In this book, Sharpe changes that by setting out his state-of-the-art approach to asset pricing in a nonmathematical form that will be comprehensible to a broad range of investment professionals, including investment advisors, money ...

Bank customers are not financial experts, and yet they make high-stakes decisions that can substantively affect personal wealth. Sooner or later, every individual has to take relevant investment decisions. Using data collected from financial advisors, bank customers and university students in Italy, this paper aims to reveal new insights about the decision processes of average non-expert investors: their investment goals, the information sets they consider, and the factors that ultimately influence decisions about investment products. Using four portfolio choice (...) tasks based on data collected directly from financial advisors and their clients, we find that most subjects used a limited set of information, ignoring factors that conventional economic models usually assume drive investor behavior. Furthermore, we suggest that non-compensatory decision-tree models, which make no trade-offs among investment features, are parsimonious descriptions of investor behavior useful for improving the organization of financial institutions and in policy contexts alike. (shrink)

This paper describes the admissible classes of parametric distribution functions of return portfolios and analyzes their consistency with the maximization of the expected utility. In particular, we present a general theory and a unifying framework with the following aims: (1) studying the implications of the classical market restrictions on the portfolio distributions; (2) establishing general rules of ordering, when the uncertain prospect depends by a finite number of parameters; (3) understanding how a dispersion measure has to be used, in (...) order to obtain the investors' optimal portfolios. (shrink)

We survey the literature that has explored the implications of decision-making under ambiguity for financial market outcomes, such as portfolio choice and equilibrium asset prices. This ambiguity literature has led to a number of significant advances in our ability to rationalize empirical features of asset returns and portfolio decisions, such as the failure of the two-fund separation theorem in portfolio decisions, the modest exposure to risky securities observed for a majority of investors, the home equity preference (...) in international portfolio diversification, the excess volatility of asset returns, the equity premium and the risk-free rate puzzles, and the occurrence of trading break-downs. (shrink)

In this note we provide new results of interest in the portfolio choice problem when the risky opportunities are correlated: for a general vector (X 1, X 2,..., X n ) of risky opportunities we give new conditions for stochastic comparison among different portfolios choices and new necessary and sufficient conditions to characterize the portfolio which gives the maximal expected utility.

We investigate whether the display of portfolio performance as coming from one large portfolio or two smaller subportfolios matters to individuals and whether prospect theory can explain this preference. To this end, we run a large survey experiment of 3267 individuals in 5 European countries presenting an identical overall return as coming from one portfolio or two smaller subportfolios to individuals. We also elicited the coefficients of the prospect theory value function through price list lotteries. In losses, (...) following prospect theory and mental accounting predictions, we observe emprically a preference for the display of returns as coming from 2 subportfolios, one displaying a small gain and the other a large loss, over a unique portfolio displaying the aggregated resulting loss. As expected, for an overall gain, individuals favor one portfolio over two subportfolios, one displaying a small loss and the other a larger gain. The shape of the value function does not explain individuals’ preferences. The reference point seems to be the main factor involved in explaining individuals’ choice of two subportfolio presentations of the outcome. (shrink)

Most theories in economics and finance predict what people will do, given what they know about the world around them. But what do people know about their environments? The study of information choice seeks to answer this question, explaining why economic players know what they know--and how the information they have affects collective outcomes. Instead of assuming what people do or don't know, information choice asks what people would choose to know. Then it predicts what, given that information, (...) they would choose to do. In this textbook, Laura Veldkamp introduces graduate students in economics and finance to this important new research. The book illustrates how information choice is used to answer questions in monetary economics, portfolio choice theory, business cycle theory, international finance, asset pricing, and other areas. It shows how to build and test applied theory models with information frictions. And it covers recent work on topics such as rational inattention, information markets, and strategic games with heterogeneous information.Illustrates how information choice is used to answer questions in monetary economics, portfolio choice theory, business cycle theory, international finance, asset pricing, and other areas Teaches how to build and test applied theory models with information frictions Covers recent research on topics such as rational inattention, information markets, and strategic games with heterogeneous information. (shrink)

We provide a simple model to measure the impact of aggregate risks. We consider agents whose rankings of lotteries over vectors of outcomes satisfy expected utility and separability. Such rankings are characterized in terms of aggregative utilities that measure sensitivity to aggregate uncertainty in a straightforward way. We consider applications to models of product variety, portfolio choice, and public attitudes towards catastrophic risks. The framework lends support to precautionary measures that penalize policies for exposure to correlation. The model (...) rationalizes a number of behavioral and policy patterns as attempts to hedge against aggregate uncertainty. (shrink)

Using a new dataset of environmental, social, and corporate governance company ratings for the European market, this article examines whether socially responsible stock selection adds or destroys value in terms of portfolio performance. From 2004 to 2012, we find the following: Negative screens excluding unrated stocks from a representative European stock universe allow investors to significantly outperform a passive investment in a diversified European stock benchmark portfolio. Additional negative screens based on environmental and social scores neither add nor (...) destroy portfolio value, when cut-off rates are not too high. In contrast, governance screens can significantly increase portfolio performance under similar conditions. Thus, investors in the European stock market can do well while doing good. Because of a loss of diversification, positive screens can cause portfolios to underperform the benchmark. This implies that investors should concentrate on eliminating the worst firms. Our results are robust along several dimensions, namely, choice of performance measure, time, test parametrisation, portfolio weighting scheme, approximation of the risk-free rate, and consideration of transaction costs. (shrink)

