Reflections on social forecasting

Social forecasting in its present state is inadequate to deal with the enormous changes taking place in human societies. New concepts of space and time are evolving, and the development of data processing has provided techniques highly suited to technological forecasting. What is also needed for social forecasting, however, is an attitude towards the future which is open-minded, takes account of man in his entirety and stresses that he can play a creative part in decision making by determining the kind of future he wants.     

The impact of prudence on optimal prevention revisited

We re-examine the link between absolute prudence and self-protection activities. We show that the level of effort chosen by an agent with decreasing absolute prudence is larger than the optimal effort chosen by a risk-neutral agent if the degree of absolute prudence is less than a threshold that is utility-independent and empirically verifiable.     

Arbitrage costs and nonlinear adjustment in the G7 stock markets

This article aims to study stock price adjustments towards fundamentals due to the existence of arbitrage costs defined as the sum of transaction costs and a risky arbitrage premium associated with the uncertainty characterizing the fundamentals. Accordingly, it is shown that a two regime Smooth Transition Error Correction Model (STECM) is appropriate to reproduce the dynamics of stock price deviations from fundamentals in the G7 countries during the period 1969 to 2005. This model takes into account the interdependences or contagion effects between stock markets. Deviations appear to follow a quasi random walk in the central regime when prices are near fundamentals (i.e. when arbitrage costs are greater than expected arbitrage profits, the mean reversion mechanism is inactive), while they approach a white noise in the outer regimes (i.e. when arbitrage costs are lower than expected arbitrage profits, the mean reversion is active). Interestingly, as expected when arbitrage costs are heterogeneous, the estimated STECM shows that stock price adjustments are smooth and that the convergence speed depends on the size of the deviation. Finally, using two appropriate indicators proposed by Peel and Taylor (2000), both the magnitudes of under and overvaluation of stock price and the adjustment speed are calculated per date in the G7 countries. These indicators show that the dynamics of stock price adjustment are strongly dependent on both the date and the country under consideration.     

A Balanced Concept of the Firm and the Measurement of Its Long-term Planning and Performance

This paper offers a new concept of the firm that aims at balancing the corporate economic, social, and environmental responsibilities and goes beyond the stakeholder approach. It intends to provide a conceptual and operationalizable basis to fairly assess corporate conduct from both inside and outside the companies. To a large extent these different responsibilities may overlap and reinforce each other. However, if they conflict, they should be clearly evaluated for their own sake and in terms of wealth creation. Only then can a balanced approach be realized. Section 1 briefly discusses some general aspects of the relationship between concepts and measurement. In Section 2, a concept of the firm is developed that is based on the notion of responsibility and balances economic, social and environmental responsibilities. According to these concepts, different ways of measuring corporate planning and performance are examined in Section 3, followed up by a summary and conclusions.