Entrepreneurial success and failure: Confidence and fallible judgement

Excess entry or the high failure rate of market-entry decisions is often attributed tooverconfidence exhibited by entreprene urs. We show analytically that whereas excess entryis an inevitable consequence of imperfect assessments of entrepreneurial skill, it does notimply overconfidence. Judgmental fallibility leads to excess entry even when everyone isunderconfident. Self-selection implies greater confidence (but not necessarilyoverconfidence) among those who start new businesses than those who do not and amongsuccessful entrants than failures. Our results question claims that entrepreneurs areoverconfident and emphasize the need to understand the role of judgmental fallibility inproducing economic outcomes.

Estimating arterial blood gases with the EABC® System (“Earlobe Arterialized Blood Collector”) in critically ill patients. A validation study.

The Earlobe Arterialized Blood Collector® is a minimally invasive system able to perform arterialized capillary blood gas analysis from the earlobe (EL). A prospective validation study was performed in 55 critical ill patients. Sampling failure rate was high (53.6%). Risk factors were age > 65 years, diabetes, vasoactive drug therapy and noradrenaline (NA) doses above 0.22 μg / kg / min. Multivariate analysis showed age > 65 years was the only factor independently associated with failure. Concordance analysis with arterial blood gases and Bland-Altman agreement evaluation were insufficient for validating the new system for all gasometrical variables.

Excess Entry, Ambiguity Seeking, and Competence: An Experimental Investigation

Excess entry refers to the high failure rate of new entrepreneurial ventures. Economic explanations suggest 'hit and run' entrants and risk-seeking behavior. A psychological explanation is that people (entrepreneurs) are overconfident in their abilities (Camerer & Lovallo, 1999). Characterizing entry decisions as ambiguous gambles, we alternatively suggest following Heath and Tversky (1991) that people seek ambiguity when the source of uncertainty is related to their competence. Overconfidence, as such, plays no role. This hypothesis is confirmed in an experimental study that also documents the phenomenon of reference group neglect. Finally, we emphasize the utility that people gain from engaging in activities that contribute to a sense of competence. This is an important force in economic activity that deserves more explicit attention.

Excess entry, ambiguity seeking and competence: An experimental investigation

Excess entry refers to the high failure rate of new entrepreneurial ventures. Economic explanations suggest 'hit and run' entrants and risk-seeking behavior. A psychological explanation is that people (entrepreneurs) are overconfident in their abilities (Camerer & Lovallo, 1999). Characterizing entry decisions as ambiguous gambles, we alternatively suggest following Heath and Tversky (1991) that people seek ambiguity when the source of uncertainty is related to their competence. Overconfidence, as such, plays no role. This hypothesis is confirmed in an experimental study that also documents the phenomenon of reference group neglect. Finally, we emphasize the utility that people gain from engaging in activities that contribute to a sense of competence. This is an important force in economic activity that deserves more explicit attention.

Abnormalities of sodium excretion and other disorders of renal function in fulminant hepatic failure

Renal function was evaluated in 40 patients with fulminant hepatic failure, They were divided into two groups on the basis of glomerular filtration rates greater than 40 ml/min or less than 25 ml/min. A number of patients in group 1 had markedly abnormal renal retention of sodium together with a reduced free water clearance and low potassium excretion which could be explained by increased proximal tubular reabsorption of sodium. The patients in group 2 had evidence that renal tubular integrity was maintained when the glomerular filtration rate was greater than or equal ml/min (functional renal failure), but evidence of tubular damage was present when this was less than 3 ml/min (acute tubular necrosis).

Growth of positive words and lower bounds of the growth rate for Thompson's group (F)p

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Observability and overcoming coordination failure in organizations

Many organizations suffer poor performance because its members fail to coordinate on efficient patterns of behavior. In previous research, we have shown that financial incentives can be used to find a way out of such performance traps. Here we examine the sensitivity of this result to the ability of people to observe others' choices. Our experiments are set in a corporate environment where subjects' payoffs depend on coordinating at high effort levels; the underlying game being played repeatedly by the employees of an experimental firm is a weak-link game. Treatments vary along two dimensions. First, subjects either start with low financial incentives for coordination, which typically leads to coordination failure, and then are switched to higher incentives or start with high incentives, which typically yield effective coordination, and are switched to low incentives. Second, as the key treatment variable, subjects either observe the effort levels chosen by all employees in their experimenta

A change would do you good . . . An experimental study on how to overcome coordination failure in organizations

Many organizations suffer poor performance because individuals within the organization fail to coordinate on efficient patterns of behavior. Using controlled laboratory experiments, we study how financial incentives can be used to find a way out of such performance traps. Our experiments are set in a corporate environment where subjects' payoffs depend on coordinating at high effort levels; the underlying game being played repeatedly by employees is a weak-link game. In an initial phase, the benefits of coordination are low relative to the cost of increased effort. Play in this initial phase typically converges to an inefficient outcome with employees failing to coordinate at high effort levels. The experimental design then explores the effects of varying the financial incentives to coordinate at a higher effort level. We find that an increase in the benefits of coordination leads to improved coordination, but, surprisingly, large increases have no more impact than small increases. Once subj

Interest rate determination in the interbank market

The purpose of this paper is to study the determinants of equilibrium in the market for daily funds. We use the EONIA panel database which includes daily information on the lending rates applied by contributing commercial banks. The data clearly shows an increase in both the time series volatility and the cross section dispersion of rates towards the end of the reserve maintenance period. These increases are highly correlated. With respect to quantities, we find that the volume of trade as well as the use of the standing facilities are also larger at the end of the maintenance period. Our theoretical model shows how the operational framework of monetary policy causes a reduction in the elasticity of the supply of funds by banks throughout the reserve maintenance period. This reduction in the elasticity together with market segmentation and heterogeneity are able to generate distributions for the interest rates and quantities traded with the same properties as in the data.

