Paying for long-term performance: restructuring bankers’ pay for risk regulation

The purpose of this paper is to propose hybrid capital securities as a new approach to compensation for senior bank executives and risk-takers instead of cash or equity-based compensation currently adopted by the industry. The global financial turmoil indicated that misaligned pay-for-performance compensation arrangements encouraged management short-termism and rewarded excessive risk-taking behaviour in Anglo-Saxon system. Rather than regulating specific instruments and processes, we believe that it is much more efficient to overhaul the compensation scheme to align it with risk management and governance. This empirical paper investigates the European hybrid market by employing data from the Merrill Lynch Global Index System from 2000 to 2010. Our paper contributes to both literature and practices by designing a structured scheme to tie the executive’s interests to long-term performance of the bank, the goal of regulators and the economy at large which consequently reduce the probability of future bank failures.

Improving mood with psychoanalytic and cognitive therapies (IMPACT): a pragmatic effectiveness superiority trial to investigate whether specialised psychological treatment reduces the risk for relapse in adolescents with moderate to severe unipolar depression: study protocol for a randomised controlled trial

Background Up to 70% of adolescents with moderate to severe unipolar major depression respond to psychological treatment plus Fluoxetine (20-50 mg) with symptom reduction and improved social function reported by 24 weeks after beginning treatment. Around 20% of non responders appear treatment resistant and 30% of responders relapse within 2 years. The specific efficacy of different psychological therapies and the moderators and mediators that influence risk for relapse are unclear. The cost-effectiveness and safety of psychological treatments remain poorly evaluated. Methods/Design Improving Mood with Psychoanalytic and Cognitive Therapies, the IMPACT Study, will determine whether Cognitive Behavioural Therapy or Short Term Psychoanalytic Therapy is superior in reducing relapse compared with Specialist Clinical Care. The study is a multicentre pragmatic effectiveness superiority randomised clinical trial: Cognitive Behavioural Therapy consists of 20 sessions over 30 weeks, Short Term Psychoanalytic Psychotherapy 30 sessions over 30 weeks and Specialist Clinical Care 12 sessions over 20 weeks. We will recruit 540 patients with 180 randomised to each arm. Patients will be reassessed at 6, 12, 36, 52 and 86 weeks. Methodological aspects of the study are systematic recruitment, explicit inclusion criteria, reliability checks of assessments with control for rater shift, research assessors independent of treatment team and blind to randomization, analysis by intention to treat, data management using remote data entry, measures of quality assurance, advanced statistical analysis, manualised treatment protocols, checks of adherence and competence of therapists and assessment of cost-effectiveness. We will also determine whether time to recovery and/or relapse are moderated by variations in brain structure and function and selected genetic and hormone biomarkers taken at entry. Discussion The objective of this clinical trial is to determine whether there are specific effects of specialist psychotherapy that reduce relapse in unipolar major depression in adolescents and thereby costs of treatment to society. We also anticipate being able to utilise psychotherapy experience, neuroimaging, genetic and hormone measures to reveal what techniques and their protocols may work best for which patients.

Internalizing symptomatology and academic achievement: bi-directional prospective relations in adolescence

Prior research has documented negative, concurrent relations between internalizing symptomatology and academic achievement among adolescents. The present study provided the first rigorous, longitudinal examination of the bi-directional, prospective relations between adolescent internalizing symptomatology and academic achievement. One hundred and thirty adolescents reported depression and anxiety annually from 6th through 10th grades, and GPA records were obtained annually from schools. Results showed that a) high depression and anxiety at the beginning of a school year predicted lower GPA during that school year, and b) low GPA in any school year predicted higher depression and anxiety at the beginning of the following school year. These findings underscore the tight link between adolescent internalizing symptomatology and academic achievement.

Effects of active information processing on the understanding of risk information

Two experiments investigated effects of active processing of risk information on participants' understanding and judgments. It was hypothesized that more active processing would lead to better understanding and differences in affective judgments (e.g. increased satisfaction and reduced perceived risk to health). In both experiments participants were given a written scenario about their being prescribed a fictitious medication. This medication was said to cause side effects in 2% of people who took it. Before answering a series of written questions, participants in the active conditions of both experiments were asked to carry out a reflective task (portraying the size of risk on a bar chart in Experiment 1 and answering a reflective question in Experiment 2). The results showed that active participants rated the likelihood of experiencing possible side effects significantly lower than passive participants (Experiment 1), and that active participants were significantly more satisfied with the information and judged perceived risk to health from taking the medication significantly lower than passive participants (Experiment 2). In both experiments, active participants were significantly more correct in their probability and frequency estimates. The studies demonstrate that active processing of risk information leads to improved understanding of the information given. This has important implications for risk communication. In the context of health, better understanding should lead to improved decision-making and health outcomes. Copyright (C) 2004 John Wiley Sons, Ltd.

