The three faces of bounded reliability: Alfred Chandler and the micro-foundations of management theory

Alfred Chandler, the celebrated business historian, provided detailed descriptions of the reasons for failed human commitments and the managerial tools needed to prevent/remediate such failings in the context of large business firms. Chandler's historical narrative identifies three distinct “faces” of bounded reliability—opportunism, benevolent preference reversal, and identity-based discordance—as the main drivers of commitment failure. Adopting bounded reliability (BRel) as a micro-foundation in management studies will raise the quality and relevance of scholarly recommendations to improve managerial decision making and action, because analysis of BRel challenges closely mirrors the real-world problems facing practicing managers.

Thinking about a limited future enhances the positivity of younger and older adults’ recall: support for socioemotional selectivity theory

Compared with younger adults, older adults have a relative preference to attend to and remember positive over negative information. This is known as the “positivity effect,” and researchers have typically evoked socioemotional selectivity theory to explain it. According to socioemotional selectivity theory, as people get older they begin to perceive their time left in life as more limited. These reduced time horizons prompt older adults to prioritize achieving emotional gratification and thus exhibit increased positivity in attention and recall. Although this is the most commonly cited explanation of the positivity effect, there is currently a lack of clear experimental evidence demonstrating a link between time horizons and positivity. The goal of the current research was to address this issue. In two separate experiments, we asked participants to complete a writing activity, which directed them to think of time as being either limited or expansive (Experiments 1 and 2) or did not orient them to think about time in a particular manner (Experiment 2). Participants were then shown a series of emotional pictures, which they subsequently tried to recall. Results from both studies showed that regardless of chronological age, thinking about a limited future enhanced the relative positivity of participants’ recall. Furthermore, the results of Experiment 2 showed that this effect was not driven by changes in mood. Thus, the fact that older adults’ recall is typically more positive than younger adults’ recall may index naturally shifting time horizons and goals with age.

A Theory of voter experimentation in repeated elections

Nesse artigo, eu desenvolvo e analiso um modelo de dois perí odos em que dois polí ticos competem pela preferência de um eleitor representativo, que sabe quão benevolente é um dos polí ticos mas é imperfeitamente informado sobre quão benevolente é o segundo polí tico. O polí tico conhecido é interpretado como um incumbente de longo prazo, ao passo que o polí tico desconhecido é interpretado como um desa fiante menos conhecido. É estabelecido que o mecanismo de provisão de incentivos inerente às elei cões - que surge através da possibilidade de não reeleger um incumbente - e considerações acerca de aquisi cão de informa cão por parte do eleitor se combinam de modo a determinar que em qualquer equilí brio desse jogo o eleitor escolhe o polí tico desconhecido no per íodo inicial do modelo - uma a cão à qual me refi ro como experimenta cão -, fornecendo assim uma racionaliza cão para a não reelei cão de incumbentes longevos. Especifi camente, eu mostro que a decisão do eleitor quanto a quem eleger no per odo inicial se reduz à compara cão entre os benefí cios informacionais de escolher o polí tico desconhecido e as perdas econômicas de fazê-lo. Os primeiros, que capturam as considera cões relacionadas à aquisi cão de informa cão, são mostrados serem sempre positivos, ao passo que as últimas, que capturam o incentivo à boa performance, são sempre não-negativas, implicando que é sempre ótimo para o eleitor escolher o polí tico desconhecido no per íodo inicial.

The spenders-hoarders theory of capital accumulations, wealth distribution and fiscal policy

This paper proposes a simple OLG model which is consistent with the essential facts about consumer behavior, capital accumulation and wealth distribution, and yields some new and surprising conclusions about fiscal policy. By considering a society in which individuais are distinguished according to two characteristics, altruism and wealth preference, we show that those who in the long run hold the bulk of private capital are not so rnuch motivated by dynastic altruism as by preference for wealth. Two types of social segmentation can result with different wcalth distribution. To a large extcnt our results seem to fit reality better than those obtained with standard optimal growth models in which dynastic altruism ( or r ate o f impatience) is the only source of heterogeneity: overaccumulation can appear, public debt and unfunded pensions are not neutra!, estate taxation can improve the welfare of the top wealthy.

