ALBERT

Notizen: We develop a simple model in which there is both interfirm (or intraproduct) and intrafirm (or interproduct) competition. The purpose is to develop a classificatoy framework in order to understand product-range or diversification decisions alongside conventional competition. The equilibrium outcomes commonly involve a limited range of the available goods being produced. Deterrence equilibria and other strategic actions are also examined.

Notizen: DeGraba and Postlewaite (1992) show that the seller of a durable input can solve the time inconsistency problem by offering most-favored-customer (MFC) protection to buyers. McAfee and Schwartz (1994) show that if a supplier sells inputs to competing firms using two-part tariffs, MFC protection that allows a firm to replace its contract with a contract executed by any other firm will not solve the commitment problem, and argue this implies managers cannot use MFCs as a strategic commitment device in complex contracting situations. This paper shows that if the profits of the seller and the buyers are monotonic in each term of the contract, then applying MFC protection to each term of a contract allows a manager to solve his commitment problem in complex contacting situations. We show that “standard” contract arrangements (two-part tariffs, declining block tariffs, and royalties as a percentage of sales) meet this condition.

Notizen: Food-related illness in the United States is estimated to affect over six million people per year and cost the economy several billion dollars. These illnesses and costs could be reduced if minimum infectious doses were established and used as the basis of regulations and monitoring. However, standard methodologies for dose-response assessment are not yet formulated for microbial risk assessment. The objective of this study was to compare dose response models for food-borne pathogens and determine which models were most appropriate for a range of pathogens. The statistical models proposed in the literature and chosen for comparison purposes were log-normal,(19) log-logistic,(17) exponential,(7,9,17)ß-Poisson(7,9,18) and Welbull-Gamma.(3) These were fit to four data sets also taken from published literature, Shigella fiexneri,(9,12,13)Shigella dysenteriae,(9,11)Campylobacter jejuni,(15,16) and Salmonella typhosa,(7,14) usingthe method of maximum likelihood. The Weibull-gamma, the only model with three parameters, was also the only model capable of fitting all the data sets examined using the maximum likelihood estimation for comparisons. Infectious doses were also calculated using each model. Within any given data set, the infectious dose estimated to affect one percent of the population ranged from one order of magnitude to as much as nine orders of magnitude, illustrating the differences in extrapolation of the dose response models. More data are needed to compare models and examine extrapolation from high to low doses for food-borne pathogens.

Notizen: Environmental managers are increasingly charged with involving the public in the development and modification of policies regarding risks to huma health and the environment. Involving the public in environmental decision making first requires a broad understanding of how and why the public perceives various risks. The Savannah River Stakeholder Study was conducted withthe purpose of investigating individual, economic, and social characteristics of risk perceptions among those living near the Savannah River Nuclear Weapons Site. A number of factors were found to impact risk perceptions among those living near the site. One's estimated proximity to the site and relative river location surfaced as strong determinants of risk perceptions among SRS residents. Additionally, living in a quality neighborhood and demonstrating a willingness to accept health risks for economic gain strongly abated heightened risk perceptions.

Notizen: Five atmospheric transport models were evaluated for use in Phase I1 ofthe Historical Public Exposures Studies at the Rocky Flats Plant. Models included a simple straight-line Gaussian plume model (ISCST2), several integrated puff models (RATCHET, TRIAD, and INPUFF2), and a complex terrain mode (TRAC). Evaluations were based on how well model predictions compared with sulfur hexafluoride tracer measurements taken in the vicinity of Rocky Flats in February 1991. Twelve separate tracer experiments were conducted, eac lasting 9 hr and measured at 140 samplers in arcs 8 and 16 km from the release point at Rocky Flats. Four modeling objectives were defined based on the endpoints of the overall study: (1) the unpaired maximum hourly average concentration, (2) paired time-averaged concentration, (3) unpaired time-averaged concentration, and (4) arc-integrated concentration. Performance measures were used to evaluate models and focused on the geometric mean and standard deviation of the predicted-to-observed ratio and the correlation coefficient between predicted and observed concentrations. No one model consistently outperformed the others in all modeling objectives and performance measures. About 75% of the maximum hourly concentration predictions were within a factor of 5 of the observations. About 64% of the paired and 80% of the unpaired time-averaged model predictions were within a factor of 5 of theobservations. The overall performance of the RATCHET model was somewhat better than the other models. All models appeared to experience difficulty defining plume trajectories, which was attributed to the influence of multilayered flow initiated by terrain complexities and the diurnal flow patterns characteristic of the Colorado Front Range.

