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.

The effect of accountability on loss aversion.

This paper investigates the effect of accountability-the expectation on the side of the decision maker of having to justify his/her decisions to somebody else-on loss aversion. Loss aversion is commonly thought to be the strongest component of risk aversion. Accountability is found to reduce the bias of loss aversion. This effect is explained by the higher cognitive effort induced by accountability, which triggers a rational check on emotional reactions at the base of loss aversion, leading to a reduction of the latter. Connections to dual-processing models are discussed.

Risk taking of executives under different incentive contracts: experimental evidence

Classic financial agency theory recommends compensation through stock options rather than shares to counteract excessive risk aversion in agents. In a setting where any kind of risk taking is suboptimal for shareholders, we show that excessive risk taking may occur for one of two reasons: risk preferences or incentives. Even when compensated through restricted company stock, experimental CEOs take large amounts of excessive risk. This contradicts classical financial theory, but can be explained through risk preferences that are not uniform over the probability and outcome spaces, and in particular, risk seeking for small probability gains and large probability losses. Compensation through options further increases risk taking as expected. We show that this effect is driven mainly by the personal asset position of the experimental CEO, thus having deleterious effects on company performance.

The survival advantage of milk and dairy consumption: An overview of evidence from cohort studies of vascular diseases, diabetes and cancer

Objectives: To conduct it detailed evaluation, with meta-analyses, of the published evidence on milk and dairy consumption and the incidence of vascular diseases and diabetes. Also to summarise the evidence on milk and dairy consumption and cancer reported by the World Cancer Research Fund and then to consider the relevance of milk and dairy consumption to survival in the UK, a typical Western community. Finally, published evidence on relationships with whole milk and fat-reduced milks was examined. Methods: Prospective cohort studies of vascular disease and diabetes with baseline data on milk or dairy consumption and a relevant disease outcome were identified by searching MEDLINE, and reference lists in the relevant published reports. Meta-analyses of relationships in these reports were conducted. The likely effect of milk and dairy consumption on survival was then considered, taking into account the results of published overviews of relationships of these foods with cancer. Results: From meta-analysis of 15 studies the relative risk of stroke and/or heart disease in subjects with high milk or dairy consumption was 0.84 (95% CI 0.76, 0,93) and 0.79 (0.75, 0.82) respectively, relative to the risk in those with low consumption. Four studies reported incident diabetes as an outcome, and the relative risk in the Subjects with the highest intake of milk or diary foods was 0.92 (0.86, 0.97). Conclusions: Set against the proportion of total deaths attributable to the life-threatening diseases in the UK, vascular disease, diabetes and cancer, the results of meta-analyses provide evidence of an overall survival advantage from the consumption of milk and dairy foods.

Relationship between milk consumption and prostate cancer: a short review

Epidemiological evidence based on both case–control and prospective cohort studies points to an overall positive relationship between consumption of milk/dairy products and the risk of developing prostate cancer. There are inconsistencies in the data, but taken together, the increased relative risk does not seem to be high. A number of mechanisms have been proposed to account for the relationship, with most attention being focused on the involvement of calcium/vitamin D, insulin-like growth factor-1 and oestrogens, although it is unlikely that a single factor in milk is implicated. In any event, any added risk of prostate cancer from increased milk consumption has to be set alongside other evidence, which shows that increased milk consumption can provide substantially reduced risk of coronary heart disease, stroke and colorectal cancer, particularly because cardiovascular disease accounts for vastly more deaths than prostate cancer (although the latter is of course restricted to men).

Meta-analysis: a unifying meta-likelihood approach framing unobserved heterogeneity, study covariates, publication bias, and study quality

OBJECTIVES: This contribution provides a unifying concept for meta-analysis integrating the handling of unobserved heterogeneity, study covariates, publication bias and study quality. It is important to consider these issues simultaneously to avoid the occurrence of artifacts, and a method for doing so is suggested here. METHODS: The approach is based upon the meta-likelihood in combination with a general linear nonparametric mixed model, which lays the ground for all inferential conclusions suggested here. RESULTS: The concept is illustrated at hand of a meta-analysis investigating the relationship of hormone replacement therapy and breast cancer. The phenomenon of interest has been investigated in many studies for a considerable time and different results were reported. In 1992 a meta-analysis by Sillero-Arenas et al. concluded a small, but significant overall effect of 1.06 on the relative risk scale. Using the meta-likelihood approach it is demonstrated here that this meta-analysis is due to considerable unobserved heterogeneity. Furthermore, it is shown that new methods are available to model this heterogeneity successfully. It is argued further to include available study covariates to explain this heterogeneity in the meta-analysis at hand. CONCLUSIONS: The topic of HRT and breast cancer has again very recently become an issue of public debate, when results of a large trial investigating the health effects of hormone replacement therapy were published indicating an increased risk for breast cancer (risk ratio of 1.26). Using an adequate regression model in the previously published meta-analysis an adjusted estimate of effect of 1.14 can be given which is considerably higher than the one published in the meta-analysis of Sillero-Arenas et al. In summary, it is hoped that the method suggested here contributes further to a good meta-analytic practice in public health and clinical disciplines.