_In _Challenging the One Best System_, a team of leading education scholars offers a rich comparative analysis of the set of urban education governance reforms collectively known as the “portfolio management model.”_ They investigate the degree to which this model—a system of schools operating under different types of governance and with different degrees of autonomy—challenges the standard structure of district governance famously characterized by David Tyack as “the one best system.” The authors examine the design and enactment of the (...) portfolio management model in three major cities: New Orleans, Los Angeles, and Denver. They identify the five interlocking mechanisms at the core of the model—planning and oversight, choice, autonomy, human capital, and school supports—and show how these are implemented differently in each city. Using rich qualitative data from extensive interviews, the authors trace the internal tensions and tradeoffs that characterize these systems and highlight the influence of historical and contextual factors as well. Most importantly, they question whether the portfolio management model represents a fundamental restructuring of education governance or more incremental change, and whether it points in the direction of meaningful improvement in school practices. Drawing on a rigorous, multimethod study, _Challenging the One Best System_ represents a significant contribution to our understanding of system-level change in education. (shrink)

This paper attempts to identify behavioral patterns and compare their average success considering several criteria of bounded rationality. Experimentally observed choice behavior in various decision tasks is used to assess heterogeneity in how individual participants respond to 15 randomly ordered portfolio choices, each of which is experienced twice. Treatments differ in granting probability information and in eliciting aspirations. Since in our setting neither other regarding concerns nor risk attitude matter and probability of the binary chance move is (...) class='Hi'>choice irrelevant, categorizing decision types relies on parameter dependence and choice adaptations. We find that most participants reduce systematically sub-optimality when following the identified criteria. (shrink)

Multiple-choice questions have an undeserved reputation for only being able to test student recall of basic facts. In fact, well-crafted mechanically gradable questions can measure very sophisticated cognitive skills, including those engaged at the highest level of Benjamin Bloom’s taxonomy of outcomes. In this article, I argue that multiple-choice questions should be a part of the diversified assessment portfolio for most philosophy courses. I present three arguments broadly related to fairness. First, multiple-choice questions allow one to (...) consolidate subjective decision making in a way that makes it easier to manage. Second, multiple-choice questions contribute to the diversity of an evaluation portfolio by balancing out problems with writing-based assessments. Third, by increasing the diversity of evaluations, multiple-choice questions increase the inclusiveness of the course. In the course of this argument I provide examples of multiple-choice questions that measure sophisticated learning and advice for how to write good multiple-choice questions. (shrink)

The proposed study is based on a double causality, such as: the need to improve the counselling tools for high school students for the appropriate choice of a career development path; the existence of the category of disadvantaged students from an economic perspective, whose difficulties in choosing a training path for their career have been augmented during the pandemic. Our research provides an analysis of how the motivational essay can be substantiated as a useful tool in career counselling activities, (...) as well as how it can be integrated into counselling approaches for the economically disadvantaged teenagers to choose the academic development path. We have used a mixed research methodology, which complements the peer review approach with the qualitative analysis of a set of motivation essays developed by the 11th and 12th Grade students. The research aims to identify the level of development of self-analysis, self-reflection and self-assessment of motivational factors, which may be decisive in choosing a future career. The essay analysis highlights a series of elements, which reflects the dynamics of the change of motivational resources in the context of the digitalisation acceleration, of the upheavals on the labour market generated by the new social and economic context. The obtained results allow the formulation of conclusions: confirming the need for such an approach; certifying the possibility and usefulness of integrating the motivational essay into the career counsellor’s methodological portfolio and professional counselling approaches; illustrating useful effects and limits of the reflective effort generated during the essay. (shrink)

This article examines the risk and return profiles of stock indices composed of companies meeting environmental, social and governance screening criteria [such as the Dow Jones Sustainability Indices ] and conventional composite indices of eight Asian countries from 2002 to 2014. The results indicate that there are no significant differences in the returns or risk-adjusted returns between the ESG indices and the composite indices within countries. The results do reveal that the market volatility of the ESG indices is higher than (...) the market volatility of the conventional indices. Market betas of DJSI and ESG equity indices are significantly lower than betas of the composite equity indices. The overall results indicate that the performance of ESG equity indices of many Asian countries is similar to the performance of conventional indices, suggesting that investors can pursue socially responsible investing objectives without a material difference in portfolio performance from conventional investing. (shrink)

According to the local risk-neutrality theorem an agent who has the opportunity to invest in an uncertain asset does not buy it or sell it short iff its expected value is equal to its price, independently of the agent's attitude towards risk. Contrary to that it is shown that, in the context of expected utility theory with differentiable vNM utility function, but without the assumption of stochastic constant returns to scale, nondegenerate intervals of no-trade prices may exist. With a quasiconcave (...) expected utility function they do if, and only if, the agent is risk averse of order one. (shrink)