Marx's analysis of the falling rate of profit on the first version of volume III of capital

The paper provides a description and analysis of the Hodgskin section of Theories of Surplus Value and the general law section of the first version of Volume III of Capital. It then considers Part III of Volume III, the evolution of Marx's thought and various interpretations of his theory in the light of this analysis. It is suggested that Marx thought that the rate of profit must fall and even in the 1870s hoped to be able to provide a demonstration of this. However the main conclusions are: 1. Marx's major attempt to show that the rate of profit must fall occurred in the general law section. 2. Part III does not contain a demonstration that the rate of profit must fall. 3. Marx was never able to demonstrate that the rate of profit must fall and he was aware of this.

How tight should one's hands be tied? Fear of floating and credibility of exchange rate regimes

This paper analyzes the linkages between the credibility of a target zone regime, the volatility of the exchange rate, and the width of the band where the exchange rate is allowed to fluctuate. These three concepts should be related since the band width induces a trade-off between credibility and volatility. Narrower bands should give less scope for the exchange rate to fluctuate but may make agents perceive a larger probability of realignment which by itself should increase the volatility of the exchange rate. We build a model where this trade-off is made explicit. The model is used to understand the reduction in volatility experienced by most EMS countries after their target zones were widened on August 1993. As a natural extension, the model also rationalizes the existence of non-official, implicit target zones (or fear of floating), suggested by some authors.

Current Account imbalances, thriftiness and the real exchange rate in a growing economy

This paper analyses the theoretical relevance of the dynamical aspects of growth on the discussion about the observed positive correlation between per capita real income and real exchange rates. With this purpose, we develop a simple exogenous growth model where the internal, external and intertemporal equilibrium conditions of a typical macroeconomic model are imposed; this last one through the inclusion of a balanced growth path for the foreign assets accumulation. The main result under this consideration is that the relationship defended by the Balassa-Samuelson hypothesis is no more so straightforward. In our particular approach, the mentioned bilateral relationship depends on a parameter measuring thriftiness in the economy. Therefore, the probability of ending up with a positive relationship between growth and real exchange rates -as the classical economic theory predicts- will be higher when the economy is able to maintain a minimum saving ratio. Moreover, given that our model considers a simple Keynesian consumption function, some explosive paths can also be possible.

A Descriptive and analytic look at Marx's own explanations of the falling rate of profit (second version)

This paper examines, both descriptively and analytically, Marx's arguments for the falling rate of profit from the Hodgskin section of Theories of Surplus Value, The General Law section of the recently published Volume 33 of the Collected Works and Chapter 3 of Volume III of Capital. The conclusions are as follows: First, Marx realised that his main attempt to give an intrinsic explanation of the falling rate of profit, which occurred in the General Law section, had failed; but he still hoped that he would be able to demonstrate it in the future. Second, the Hodgskin and General Law sections contain a number of subsidiary explanations, mostly related to resource scarcity, some of which are correct. Third, Part III of volume III does not contain a demonstration of the falling rate of profit, but a description of the role of the falling rate of profit in capitalist development. Forth, it also contains suppressed references to resource scarcity. And finally, in Chapter 3 of Volume III, Marx says that it is resource scarcity that causes the fall in the rate of profit described in Part III of the same volume. The key to all these conclusions in the careful analysis of the General Law section.

A foundation model for marxian breakdown theories based on a new falling rate of profit mechanism (Long version)

The paper presents a foundation model for Marxian theories of the breakdown of capitalism based on a new falling rate of profit mechanism. All of these theories are based on one or more of "the historical tendencies": a rising capital-wage bill ratio, a rising capitalist share and a falling rate of profit. The model is a foundation in the sense that it generates these tendencies in the context of a model with a constant subsistence wage. The newly discovered generating mechanism is based on neo-classical reasoning for a model with land. It is non-Ricardian in that land augmenting technical progress can be unboundedly rapid. Finally, since the model has no steady state, it is necessary to use a new technique, Chaplygin's method, to prove the result.

On the choice of an exchange rate regime: target zones revisited

From the classical gold standard up to the current ERM2 arrangement of the European Union, target zones have been a widely used exchange regime in contemporary history. This paper presents a benchmark model that rationalizes the choice of target zones over the rest of regimes: the fixed rate, the free float and the managed float. It is shown that the monetary authority may gain efficiency by reducing volatility of both the exchange rate and the interest rate at the same time. Furthermore, the model is consistent with some known stylized facts in the empirical literature that previous models were not able to produce, namely, the positive relation between the exchange rate and the interest rate differential, the degree of non-linearity of the function linking the exchage rate to fundamentals and the shape of the exchange rate stochastic distribution.