A likelihood ratio appropach to family-based association studies with covariates

We introduce a procedure for association based analysis of nuclear families that allows for dichotomous and more general measurements of phenotype and inclusion of covariate information. Standard generalized linear models are used to relate phenotype and its predictors. Our test procedure, based on the likelihood ratio, unifies the estimation of all parameters through the likelihood itself and yields maximum likelihood estimates of the genetic relative risk and interaction parameters. Our method has advantages in modelling the covariate and gene-covariate interaction terms over recently proposed conditional score tests that include covariate information via a two-stage modelling approach. We apply our method in a study of human systemic lupus erythematosus and the C-reactive protein that includes sex as a covariate.

Fracture incidence in relation to the pattern of use of hormone therapy in postmenopausal women

Context: Evidence is limited on the effects of different patterns of use of postmenopausal hormone therapy on fracture incidence and particularly on the effects of ceasing use. Objective: To investigate the effect of different patterns of hormone therapy use on fracture incidence. Design, Setting, and Participants: Prospective study of 138737 postmenopausal women aged 50 to 69 years recruited from the UK general population in 19961998 (the Million Women Study) and followed up for 1.9 to 3.9 years (average, 2.8 years) for fracture incidence. Main Outcome Measure: Adjusted relative risk (RR) for incident fracture (except fracture of the fingers, toes, and ribs) in hormone therapy users compared with never users at baseline. Results: A total of 5197 women (3.7%) reported 1 or more fractures, 79% resulting from falls. Current users of hormone therapy at baseline had a significantly reduced incidence of fracture (RR, 0.62; 95% confidence interval [CI], 0.58-0.66; P<.001). This protection was evident soon after hormone therapy began, and the RR decreased with increasing duration of use (P=.001). Among current users at baseline the RR of fracture did not vary significantly according to whether estrogen-only, estrogen-progestin, or other types of hormones were used (RR [95% CI], 0.64 [0.58-0.71], 0.58 [0.53-0.64], and 0.67 [0.56-0.80], respectively; P=19), nor did it vary significantly according to estrogen dose or estrogen or progestin constituents. The RR associated with current use of hormone therapy did not vary significantly according to 11 personal characteristics of study participants, including their age at menopause, body mass index, and physical activity. Past users of hormone therapy at baseline experienced no significant protection against fractures (RR, 1.07; 95% CI, 0.99-1.15); incidence rates returned to those of never-users within about a year of ceasing use. Conclusions: All types of hormone therapy studied confer substantial protection against fracture while they are used. This protection appears rapidly after use commences and wears off rapidly after use ceases. The older women are, the greater is their absolute reduction in fracture incidence while using hormone therapy.

Cost-benefit evaluation of routine influenza immunisation in people 65-74 years of age