Notizen: Calculation of accident dose-risk estimates with the RADTRAN code requires input data describing the population likely to be affected by the plumeof radioactive material (RAM) released in a hypothetical transportation accident. In the existing model, population densities within 1/2 mile (0.8 km)of the route centerline are tabulated in three ranges (Rural, Suburban, andUrban). These population densities may be of questionable validity since the plume in the RADTRAN analysis is assumed to extend out to 120 km from thehypothetical accident site. We present a GIs-based population model which accounts for the actual distribution of population under a potential plume, and compare accident-risk estimates based on the resulting population densities with those based on the existing model. Results for individual points along a route differ greatly, but the cumulative accident risks for a sample route of a few hundred kilometers are found to be comparable, if not identical. We conclude, therefore, that for estimation of aggregate accident risks over typical routes of several hundred kilometers, the existing, simpler RADTRAN model is sufficiently detailed and accurate.

Notizen: This paper discusses a number of the key challenges to the acceptance and aplication of probabilistic risk analysis (PRA). Those challenges include:(a) the extensive reliance on subjective judgment in PRA, requiring the development of guidance for the use of PRA in risk-informed regulation, and possibly the development of “robust” or “reference” prior distributions to minimize the reliance on judgment; and (b) the treatment of human perfor-mance in PRA, including not only human errorperse but also management and organizational factors more broadly. All of these areas are seen as presentinginteresting research challenges at the interface between engineering and other disciplines.

Notizen: Rational decision making requires that the total uncertainty about a variate of interest (a predictand) be quantified in terms of a probability distribution, conditional on all available information and knowledge. Supposethe state-of-knowledge is embodied in a deterministic model, which is imperfect and outputs only an estimate of the predictand. Fundamentals are presented of two Bayesian methods for producing a probabilistic forecast via anydeterministic model. The Bayesian Processor of Forecast (BPF) quantifies the total uncertainty in terms of a posterior distribution, conditional on model output. The Bayesian Forecasting System (BFS) decomposes the total uncertainty into input uncertainty and model uncertainty, which are characterized independently and then integrated into a predictive distribution. The BFS is compared with Monte Carlo simulation and “ensemble forecasting” technique, none of which can alone produce a probabilistic forecast that quantifies the total uncertainty, but each can serve as a component of the BFS.

Notizen: This article describes an application of a method for assessing risks associated with the introduction of an organism into a new environment. The test organism was a binucleate Rhizoctonia fungal isolate that has potential for commercial development as a biological control agent for damping-off diseases in bedding plants. A test sample of host plant species was selected using the centrifugal phylogenetic host range principles, but with an emphasis on economic species. The effect of the fungus on the plant was measured for each species and expressed on a logarithmic scale. The effects on weights of shoots and roots per container were not normally distributed, nor were the effects on the number of plants standing (those which survived). Statements about the effect on the number standing and the shoot weight per container involved using the observed (empirical) distribution. This is illustrated with an example. Problems were encountered in defining the population of species at risk, and in deciding how this population should be formally sampled. The limitations of the method are discussed.

