiants de deuxième cycle diplômés en gestion, bien renseignés tant sur le contexte de la tâche que sur les probabilités subjectives, se sont prêtés à l'expérience. L'inférence directe a donné des probabilités subjectives beaucoup plus exactes que la bissection et s'est révélée beaucoup plus acceptable aux yeux des participants.