Organizational Choice and Environmental Change

We explain the choice between franchising and vertical integration by estimating a model of relative performance in a sample of 250 Spanish car distributors, controlling for self-selection and including environmental factors. The method allows us to estimate performance counterfactuals. Organizational choice seemingly aims to contain moral hazard for both distributors and manufacturers but it is subject to start-up constraints and switching costs. While the market for franchises remained underdeveloped, information asymmetries led to the opening of integrated outlets. Their subsequent conversion into franchised outlets probably involved prohibitive transaction costs. Consequently, they performed worse than would have been expected had they been independent, as confirmed by the systematic improvement observed when they were in fact converted. The timing of such conversions suggests that switching costs were prohibitive until firms developed a substantial cushion of temporary contracts, previously forbidden by regulation.

Salience theory of choice under risk

We present a theory of choice among lotteries in which the decision maker's attention is drawn to (precisely defined) salient payoffs. This leads the decision maker to a context-dependent representation of lotteries in which true probabilities are replaced by decision weights distorted in favor of salient payoffs. By endogenizing decision weights as a function of payoffs, our model provides a novel and unified account of many empirical phenomena, including frequent risk-seeking behavior, invariance failures such as the Allais paradox, and preference reversals. It also yields new predictions, including some that distinguish it from Prospect Theory, which we test.

Effect of an ectoparasite on lay date, nest-site choice, desertion, and hatching success in the great tit (Parus major)

Ectoparasites are common in most bird species, but experimental evidence of their effects on life-history traits is scarce. We investigated experimentally the effects of the hematophagous hen flea (Ceratophyllus gallinae) on timing of reproduction, nest-site choice, nest desertion, clutch size, and hatching success in the great tit (Parus major). When great tits were offered a choice on their territory between an infested and a parasite-free nest-box, they chose the one without parasites. When there was no choice, the great tits in a territory containing an infested nest-box delayed laying the clutch by 11 days as compared with the birds that were offered a parasite-free nesting opportunity. The finding that there was no difference in phenotypic traits related to dominance between the birds nesting in infested boxes and birds nesting in parasite-free boxes suggests that the delay is not imposed by social dominance. Nest desertion between laying and shortly after hatching was significandy higher in infested nests. There was no difference between infested and parasite-free nests in clutch size, but hatching success and hence brood size at hatching were significantly smaller in infested nests. Nest-box studies of great tits have been seminal in the development of evolutionary, ecological, and behavioral theory, but recently a polemic has arisen in the literature about the validity of the conclusions drawn from nest-box studies where the naturally occurring, detrimental ectoparasites are eliminated by the routine removal of old nests between breeding seasons. Our study suggests that this criticism is valid and that the evaluation of the effects of ectoparasites may improve our understanding of behavioral traits, life-history traits, or population dynamics

L'enseignement du patient diabétique et son évaluation par un questionnaire à choix multiple. [Education of the diabetic patient and its evaluation by a multiple-choice questionnaire].

37 insulin-dependent and non-insulin-dependent diabetics answered a multiple-choice questionnaire during inpatient educational sessions. 12 dietetic and 12 pathophysiologic questions had to be answered. Statistical analysis of factors influencing the number of errors can be summed up as follows: there is a direct correlation between age of the patient and number of errors; the older the patient, the greater the number of errors. However, insulin-dependent diabetics committed fewer errors than non-insulin-dependent subjects of the same age, which suggests greater motivation in the first group due to their treatment. The test likewise affords the patients an opportunity of reviewing unclear topics and enables the educational team to adapt their teaching to the patients.

Portfolio choice and the effects of liquidity

This paper shows how to introduce liquidity into the well known mean-variance framework of portfolio selection. Either by estimating mean-variance liquidity constrained frontiers or directly estimating optimal portfolios for alternative levels of risk aversion and preference for liquidity, we obtain strong effects of liquidity on optimal portfolio selection. In particular, portfolio performance, measured by the Sharpe ratio relative to the tangency portfolio, varies significantly with liquidity. Moreover, although mean-variance performance becomes clearly worse, the levels of liquidity onoptimal portfolios obtained when there is a positive preference for liquidity are much lower than on those optimal portfolios where investors show no sign of preference for liquidity.

