Utility of gambling II: risk,paradoxes, and data

We specialize our results on entropy-modified representations of event-based gambles to representations of probability-based gambles by assuming an implicit event structure underlying the probabilities, and adding assumptions linking the qualitative properties of the former and the latter. Under segregation and under duplex decomposition, we obtain numerical representations consisting of a linear weighted utility term plus a term corresponding to information-theoretical entropies. These representations accommodate the Allais paradox and most of the data due to Birnbaum and associates. A representation of mixed event-and probability-based gambles accommodates the Ellsberg paradox. We suggest possible extensions to handle the data not accommodated.      

HOW WELL HAS THE NEW DEAL FOR YOUNG PEOPLE WORKED IN THE UK REGIONS?

The UK New Deal for Young People (NDYP) is a mandatory active labour market programme aimed at helping unemployed young people into jobs. This paper examines how the programme affected hazard rates for unemployment exits across the UK regions in its first few years. The regional focus is motivated by the belief that differences between regional labour markets, between claimants, and differences in implementation may have led to differences in programme outcomes. The paper shows that NDYP increased outflows from unemployment in all regions but that its impact was larger in some regions than in others. The paper also shows differential NDYP impacts across the regions on destination-specific hazard rates from unemployment to employment, to education/training, to inactivity and to 'other'. Possible explanations for these results are then discussed.     

Mind your pricing cues

For most of the items they buy, consumers don't have an accurate sense of what the price should be. Ask them to guess how much a four-pack of 35-mm film costs, and you'll get a variety of wrong answers: Most people will underestimate; many will only shrug. Research shows that consumers' knowledge of the market is so far from perfect that it hardly deserves to be called knowledge at all. Yet people happily buy film and other products every day. Is this because they don't care what kind of deal they're getting? No. Remarkably, it's because they rely on retailers to tell them whether they're getting a good price. In subtle and not-so-subtle ways, retailers send signals to customers, telling them whether a given price is relatively high or low. In this article, the authors review several common pricing cues retailers use--"sale" signs, prices that end in 9, signpost items, and price-matching guarantees. They also offer some surprising facts about how--and how well--those cues work. For instance, the authors' tests with several mail-order catalogs reveal that including the word "sale" beside a price can increase demand by more than 50%. The practice of using a 9 at the end of a price to denote a bargain is so common, you'd think customers would be numb to it. Yet in a study the authors did involving a women's clothing catalog, they increased demand by a third just by changing the price of a dress from $34 to $39. Pricing cues are powerful tools for guiding customers' purchasing decisions, but they must be applied judiciously. Used inappropriately, the cues may breach customers' trust, reduce brand equity, and give rise to lawsuits.     

Efficiencies,market power and horizontal merger

In June 1982 the Justice Department issued itsMerger Guidelines which specify in terms of the Herfindahl index (H) what combinations of merger size and post-merger H are likely to lead to a merger challenge. This paper assesses theseGuidelines using Williamson's (1968) well-known model in which an optimal merger policy is viewed as one that considers both the price and cost consequences of merger. The Williamson model is recast in terms of H and changes in H and linked to theGuidelines. This allows an assessment of the welfare congequences of an industry merger for any given level of concentration and merger-produce changes in concentration. Among the conclusions are that, consistent with theGuidelines, higher values of H make socially successful mergers less likely, and a more appropriate, if perhaps not more feasible, focus for theGuidelines are coordination adjusted measures of concentration and merger size.     

Measuring the Extent of Impact from Occupational Violence and Bullying on Traumatised Workers

Across the industrialised world, there is evidence that both the incidence and the severity of occupational violence and bullying are increasingly being reported over time. While there have been few substantive scientific studies in Australia, all the available evidence shows a similar increasing level of risk. It has long been assumed that those who suffer a physical assault during the course of violent events are more likely to be emotionally traumatised by the experience than are those who are merely threatened or bullied at work. However, there are no substantive data published to date. In this paper the authors aim to elucidate and quantify the extent of emotional injury/stress suffered as a result of different forms of occupational violence, based on empirical data collected during face-to-face interviewing of 800 Australian workers employed in the tertiary education, health and long-haul transport industry sectors. The authors conclude that the impact from more covert forms of occupational violence (such as bullying) can, in many instances, at least equal the emotional trauma following assaults on-the-job.