The stochastic component in choice and regression to the mean

In this article, we illustrate experimentally an important consequence of the stochastic component in choice behaviour which has not been acknowledged so far. Namely, its potential to produce ‘regression to the mean’ (RTM) effects. We employ a novel approach to individual choice under risk, based on repeated multiple-lottery choices (i.e. choices among many lotteries), to show how the high degree of stochastic variability present in individual decisions can distort crucially certain results through RTM effects. We demonstrate the point in the context of a social comparison experiment.

Information strategies and the theory of the Firm

Information costs play a key role in determining the relative efficiency of alternative organisational structures. The choice of locations at which information is stored in a firm is an important determinant of its information costs. A specific example of information use is modelled in order to explore what factors determine whether information should be stored centrally or locally and if it should be replicated at different sites. This provides insights into why firms are structured hierarchically, with some decisions and tasks being performed centrally and others at different levels of decentralisation. The effects of new information technologies are also discussed. These can radically alter the patterns and levels of information costs within a firm and so can cause substantial changes in organisational structure.

A causal role for posterior medial prefrontal cortex in choice-induced preference change

After a person chooses between two items, preference for the chosen item will increase and preference for the unchosen item will decrease because of the choice made. In other words, we tend to justify or rationalize our past behavior by changing our attitude. This phenomenon of choice-induced preference change has been traditionally explained by cognitive dissonance theory. Choosing something that is disliked or not choosing something that is liked are both cognitively inconsistent, and in order to reduce this inconsistency, people tend to change their subsequently stated preference in accordance with their past choices. Previously, neuroimaging studies identified posterior medial frontal cortex (pMFC) as a key brain region involved in cognitive dissonance. However, it still remains unknown whether the pMFC plays a causal role in inducing preference change following cognitive dissonance. Here, we demonstrate that 25-min 1-Hz repetitive transcranial magnetic stimulation (TMS) applied over the pMFC significantly reduces choice-induced preference change compared to sham stimulation, or control stimulation over a different brain region, demonstrating a causal role for the pMFC.

Corporate strategic responses to foreign entry: insights from prospect theory

Purpose – The purpose of this paper is to address how firms adapt their product and geographic diversification as a response to foreign rivals penetrating their domestic market by adopting a behavioral perspective to understand firm-level strategic responses to foreign entry. Design/methodology/approach – The study proposes that strategic responses to foreign entry selected by domestic incumbents have both a framing component and a related, strategic choice component, with the latter including changes in product and geographic market diversification (though other more business strategy-related responses are also possible, e.g. in product pricing and marketing). This study tests a set of hypotheses building on panel data of large US firms. Findings – The study finds, in accordance with our predictions, that domestic incumbents reduce their product and geographic diversification when facing an increase in import penetration. However, when increased market penetration by foreign firms takes the form of FDI rather than imports, the corporate response appears to be an increase in product and geographic diversification, again in line with our predictions. Originality/value – The study develops a new conceptual framework that is grounded in prospect theory, but builds on recent insights from mainstream international strategic management studies (Bowen and Wiersema, 2005; Wiersema and Bowen, 2008).

Intraindividual relations between achievement goals and discrete achievement emotions: an experience sampling approach

Theories on the link between achievement goals and achievement emotions focus on their within-person functional relationship (i.e., intraindividual relations). However, empirical studies have failed to analyze these intraindividual relations and have instead examined between-person covariation of the two constructs (i.e., interindividual relations). Aiming to better connect theory and empirical research, the present study (N = 120 10th grade students) analyzed intraindividual relations by assessing students’ state goals and emotions using experience sampling (N = 1,409 assessments within persons). In order to replicate previous findings on interindividual relations, students’ trait goals and emotions were assessed using self-report questionnaires. Despite being statistically independent, both types of relations were consistent with theoretical expectations, as shown by multi-level modeling: Mastery goals were positive predictors of enjoyment and negative predictors of boredom and anger; performance-approach goals were positive predictors of pride; and performance-avoidance goals were positive predictors of anxiety and shame. Reasons for the convergence of intra- and interindividual findings, directions for future research, and implications for educational practice are discussed.

