Classical decision rules and adaptation to climate change*

One approach to rationalising policies for addressing potentially catastrophic climate change when such policies may prove unnecessary is to suppose the policies provide a form of social insurance even in the presence of pure uncertainty. Then, provided the policies are effective, such insurance can be justified as a precautionary or minimax response. Even if the policies are potentially ineffective however, intervention can be justified as an attempt to minimise the regret experienced by future generations. This reasoning extends to justify ‘all weather’ policies provided such policies always reduce policy costs. If, however, policy decisions provide ‘all weather’ benefits in only certain states of the world, this rationale breaks down. Minimising regret can establish a case for ‘mixed’ policy responses provided adopting a policy mix precludes the chance that intervention will fail altogether. Precautionary policies and policies which minimise regret are computed for a simple, dynamic, adaptive climate change planning problem and sufficient conditions for policy maker pessimism provided.     

The long-term impact of mergers and the emergence of a merger wave in pre-World-War I Germany

Using annual data on mergers for 35 leading German companies from 1870 to 1913, my study tries to explain the first merger wave that emerged 1898. My panel probit model that accounted for economies of scale, macroeconomic conditions, success of former mergers, and market structure revealed that previous mergers made subsequent mergers more likely. The propensity to merge was higher for larger companies that increased their market power. In the banking industry, managers imitated mergers, although these mergers were not successful, and hence followed the minimax regret principle. Rational information-based herding caused the serial dependency of mergers in other industries.     

Sequential point estimation of the powers of a normal scale parameter

We consider the sequential point estimation problem of the powers of a normal scale parameter σ^r with r≠ 0 when the loss function is squared error plus linear cost. It is shown that the regret due to using our fully sequential procedure in ignorance of σ is asymptotically minimized for estimating σ⁻². We also propose a bias-corrected procedure to reduce the risk and show that the larger the distance between r and −2 is, the more effective our bias-corrected procedure is. Received August 2000     

Cooling off and backing out: Understanding consumer decisions to rescind a product purchase

Consumers sometimes have the right to exit a sales contract during what is known as a cooling-off period. Sales process research generally does not address cases when consumers withdraw from sales contracts during this period. Since securing product sales involves substantial marketing and sales costs, a need exists to better understand not only consumer rescission decisions and their legal context but also the managerial implications of the cooling-off period. This exploratory qualitative study examines purchase rescinding and develops a conceptual model using timeshare as the context. Results suggest that rescission relates to a mismatch between product features and personal circumstances, post-purchase concerns about product value, reassessment of financial capability, reflections on sales presentations, and cautionary influences of reference groups.     

Minimax after money-max: why major league baseball players do not follow optimal strategies

Using real-life sports data of Major League Baseball, this paper investigates whether professional players follow the minimax theorem in their strategies. Our empirical results using the 2010 regular-season data show that baseball players do not optimize their strategies: there is a significant difference in their payoffs across strategies, and the sequence of their strategy choices is predictable from their previous actions. Further analysis using individual salaries and key contract variables indicates that a higher salary has a positive impact on following minimax strategies in the regular season. By contrast, a longer contract decreases a player’s incentive to pursue optimal strategies in the postseason. These results have important implications for compensation practices in various fields.     

后悔与非理性决策思维心理误区的研究

后悔是人们最常见的负面情绪之一,但是国内外关于后悔的研究起步较晚。后悔与非理性决策形影相随。人们在决策时常常陷入非理性思维心理误区中,导致后悔情绪的产生。非理性决策思维心理误区主要有：锚定效应、沉没成本效应、思维定势效应、禀赋效应、大众强化效应、认知偏差效应等。“非理性,,是人类的特殊心理现象。研究探讨非理性决策行为,可以规避“人性误区”,作出理性决策。     

AN ONLINE PORTFOLIO SELECTION ALGORITHM WITH REGRET LOGARITHMIC IN PRICE VARIATION

We present a novel efficient algorithm for portfolio selection which theoretically attains two desirable properties:

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