Coherent-ambiguity aversion is defined within the smooth-ambiguity model as the combination of choice-ambiguity and value-ambiguity aversion. Five ambiguous decision tasks are analyzed theoretically, where an individual faces two-stage lotteries with binomial, uniform, or unknown second-order probabilities. Theoretical predictions are then tested through a 10-task experiment. In tasks 1–5, risk aversion is elicited through both a portfolio choice method and a BDM mechanism. In tasks 6–10, choice-ambiguity aversion is elicited through the portfolio choice method, while (...) value-ambiguity aversion comes about through the BDM mechanism. The behavior of over 75 % of classified subjects is in line with the KMM model in all tasks 6–10, independent of their degree of risk aversion. Furthermore, the percentage of coherent-ambiguity-averse subjects is lower in the binomial than in the uniform and in the unknown treatments, with only the latter difference being significant. The most part of coherent-ambiguity-loving subjects show a high risk aversion. (shrink)

Financial literacy is essential for every individual concerned with public welfare and household portfolio choices. In this study, we investigate the impact of household financial literacy on individuals’ financial behavior using the China Household Financial Survey Data of 2015 and 2017. The results show that financial knowledge has significant current, long-term, and dynamic effects on financial behavior. This finding suggests that financial literacy is an important factor in shaping and improving financial behavior. Second, financial literacy can improve residents’ limited (...) attention, and residents with high attention tend to have formal bank accounts, participate in the stock market, and engage in financial behaviors in situations such as risky financial markets. High attention also helps to improve residents’ financial behavior. This relationship suggests that financial literacy positively impacts formal bank account holding, participation in financial markets, participation in commercial insurance, participation in pension plans, and credit card holdings through limited attention channels that facilitate access to specific financial information. In addition, heterogeneity analysis showed that the impact of financial literacy on financial behavior differs significantly between urban and rural households, between men and women, and between high and low education levels. The study provides valuable insights for policy implications to enhance financial literacy, such as carrying out financial training to improve residents’ knowledge about financial aspects, which further helps to optimize household financial decision-making. (shrink)

The existing literature on savings, insurance, and portfolio choices under risk has revealed that quite often comparative statics results depend, among other things, upon the values of the coefficients of relative risk aversion and relative prudence. More specifically the benchmark values for these coefficients are, respectively, one and two. Recently, several papers investigated constraints on the higher degree extensions of the coefficients of relative risk aversion and of relative prudence. The present work provides a unified approach to this question (...) based on the concept of elementary correlation increasing transformations, allowing for a better understanding of changes in risk in the multiplicative case. (shrink)

This paper attempts to empirically assess how advice may reduce suboptimality in a portfolio choice experiment with risk-neutral participants induced via binary-lottery incentives. Previous studies with a larger set of choice tasks report overwhelming evidence of suboptimality and how it is slightly reduced by learning and experience. Participants confront 15 randomly ordered portfolio choices, which they experience again in 2 successive phases. Intermediate advice between phases alerts participants that less-risky investments can improve the outcome for at (...) least one chance event without harming their success chances in the other random event. Compared to the pure choice treatment, another cognitively more demanding treatment additionally asks participants to form event-specific success aspirations that allow us to test satisficing and its optimality. The results show that intermediate advice increases the share of satisficing but not of optimal behavior beyond learning through experience. However, it significantly lowers the average distance from optimality. (shrink)

Willingness to take risk is one of the most important aspects of personal financial decisions, especially those regarding investments. Recent studies show that one’s perception of time, specifically the individual level of Present Hedonistic and Future Time Perspectives (TPs), influence risky financial choices. This was demonstrated for both, Time Perspective treated as an individual trait and for experimentally induced Time Perspectives. However, on occasion, people might find themselves under the joint influence of both, chronic and situational Time Perspectives and little (...) is known about interactions between them. The paper focuses on the interplay between chronic and induced levels of Future and Present Hedonistic TPs in explaining people’s propensity to take investment risks. An experimental study using a Polish national random-quota sample was conducted. The results showed that situationally induced Future TP lowered the preferred level of portfolio riskiness while situationally induced Present Hedonistic TPs resulted in exactly the opposite effect, and that the higher level of chronic Present Hedonistic TP was linked to higher investment risk preferences. The role of the chronic Present Hedonistic TP was moderated by the situationally induced Future (approaching significance) and Present Hedonistic TPs. The induction of these TPs resulted in reduction of the propensity to take investment risks. The study adds to the literature on psychological factors influencing the propensity to take financial risk. The results are also important for researchers who experimentally manipulate variables that might be also considered as chronic traits. They indicate that whether the manipulation is congruent with one’s natural tendencies may have a differential impact on subsequent measures. (shrink)

