Deciding the price of fame

Previous studies of ignorance-driven decision-making have either analyzed when ignorance should prove advantageous on theoretical grounds, or else they have examined whether human behavior is consistent with an ignorance driven inference strategy (e.g., the recognition heuristic). The current study merges these research goals by examining whether – under conditions where ignorance driven inference might be expected – the type of advantages theoretical analyses predict are evident in human performance data. A single experiment shows that, when asked to make relative wealth judgments, participants reliably use recognition as a basis for their judgments. Their wealth judgments under these conditions are reliably more accurate when some of the target names are unknown than when participants recognize all the names (the “less-is-more effect”). these data are robust against a number of variations on the size of the pool from which participants have to choose and the nature of the wealth judgment.

The price of risk in construction projects: contingency approximation model (CAM)

Little attention has been focussed on a precise definition and evaluation mechanism for project management risk specifically related to contractors. When bidding, contractors traditionally price risks using unsystematic approaches. The high business failure rate our industry records may indicate that the current unsystematic mechanisms contractors use for building up contingencies may be inadequate. The reluctance of some contractors to include a price for risk in their tenders when bidding for work competitively may also not be a useful approach. Here, instead, we first define the meaning of contractor contingency, and then we develop a facile quantitative technique that contractors can use to estimate a price for project risk. This model will help contractors analyse their exposure to project risks; and help them express the risk in monetary terms for management action. When bidding for work, they can decide how to allocate contingencies strategically in a way that balances risk and reward.

Intrinsic chess rating

This paper develops and tests formulas for representing playing strength at chess by the quality of moves played, rather than by the results of games. Intrinsic quality is estimated via evaluations given by computer chess programs run to high depth, ideally so that their playing strength is sufficiently far ahead of the best human players as to be a `relatively omniscient' guide. Several formulas, each having intrinsic skill parameters s for `sensitivity' and c for `consistency', are argued theoretically and tested by regression on large sets of tournament games played by humans of varying strength as measured by the internationally standard Elo rating system. This establishes a correspondence between Elo rating and the parameters. A smooth correspondence is shown between statistical results and the century points on the Elo scale, and ratings are shown to have stayed quite constant over time. That is, there has been little or no `rating inflation'. The theory and empirical results are transferable to other rational-choice settings in which the alternatives have well-defined utilities, but in which complexity and bounded information constrain the perception of the utility values.

New evidence on the green building rent and price premium

This paper investigates the effect of voluntary eco-certification on the rental and sale prices of US commercial office properties. Hedonic and logistic regressions are used to test whether there are rental and sale price premiums for LEED and Energy Star certified buildings. The results of the hedonic analysis suggest that there is a rental premium of approximately 6% for LEED and Energy Star certification. A sale price premium of approximately 35% was found for 127 price observations involving LEED rated buildings and 31% for 662 buildings involving Energy Star rated buildings. When compared to samples of similar buildings identified by a binomial logistic regression for LEED-certified buildings, the existence of a rent and sales price premium is confirmed albeit with differences regarding the magnitude of the premium. Overall, the results of this study confirm that LEED and Energy Star buildings exhibit higher rental rates and sales prices per square foot controlling for a large number of location- and property-specific factors.