Notizen: The heuristic-systematic information processing model (HSM) holds that individuals will use one or both of these modes of information processing when attempting to evaluate information in order to arrive at a judgment. Systematic processing is defined by effortful scrutiny and comparison of information, whereas heuristic processing is defined by the use of cues to amve more easily at a judgment. Antecedents to the two processing modes include information sufficiency, motivation, and self-efficacy. Structural equation modeling is used to examine competing configuration of this model and to evaluate the model as appropriate for predicting risk judgment. The model also is evaluated across three groups that vary with respect to their level of concern. These analyses are executed within a case study involving an epidemiological investigation of a suspected cancer cluster. The analysis confirms the HSM's theoretically proposed structure and shows it to be a useful vehicle for evaluating risk judgment. In the overall analysis, antecedent variables generally function as specified by theory. Systematic processing is predicted by greater motivation. Heuristic processing is predicted by information sufficiency. Self-efficacy is a significant predictor of both processing modes. And heuristic processing is shown to be associated with judgment of less risk. However, when the analysis is contrasted across three groups (those concerned about cancer, not concerned and uncertain) it is shown that the model is significantly more robust for the uncertain group. This finding may have implications for the use of the HSM in risk research specifically, and in field research generally.

Notizen: South Carolina has issued fish consumption advisories for the Savannah River based on mercury and radionuclide levels. We examine differences in fishing rates and fish consumption of 258 people interviewed while fishing along the Savannah River, as a function of age, education, ethnicity, employment history, and income, and test the assumption that the average consumption of fish is less than the recreational value of 19 kg/year assumed by risk assessors. Ethnicity and education contributed significantly to explaining variations in number of fish meals per month, serving size, and total quantity of fish consumed per year. Blacks fished more often, ate more fish meals of slightly larger serving sizes, and consumed more fish per year than did Whites. Although education and income were correlated, education contributed most significantly to behavior; people who did not graduate from high school ate fish more often, ate more fish per year, and ate more whole fish than people who graduated from high school. Computing consumption of fish for each person individually indicates that (1) people who eat fish more often also eat larger portions, (2) a substantial number of people consume more than the amount of fish used to compute risk to recreational fishermen, (3) some people consume more than the subsistence level default assumption (50 kglyear) and (4) Blacks consume more fish per year than Whites, putting them at greater risk from contaminants in fish. Overall, ethnicity, age, and education contributed to variations in fishing behavior and consumption.

Notizen: The association between daily fluctuations in ambient particulate matter and daily variations in nonaccidental mortality have been extensively investigated. Although it is now widely recognized that such an association exists, the form of the concentration-response model is still in question. Linear, no threshold and linear threshold models have been most commonly examined. In this paper we considered methods to detect and estimate threshold concentrations using time series data of daily mortality rates and air pollution concentrations. Because exposure is measured with error, we also considered the influence of measurement error in distinguishing between these two completing model specifications. The methods were illustrated on a 15-year daily time series of nonaccidental mortality and particulate air pollution data in Toronto, Canada. Nonparametric smoothed representations of the association between mortality and air pollution were adequate to graphically distinguish between these two forms. Weighted nonlinear regression methods for relative risk models were adequate to give nearly unbiased estimates of threshold concentrations even under conditions of extreme exposure measurement error. The uncertainty in the threshold estimates increased with the degree of exposure error. Regression models incorporating threshold concentrations could be clearly distinguished from linear relative risk models in the presence of exposure measurement error. The assumption of a linear model given that a threshold model was the correct form usually resulted in overestimates in the number of averted premature deaths, except for low threshold concentrations and large measurement error.

Notizen: Facility-specific information on pollution was obtained for 36 coke plants and 46 oil refineries in the United States and matched with information on populations surrounding these 82 facilities. These data were analyzed to determine whether environmental inequities were present, whether they were more economic or racial in nature, and whether the racial composition of nearby communities has changed significantly since plants began operations. The Census tracts near coke plants have a disproportionate share of poor and nonwhite residents. Multivariate analyses suggest that existing inequities are primarily economic in nature. The findings for oil refineries are not strongly supportive of the environmental inequity hypothesis. Rank ordering of facilities by race, poverty, and pollution produces limited (although not consistent) evidence that the more risky facilities tend to be operating in communities with above-median proportions of nonwhite residents (near coke plants) and Hispanic residents (near oil refineries). Over time, the racial makeup of many communities near facilities has changed significantly, particularly in the case of coke plants sited in the early 1900s. Further risk-oriented studies of multiple manufacturing facilities in various industrial sectors of the economy are recommended.