OBJECTIVES: To determine the cost-effectiveness of influenza vaccination in people aged 65-74 years in the absence of co-morbidity. DESIGN: Primary research: randomised controlled trial. SETTING: Primary care. PARTICIPANTS: People without risk factors for influenza or contraindications to vaccination were identified from 20 general practitioner (GP) practices in Liverpool in September 1999 and invited to participate in the study. There were 5875/9727 (60.4%) people aged 65-74 years identified as potentially eligible and, of these, 729 (12%) were randomised. INTERVENTION: Participants were randomised to receive either influenza vaccine or placebo (ratio 3:1), with all individuals receiving pneumococcal vaccine unless administered in the previous 10 years. Of the 729 people randomised, 552 received vaccine and 177 received placebo; 726 individuals were administered pneumococcal vaccine. MAIN OUTCOME MEASURES AND METHODOLOGY OF ECONOMIC EVALUATION: GP attendance with influenza-like illness (ILI) or pneumonia (primary outcome measure); or any respiratory symptoms; hospitalisation with a respiratory illness; death; participant self-reported ILI; quality of life (QoL) measures at 2, 4 and 6 months post-study vaccination; adverse reactions 3 days after vaccination. A cost-effectiveness analysis was undertaken to identify the incremental cost associated with the avoidance of episodes of influenza in the vaccination population and an impact model was used to extrapolate the cost-effectiveness results obtained from the trial to assess their generalisability throughout the NHS. RESULTS: In England and Wales, weekly consultations for influenza and ILI remained at baseline levels (less than 50 per 100,000 population) until week 50/1999 and then increased rapidly, peaking during week 2/2000 with a rate of 231/100,000. This rate fell within the range of 'higher than expected seasonal activity' of 200-400/100,000. Rates then quickly declined, returning to baseline levels by week 5/2000. The predominant circulating strain during this period was influenza A (H3N2). Five (0.9%) people in the vaccine group were diagnosed by their GP with an ILI compared to two (1.1%) in the placebo group [relative risk (RR), 0.8; 95% confidence interval (CI) = 0.16 to 4.1]. No participants were diagnosed with pneumonia by their GP and there were no hospitalisations for respiratory illness in either group. Significantly fewer vaccinated individuals self-reported a single ILI (4.6% vs 8.9%, RR, 0.51; 95% CI for RR, 0.28 to 0.96). There was no significant difference in any of the QoL measurements over time between the two groups. Reported systemic side-effects showed no significant differences between groups. Local side-effects occurred with a significantly increased incidence in the vaccine group (11.3% vs 5.1%, p = 0.02). Each GP consultation avoided by vaccination was estimated from trial data to generate a net NHS cost of 174 pounds. CONCLUSIONS: No difference was seen between groups for the primary outcome measure, although the trial was underpowered to demonstrate a true difference. Vaccination had no significant effect on any of the QoL measures used, although vaccinated individuals were less likely to self-report ILI. The analysis did not suggest that influenza vaccination in healthy people aged 65-74 years would lead to lower NHS costs. Future research should look at ways to maximise vaccine uptake in people at greatest risk from influenza and also the level of vaccine protection afforded to people from different age and socio-economic populations.

Is influenza vaccination cost effective for healthy people between ages 65 and 74 years? A randomised controlled trial

The aim of this study was to determine the cost effectiveness of influenza vaccination for healthy people aged 65-74 years living in the UK. People without risk factors for influenza (chronic heart, lung or renal disease, diabetic, immuno-suppressed or those living in an institution) were identified from 20 general practitioner (GP) practices in Liverpool in September 1999. 729/5875 (12.4%) eligible individuals were recruited and randomised to receive either influenza vaccine or placebo (ratio 3: 1)! with all participants receiving 23-valent-pneumococcal polysaccharide vaccine unless already administered. The primary analysis was the frequency of influenza as recorded by a GP diagnosis of pneumonia or influenza like illness. In 2000, the UK vaccination policy was changed with influenza vaccine becoming available. for all people aged 65 years and over irrespective of risk. As a consequence of this policy change. the study had to be fundamentally restructured and only results obtained over a one rather than the originally planned two-year randomised controlled trial framework were used. Results from 1999/2000 demonstrated no significant difference between groups for the primary outcome (relative risk 0.8, 95%, CI 0.16-4.1). In addition. there were no deaths or hospitalisations for influenza associated respiratory illness in either group. The subsequent analysis. using both national and local sources of evidence, estimated the following cost effectiveness indicators: (1) incremental NHS cost per GP consultation avoided = pound2000; (2) incremental NHS cost per hospital admission avoided = pound61,000: (3) incremental NHS cost per death avoided = pound1.900.000 and (4) incremental NHS cost per QALY gained = pound304,000. The analysis suggested that influenza vaccination in this Population would not be cost effective. (C) 2004 Elsevier Ltd. All rights reserved.

The consumption of milk and dairy foods and the incidence of vascular disease and diabetes: An overview of the evidence

The health effects of milk and dairy food consumption would best be determined in randomised controlled trials. No adequately powered trial has been reported and none is likely because of the numbers required. The best evidence comes, therefore, from prospective cohort studies with disease events and death as outcomes. Medline was searched for prospective studies of dairy food consumption and incident vascular disease and Type 2 diabetes, based on representative population samples. Reports in which evaluation was in incident disease or death were selected. Meta-analyses of the adjusted estimates of relative risk for disease outcomes in these reports were conducted. Relevant case–control retrospective studies were also identified and the results are summarised in this article. Meta-analyses suggest a reduction in risk in the subjects with the highest dairy consumption relative to those with the lowest intake: 0.87 (0.77, 0.98) for all-cause deaths, 0.92 (0.80, 0.99) for ischaemic heart disease, 0.79 (0.68, 0.91) for stroke and 0.85 (0.75, 0.96) for incident diabetes. The number of cohort studies which give evidence on individual dairy food items is very small, but, again, there is no convincing evidence of harm from consumption of the separate food items. In conclusion, there appears to be an enormous mis-match between the evidence from long-term prospective studies and perceptions of harm from the consumption of dairy food items.