Responsibility effects in decision making under risk

We systematically explore decision situations in which a decision maker bears responsibility for somebody else's outcomes as well as for her own in situations of payoff equality. In the gain domain we confirm the intuition that being responsible for somebody else's payoffs increases risk aversion. This is however not attributable to a 'cautious shift' as often thought. Indeed, looking at risk attitudes in the loss domain, we find an increase in risk seeking under responsibility. This raises issues about the nature of various decision biases under risk, and to what extent changed behavior under responsibility may depend on a social norm of caution in situations of responsibility versus naive corrections from perceived biases. To further explore this issue, we designed a second experiment to explore risk-taking behavior for gain prospects offering very small or very large probabilities of winning. For large probabilities, we find increased risk aversion, thus confirming our earlier finding. For small probabilities however, we find an increase of risk seeking under conditions of responsibility. The latter finding thus discredits hypotheses of a social rule dictating caution under responsibility, and can be explained through flexible self-correction models predicting an accentuation of the fourfold pattern of risk attitudes predicted by prospect theory. An additional accountability mechanism does not change risk behavior, except for mixed prospects, in which it reduces loss aversion. This indicates that loss aversion is of a fundamentally different nature than probability weighting or utility curvature. Implications for debiasing are discussed.

Implementing systematic review techniques in chemical risk assessment: challenges, opportunities and recommendations

Systematic review (SR) is a rigorous, protocol-driven approach designed to minimise error and bias when summarising the body of research evidence relevant to a specific scientific question. Taking as a comparator the use of SR in synthesising research in healthcare, we argue that SR methods could also pave the way for a “step change” in the transparency, objectivity and communication of chemical risk assessments (CRA) in Europe and elsewhere. We suggest that current controversies around the safety of certain chemicals are partly due to limitations in current CRA procedures which have contributed to ambiguity about the health risks posed by these substances. We present an overview of how SR methods can be applied to the assessment of risks from chemicals, and indicate how challenges in adapting SR methods from healthcare research to the CRA context might be overcome. Regarding the latter, we report the outcomes from a workshop exploring how to increase uptake of SR methods, attended by experts representing a wide range of fields related to chemical toxicology, risk analysis and SR. Priorities which were identified include: the conduct of CRA-focused prototype SRs; the development of a recognised standard of reporting and conduct for SRs in toxicology and CRA; and establishing a network to facilitate research, communication and training in SR methods. We see this paper as a milestone in the creation of a research climate that fosters communication between experts in CRA and SR and facilitates wider uptake of SR methods into CRA.

Mediated action and sexual risk: Searching for 'culture' in discourses of homosexuality and AIDS prevention in China

This paper examines the concept of ‘culture’ and its relationship to HIV prevention. Culture is here seen as the interaction between human beings and the various ‘cultural tools’ they appropriate when taking action. Among these tools are ways of speaking which encode certain meanings, ideologies and social practices. When individuals take action with regard to AIDS, what they do is mediated through voices which they borrow strategically from their environ- ment. The textual tools that are available and the ways individuals adapt and combine them work to either limit or amplify their participation in HIV prevention. What are traditionally seen as ‘cultures’ or ‘sub-cultures’, or worse, ‘risk groups’, are, in this perspective, viewed as ‘communities of practice’, groups of individuals who share particular cultural tools and ways of using them. This conceptual framework is applied to recent discourses of homosexuality and AIDS prevention in China. An instance of ‘of� cial’ discourse in the form of an AIDS education pamphlet for ‘gays’ is analysed for the voices it contains and how these voices are strategically marshalled by the authors and mixed with other voices in ways which amplify participation in AIDS prevention for some and limit it for others. This ‘offical’ discourse is then compared to the discourse of homosexually active Chinese men recently interviewed in Beijing and Fuzhou to examine which of these of� cial voices and other voices they appropriate, and how they adapt these voices in responding to HIV.

