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.

Neglected risks, financial innovation, and financial fragility

We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash flows. Financial intermediaries cater to these preferences and beliefs by engineering securities perceived to be safe but exposed to neglected risks. Because the risks are neglected, security issuance is excessive. As investors eventually recognize these risks, they fly back to safety of traditional securities and markets become fragile, even without leverage, precisely because the volume of new claims is excessive.

A model of shadow banking

We present a model of shadow banking in which financial intermediaries originate and trade loans, assemble these loans into diversified portfolios, and then finance these portfolios externally with riskless debt. In this model: i) outside investor wealth drives the demand for riskless debt and indirectly for securitization, ii) intermediary assets and leverage move together as in Adrian and Shin (2010), and iii) intermediaries increase their exposure to systematic risk as they reduce their idiosyncratic risk through diversification, as in Acharya, Schnabl, and Suarez (2010). Under rational expectations, the shadow banking system is stable and improves welfare. When investors and intermediaries neglect tail risks, however, the expansion of risky lending and the concentration of risks in the intermediaries create financial fragility and fluctuations in liquidity over time.

Improving generalized regression analysis for the spatial prediction of forest communities

Aim This study used data from temperate forest communities to assess: (1) five different stepwise selection methods with generalized additive models, (2) the effect of weighting absences to ensure a prevalence of 0.5, (3) the effect of limiting absences beyond the environmental envelope defined by presences, (4) four different methods for incorporating spatial autocorrelation, and (5) the effect of integrating an interaction factor defined by a regression tree on the residuals of an initial environmental model. Location State of Vaud, western Switzerland. Methods Generalized additive models (GAMs) were fitted using the grasp package (generalized regression analysis and spatial predictions, http://www.cscf.ch/grasp). Results Model selection based on cross-validation appeared to be the best compromise between model stability and performance (parsimony) among the five methods tested. Weighting absences returned models that perform better than models fitted with the original sample prevalence. This appeared to be mainly due to the impact of very low prevalence values on evaluation statistics. Removing zeroes beyond the range of presences on main environmental gradients changed the set of selected predictors, and potentially their response curve shape. Moreover, removing zeroes slightly improved model performance and stability when compared with the baseline model on the same data set. Incorporating a spatial trend predictor improved model performance and stability significantly. Even better models were obtained when including local spatial autocorrelation. A novel approach to include interactions proved to be an efficient way to account for interactions between all predictors at once. Main conclusions Models and spatial predictions of 18 forest communities were significantly improved by using either: (1) cross-validation as a model selection method, (2) weighted absences, (3) limited absences, (4) predictors accounting for spatial autocorrelation, or (5) a factor variable accounting for interactions between all predictors. The final choice of model strategy should depend on the nature of the available data and the specific study aims. Statistical evaluation is useful in searching for the best modelling practice. However, one should not neglect to consider the shapes and interpretability of response curves, as well as the resulting spatial predictions in the final assessment.

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.

Neglected risks, financial innovation and financial fragility

We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash flows. Financial intermediaries cater to these preferences and beliefs by engineering securities perceived to be safe but exposed to neglected risks. Because the risks are neglected, security issuance is excessive. As investors eventually recognize these risks, they fly back to safety of traditional securities and markets become fragile, even without leverage, precisely because the volume of new claims is excessive.

Tax simulation in the SHP

This paper describes a simulation package designed to estimate the annual income taxes paid by respondents of the Swiss Household Panel (SHP). In Switzerland, the 26 cantons have their own tax system. Additionally, tax levels vary between the over 2000 municipalities and over time. The simulation package takes account of this complexity by building on existing tables on tax levels which are provided by the Swiss Federal Tax Administration Office. Because these are limited to a few types of households and only 812 municipalities, they have to be extended to cover all households and municipalities. A further drawback of these tables is that they neglect several deductions. The tax simulation package fills this gap by taking additionally account of deductions for children, double-earner couples, third pillar and support for dependent persons according to cantonal legislation. The resulting variable on direct taxes not only serves to calculate household income net of taxes, but can also be a variable for analysis by its own account.

Intrahippocampal cholinergic grafts in aged rats compensate impairments in a radial maze and in a place learning task

Age-related cognitive impairments were studied in rats kept in semi-enriched conditions during their whole life, and tested during ontogeny and adult life in various classical spatial tasks. In addition, the effect of intrahippocampal grafts of fetal septal-diagonal band tissue, rich in cholinergic neurons, was studied in some of these subjects. The rats received bilateral cell suspensions when aged 23-24 months. Starting 4 weeks after grafting, they were trained during 5 weeks in an 8-arm maze made of connected plexiglass tunnels. No age-related impairment was detected during the first eight trials, when the maze shape was that of a classical radial maze in which the rats had already been trained when young. The older rats were impaired when the task was made more difficult by rendering two arms parallel to each other. They developed an important neglect of one of the parallel tunnels resulting in a high amount of errors before completion of the task. In addition, the old rats developed a systematic response pattern of visits to adjacent arms in a sequence, which was not observed in the younger subjects. None of these behaviours were observed in the old rats with a septal transplant. Sixteen weeks after grafting, another experiment was conducted in a homing hole board task. Rats were allowed to escape from a large circular arena through one hole out of many, and to reach home via a flexible tube under the table. The escape hole was at a fixed position according to distant room cues, and olfactory cues were made irrelevant by rotating the table between the trials. An additional cue was placed on the escape position. No age-related difference in escape was observed during training. During a probe trial with no hole connected and no proximal cue present, the old untreated rats were less clearly focussed on the training sector than were either the younger or the grafted old subjects. Taken together, these experiments indicate that enriched housing conditions and spatial training during adult life do not protect against all age-related deterioration in spatial ability. However, it might be that the considerable improvement observed in the grafted subjects results from an interaction between the graft treatment and the housing conditions.