Most studies on the choices, motivations and behavior of investors consist of segmentations focused on socio-demographic characteristics such as age, income, education level, etc. Such approaches seem to simplify, even mutilate, reality by aggregating data about observable variables and considering investors as homogeneous groups. These perspectives are inspired by a scientific approach that consists of separating in order to better understand the observed phenomena. By considering individual as a “homo economicus”, that is to say, a rational and autonomous individual who (...) makes decisions motivated by material gains, these studies fail to recognize all the complexity that shapes human behavior. This paper argues that to understand the behavior and choices of investors in regards to socially responsible investing, we must consider social investors as complex individuals. In addition, we should take into account influence that the institution may exercise throughout the role of advisors and SRI promotion strategies. Our research builds on a multidimensional approach that explores to what extent demographic, environmental, social and governance issues, the trade-offs between financial return and social values, the attitudes and the role of the institution influence the decisions of individual social investors. Moreover, it adopts a more open approach by exploring the characteristics and behaviors of individual social investors in relation to those of conventional investors. Our research provides evidence from the Desjardins Fund. Qualitative and quantitative data gathered by Desjardins from online surveys are subjected to bivariate and multivariate analyses and are complimented by ten semi-structured interviews with managers, analysts, and advisors who provided further insight into SRI investment behavior and choice. The results show that while demographic characteristics still remain important in understanding the behavior and attitudes of social investors, it is their social values, ESG issues, financial return considerations and the role played by the institution in mediating investment decisions that are significantly associated with SRI portfolios. Our research highlights the complexity surrounding the phenomenon of SRI and has several implications both in terms of theory and practice. (shrink)

Corporate social responsibility (CSR) is a dramatically expanding area of activity for managers and academics. Consumer demand for responsibly produced and fair trade goods is swelling, resulting in increased demands for CSR activity and information. Assets under professional management and invested with a social responsibility focus have also grown dramatically over the last 10 years. Investors choosing social responsibility investment strategies require access to information not provided through traditional financial statements and analyses. At the same time, a group of mainstream (...) institutional investors has encouraged a movement to incorporate environmental, social, and governance information into equity analysis, and multi-stakeholder groups have supported enhanced business reporting on these issues. The majority of research in this area has been performed on European and Australian firms. We expand on this literature by exploring the CSR disclosure practices of a size- and industry-stratified sample of 50 publicly traded U.S. firms, performing a content analysis on the complete identifiable public information portfolio provided by these firms during 2004. CSR activity was disclosed by most firms in the sample, and was included in nearly half of public disclosures made during that year by the sample firms. Areas of particular emphasis are community matters, health and safety, diversity and human resources (HR) matters, and environmental programs. The primary venues of disclosure are mass media releases such as corporate websites and press releases, followed closely by disclosures contained in mandatory filings. Consistent with prior research, we identify industry effects in terms of content, emphasis, and reporting format choices. Unlike prior research, we can offer only mixed evidence on the existence of a size effect. The disclosure frequency and emphasis is significantly different for the largest one-fifth of the firms, but no identifiable trends are present within the rest of the sample. There are, however, identifiable size effects with respect to reporting format choice. Use of websites is positively related to firm size, while the use of mandatory filings is negatively related to firm size. Finally, and also consistent with prior literature, we document a generally self-laudatory tone in the content of CSR disclosures for the sample firms. (shrink)

This paper investigates the impact of negative screening on the investment universe as well as on financial performance. We come up with a novel identification process and as such depart from mainstream socially responsible investing literature by concentrating on individual firms’ conduct and by studying a much wider range of issues. Firstly, we study the size and financial performance of fourteen potentially controversial issues: abortion, adult entertainment, alcohol, animal testing, contraceptives, controversial weapons, fur, gambling, genetic engineering, meat, nuclear power, pork, (...) stem cells, and tobacco. We investigate an international sample of more than 1,600 stocks for more than twenty years. We then analyze the impact of applying negative screens to a market portfolio. Our findings suggest that the choice for negative screening strategies does matter for the size of the investment universe as well as for risk-adjusted return performance. Investing in controversial stocks in many cases results in additional risk-adjusted returns, whereas excluding them may reduce financial performance. These findings suggest that there are opportunity costs to negative screening. (shrink)

Recent years have witnessed an increasing growth in mutual funds that invest according to social criteria. As a consequence, the financial performance of these portfolios has attracted the interest of academics and practitioners. This paper investigates the performance of a sample of socially responsible mutual funds from seven European countries investing globally and/or in the European market. Using unconditional and conditional models, we assess the performance of these funds in comparison to conventional and socially responsible benchmark portfolios. The results show (...) that European socially responsible funds present in general neutral performance in relation to both conventional and socially responsible benchmarks. However, performance estimates seem to be slightly higher when funds are evaluated in relation to socially responsible indices. Our results also show that socially responsible funds are more exposed to conventional than to socially responsible indices. Furthermore, conventional benchmarks are better able to explain fund returns than socially responsible benchmarks. These findings are robust to both unconditional and conditional models of performance. We also observe that conditional models lead to a slight improvement of performance estimates and to the explanatory power of the models, both when conventional and socially responsible benchmarks are considered. This is consistent with most previous empirical findings on conditional performance evaluation. Our results show that investors who wish to hold European funds can add social screens to their investment choices without compromising financial performance. (shrink)