Notizen: We investigated the way results of human health risk assessments are used, and the theory used to describe those methods, sometimes called the “NAS paradigm.” Contrary to a key tenet of that theory, current methods have strictly limited utility. The characterizations now considered standard, Safety Indices such as “Acceptable Daily Intake,”“Reference Dose,” and so on, usefully inform only decisions that require a choice between two policy alternatives (e.g., approve a food additive or not), decided solely on the basis of a finding of safety. Riskis characterized as the quotient of one of these Safety Indices divided by an estimate of exposure: a quotient greater than one implies that the situation may be considered safe. Such decisions are very widespread, both in the U. S. federal government and elsewhere. No current method is universal; different policies lead to different practices, for example, in California's “Proposition 65,” where statutory provisions specify some practices. Further, an important kind of human health risk assessment is not recognized by this theory: this kind characterizes risk as likelihood of harm, given estimates of exposure consequent to various decision choices. Likelihood estimates are necessary whenever decision makers have many possible decision choices and must weigh more than two societal values, such as in EPA's implementation of “conventional air pollutants.” These estimates can not be derived using current methods; different methods are needed. Our analysis suggests changes needed in both the theory and practice of human health risk assessment, and how what is done is depicted.

Notizen: The prominent role of animal bioassay evidence in environmental regulatory decisions compels a careful characterization of extrapolation uncertainties. In noncancer risk assessment, uncertainty factors are incorporated to account for each of several extrapolations required to convert a bioassay outcome into a putative subthreshold dose for humans. Measures of relative toxicity taken between different dosing regimens, different endpoints, or different species serve as a reference for establishing the uncertainty factors. Ratios of no observed adverse effect levels (NOAELs) have been used for this purpose; statistical summaries of such ratios across sets of chemicals are widely used to guide the setting of uncertainty factors. Given the poor statistical properties of NOAELs, the informativeness of these summary statistics is open to question. To evaluate this, we develop an approach to “calibrate” the ability of NOAEL ratios to reveal true properties of a specified distribution for relative toxicity. A priority of this analysis is to account for dependencies of NOAEL ratios on experimental design and other exogenous factors. Our analysis of NOAEL ratio summary statistics finds (1) that such dependencies are complex and produce pronounced systematic errors and (2) that sampling error associated with typical sample sizes (50 chemicals) is nonnegligible. These uncertainties strongly suggest that NOAEL ratio summary statistics cannot be taken at face value; conclusions based on such ratios reported in well over a dozen published papers should be reconsidered.

Notizen: We compare the regulatory implications of applying the traditional (linearized) and exact two-stage dose-response models to animal carcinogenic data. We analyze dose-response data from six studies, representing five different substances, and we determine the “goodness- of-fit” of each model as well as the 95% confidence lower limit ofthe dose corresponding to a target excess risk of 10-5 (the target risk doseTRD). For the two concave datasets, we find that the exact model gives a substantially better fit to the data than the traditional model, and that the exact model gives aTRD that is an order of magnitude lower than that given by the traditional model. In the other cases, the exact model gives a fit equivalent to or better than the traditional model. We also show that although the exact two-stage model may exhibit dose-response concavity at moderate dose levels, it is always linear or sublinear, and never supralinear, in the low-dose limit. Because regulatory concern is almost always confined to the low-dose region extrapolation, supralinear behavior seems not to be of regulatory concern in the exact two-stage model. Finally, we find that when performing this low-dose extrapolation in cases of dose-response concavity, extrapolating the model fit leads to a more conservative TRD than taking a linear extrapolation from 10% excess risk. We conclude with a set of recommendations.