Community Partnerships Evaluation: The Story so Far..., August 2008

Community Partnerships for Protecting Children (CPPC) is an approach that neighborhoods, towns, cities and states can adopt to improve how children are protected from abuse and/or neglect. The State of Iowa recognizes that the child protection agency, working alone, cannot keep children safe from abuse and neglect. It aims to blend the work and expertise of professionals and community members to bolster supports for vulnerable families and children. Community Partnerships is not a “program” – rather, it is a way of working with families to help services and supports to be more inviting, need-based, accessible and relevant. It incorporates prevention strategies as well as those interventions needed to address abuse, once identified.

Relativistic mean-field interaction with density-dependent meson-nucleon vertices based on microscopical calculations

Although ab initio calculations of relativistic Brueckner theory lead to large scalar isovector fields in nuclear matter, at present, successful versions of covariant density functional theory neglect the interactions in this channel. A new high-precision density functional DD-MEδ is presented which includes four mesons, σ, ω, δ, and ρ, with density-dependent meson-nucleon couplings. It is based to a large extent on microscopic ab initiocalculations in nuclear matter. Only four of its parameters are determined by adjusting to binding energies and charge radii of finite nuclei. The other parameters, in particular the density dependence of the meson-nucleon vertices, are adjusted to nonrelativistic and relativistic Brueckner calculations of symmetric and asymmetric nuclear matter. The isovector effective mass mp*−mn* derived from relativistic Brueckner theory is used to determine the coupling strength of the δ meson and its density dependence.

EFNS guidelines on cognitive rehabilitation: report of an EFNS task force.

Disorders of language, spatial perception, attention, memory, calculation and praxis are a frequent consequence of acquired brain damage [in particular, stroke and traumatic brain injury (TBI)] and a major determinant of disability. The rehabilitation of aphasia and, more recently, of other cognitive disorders is an important area of neurological rehabilitation. We report here a review of the available evidence about effectiveness of cognitive rehabilitation. Given the limited number and generally low quality of randomized clinical trials (RCTs) in this area of therapeutic intervention, the Task Force considered, besides the available Cochrane reviews, evidence of lower classes which was critically analysed until a consensus was reached. In particular, we considered evidence from small group or single cases studies including an appropriate statistical evaluation of effect sizes. The general conclusion is that there is evidence to award a grade A, B or C recommendation to some forms of cognitive rehabilitation in patients with neuropsychological deficits in the post-acute stage after a focal brain lesion (stroke, TBI). These include aphasia therapy, rehabilitation of unilateral spatial neglect (ULN), attentional training in the post-acute stage after TBI, the use of electronic memory aids in memory disorders, and the treatment of apraxia with compensatory strategies. There is clearly a need for adequately designed studies in this area, which should take into account specific problems such as patient heterogeneity and treatment standardization.

Iowa Elder Abuse Initiative Demonstration Projects Fiscal Year 2001-2011

In 2001, the Iowa Legislature approved approximately $475,000 to fund strategies for elder abuse detection, training and services in an effort to evaluate Iowa’s adult abuse system. This endeavor became known as Iowa’s Elder Abuse Initiative (EAI) demonstration projects. These projects were located in 4 of the 13 Area Agencies on Aging and available in 22 of Iowa’s 99 counties. The EAI focused on the prevention, intervention, detection, and reporting of elder abuse, neglect and exploitation by presenting elders with options to enhance their lifestyle choices.

Nonempirical cluster-model study of the chemisorption of atomic hydrogen on the (111) surface of diamondlike crystals

The interaction of atomic hydrogen with C4H9, Si4H9, and Ge4H9 model clusters has been studied using all-electron and pseudopotential ab initio Hartree-Fock computations with basis sets of increasing flexibility. The results show that the effect of polarization functions is important in order to reproduce the experimental findings, but their inclusion only for the atoms directly involved in the chemisorption bond is usually sufficient. For the systems H-C4H9 and H-Si4H9 all-electron and pseudopotential results are in excellent agreement when basis sets of comparable quality are used. Besides, semiempirical modified-neglect-of-differential-overlap computations provide quite reliable results both for diamond and silicon and have been used to investigate larger model clusters. The results confirm the local nature of chemisorption and further justify the use of minimal X4H9 model clusters.

Elder Abuse Task Force Report Pursuant to HF 2387: An Act Relating to Improvements to and Implementation of Laws Concerning Elder Abuse

During its 2012 session, Iowa’s 84th General Assembly passed House File 2387. The bill was signed into law by Governor Branstad and mandated a review of occurrences of and laws relating to abuse, neglect, or exploitation of individuals who are sixty years of age or older. After conducting the review, the twenty-three member Elder Abuse Task Force presents the following recommendations. These recommendations build upon current Iowa law and practice for the purpose of protecting older Iowans from abuse, neglect, and exploitation.

Representational pseudoneglect and reference points both influence geographic location estimates

Our mental representation of the world is far from objective. For example, western Canadians estimate the locations of North American cities to be too far to the west. This bias could be due to a reference point effect, in which people estimate more space between places close to them than far from them, or to representational pseudoneglect, in which neurologically intact individuals favor the left side of space when asked to image a scene.We tested whether either or both of these biases influence the geographic world representations of neurologically intact young adults from Edmonton and Ottawa, which are in western and eastern Canada, respectively. Individuals were asked to locate NorthAmerican cities on a two-dimensional grid. Both groups revealed effects of representational pseudoneglect in this novel paradigm, but they also each exhibited reference point effects. These results inform theories in both cognitive psychology and neuroscience.