A randomized concave programming method for choice network revenue management

Models incorporating more realistic models of customer behavior, as customers choosing froman offer set, have recently become popular in assortment optimization and revenue management.The dynamic program for these models is intractable and approximated by a deterministiclinear program called the CDLP which has an exponential number of columns. However, whenthe segment consideration sets overlap, the CDLP is difficult to solve. Column generationhas been proposed but finding an entering column has been shown to be NP-hard. In thispaper we propose a new approach called SDCP to solving CDLP based on segments and theirconsideration sets. SDCP is a relaxation of CDLP and hence forms a looser upper bound onthe dynamic program but coincides with CDLP for the case of non-overlapping segments. Ifthe number of elements in a consideration set for a segment is not very large (SDCP) can beapplied to any discrete-choice model of consumer behavior. We tighten the SDCP bound by(i) simulations, called the randomized concave programming (RCP) method, and (ii) by addingcuts to a recent compact formulation of the problem for a latent multinomial-choice model ofdemand (SBLP+). This latter approach turns out to be very effective, essentially obtainingCDLP value, and excellent revenue performance in simulations, even for overlapping segments.By formulating the problem as a separation problem, we give insight into why CDLP is easyfor the MNL with non-overlapping considerations sets and why generalizations of MNL posedifficulties. We perform numerical simulations to determine the revenue performance of all themethods on reference data sets in the literature.

Welfare of naive and sophisticated players in school choice

Two main school choice mechanisms have attracted the attention in the literature: Boston and deferred acceptance (DA). The question arises on the ex-ante welfareimplications when the game is played by participants that vary in terms of their strategicsophistication. Abdulkadiroglu, Che and Yasuda (2011) have shown that the chances ofnaive participants getting into a good school are higher under the Boston mechanism thanunder DA, and some naive participants are actually better off. In this note we show thatthese results can be extended to show that, under the veil of ignorance, i.e. students not yetknowing their utility values, all naive students may prefer to adopt the Boston mechanism.

The role of awareness, information gathering and processing in school choice

This paper studies the determinants of school choice, focusing on the role of information. Weconsider how parents' search efforts and their capacity to process information (i.e., tocorrectly assess schools) affect the quality of the schools they choose for their children. Usinga novel dataset, we are able to identify parents' awareness of schools in their neighborhoodand measure their capacity to rank the quality of the school with respect to the officialrankings. We find that parents education and wealth are important factors in determiningtheir level of school awareness and information gathering. Moreover, these search effortshave important consequences in terms of the quality of school choice.

Choice by sequential procedures

We propose a rule of decision-making, the sequential procedure guided byroutes, and show that three influential boundedly rational choice models can be equivalentlyunderstood as special cases of this rule. In addition, the sequential procedure guidedby routes is instrumental in showing that the three models are intimately related. We showthat choice with a status-quo bias is a refinement of rationalizability by game trees, which, inturn, is also a refinement of sequential rationalizability. Thus, we provide a sharp taxonomyof these choice models, and show that they all can be understood as choice by sequentialprocedures.

A new compact linear programming formulation for choice network revenue management

The choice network revenue management model incorporates customer purchase behavioras a function of the offered products, and is the appropriate model for airline and hotel networkrevenue management, dynamic sales of bundles, and dynamic assortment optimization.The optimization problem is a stochastic dynamic program and is intractable. A certainty-equivalencerelaxation of the dynamic program, called the choice deterministic linear program(CDLP) is usually used to generate dyamic controls. Recently, a compact linear programmingformulation of this linear program was given for the multi-segment multinomial-logit (MNL)model of customer choice with non-overlapping consideration sets. Our objective is to obtaina tighter bound than this formulation while retaining the appealing properties of a compactlinear programming representation. To this end, it is natural to consider the affine relaxationof the dynamic program. We first show that the affine relaxation is NP-complete even for asingle-segment MNL model. Nevertheless, by analyzing the affine relaxation we derive a newcompact linear program that approximates the dynamic programming value function betterthan CDLP, provably between the CDLP value and the affine relaxation, and often comingclose to the latter in our numerical experiments. When the segment consideration sets overlap,we show that some strong equalities called product cuts developed for the CDLP remain validfor our new formulation. Finally we perform extensive numerical comparisons on the variousbounds to evaluate their performance.