Contagion in financial networks: a network theory and agent-based approaches to modeling the spread of risk in financial systems

Esta dissertação estuda a propagação de crises sobre o sistema financeiro. Mais especi- ficamente, busca-se desenvolver modelos que permitam simular como um determinado choque econômico atinge determinados agentes do sistema financeiro e apartir dele se propagam, transformando-se em um problema sistêmico. A dissertação é dividida em dois capítulos,além da introdução. O primeiro capítulo desenvolve um modelo de propa- gação de crises em fundos de investimento baseado em ciência das redes.Combinando dois modelos de propagação em redes financeiras, um simulando a propagação de perdas em redes bipartites de ativos e agentes financeiros e o outro simulando a propagação de perdas em uma rede de investimentos diretos em quotas de outros agentes, desenvolve-se um algoritmo para simular a propagação de perdas através de ambos os mecanismos e utiliza-se este algoritmo para simular uma crise no mercado brasileiro de fundos de investimento. No capítulo 2,desenvolve-se um modelo de simulação baseado em agentes, com agentes financeiros, para simular propagação de um choque que afeta o mercado de operações compromissadas.Criamos também um mercado artificial composto por bancos, hedge funds e fundos de curto prazo e simulamos a propagação de um choque de liquidez sobre um ativo de risco securitizando utilizado para colateralizar operações compromissadas dos bancos.

Intercalation processes and diffusion paths of lithium ions in spinel-type structured Li(1+x)Ti(2)O(4): Density functional theory study

Intercalation processes and corresponding diffusion paths of Li ions into spinel-type structured Li(1+x)Ti(2)O(4) (0 <= x <= 0.375) are systematically studied by means of periodic density functional theory calculations for different compositions and arrangements. An analysis of the site preference for intercalation processes is carried out, while energy barriers for the diffusion paths have been computed in detail. Our results indicate that the Li insertion is thermodynamically favorable at octahedral sites 16c in the studied composition range, and Li migration from tetrahedral sites 8a to octahedral sites 16c stabilizes the structure and becomes favorable for compositions x >= 0.25. Diffusion paths from less stable arrangements involving Li migrations between tetrahedral and octahedral sites exhibit the lowest energy barrier since the corresponding trajectories and energy profiles take place across a triangle made by three neighboring oxygen anions without structural modification. Theoretical and experimental diffusion coefficients are in reasonable agreement.

Local home bias: Theory and new empirical evidence from Italy

This thesis examines the literature on local home bias, i.e. investor preference towards geographically nearby stocks, and investigates the role of firm’s visibility, profitability, and opacity in explaining such behavior. While firm’s visibility is expected to proxy for the behavioral root originating such a preference, firm’s profitability and opacity are expected to capture the informational one. I find that less visible, and more profitable and opaque firms, conditionally to the demand, benefit from being headquartered in regions characterized by a scarcity of listed firms (local supply of stocks). Specifically, research estimates suggest that firms headquartered in regions with a poor supply of stocks would be worth i) 11 percent more if non-visible, non-profitable and non-opaque; ii) 16 percent more if profitable; and iii) 28 percent more if both profitable and opaque. Overall, as these features are able to explain most, albeit not all, of the local home bias effect, I reasonably argue and then assess that most of the preference for local is determined by a successful attempt to exploit local information advantage (60 percent), while the rest is determined by a mere (irrational) feeling of familiarity with the local firm (40 percent). Several and significant methodological, theoretical, and practical implications come out.

Essays on the Axiomatic Theory of Matching

This dissertation mimics the Turkish college admission procedure. It started with the purpose to reduce the inefficiencies in Turkish market. For this purpose, we propose a mechanism under a new market structure; as we prefer to call, semi-centralization. In chapter 1, we give a brief summary of Matching Theory. We present the first examples in Matching history with the most general papers and mechanisms. In chapter 2, we propose our mechanism. In real life application, that is in Turkish university placements, the mechanism reduces the inefficiencies of the current system. The success of the mechanism depends on the preference profile. It is easy to show that under complete information the mechanism implements the full set of stable matchings for a given profile. In chapter 3, we refine our basic mechanism. The modification on the mechanism has a crucial effect on the results. The new mechanism is, as we call, a middle mechanism. In one of the subdomain, this mechanism coincides with the original basic mechanism. But, in the other partition, it gives the same results with Gale and Shapley's algorithm. In chapter 4, we apply our basic mechanism to well known Roommate Problem. Since the roommate problem is in one-sided game patern, firstly we propose an auxiliary function to convert the game semi centralized two-sided game, because our basic mechanism is designed for this framework. We show that this process is succesful in finding a stable matching in the existence of stability. We also show that our mechanism easily and simply tells us if a profile lacks of stability by using purified orderings. Finally, we show a method to find all the stable matching in the existence of multi stability. The method is simply to run the mechanism for all of the top agents in the social preference.

Mapping Individual Variation in Male Mating Preference Space: Multiple Choice in a Color Polymorphic Cichlid Fish

Sexual selection theory largely rests on the assumption that populations contain individual variation in mating preferences and that individuals are consistent in their preferences. However, there are few empirical studies of within-population variation and even fewer have examined individual male mating preferences. Here, we studied a color polymorphic population of the Lake Victoria cichlid fish Neochromis omnicaeruleus, a species in which color morphs are associated with different sex-determining factors. Wild-caught males were tested in three-way choice trials with multiple combinations of different females belonging to the three color morphs. Compositional log-ratio techniques were applied to analyze individual male mating preferences. Large individual variation in consistency, strength, and direction of male mating preferences for female color morphs was found and hierarchical clustering of the compositional data revealed the presence of four distinct preference groups corresponding to the three color morphs in addition to a no-preference class. Consistency of individual male mating preferences was higher in males with strongest preferences. We discuss the implications of these findings for our understanding of the mechanisms underlying polymorphism in mating preferences.