Notizen: The characterization and treatment of uncertainty poses special challenges when modeling indeterminate or complex coupled systems such as those involved in the interactions between human activity, climate and the ecosystem. Uncertainty about model structure may become as, or more important than, uncertainty about parameter values. When uncertainty grows so large that prediction or optimization no longer makes sense, it may still be possible to use the model as a “behavioral test bed” to examine the relative robustness of alternative observational and behavioral strategies. When modelsmust be run into portions of their phase space that are not well understood, different submodels may become unreliable at different rates. A common example involves running a time stepped model far into the future. Several strategies can be used to deal with such situations. The probability of model failure can be reported as a function of time. Possible alternative “surprises” can be assigned probabilities, modeled separately, and combined. Finally, through the use of subjective judgments, one may be able to combine, and over time shift between models, moving from more detailed to progressively simpler order-of-magnitude models, and perhaps ultimately, on to simple bounding analysis.

Notizen: In any model the values of estimates for various parameters are obtained from different sources each with its own level of uncertainty. When the probability distributions of the estimates are obtained as opposed to point values only, the measurement uncertainties in the parameter estimates may be addressed. However, the sources used for obtaining the data and the models used to select appropriate distributions are of differing degrees of uncertainty. A hierarchy of different sources of uncertainty based upon one's ability to validate data and models empirically is presented. When model parameters are aggregated with different levels of the hierarchy represented, this implies distortion or degradation in the utility and validity of the models used. Means to identify and deal with such heterogeneous data sourcesare explored, and a number of approaches to addressing this problem is presented. One approach, using Range/confidence Estimates coupled with an Information Value Analysis Process, is presented as an example.

Notizen: Variability arises due to differences in the value of a quantity among different members of a population. Uncertainty arises due to lack of knowledge regarding the true value of a quantity for a given member of a population. We describe and evaluate two methods for quantifying both variability and uncertainty. These methods, bootstrapsimulation and a likelihood-based method, are applied to three datasets. The datasetsinclude a synthetic sample of 19 values from a Lognormal distribution, a sample of nine values obtained from measurements of the PCB concentration in leafy produce, and asample of five values for the partitioning of chromium in the flue gas desulfurization system of coal-fired power plants. For each of these datasets, we employ the two methods to characterize uncertainty in the arithmetic mean and standard deviation, cumulative distribution functions based upon fitted parametric distributions, the 95th percentile of variability, and the 63rd percentile of uncertainty for the 81st percentile of variability. The latter is intended to show that it is possible to describe anypoint within the uncertain frequency distribution by specifying an uncertainty percentile and a Variability percentile. Using the bootstrap method, we compare results based upon use of the method of matching moments and the method of maximum likelihood for fitting distributions to data. Our results indicate that with only 5-19 data pointsas in the datasets we have evaluated, there is substantial uncertainty based upon random sampling error. Both the boostrap and likelihood-based approaches yield comparable uncertainty estimates in most cases.

Notizen: Evaluating alternatives for restoring the Everglades involves analysis of a complex ecological and economic system for which current knowledge is limited. Uncertain benefits and impacts are analyzed probabilistically in this paper, following otherwise accepted principles of net present value (NPV) analysis. Ecological benefits and impacts were considered in monetary terms. Probabilities for selected uncertain parameters were found by maximizing entropy. The first ecological risk conceptual model for the Everglades ecosystem was developed to show ecological interactions. “Current Plans” for restoration involve discharge of phosphorus-enriched water from artificial wetlands to relatively pristine Everglades marshes for 3–10 years, risking conversion of the ecosystem to a eutrophic cattail marsh. For two of the three areas studied, alternative “Bypass Plans” were shown to avoid the loss of up to 3000 acres of sawgrass marsh at a cost that is probabilistically justified by the value of the ecosystem preserved. Sensitivity of the results to projected ecological changes, eutrophic marsh valuation, natural marsh valuation, and future values as represented in the discount rate, was examined.