Exploring the role the brand plays in the choice of charity by UK volunteers

Charities need to understand why volunteers choose one brand rather than another in order to attract more volunteers to their organisation. There has been considerable academic interest in understanding why people volunteer generally. However, this research explores the more specific question of why a volunteer chooses one charity brand rather than another. It builds on previous conceptualisations of volunteering as a consumption decision. Seen through the lens of the individual volunteer, it considers the under-researched area of the decision-making process. The research adopts an interpretivist epistemology and subjectivist ontology. Qualitative data was collected through depth interviews and analysed using both Means-End Chain (MEC) and Framework Analysis methodology. The primary contribution of the research is to theory: understanding the role of brand in the volunteer decision-making process. It identifies two roles for brand. The first is as a specific reason for choice, an ‘attribute’ of the decision. Through MEC, volunteering for a well-known brand connects directly through to a sense of self, both self-respect but also social recognition by others. All four components of the symbolic consumption construct are found in the data: volunteers choose a well-known brand to say something about themselves. The brand brings credibility and reassurance, it reduces the risk and enables the volunteer to meet their need to make a difference and achieve a sense of accomplishment. The second closely related role for brand is within the process of making the volunteering decision. Volunteers built up knowledge about the charity brands from a variety of brand touchpoints, over time. At the point of decision-making that brand knowledge and engagement becomes relevant, enabling some to make an automatic choice despite the significant level of commitment being made. The research identifies four types of decision-making behaviour. The research also makes secondary contributions to MEC methodology and to the non-profit context. It concludes within practical implications for management practice and a rich agenda for future research.

Continuum, Discrete, and Explicit Solvation Models for Describing the Low-Lying Absorption Spectrum of the Pterin Acid in Aqueous Environment

The absorption spectrum of the acid form of pterin in water was investigated theoretically. Different procedures using continuum, discrete, and explicit models were used to include the solvation effect on the absorption spectrum, characterized by two bands. The discrete and explicit models used Monte Carlo simulation to generate the liquid structure and time-dependent density functional theory (B3LYP/6-31G+(d)) to obtain the excitation energies. The discrete model failed to give the correct qualitative effect on the second absorption band. The continuum model, in turn, has given a correct qualitative picture and a semiquantitative description. The explicit use of 29 solvent molecules, forming a hydration shell of 6 angstrom, embedded in the electrostatic field of the remaining solvent molecules, gives absorption transitions at 3.67 and 4.59 eV in excellent agreement with the S(0)-S(1) and S(0)-S(2) absorption bands at of 3.66 and 4.59 eV, respectively, that characterize the experimental spectrum of pterin in water environment. (C) 2010 Wiley Periodicals, Inc. Int J Quantum Chem 110: 2371-2377, 2010

A note on a practical relationship between filter coefficients and scaling and wavelet functions of Discrete Wavelet Transforms

In this paper, the relationship between the filter coefficients and the scaling and wavelet functions of the Discrete Wavelet Transform is presented and exemplified from a practical point-of-view. The explanations complement the wavelet theory, that is well documented in the literature, being important for researchers who work with this tool for time-frequency analysis. (c) 2011 Elsevier Ltd. All rights reserved.

On choice of technique in the Robinson-Solow-Srinivasan model

We report results on the optimal \choice of technique" in a model originally formulated by Robinson, Solow and Srinivasan (henceforth, the RSS model) and further discussed by Okishio and Stiglitz. By viewing this vintage-capital model without discounting as a speci c instance of the general theory of intertemporal resource allocation associated with Brock, Gale and McKenzie, we resolve longstanding conjectures in the form of theorems on the existence and price support of optimal paths, and of conditions suÆcient for the optimality of a policy rst identi ed by Stiglitz. We dispose of the necessity of these conditions in surprisingly simple examples of economies in which (i) an optimal path is periodic, (ii) a path following Stiglitz' policy is bad, and (iii) there is optimal investment in di erent vintages at di erent times. (129 words)

Uncertainty aversion and the optmal choice of portfolio

In this paper we apply the theory of declsion making with expected utility and non-additive priors to the choice of optimal portfolio. This theory describes the behavior of a rational agent who i5 averse to pure 'uncertainty' (as well as, possibly, to 'risk'). We study the agent's optimal allocation of wealth between a safe and an uncertain asset. We show that there is a range of prices at which the agent neither buys not sells short the uncertain asset. In contrast the standard theory of expected utility predicts that there is exactly one such price. We also provide a definition of an increase in uncertainty aversion and show that it causes the range of prices to increase.