The Animal Breeding Research Organisation in Edinburgh (ABRO, founded in 1945) was a direct ancestor of the Roslin Institute, celebrated for the cloning of Dolly the sheep. After a period of sustained growth as an institute of the Agricultural Research Council (ARC), ABRO was to lose most of its funding in 1981. This decision has been absorbed into the narrative of the Thatcherite attack on science, but in this article I show that the choice to restructure ABRO pre-dated major (...) government cuts to agricultural research, and stemmed from the ARC's wish to prioritize biotechnology in its portfolio. ABRO's management embraced this wish and campaigned against the cuts based on a promise of biotechnological innovation, shifting its focus from farm animal genetics to the production of recombinant pharmaceuticals in sheep milk. By tracing interaction between government policies, research council agendas and local strategies, I show how novel research programmes such as genetic modification could act as a lifeline for struggling institutions. (shrink)

“Ethical investing” is interpreted in the following paper to be the use of non-financial normative criteria by investors in the choice ofsecurities for their portfolios.Ethical investors may aim at fulfilling duties they feel they have, possibly including increasing the amount of good in society through theconsequences of their buying and selling behavior. The main duties are those of not-profiting from bad corporate behavior and of punishing bad firms. The main consequence desired is that managers manage corporations in a more (...) ethical manner. But ethical investors also aim at receiving returns based on the market risk of their investments.If the aim of managers is to maximize shareholder wealth, then ethical investors can fulfill their duties or achieve their desired consequences only if their trading activities affect shareholder wealth, i.e., share price. A theoretical argument is presented to show that this trading activity will not affect share price or return. In addition, reference is made to results of empirical studies which show that ethical stocks yield market returns, i.e., that the share price of ethical firms is unaffected by the actions of ethical investors.If the trading activity of ethical investors fails to affect share price and return, then these investors fail to fulfill any of their goals or to achieve their ends. (shrink)

This study explores the underlying drivers of US public pension funds’ tendency to tilt their portfolios towards companies with stronger corporate social responsibility. Studying the equity holdings of large, internally managed US state pension funds, we find evidence that the political leaning of their beneficiaries and political pressures by state politicians affect funds’ investment decisions. State pension funds from states with Democratic-leaning beneficiaries tilt their portfolios more strongly towards companies that perform well on CSR issues, and this tendency is intensified (...) when the state government is dominated by Democratic state politicians. Moreover, we find that funds which tilt their portfolios towards companies with superior CSR scores generate a slightly higher return compared with their counterparts. Overall, our findings indicate that funds align their investment choices with the financial and non-financial interests of their beneficiaries when deciding whether to incorporate CSR into their equity allocations. (shrink)

Many research-intensive universities have moved into the business of promoting technology development that promises revenue, impact, and legitimacy. While the scholarship on academic capitalism has documented the general dynamics of this institutional shift, we know less about the ground-level challenges of research priority and scientific problem choice. This paper unites the practice tradition in science and technology studies with an organizational analysis of decision-making to compare how two university artificial intelligence labs manage ambiguities at the edge of scientific knowledge. (...) One lab focuses on garnering funding through commercialization schemes, while the other is oriented to federal science agencies. The ethnographic comparison identifies the mechanisms through which an industry-oriented lab can be highly adventurous yet produce a research program that is thin and erratic due to a priority placed on commercialization. However, the comparison does not yield an implicit nostalgia for federalized science; it reveals the mechanisms through which agency-oriented labs can pursue a thick and consistent research portfolio but in a strikingly myopic fashion. (shrink)

A rise of academic capitalism over the past four decades has been well documented within many research-intensive universities. Largely missing, however, are in-depth studies of how particularly situated academic groups manage the uncertainties that come with intermittent and fickle commercial funding streams in their daily research practice and problem choice. To capture the strategies scientists adopt under these conditions, this article provides an ethnographically detailed (and true) story about how a single project in Artificial Intelligence grew over several years (...) from a peripheral idea to the very center of an academic lab’s commercial portfolio. The analysis theorizes an epistemic form—nimble knowledge production—and documents three of its lab-level features: 1) rapid prototyping to keep sunk costs low, 2) shared search for “real world problems” rather than “theoretical” ones, and 3) nimble commitment to research problem choice. While similar forms of academic knowledge transfer have been lauded as “mode 2,” “innovative,” or “hybrid” for initiating cross-institutional collaboration and pushing science beyond disciplinary silos, this case suggests it can rely on fleeting attention to problems resistant to a quick fix. (shrink)

Mental accounting is a concept associated with the work of Richard Thaler. According to Thaler, people think of value in relative rather than absolute terms. They derive pleasure not just from an object’s value, but also the quality of the deal – its transaction utility (Thaler, 1985). In addition, humans often fail to fully consider opportunity costs (tradeoffs) and are susceptible to the sunk cost fallacy. Why are people willing to spend more when they pay with a credit card than (...) cash (Prelec & Simester, 2001)? Why would more individuals spend $10 on a theater ticket if they had just lost a $10 bill than if they had to replace a lost ticket worth $10 (Kahneman & Tversky, 1984)? Why are people more likely to spend a small inheritance and invest a large one (Thaler, 1985)? According to the theory of mental accounting, people treat money differently, depending on factors such as the money’s origin and intended use, rather than thinking of it in terms of the “bottom line” as in formal accounting (Thaler, 1999). An important term underlying the theory is fungibility, the fact that all money is interchangable and has no labels. In mental accounting, people treat assets as less fungible than they really are. Even seasoned investors are susceptible to this bias when they view recent gains as disposable “house money” (Thaler & Johnson, 1990) that can be used in high-risk investments. In doing so, they make decisions on each mental account separately, losing out the big picture of the portfolio. (See also partitioning and pain of paying for ideas related to mental accounting.) . (shrink)