Notizen: The motivation of the present work is to provide an auxiliary tool for the decision-maker (DM) faced with predictive model uncertainty. The tool is especially suited for the allocation of R&Dresources. When taking decisions under uncertainties, making use of the output from mathematical or computational models, the DM might be helped if the uncertainty in model predictions be decomposed in a quantitative-rather than qualitativefashion, apportioning uncertainty according to source. This would allow optimal use of resources to reduce the imprecision in the prediction. For complex models, such a decomposition of the uncertainty into constituent elements could be impractical as such, due to the large number of parameters involved. If instead parameters could be grouped into logical subsets, then the analysis could be more useful, also because the decision maker might likely have different perceptions (and degrees of acceptance) for different kinds of uncertainty. For instance, the decomposition in groups could involve one subset of factors for each constituent module of the model; or one set for the weights, and one for the factors in a multicriteria analysis; or phenomenological parameters of the model vs. factors driving the model configuratiodstructure aggregation level, etc.); finally, one might imagine that a partition of the uncertainty could be sought between stochastic (or aleatory) and subjective (or epistemic) uncertainty. The present note shows how to compute rigorous decomposition of the output's variance with grouped parameters, and how this approach may be beneficial for the efficiency and transparency of the analysis.

Notizen: The concept of vulnerability of complex industrial systems is defined and discussed in relation to risk and system survivability. The discussion is illustrated by referring to a number of previous industrial accidents. The various risk factors, or threats, influencing an industrial system's vulnerability are classified and discussed. Both internal and external threats are covered. The general scope of vulnerability analysis is compared to traditional risk analysis approaches and main differences are illustrated. A general procedure for vulnerability analysis in two steps, including building of scenarios and preparation of relevant worksheets, is described and discussed.

Notizen: The current safety criteria for a high hazard dam focus on protecting the dam during a large flood. While protecting the dam does help to protect downstream people and property, the two objectives are not the same. Instead, the criteria should focus on lowering property damage (including damage to the dam) and preventing flood deaths.High hazard dams must survive a design flood in the current safety criteria. However, experts don't agree on the size of the peak flow that meets this criteria.Statistical hydrologists have proposed an alternative to using professional judgment to specify the design flood. Unfortunately, peak flow distributions cannot be estimated with confidence for extreme floods given available data.A major safety goal is to prevent deaths from floods. Preventing deaths is a major reason for constructing the spillway to handle extreme floods so that the dam doesn't fail due to overtopping. However, even if the dam doesn't fail, the spilled floods could cause many deaths. A better approach is to warn people to get them out of harm's way if a flood is coming.Retrofitting existing dams that could pass a “probable maximum flood” (PMF) when built is almost never a good use of funds. Instead, funds would be spent better by focusing on preventing damage from small floods, lowering the damage from medium-sized floods, and warning people in the event of a flood that could pose risks to life.

Notizen: This paper describes and illustrates the architecture of computer-based Dynamic Risk Management Systems (DRMS) designed to assist real-time risk management decisions for complex physical systems, for example, engineered systems such as offshore platforms or medical systems such as patient treatment in Intensive Care Units. A key characteristic of the DRMSs that we describe is that they are hybrid, combining the powers of Probabilistic Risk Analysis methods and heuristic Artificial Intelligence techniques. A control module determines whether the situation corresponds to a specific rule or regulation, and is clear enough or urgent enough for an expert system to make an immediate recommendation without further analysis of the risks involved. Alternatively, if time permits and if the uncertainties justify it, a risk and decision analysis module formulates and evaluates options, including that of gathering further information. This feature is particularly critical since, most of the time, the physical system is only partially observable, i.e., the signals observed may not permit unambiguous characterization of its state. The DRMS structure is also dynamic in that, for a given time window (e.g., 1 day or 1 hour), it anticipates the physical system's state (and, when appropriate, performs a risk analysis) accounting for its evolution, its mode of operations, the predicted external loads and problems, and the possible changes in the set of available options. Therefore, we specifically address the issue of dynamic information gathering for decision-making purposes. The concepts are illustrated focusing on the risk and decision analysis modules for a particular case of real-time risk management on board offshore oil platforms, namely of two types of gas compressor leaks, one progressive and one catastrophic. We describe briefly the DRMS proof-of-concept produced at Stanford, and the prototype (ARMS) that is being constructed by Bureau Veritas (Paris) based on these concepts.