Real options and game theoretical approaches to real estate development projects: multiple equilibria and the implications of different tie-breaking rules

This paper contributes to a fast growing literature which introduces game theory in the analysis of real option investments in a competitive setting. Specifically, in this paper we focus on the issue of multiple equilibria and on the implications that different equilibrium selections may have for the pricing of real options and for subsequent strategic decisions. We present some theoretical results of the necessary conditions to have multiple equilibria and we show under which conditions different tie-breaking rules result in different economic decisions. We then present a numerical exercise using the in formation set obtained on a real estate development in South London. We find that risk aversion reduces option value and this reduction decreases marginally as negative externalities decrease.

Social networks and occupational choice: the endogenous formation of attitudes and beliefs about tax compliance

The paper analyses the emergence of group-specific attitudes and beliefs about tax compliance when individuals interact in a social network. It develops a model in which taxpayers possess a range of individual characteristics – including attitude to risk, potential for success in self-employment, and the weight attached to the social custom for honesty – and make an occupational choice based on these characteristics. Occupations differ in the possibility for evading tax. The social network determines which taxpayers are linked, and information about auditing and compliance is transmitted at meetings between linked taxpayers. Using agent-based simulations, the analysis demonstrates how attitudes and beliefs endogenously emerge that differ across sub-groups of the population. Compliance behaviour is different across occupational groups, and this is reinforced by the development of group-specific attitudes and beliefs. Taxpayers self-select into occupations according to the degree of risk aversion, the subjective probability of audit is sustained above the objective probability, and the weight attached to the social custom differs across occupations. These factors combine to lead to compliance levels that differ across occupations.

Revenue-neutral tax policy under price uncertainty

The firm's response to revenue-neutral taxation is investigated under price uncertainty. Revenue-neutral policies adjust simultaneously the marginal tax rate and the level of exemptions while keeping expected tax receipts constant. Nonincreasing absolute risk aversion is sufficient to sign the firm's response: a reduction in the marginal rate causes the firm to contract output. Implications are established for the equilibrium level of treasury receipts.

The treatment of child anxiety disorders via guided parent-delivered cognitive-behavioural therapy: a randomised controlled trial

Background Promising evidence has emerged of clinical gains using guided self-help cognitive-behavioural therapy (CBT) for child anxiety and by involving parents in treatment; however, the efficacy of guided parent-delivered CBT has not been systematically evaluated in UK primary and secondary settings. Aims To evaluate the efficacy of low-intensity guided parent-delivered CBT treatments for children with anxiety disorders. Method A total of 194 children presenting with a current anxiety disorder, whose primary carer did not meet criteria for a current anxiety disorder, were randomly allocated to full guided parent-delivered CBT (four face-to-face and four telephone sessions) or brief guided parent-delivered CBT (two face-to-face and two telephone sessions), or a wait-list control group (trial registration: ISRCTN92977593). Presence and severity of child primary anxiety disorder (Anxiety Disorders Interview Schedule for DSM-IV, child/parent versions), improvement in child presentation of anxiety (Clinical Global Impression-Improvement scale), and change in child anxiety symptoms (Spence Children’s Anxiety Scale, child/parent version and Child Anxiety Impact scale, parent version) were assessed at post-treatment and for those in the two active treatment groups, 6 months post-treatment. Results Full guided parent-delivered CBT produced superior diagnostic outcomes compared with wait-list at post-treatment, whereas brief guided parent-delivered CBT did not: at post-treatment, 25 (50%) of those in the full guided CBT group had recovered from their primary diagnosis, compared with 16 (25%) of those on the wait-list (relative risk (RR) 1.85, 95% CI 1.14-2.99); and in the brief guided CBT group, 18 participants (39%) had recovered from their primary diagnosis post-treatment (RR = 1.56, 95% CI 0.89-2.74). Level of therapist training and experience was unrelated to child outcome. Conclusions Full guided parent-delivered CBT is an effective and inexpensive first-line