Surviving organizational disasters

Man-made and natural disasters are becoming increasingly common in today's world. Among other entities, companies should be concerned because these impact organizational survival, disrupting the lives and functioning of employees, suppliers, customers, and organizational infrastructure. If the present trend continues, the Federal Emergency Management Agency is on track to declare 30% more disasters in 2010 than in 2009. Organizational disasters are crises in the extreme. While the crisis management literature provides a useful foundation for planning for internal organizational threats, it does not adequately address larger external threats brought about by disasters. With this gap in mind, we herein present a framework for planning for man-made or natural disasters: continuity of operations planning (COOP). Continuity of operations planning is a tool that aids organizations in staying in business under extreme circumstances. Although continuity of operations planning is not an entirely new practice, many small and medium-sized firms are reluctant to engage in this type of planning. To highlight the value of the process, this article provides examples of organizational disasters, alongside a simplified method for developing an effective continuity of operations plan.     

Salience and social choice

The axioms of expected utility and discounted utility theory have been tested extensively. In contrast, the axioms of social welfare functions have only been tested in a few questionnaire studies involving choices between hypothetical income distributions. In a controlled experiment with 100 subjects placed in the role of social planners, we test five fundamental properties of social welfare functions to determine the efficacy of traditional social choice models in predicting social planner allocations when presented with choice sets designed to test the axioms of the theory. We find that three properties of the standard social welfare functions tested are systematically violated, producing an Allais paradox, a common ratio effect, and a framing effect in social choice. We find support for scale invariance and a preference for tail-increasing transfers. Our experiment also enables us to test a model of salience-based social choice which predicts the systematic deviations and highlights the close relationship between these anomalies and the classical paradoxes for risk and time.

     

Economic efficiency adjusted for risk preferences

This study investigates the impact of risk preferences on cost and revenue efficiency for a sample of farms. Risk preference scores were used to measure risk aversion. Cost and revenue efficiency were estimated using traditional input and output measures, and then re-estimated including each farm’s risk preference score. Comparisons were made between farms with and without a change in efficiency when each farm’s risk preference was included in the analysis. As expected, risk preference plays an important role in explaining farm inefficiency. Failure to account for risk preferences overstates inefficiency, particularly for slightly risk averse and risk neutral farms.     

Should Austrians Scorn General-Equilibrium Theory?

The Review of Austrian Economics -     

Health state utilities associated with treatment options for acute myeloid leukemia (AML)

Abstract

Aims: Acute myeloid leukemia (AML) treatment typically involves remission induction chemotherapy followed by consolidation chemotherapy. New treatments for AML have recently been introduced, including a chemotherapy formulation called CPX-351, which is administered via less time-intensive IV infusion than the standard “7?+?3” continuous infusion regimen of cytarabine plus an anthracycline. The purpose of this study was to estimate utilities that could be used in economic modeling of AML treatment.

Materials and methods: In time trade-off interviews, participants from the UK general population valued 12 health states drafted based on literature and clinician interviews. To identify disutility associated with chemotherapy, two types of induction and four types of consolidation were added to an otherwise identical health state describing AML. The decrease in utility when adding these chemotherapy regimens represents the disutility of each regimen. Five additional health states were valued to estimate utilities associated with other AML treatments.

Results: Two hundred participants completed interviews. Mean (SD) utilities were 0.55 (0.31) for pre-treatment AML and 0.66 (0.29) for AML in temporary remission. Adding any chemotherapy significantly decreased utility (p?<?0.0001). Induction had a mean disutility of –0.11 with CPX-351 and –0.15 with 7?+?3. Mean disutility for consolidation ranged from –0.03 with outpatient CPX-351 to –0.11 with inpatient 5?+?2. Utilities are also reported for other AML treatments (e.g. transplant, low-intensity chemotherapy).

Limitations: One limitation is that the differences in adverse event profiles between the treatment regimens were based on clinician opinion. Future use of CPX-351 in clinical trials or clinical settings will provide additional information on its adverse event profile.

Conclusions: While all chemotherapy regimens were associated with disutility, regimens with shorter hospitalization and less time-intensive infusion were generally perceived as preferable. These utilities may be useful in cost-utility models comparing the value of AML treatments.     

The new institutional economics and its relevance to social economics

There has been a quiet revolution in economic theory, led by the New Institutionalists. Pioneered by Douglass C. North, this group argues that institutions are the main determinants of economic performance, yet neoclassical economics has no role for institutions. Contrary to many misconceptions, this theory of institutions can be integrated with neoclassical economics, leaving mainstream economic theory in tact, but broader and more relevant. The purpose of this article is twofold. First, the main arguments of the New Institutionalists are summarized. Second, the bridge between institutions and social economics is explored. The article concludes by arguing that the New Institutional approach is fruitful, and that the theory will gradually be integrated with neoclassical economics, until the two merge into a single body of theory.