Official warnings on thromboembolism risk with oral contraceptives fail to inform users adequately

Following the 1995 “pill scare” relating to the risk of venous thrombosis from taking second- or third-generation oral contraceptives, the Committee on Safety of Medicines (CSM) withdrew their earlier recommended restrictions on the use of third-generation pills and published recommended wording to be used in patient information leaflets. However, the effectiveness of this wording has not been tested. An empirical study (with 186 pill users, past users, and non-users) was conducted to assess understanding, based on this wording, of the absolute and relative risk of thrombosis in pill users and in pregnancy. The results showed that less than 12% of women in the (higher education) group fully understood the absolute levels of risk from taking the pill and from being pregnant. Relative risk was also poorly understood, with less than 40% of participants showing full understanding, and 20% showing no understanding. We recommend that the CSM revisit the wording currently provided to millions of women in the UK.

Noise, predation risk compensation and vigilance in the chaffinch Fringilla coelebs

Background noise should in theory hinder detection of auditory cues associated with approaching danger. We tested whether foraging chaffinches Fringilla coelebs responded to background noise by increasing vigilance, and examined whether this was explained by predation risk compensation or by a novel stimulus hypothesis. The former predicts that only inter-scan interval should be modified in the presence of background noise, not vigilance levels generally. This is because noise hampers auditory cue detection and increases perceived predation risk primarily when in the head-down position, and also because previous tests have shown that only interscan interval is correlated with predator detection ability in this system. Chaffinches only modified interscan interval supporting this hypothesis. At the same time they made significantly fewer pecks when feeding during the background noise treatment and so the increased vigilance led to a reduction in intake rate, suggesting that compensating for the increased predation risk could indirectly lead to a fitness cost. Finally, the novel stimulus hypothesis predicts that chaffinches should habituate to the noise, which did not occur within a trial or over 5 subsequent trials. We conclude that auditory cues may be an important component of the trade-off between vigilance and feeding, and discuss possible implications for anti-predation theory and ecological processes

Introduction to the DISRUPT postprandial database: subjects, studies and methodologies

Dysregulation of lipid and glucose metabolism in the postprandial state are recognised as important risk factors for the development of cardiovascular disease and type 2 diabetes. Our objective was to create a comprehensive, standardised database of postprandial studies to provide insights into the physiological factors that influence postprandial lipid and glucose responses. Data were collated from subjects (n = 467) taking part in single and sequential meal postprandial studies conducted by researchers at the University of Reading, to form the DISRUPT (DIetary Studies: Reading Unilever Postprandial Trials) database. Subject attributes including age, gender, genotype, menopausal status, body mass index, blood pressure and a fasting biochemical profile, together with postprandial measurements of triacylglycerol (TAG), non-esterified fatty acids, glucose, insulin and TAG-rich lipoprotein composition are recorded. A particular strength of the studies is the frequency of blood sampling, with on average 10-13 blood samples taken during each postprandial assessment, and the fact that identical test meal protocols were used in a number of studies, allowing pooling of data to increase statistical power. The DISRUPT database is the most comprehensive postprandial metabolism database that exists worldwide and preliminary analysis of the pooled sequential meal postprandial dataset has revealed both confirmatory and novel observations with respect to the impact of gender and age on the postprandial TAG response. Further analysis of the dataset using conventional statistical techniques along with integrated mathematical models and clustering analysis will provide a unique opportunity to greatly expand current knowledge of the aetiology of inter-individual variability in postprandial lipid and glucose responses.

Effects of presenting the baseline risk when communicating absolute and relative risk reductions

This study compares relative and absolute forms of presenting risk information about influenza and the need for vaccination. It investigates whether differences in people's risk estimates and their evaluations of risk information, as a result of the different presentation formats, are still apparent when they are provided with information about the baseline level of risk. The results showed that, in the absence of baseline information, the relative risk format resulted in higher ratings of satisfaction, perceived effectiveness of vaccination, and likelihood of being vaccinated. However, these differences were not apparent when baseline information was presented. Overall, provision of baseline information resulted in more accurate risk estimates and more positive evaluations of the risk messages. It is recommended that, in order to facilitate shared and fully informed decision making, information about baseline level of risk should be included in all health communications specifying risk reductions, irrespective of the particular format adopted.

Training conditional and cumulative risk judgements: the role of frequencies, problem-structure and Einstellung

Two experiments implement and evaluate a training scheme for learning to apply frequency formats to probability judgements couched in terms of percentages. Results indicate that both conditional and cumulative probability judgements can be improved in this manner, however the scheme is insufficient to promote any deeper understanding of the problem structure. In both experiments, training on one problem type only (either conditional or cumulative risk judgements) resulted in an inappropriate transfer of a learned method at test. The obstacles facing a frequency-based training programme for teaching appropriate use of probability data are discussed. Copyright (c) 2006 John Wiley & Sons, Ltd.