Notizen: Identifying the causes of accidents is a necessary prerequisite for preventive action. Some research suggests however that the analysis of accidents does not only differ between experts and laymen but that it is also linked to certain characteristics inherent in the analyst and in the social group to which he belongs: beliefs, value systems, norms, experiences in common, attitudes, roles, social and technical practices, etc. Culturally determined bias seems to affect the perception of risk and the causes of accidents. This article presents a certain number of thoughts and results based upon research carried out on causal attributions of traffic accidents in The Ivory Coast (West Africa) and discusses the importance of culture in risk-taking and accident prevention. It shows in particular that fatalistic beliefs and mystical practices influence the perception of accidents and consequently incite one to take more risks and neglect safety measures.

Notizen: Since substantial bias can result from assigning some type of mean exposure to a group, risk assessments based on epidemiological data should avoid the grouping of data whenever possible. However, ungrouped data are frequently unavailable, and the question arises as to whether an arithmetic or geometric mean is the most appropriate summary measure of exposure. It is argued in this paper that one should use the type of mean for which the total risk that would result if every member of the population was exposed to the mean level is as close as possible to the actual total population risk. Using this criterion an arithmetic mean is always preferred over a geometric mean whenever the dose response is convex. In each of several data sets examined in this paper for which the dose response was not convex, an arithmetic mean was still preferred based on this criterion.

Notizen: Developmental anomalies resulting from prenatal toxicity can be manifested in terms of both malformations among surviving offspring and prenatal death. Although these two endpoints have traditionally been analyzed separately in the assessment of risk, multivariate methods of risk characterization have recently been proposed. We examined this and other issues in developmental toxicity risk assessment by evaluating the accuracy and precision of estimates of the effective dose (ED05) and the benchmark dose (BMD05) using computer simulation. Our results indicated that different variance structures (Dirichlet-trinomial and generalized linear model) used to characterize overdispersion yielded comparable results when fitting joint dose response models based on generalized estimating equations. (The choice of variance structure in separate modeling was also not critical.) However, using the Rao-Scott transformation to eliminate overdispersion tended to produce estimates of the ED05 with reduced bias and mean squared error. Because joint modeling ensures that the ED05 for overall toxicity (based on both malformations and prenatal death) is always less than the ED05 for either malformations or prenatal death, joint modeling is preferred to separate modeling for risk assessment purposes.

Notizen: Nineteen Senior Managers of a major chemical company in the United Kingdom participated in a survey to determine their attitudes, beliefs, and perceptions regarding risks from chemicals. Similar surveys had previously been conducted with toxicologists and members of the general public in the United States and Canada. In general, the Senior Managers tended to judge risks to be quite small for most chemicals. Moreover, they had lower risk perceptions than did members of the British Toxicological Society and even far lower perceptions of risk than a comparison group of members of the Canadian public. The managers held views that were similar to British toxicologists working in industry and government and dissimilar to the views of toxicologists working in academia. The observed differences between views of managers, toxicologists, and the public must be recognized and understood in order to facilitate communication and constructive efforts to manage chemical risks.

