ALBERT

Notes: The world's governments look set to commit the same fundamental economic errors to obstruct the development of natural resources outside the earth's atmosphere as have hampered the exploitation of the earth's seabed. Professor Sandler and Schulze of the Universities of Colorado and Wyoming, argue that, without the establishment of property rights in slots in the earth's orbit, in the electro-magnetic spectrum, and other outer space resources to allow private development, mankind may forego many of their benefits.

Notes: We argue that the challenges faced by threshold firms are deeply rooted in governance characteristics (i.e. the incentives, authority and legitimacy) which imbue them with characteristic capabilities, disabilities and path dependencies. Whereas Zahra and Filatotchev (2004) reason the principal problem facing threshold firms relates to organizational learning and knowledge management, we posit resource acquisition and utilization to be equally important. Moreover, we argue governance theory is more able than a knowledge-based perspective to explain the root causes of the learning and resource issues faced by threshold firms as well as the complex set of processes involved in their effective management.

Notes: In recent years, benefit-cost analysis has been increasingly applied to large societal decision problems (such as developing a fast breeder energy economy) which involve both risks to society and analysis of very long-term consequences possibly extending over many human generations. This paper examines the philosophical underpinnings of the technique which is a special case of utilitarianism, and compares implications of the technique to those arising from alternative ethical systems in analyzing questions of public safety. Ethical systems which emphasize the good of the whole, such as utilitarianism, are shown to differ sharply in decision outcomes from those which emphasize the rights of the individual, such as libertarianism. It is suggested that benefit-cost analysis should be broadened to include alternative weightings of benefits and costs consistent with a variety of ethical views.

Notes: This study analyzes the effectiveness of a mass-media radon information and testing campaign conducted in the Washington, D.C. area in the winter of 1988. Although an impressive number of test kits (approximately 100,000) were sold, the ultimate mitigation rates resulting from the campaign were extremely low. Analyses show that low mitigation rates cannot be explained by postulating that people's responses to radon are insensitive to the level of objective risk. They may instead be due to characteristics of the protective response required to reduce radon risk. Radon may be thought of as one of a family of household risks which have risk response profiles that make them particularly difficult for people to manage and remediate. Traditional information campaigns for such risks are likely to be ineffective; instead, they may require regulatory strategies or programs which provide active guidance and assistance.

Notes: Health risk beliefs of homeowners near a landfill site were assessed in a survey and compared to expert judgments of the health risks of living near the site. A bimodal distribution of health risk beliefs suggested sharp disagreement between the experts and at least some of the residents. Correlates of high risk beliefs included perception of odor from the site, exposure to media coverage of the problem, having children living at home, age (younger respondents more concerned), and gender (females more concerned). An aggregated neighborhood health risk belief predicted reductions in home prices even after controlling for home physical characteristics, such as size and other disamenities such as proximity to a freeway. In the 4100 homes near the site, the estimated depression in property values was estimated to total about $40.2 million before the site was closed and to be about $19.7 million after closure. Implications of these results for community conflict and for benefit-cost analysis of hazard site remediation are discussed.

Notes: Conclusions We have implicitly argued in the last section that a dynamic iterative survey mechanism may well need to be employed in the design of contingent valuation survey instruments in order to improve the accuracy of responses. Furthermore, due to the current inaccuracy of hedonic and travel cost approaches for valuing public goods, the least cost method, in our view, for establishing anchor or true individual values for testing alternative survey instruments is to use laboratory experiments. The objective of these experiments should be the development of the most simple survey design which gives accurate responses subject to the budget of the investigator. Is a complex iterative voting procedure required? How fast will such a procedure converge to ‘true’ values? What is the effect on incentives of relaxing the unanimity voting feature for large groups? All of these operational questions can at least qualitatively be answered in an experimental laboratory setting. This approach would allow rapid resolution of a number of problems which have developed in the application of the contingent valuation approach. First, the large difference between economic measures of willingness to accept and willingness to pay may be greatly reduced by application of demand revealing mechanisms. Any remaining difference between the two measures might then be properly attributed to psychological, ethical or other complicating factors. Second, the consistently large differences between the iterative bidding and payment card measures of willingness to pay suggests that one of the procedures might be more accurate than the other. Laboratory experimentation should be able to quickly identify the superior procedure. Third, contingent valuation studies which involve uncertainty have not proven successful. In a study of the willingness to pay to contain toxic wastes undertaken by Cummings and reported on in Schulze et al. (1983) nearly half of the respondents were willing to contribute the same amount of money for 50 percent odds of containment as for 100 percent odds of containment. Does this result indicate a failure of the expected utility hypothesis or a failure to perceive or comprehend probabilities by a large sub-sample of individuals? Or, is the survey at fault? Again the least cost approach for resolving these questions is likely to be a laboratory setting. Finally, individuals may have severe perception problems with the timing and method of payment used to collect bids for public goods. Schulze et al. (1983) report on a large divergence in the value of preserving visibility for visitors at the Grand Canyon using monthly payments in the form of higher electric utility bills to collect payment as compared to collecting higher daily entrance fees. Note that the first method hypothetically collects a regular payment on a monthly basis while the second hypothetically collects payments only if respondents visit the Grand Canyon. The first method implied an overall larger total benefit of preserving visibility than the second. Again, laboratory experiments could readily determine the relative accuracy of alternative temporal payment mechanisms.

Notes: Abstract Two insurance experiments using real-money consequences and multiple rounds to provide experience are described. In the first experiment, subjects bid for insurance to prevent a fixed loss of $4 at probabilities ranging from .01 to .9. Mean bids were near expected value except at the lowest probability of.01, for which a very bimodal distribution was observed (some subjects bid zero and others bid much more than expected value). A second experiment explored this bimodality at a probability of .01 with loss increased to $40. A similar bimodal distribution was obtained that persisted over 50 rounds of experience. These laboratory results are consistent with field evidence for low-probability hazards, for which people appear either to dismiss the risks or to worry too much about them.

Notes: Abstract This article estimates the marginal value of safety based on contingent values obtained in a labor-market-oriented national random-sample mail survey. Thus, worker preferences for safety are assessed directly, in contrast to the hedonic price method that has been used almost exclusively in related studies. Key aspects of this article are that (1) contingent values are obtained for small changes in risks of job-related fatal accidentsperceived by respondents, and (2) relationships are analyzed between respondents' marginal safety values and their income, socioeconomic/demographic characteristics, union membership status, and initial levels of risk faced.