A test of genetic association among male nuptial coloration, female mating preference, and male aggression bias within a polymorphic population of cichlid fish

Both inter- and intrasexual selection have been implicated in the origin and maintenance of species-rich taxa with diverse sexual traits. Simultaneous disruptive selection by female mate choice and male-male competition can, in theory, lead to speciation without geographical isolation if both act on the same male trait. Female mate choice can generate discontinuities in gene flow, while male-male competition can generate negative frequency-dependent selection stabilizing the male trait polymorphism. Speciation may be facilitated when mating preference and/or aggression bias are physically linked to the trait they operate on. We tested for genetic associations among female mating preference, male aggression bias and male coloration in the Lake Victoria cichlid Pundamilia. We crossed females from a phenotypically variable population with males from both extreme ends of the phenotype distribution in the same population (blue or red). Male offspring of a red sire were significantly redder than males of a blue sire, indicating that intra-population variation in male coloration is heritable. We tested mating preferences of female offspring and aggression biases of male offspring using binary choice tests. There was no evidence for associations at the family level between female mating preferences and coloration of sires, but dam identity had a significant effect on female mate preference. Sons of the red sire directed significantly more aggression to red than blue males, whereas sons of the blue sire did not show any bias. There was a positive correlation among individuals between male aggression bias and body coloration, possibly due to pleiotropy or physical linkage, which could facilitate the maintenance of color polymorphism.

Female mating preference for bold males in the guppy, Poecilia reticulata.

Although females prefer to mate with brightly colored males in numerous species, the benefits accruing to such females are virtually unknown. According to one hypothesis of sexual selection theory, if the expression of costly preferred traits in males (such as conspicuous colors) is proportional to the male's overall quality or reveals his quality, a well-developed trait should indicate good condition and/or viability for example. A female choosing such a male would therefore stand to gain direct or indirect fitness benefits, or both. Among potential phenotypic indicators of an individual's quality are the amount and brightness of its carotenoid-based colors and its boldness, as measured by its willingness to risk approaching predators without being killed. Here, we show experimentally that in the Trinidadian guppy (Poecilia reticulata) the visual conspicuousness of the color pattern of males correlates positively with boldness toward, and with escape distance from, a cichlid fish predator. Bold individuals are thus more informed about nearby predators and more likely to survive encounters with them. Mate-choice experiments showed that females prefer colorful males as mates, but prefer bolder males irrespective of their coloration when given the opportunity to observe their behavior toward a potential fish predator. By preferentially mating with colorful males, female guppies are thus choosing on average, relatively bold, and perhaps more viable, individuals. In doing so, and to the extent that viability is heritable, they potentially gain indirect fitness benefits by producing more viable offspring than otherwise.

An endogenous rate of time preference, the Penrose effect, and dynamic optimality of environmental quality.

In the present paper, the endogenous theory of time preference is extended to analyze those processes of capital accumulation and changes in environmental quality that are dynamically optimum with respect to the intertemporal preference ordering of the representative individual of the society in question. The analysis is carried out within the conceptual framework of the dynamic analysis of environmental quality, as has been developed by a number of economists for specific cases of the fisheries and forestry commons. The duality principles on intertemporal preference ordering and capital accumulation are extended to the situation where processes of capital accumulation are subject to the Penrose effect, which exhibit the marginal decrease in the effect of investment in private and social overhead capital upon the rate at which capital is accumulated. The dynamically optimum time-path of economic activities is characterized by the proportionality of two systems of imputed, or efficient, prices, one associated with the given intertemporal ordering and another associated with processes of accumulation of private and social overhead capital. It is particularly shown that the dynamically optimality of the processes of capital accumulation involving both private and social overhead capital is characterized by the conditions that are identical with those involving private capital, with the role of social overhead capital only indirectly exhibited.

