Expected utility theory with non-commutative probability theory

In this paper, we extend von Neumann and Morgenstern’s expected utility approach to a non-commutative probability theory. We introduce a new representation of the decision maker’s set of events which extends the canonical representation. We reformulate von Neumann and Morgenstern’s approach to modeling decision maker behavior by non-commutative probability theory. We introduce a set of preference axioms similar to von Neumann and Morgenstern’s axioms, and show that they lead to a generalization of the expected utility theorem. Our generalization allows for decision makers to make an intuitive distinction between representations of a set of events. We find that this methodology enables several paradoxes and inconsistencies in traditional expected utility theory (e.g., Allais paradox, etc.) to be solved or better understood.     

Identifying Croatian museums’ indigenous visitors in a post-war era: perceptual examinations of one's own heritage

The paper focuses on the consumption of the past by indigenous people through the museum or heritage site within post-war Croatia. Through the application of an inductive, qualitative methodology, ‘Critical Ethnography’, an integrated theory of individual identity formation, which is both social and psychological in nature, is presented. The paper, which is the culmination of theory building, has been guided by in-depth interviews, observation of behaviour and the incorporation of theoretically sensitising literature. As a result of reflexive integration of both the data and the literature, three categories, which constitute the developed theory are derived and analysed in relation to the different ways of constructing meaning and experiences within the museum/heritage context. The labels assigned to each of the developed categories, the ‘Fragmented self’, the ‘Paraphrenic self’ and the ‘Enlightened self’ are a reflection of a part of the self, which identifies to varying extents with the ascribed post-war identity of ‘Croat’. Furthermore, the three explanatory categories of behaviour look into the various ways with which the individual subject reflects upon and interprets his/her own past in relation to the formation of an acceptable post-war conception of his/her individual identity. The paper concludes that in order for a nation to project its cultural heritage worldwide through its museums and cultural sites, it needs first to understand and incorporate the indigenous’ views of their own heritage and then to develop and communicate cultural heritage products through other industries, such as tourism.     

A “Super” Folk Theorem for dynastic repeated games

We analyze dynastic repeated games. These are repeated games in which the stage game is played by successive generations of finitely-lived players with dynastic preferences. Each individual has preferences that replicate those of the infinitely-lived players of a standard discounted infinitely-repeated game. Individuals live one period and do not observe the history of play that takes place before their birth, but instead create social memory through private messages received from their immediate predecessors. Under mild conditions, when players are sufficiently patient, all feasible payoff vectors (including those below the minmax of the stage game) can be sustained by sequential equilibria of the dynastic repeated game with private communication. In particular, the result applies to any stage game with n  ≥  4 players for which the standard Folk Theorem yields a payoff set with a non-empty interior. We are also able to characterize fully the conditions under which a sequential equilibrium of the dynastic repeated game can yield a payoff vector not sustainable as a subgame perfect equilibrium of the standard repeated game. For this to be the case it must be that the players’ equilibrium beliefs violate a condition that we term “inter-generational agreement.” A previous version of this paper was circulated as Anderlini et al. (2005). We are grateful to Jeff Ely, Leonardo Felli, Navin Kartik, David Levine, Stephen Morris, Michele Piccione, Andrew Postlewaite, Lones Smith and to seminar audiences at Bocconi, Cambridge, CEPR-Guerzensee, Chicago, Columbia, Edinburgh, Essex, Georgetown, Leicester, LSE, Northwestern, Oxford, Rome (La Sapienza), Rutgers, SAET-Vigo, Stanford, SUNY-Albany, UCL, UC-San Diego, Venice and Yale for helpful feedback.     

Identifying the Effect of Securitization on Foreclosure and Modification Rates Using Early Payment Defaults

This paper develops and estimates an instrumental variables strategy for identifying the causal effect of securitization on the incidence of mortgage modification and foreclosure based on the early payment default analysis performed by Piskorsi et al. (J Financ Econ 97:360–397, 2010). Estimation results show that securitized mortgages are more likely to be modified and less likely to be foreclosed on by servicers. These results are consistent with the interpretation in Adelino et al. (2009) that low modification rates are not the result of contract frictions inherent in the mortgage securitization process.     

Does a Hospital’s Profit Status Affect its Operational Scope?

We empirically evaluate whether a hospital’s organizational form (for-profit vs. not-for-profit or public) affects its operational scope (distribution of supplied medical procedures). Our results suggest that scope depends more on local demographics than causal forces from organizational form. This suggestion is consistent with differences in objectives (e.g., altruistic motives) ultimately exerting a stronger influence on operational scope than does the organizational advantage of not-for-profits in producing higher levels of non-contractible quality. It also offers information about how the availability of different medical services might change if the hospital sector continues its trend toward for-profit organization. Here, hospital conversions to for-profit status appear less likely to alter the mix of available services than do outright exits of not-for-profits.