In lieu of an abstract, here is a brief excerpt of the content:Evaluation, Standards, Normalization: Historico-philosophical Formations and the Conditions of Possibility for Checklist Thought Bernadette Baker University of Wisconsin-Madison In education today a new vocabulary has emerged that is far more than just words. In the context of educational policy the setting of goals or objectives is now being subsumed under terms such as statewidestandards, child development is now being adjectivized by descriptors such as learning disability or emotionally disturbed, (...) and the evaluation ofclassroom-based performance is now being collated in aportfolio. These are more than just buzz words-at one level they are new ways of governing children and teachers, of organizing action, and of perceiving the world. What, for instance, does it tell us about ourselves when first-grade students Mikey, Enrique, Waldo, orDonal are introduced to visitors to the school by labels such as LD, ED, ADD, ADHD, and so forth, rather thanby their name? What does it tell us about ourselves when we say a curriculum or program of study is in line with the standards established somewhere else? And what story do we think is being narratedin the documentation of a child's performance in portfolio form across a semester or year? In consideringwhyterms suchasstandards, child development, or even evaluation have such contemporary currency I am necessarily drawn into a study of the timespaces in which they did not have such currency at all. This paper maps four moves into a moment that I think of as a rather long present-day-a present that is not simply this morning, yesterday, or the daybefore, but one that links the subjectivities ofthose now living in educational workto those made available about one hundred years ago. The four moves that I analyze here can be thought of as conditions of possibility for the operation of contemporary educational mies of reasoning, especially those that have formed around the resurgent popularity of"checklist thought" in reform efforts. The four moves collectively historicize how notions of standards, child development, and evaluation can pop up as commonsensical tropes through which to gather and degather action in the educational field. The first ofthese moves is that which flows from the operation ofan ideal to the operation of a norm. The second move is that which flows between the advent of statistics and the advent of eugenics. The third move is that which flows between the appearance ofnovels and fiction and the novel ficticityoffacts. And the fourth move is that which flows from the fictions of child development narratives to the stories that standards tell us. Collectively, these historico-philosophical moves will enable reconsideration of what we think evaluation, standards, and norms for child development actually narrate, lending food for thought to the specificityoftheir uptake in music education. From Ideal to Norm One way inwhichto examinethe shift from a seventeenth-century concept of the ideal to the nineteenth-century concept of the norm is by telling a story that was told in the early twentieth century. At this time when the educational field was formalizing, there was great care taken to record discussions held at conferences. When conferenceproceedings werepublished, theywere usually structured so that the presenter's paper©Philosophy ofMusic Education ReviewlO, no. 1 (Fall, 2002): 92-101. Bernadette Baker 93 was followed by a transcript of the conversation held after it. Like today, in the discussion time, audience members asked questions or made comments. Unlike today, the names of such participating audience members were typed into the proceedings and their specific questions or comments were written up as part ofreporting on the paper presented. In a discussion held at a conference in 1 905 on the topic of methods for training children labeledas feebleminded, apresenterhadspokenof the positive uses of a vegetable garden in the disciplining of feebleminded girls. The audience members relayed their own versions of experimenting with gardening and gathering, some complaining oftoo little space and others indicating the effects of having too many fields from which to gather. Dr. Dunlap was one such participant, indicatingimplicitlytheeffectsofhavingtoo many choices. In the spirit ofthe hunter/gatherer dichotomy, thegirlslabeledas feeblemindedatthe institutionwhereDr. Dunlap worked weresentout to pick com. The following story emerged. Dr. Dunlap: Our girls go out under an attendant and gather vegetables... (shrink)

This paper presents a new decision theory for modelling choice under risk. The new theory is a two-parameter generalization of expected utility theory. The proposed theory assumes that a decision maker: behaves as if maximizing expected utility; but may experience disappointment when the utility of a lottery’s outcome falls short of the expected utility of the lottery; and may have a preference for gambling. The proposed theory can rationalize the fourfold pattern of risk attitudes; the common ratio effect and (...) the reverse thereof ; the Allais paradox in classical common consequence problems and the reverse Allais paradox—in common consequence problems with an even split of a probability mass; violations of the betweenness axiom; switching behavior in the Samuelson’s example; violations of ordinal, upper and lower cumulative independence ; and preference reversals between valuations and choice. In application to insurance, the theory can rationalize full insurance with an actuarially unfair premium and aversion to probabilistic insurance. In application to optimal portfolio investment, the theory can rationalize the equity premium puzzle. (shrink)