A hierarquia de preferência do consumidor em decisões de investimento financeiro

A literatura acadêmica sobre o comportamento do investidor financeiro é bastante escassa. A pesquisa sobre o processo de decisão, em geral, aborda tradeoffs na aquisição de produtos e pouco se discute o processo de decisão de investimento. Esta tese pretende contribuir para a redução deste gap ao discutir fatores determinantes para a tomada de decisão do investidor pessoal em produtos financeiros. A decisão de investimento é complexa, envolve, entre outros, o tradeoff entre renunciar o consumo presente pela possibilidade de maior bem estar no futuro. Adicionalmente, em muitas situações, existe possibilidade real de perda dos recursos financeiros investidos. Para investigar os percursos desta decisão foram realizadas entrevistas em profundidade com executivos ligados ao setor de fundos de investimento e ao de distribuição de produtos de investimento dos maiores bancos brasileiros atuantes no segmento de varejo. Os conhecimentos recolhidos e a revisão de literatura efetuada subsidiaram a elaboração do questionário de pesquisa aplicado em plataforma web junto a potenciais investidores. Os atributos rentabilidade, possibilidade de perda (proxy de risco), liquidez, taxa de administração e recomendação do gerente foram identificados como os mais relevantes para a decisão do investidor. Para construção dos estímulos e decomposição da utilidade da decisão foi utilizada a técnica conjoint based choice (CBC) que simula uma decisão real. Os resultados apontaram ser a recomendação do gerente o atributo mais importante para a formação da preferência por uma alternativa de investimento, resultado que, por si só, indica que fatores não racionais exercem influência na decisão. Estudou-se, então, o impacto da aversão ao risco e do estilo cognitivo do investidor. Os resultados denotam que os mais avessos e os mais intuitivos são mais suscetíveis à recomendação do gerente, mas que seus efeitos são independentes entre si. As evidências sugerem que os mais intuitivos utilizam o gerente para alcançar conforto cognitivo na decisão e que os mais avessos para mitigar a sensação de risco associada ao produto. Uma análise de cluster indicou ser possível segmentar a amostra em dois grupos, um mais propenso à recomendação do gerente e outro aos atributos do produto. A recomendação do gerente mostrou ser o atributo mais forte na distinção dos grupos. Os resultados indicam que uma segmentação de mercado baseada na propensão à recomendação do gerente pode ser efetiva para direcionar a construção de uma estratégia de relacionamento que busque incrementar os resultados de longo prazo.

Mixed Public-Private Enterprises in Europe: Economic Theory and an Empirical Analysis of Italian Water Utilities. Bruges European Economic Research (BEER) Papers 4/July 2006

Mixed enterprises, which are entities jointly owned by the public and private sector, are spreading all over Europe in local utilities. Well aware that in the vast majority of cases the preference of local authorities towards such governance structure is determined by practical reasons rather than by the ambition to implement new regulatory designs (an alternative to the typical “external” regulation), our purpose is to confer some scientific value to this phenomenon which has not been sufficiently investigated in the economic literature. This paper aims at proposing an economic analysis of mixed enterprises, especially of the specific configuration in which the public partner acts as controller and the private one (or “industrial” partner) as service provider. We suggest that the public service concession to mixed enterprises could embody, under certain conditions, a noteworthy substitute to the traditional public provision and the concession to totally private enterprises, as it can push regulated operators to outperform and limit the risk of private opportunism. The starting point of the entire analysis is that ownership allows the (public) owner to gather more information about the actual management of the firm, according to property rights theory. Following this stream of research, we conclude that under certain conditions mixed enterprises could significantly reduce asymmetric information between regulators and regulated firms by implementing a sort of “internal” regulation. With more information, in effect, the public authority (as owner/controller of the regulated firm, but also as member of the regulatory agency) can stimulate the private operator to be more efficient and can monitor it more effectively with respect to the fulfilment of contractual obligations (i.e., public service obligations, quality standards, etc.). Moreover, concerning the latter function, the board of directors of the mixed enterprise can be the suitable place where public and private representatives (respectively, welfare and profit maximisers) can meet to solve all disputes arising from incomplete contracts, without recourse to third parties. Finally, taking into account that a disproportionate public intervention in the “private” administration (or an ineffective protection of the general interest) would imply too many drawbacks, we draw some policy implications that make an equitable debate on the board of the firm feasible. Some empirical evidence is taken from the Italian water sector.

Effective leadership in salient groups: Revisiting leader-member exchange theory from the perspective of the social identity theory of leadership

Two studies compared leader-member exchange (LMX) theory and the social identity theory of leadership. Study 1 surveyed 439 employees of organizations in Wales, measuring Work group salience, leader-member relations, and perceived leadership effectiveness. Study 2 surveyed 128 members of organizations in India, measuring identification not salience and also individualism/collectivism. Both studies provided good support for social identity predictions. Depersonalized leader-member relations were associated with greater leadership effectiveness among high- than low-salient groups (Study 1) and among high than low identifiers (Study 2). Personalized leadership effectiveness was less affected by salience (Study 1) and unaffected by identification (Study 2). Low-salience groups preferred personalized leadership more than did high-salience groups (Study 1). Low identifiers showed no preference but high identifiers preferred depersonalized leadership (Study 2). In Study 2, collectivists did not Prefer depersonalized as opposed to personalized leadership, whereas individualists did, probably because collectivists focus more on the relational self.