Choice of partners in multiple two-person prisoner's dilemma games: An experimental study

We examine the effect of unilateral and mutual partner selection in the context of prisoner's dilemmas experimentally. Subjects play simultaneously several finitely repeated two-person prisoner's dilemma games. We find that unilateral choice is the best system. It leads to low defection and fewer singles than with mutual choice. Furthermore, with the unilateral choice setup we are able to show that intendingdefectors are more likely to try to avoid a match than intending cooperators. We compare our results of multiple games with single game PD-experiments and find no difference in aggregate behavior. Hence the multiple game technique is robust and might therefore be an important tool in the future for testing the use of mixed strategies.

Health care provider choice in the case of patient-initiated contacts. An extended version of discrete choice of model demand

This paper analyzes the nature of health care provider choice inthe case of patient-initiated contacts, with special reference toa National Health Service setting, where monetary prices are zeroand general practitioners act as gatekeepers to publicly financedspecialized care. We focus our attention on the factors that mayexplain the continuously increasing use of hospital emergencyvisits as opposed to other provider alternatives. An extendedversion of a discrete choice model of demand for patient-initiatedcontacts is presented, allowing for individual and town residencesize differences in perceived quality (preferences) betweenalternative providers and including travel and waiting time asnon-monetary costs. Results of a nested multinomial logit model ofprovider choice are presented. Individual choice betweenalternatives considers, in a repeated nested structure, self-care,primary care, hospital and clinic emergency services. Welfareimplications and income effects are analyzed by computingcompensating variations, and by simulating the effects of userfees by levels of income. Results indicate that compensatingvariation per visit is higher than the direct marginal cost ofemergency visits, and consequently, emergency visits do not appearas an inefficient alternative even for non-urgent conditions.

Host sex and ectoparasites choice: preference for, and higher survival on female hosts.

1. Sex differences in levels of parasite infection are a common rule in a wide range of mammals, with males usually more susceptible than females. Sex-specific exposure to parasites, e.g. mediated through distinct modes of social aggregation between and within genders, as well as negative relationships between androgen levels and immune defences are thought to play a major role in this pattern. 2. Reproductive female bats live in close association within clusters at maternity roosts, whereas nonbreeding females and males generally occupy solitary roosts. Bats represent therefore an ideal model to study the consequences of sex-specific social and spatial aggregation on parasites' infection strategies. 3. We first compared prevalence and parasite intensities in a host-parasite system comprising closely related species of ectoparasitic mites (Spinturnix spp.) and their hosts, five European bat species. We then compared the level of parasitism between juvenile males and females in mixed colonies of greater and lesser mouse-eared bats Myotis myotis and M. blythii. Prevalence was higher in adult females than in adult males stemming from colonial aggregations in all five studied species. Parasite intensity was significantly higher in females in three of the five species studied. No difference in prevalence and mite numbers was found between male and female juveniles in colonial roosts. 4. To assess whether observed sex-biased parasitism results from differences in host exposure only, or, alternatively, from an active, selected choice made by the parasite, we performed lab experiments on short-term preferences and long-term survival of parasites on male and female Myotis daubentoni. When confronted with adult males and females, parasites preferentially selected female hosts, whereas no choice differences were observed between adult females and subadult males. Finally, we found significantly higher parasite survival on adult females compared with adult males. 5. Our study shows that social and spatial aggregation favours sex-biased parasitism that could be a mere consequence of an active and adaptive parasite choice for the more profitable host.

Notes on stochastic choice

A general formalism on stochastic choice is presented. Tje Rationalizability and Recoverability (Identification) problems are discussed. For the identification issue parametric examples are analyzed by means of techniques of mathematical tomography (Random transforms).