The energy domain is still dominated by equilibrium models that underestimate both the dangers and opportunities related to climate change. In reality, climate and energy systems contain tipping points, feedback loops, and exponential developments. This paper describes how to create realistic energy transition management models: quantitative models that can discover profitable pathways from fossil fuels to renewable energy. We review the literature regarding agent-based economics, disruptive innovation, and transition management and determine the following requirements. Actors must be detailed, heterogeneous, interacting, (...) learning, and strategizing. Technology should be represented as a detailed and heterogeneous portfolio that can develop in a bottom-up manner, using endogenous feedback loops. Assumptions about discount rates and the social cost of carbon should be configurable. The model should contain interactions between the global, national, local, and individual level. A review of modelling techniques shows that equilibrium models are unsuitable and that system dynamics and discrete event simulation are too limited. The agent-based approach is found to be uniquely suited for the complex adaptive sociotechnical systems that must be modelled. But the choice for agent-based models does not mean a rejection of other approaches because they can be accommodated within the agent-based framework. We conclude with practical guidelines. (shrink)

The first topic of concern is anonymity, specifically the anonymity that is available in communications on the Internet. An earlier paper argues that anonymity in electronic communication is problematic because: it makes law enforcement difficult ; it frees individuals to behave in socially undesirable and harmful ways ; it diminishes the integrity of information since one can't be sure who information is coming from, whether it has been altered on the way, etc.; and all three of the above contribute to (...) an environment of diminished trust which is not conducive to certain uses of computer communication. Counterbalancing these problems are some important benefits. Anonymity can facilitate some socially desirable and beneficial behavior. For example, it can eliminate the fear of repercussions for behavior in contexts in which repercussions would diminish the availability or reliability of information, e.g., voting, personal relationships between consenting adults, and the like. Furthermore, anonymity can be used constructively to reduce the effect of prejudices on communications. Negative aspects of anonymity all seem to point to a tension between accountability and anonymity. They suggest that accountability and anonymity are not compatible, and they even seem to suggest that since accountability is a good thing, it would be good to eliminate anonymity. In other words, the problems with anonymity suggest that individuals are more likely to behave in socially desirable ways when they are held accountable for their behavior, and they are more likely to engage in socially undesirable behavior when they are not held accountable. I am not going to take issue with the correlation between accountability and anonymity, but rather with the claim that accountability is good. To examine this problem, let's look at a continuum that stretches from total anonymity at one end, and no anonymity at all at the other end. At the opposite extreme of anonymity is a panopticon society. The panopticon is the prison environment described by Foucault in which prison cells are arranged in a large circle with the side facing the inside of the circle open to view. The guard tower is placed in the middle of the circle so that guards can see everything that goes on in every cell. In a recent article on privacy, Jeffrey Reiman, reflecting on the new intelligent highway systems, suggests that we are moving closer and closer to a panopticon society. When we contemplate all the electronic data that is now gathered about each one of us as we move through our everyday lives- intelligent highway systems, consumer transactions, traffic patterns on the internet, medical records, financial records, and so on- we see the trend that Reiman identifies. Electronic behavior is recorded and the information is retained. While actions/transactions in separate domains are not necessarily combined, it seems obvious that the potential exists for combining data into a complete portfolio of an individual's day to day life. So it would seem that as more and more activities and domains are moved into a IT-based medium, the closer we will come to a panopticon society. A panopticon society gives us the ultimate in accountability. Everything an individual does is observable and therefore available to those to whom we are accountable. Of course, in doing this, it puts us, in effect, in prison. The prison parallel is appropriate here because what anonymity allows us is freedom; prison is the ultimate in lack of freedom. In this way the arguments for a free society become arguments for anonymity. Only when individuals are free will they experiment, try new ideas, take risks, and learn by doing so. Only in an environment that tolerates making mistakes will individuals develop the active habits that are so essential for democracy. In a world without information technology, individuals have levels or degrees and various kinds of anonymity and consequently different levels and kinds of freedom. Degrees and kinds of anonymity vary with the domain: small town social life versus urban social life, voting, commercial exchanges, banking, automobile travel, airplane travel, telephone communication, education, and so on. Drawing from our experience before IT-based institutions, we might believe that what we need is varying levels or degrees and kinds of anonymity. This seems a good starting place because it suggests an attempt to re-create the mixture that we have in the physical, non-IT-based world. Nevertheless, there is a danger. If we think in terms of levels and degrees of anonymity, we may not see the forest from the trees. We may not acknowledge that in an electronic medium, levels and kinds of anonymity mean, in an important sense, no anonymity. If there are domains in which we can be anonymous but those domains are part of a global communication infrastructure in which there is no anonymity at the entry point, then it will always be possible to trace someone's identity. We delude ourselves when we think we have anonymity on-line or off-line. Rather, what we have both places is situations in which it is more and less difficult to identify individuals. We have a continuum of situations in which it is easy and difficult to link behavior to other behavior and histories of behaviors. In the physical world, we can go places and do things where others don't know us by name and have no history with us, though they see our bodies, clothes, and behavior. If we do nothing unusual, we may be forgotten. On the other hand, if we do something illegal, authorities may attempt to track us down and figure out who we are. For example, law enforcement officials, collection agencies, those who want to sue us may take an active interest in removing our anonymity, ex post facto. Think of Timothy McVeigh and Terry Nichols-the men who apparently bombed the federal building in Oklahoma City. Much of what they did, they did anonymously, but then law enforcement officials set out to find out who had done various things, e.g., rented a car, bought explosives, etc. The shrouds of anonymity under which McVeigh and Nichols had acted were slowly removed. Is this any different than behavior on the internet? Is there a significant difference in the kind or degree of anonymity we have in the physical world versus what we have in an IT-based world? The character of the trail we leave is different; in the one case, its an electronic trail; while in the other it involves human memories, photographs, and paper and ink. What law enforcement officials had to do to track down McVeigh is quite different from tracking down an electronic law breaker. Also, the cost of electronic information gathering, both in time and money, can be dramatically lower than the cost of talking to people, gathering physical evidence, and the other minutia required by traditional detective work. We should acknowledge that we do not and are never likely to have anonymity on the Internet. We would do better to think of different levels or kinds of identity. There are important moral and social issues arising as a result of these varying degrees and kinds of identity. Perhaps the most important matter is assuring that individuals are informed about the conditions in which they are interacting. Perhaps, even more important is that individuals have a choice about the conditions under which they are communicating. In the rest of this paper we explore a few examples of levels and kinds of identity that are practical on the Internet. We discuss the advantages and disadvantages that we see for these "styles" of identity for individuals, and we examine the costs and benefits of these styles for society as a whole. (shrink)