Dinâmica monetária eficiente sob encontros aleatórios: uma classe de métodos numéricos que exploram concavidade

A dificuldade em se caracterizar alocações ou equilíbrios não estacionários é uma das principais explicações para a utilização de conceitos e hipóteses que trivializam a dinâmica da economia. Tal dificuldade é especialmente crítica em Teoria Monetária, em que a dimensionalidade do problema é alta mesmo para modelos muito simples. Neste contexto, o presente trabalho relata a estratégia computacional de implementação do método recursivo proposto por Monteiro e Cavalcanti (2006), o qual permite calcular a sequência ótima (possivelmente não estacionária) de distribuições de moeda em uma extensão do modelo proposto por Kiyotaki e Wright (1989). Três aspectos deste cálculo são enfatizados: (i) a implementação computacional do problema do planejador envolve a escolha de variáveis contínuas e discretas que maximizem uma função não linear e satisfaçam restrições não lineares; (ii) a função objetivo deste problema não é côncava e as restrições não são convexas; e (iii) o conjunto de escolhas admissíveis não é conhecido a priori. O objetivo é documentar as dificuldades envolvidas, as soluções propostas e os métodos e recursos disponíveis para a implementação numérica da caracterização da dinâmica monetária eficiente sob a hipótese de encontros aleatórios.

Nature's choice? a study of the displacement of incumbents in elections

Como choques econômicos afetam eleições em democracias? Usando dados eleitorais do Congresso dos Estados Unidos, eu testo se choques adversos podem afetar desigualmente partidos incumbentes e oponentes. Esse efeito é identificado, entre vários procedimentos, por uma regressão em descontinuidade. Eu considero possibilidades teóricas para esse efeito, quando cidadãos não conseguem observar perfeitamente se a falta de bens públicos é devido a um choque adverso, ou a consumo privado do político. Quando o choque é observável, não há efeito; enquanto se não fosse, haveria. As evidências empíricas são consistentes com a teoria.

Isolated capital cities and misgovernance: theory and evidence

Motivated by a novel stylized fact { countries with isolated capital cities display worse quality of governance { we provide a framework of endogenous institutional choice based on the idea that elites are constrained by the threat of rebellion, and that this threat is rendered less e ective by distance from the seat of political power. In established democracies, the threat of insurgencies is not a binding constraint, and the model predicts no correlation between isolated capitals and misgovernance. In contrast, a correlation emerges in equilibrium in the case of autocracies. Causality runs both ways: broader power sharing (associated with better governance) means that any rents have to be shared more broadly, hence the elite has less of an incentive to protect its position by isolating the capital city; conversely, a more isolated capital city allows the elite to appropriate a larger share of output, so the costs of better governance for the elite, in terms of rents that would have to be shared, are larger. We show evidence that this pattern holds true robustly in the data. We also show that isolated capitals are associated with less power sharing, a larger income premium enjoyed by capital city inhabitants, and lower levels of military spending by ruling elites, as predicted by the theory.

Stomach fullness modulates prey size choice in the frillfin goby, Bathygobius soporator

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)

Continuous-time and discrete-time sliding mode control accomplished using a computer

A computer-based sliding mode control (SMC) is analysed. The control law is accomplished using a computer and A/D and D/A converters. Two SMC designs are presented. The first one is a continuous-time conventional SMC design, with a variable structure law, which does not take into consideration the sampling period. The second one is a discrete-time SMC design, with a smooth sliding law, which does not have a structure variable and takes into consideration the sampling period. Both techniques are applied to control an inverted pendulum system. The performance of both the continuous-time and discrete-time controllers are compared. Simulations and experimental results are shown and the effectiveness of the proposed techniques is analysed.