In a day by day analysis, the cabinet-formation leading to the fifth Tindemans cabinet in Belgium in traced, using information gathered from talks with the main participants, and also making use of their personal notes.This «diary» consists of three parts : the first part concerns the partner-choice : the coming into the cabinet of the so-called «regional parties» and the socialists, and the disappearance of the liberals ; the second part concerns the negotiations about thegovernment-program proper, which resulted in (...) an agreement about statereform ; the third part relates the distribution of ministerial portfolios. (shrink)

As resources in health care are scarce, managers and clinicians must make difficult choices about what to fund and what not to fund. At the level of a regional health authority, limited approaches to aid decision makers in shifting resources across major service portfolios exist. A participatory action research project was conducted in the Calgary Health Region. Through five phases of action, including observation of senior management meetings, as well as two sets of one-on-one interviews and two focus groups, an (...) approach to priority setting at the macro level within the health region was developed and implemented. The resulting macro level approach builds on the program budgeting and marginal analysis (PBMA) framework. Using a multi-disciplinary expert panel, about $45M (CAN) was released for the 2002/03 fiscal year and made available for re-allocation to service growth areas and the deficit. Important qualitative themes from the managers and clinicians informed both process development and refinement. The approach developed here not only facilitated re-allocation of resources, but also drew in both clinicians and managers to work together on this challenging task. The approach is pragmatic, transparent and evidence based, and should have application elsewhere. (shrink)

Drawing from research on strategic choice, this study investigates the relationship between market turbulence and firms’ sustainable behavior, in the context of sustainability-related institutional adversity. It argues that the relationship between market turbulence and sustainability is mediated by network embeddedness, and this mediating role in turn is moderated by a firm’s innovative orientation. Data collected from a sample of Ontario restaurants inform predictions about firms’ propensity to adopt local wines in their portfolios, despite the limited market and normative support (...) that these wines receive compared with imported wines. The study shows that market turbulence enhances sustainable firm behavior, through the development of strong network relationships. Furthermore, the mediating effect of network embeddedness is particularly salient among firms that exhibit a stronger innovative orientation. These findings reveal how and when turbulent market conditions can contribute to a firm’s sustainable behaviors in the presence of limited institutional support for such behaviors. (shrink)

Concrete worthy actions have not been aterminus of discernment for moral theory in theway that they often are for the deliberatingmoral agent. Some ordinary hallmarks of worthyactions challenge the unworldly and impersonalways of envisioning life that dominatephilosophical ethics. I discuss six: a worthyaction (1) improves the world in moralperspective, (2) discloses the agent''s power,(3) is personally rewarding, (4) unites virtue,justice, and happiness, (5) is a prime objectof moral choice, and (6) belongs to a practicalgenre (such as work or love). (...) Appreciatingworthy actions leads to a less abstract andconformist view of ethical standards and moreattention to individual portfolio-buildingaccording to diverse practical opportunities. (shrink)

Drawing from research on strategic choice, this study investigates the relationship between market turbulence and firms’ sustainable behavior, in the context of sustainability-related institutional adversity. It argues that the relationship between market turbulence and sustainability is mediated by network embeddedness, and this mediating role in turn is moderated by a firm’s innovative orientation. Data collected from a sample of Ontario restaurants inform predictions about firms’ propensity to adopt local wines in their portfolios, despite the limited market and normative support (...) that these wines receive compared with imported wines. The study shows that market turbulence enhances sustainable firm behavior, through the development of strong network relationships. Furthermore, the mediating effect of network embeddedness is particularly salient among firms that exhibit a stronger innovative orientation. These findings reveal how and when turbulent market conditions can contribute to a firm’s sustainable behaviors in the presence of limited institutional support for such behaviors. (shrink)