Notizen: The construction industry is both the largest civilian industry and the most unique in terms of fragmentation and its approach to controlling risk. Structural specifications establish nominal safety factors and design criteria for engineered structures such as buildings, bridges, dams, and power facilities. The goal is satisfactory strength capacity to safely and economically meet the demands of structural performance. Structures must resist the highly uncertain effects of combined gravity, earthquakes, wind, and snow loads supported by natural and human-made materials. The public's expectation is that structures should last a long time and have low lifetime risk of structural failure. Historically, specifications have contained safety factors which evolved from past experiences and provided adequate safety or low risk. Due to pressures of economy and the need to optimize structural performance, structural specifications have recently been developed and accepted by industry based on structural reliability and risk-assessment principles. This paper reviews developments of probabilistic applications in structural specifications including specification format, database, implementation examples, target risk levels, present research activities, and future goals for establishing optimal risk-design procedures.

Notizen: Importance measures have been useful in the process of extracting insights from risk analyses. Importance measures have also been suggested for use in component classification. However, there are difficulties of interpretation associated with component classification based on importance measures. This paper briefly reviews an alternative method, “Top Event Prevention Analysis,” and, based on a simple example, compares its key characteristics to those of conventional applications of importance measures. The methods are compared with respect to the task of formulating a safety case for a complex and potentially hazardous facility, in which component classification plays an important role. A key subtask is identification of a collection of design elements that is necessary and sufficient to achieve the desired level of protection of the public, the workers, and the environment. At the design stage, identifying this set helps to determine what elements to include in the final design. Separately, a similar selection process could be used in order to justify limiting the scope of regulatory oversight to a subset of design elements, on which a safety case is to be based. This step could be taken during initial review of a design, or later as part of an effort to justify relief from regulatory requirements that are burdensome but provide little actual risk reduction.〈section xml:id="abs1-1"〉〈title type="main"〉SUMMARYA safety case should arguably be based on a collection of design elements that combine to provide satisfactory plant response to important safety challenges, and provide this response with the desired reliability (achieved through redundancy and diversity in design, and programmatic support activities as necessary in implementation). The key property of such a collection resides in the set as a whole, and not in any single element: the implications of including or not including any given design element in the collection depend strongly on what other design elements are included. Given a logic model that comprehensively addresses plant response, reflecting all components under consideration, and a defense-in-depth safety standard of the kind discussed above, TEPA is capable of choosing prevention sets: subsets of components that have the desired defense-in-depth property, and are suitable candidates for serving as the nucleus of a safety case.Single-event importance measures cannot capture considerations like this, except perhaps as part of an arduous iterative reformulation of a logic model to successively remove and restore combinations of events in a trial-and-error approach to a self-consistent design solution. No method of applying conventional importance measures has been shown to produce solutions that are feasible in the sense of completing pathsets, nor is one expected. Interpreting the upper portion of a ranked list of components as a safety case would therefore be a misapplication of the importance measure concept.However, given a prevention set, one could apply importance measures to fine-tune the allocation of resources within this set. That is, one could compute importances within a model that took credit only for elements of the prevention set, and reason from there. Even in this case, some iteration might be required in order to achieve a self-consistent allocation (one for which the reliability credit taken for each component is commensurate with the resources allocated to it). In order to draw valid conclusions in an application of this type, one must recall that all importance measures are predicated on credit for all modeled components; it is invalid to infer that components can be dropped from a safety case on grounds of low calculated importance. In short, application of importance measures is valid when (a) the selection problem has been solved by other means, (b) the importances are calculated with credit only for selected components, and (c) the resources allocated to each component are commensurate with the level of credit taken for the component (e.g., credit for a component's availability is backed up by an appropriate test schedule.).A byproduct of this work is the observation that whether or not TEPA itself is applied to choose prevention sets, a useful litmus test to be applied to a safety case is simply whether it is based on a union of complete success paths. As discussed above, thinking of the safety case in this way has other benefits, in helping to identify unmodeled components and in helping to specify the demands that must be met by each component, so that programmatic activities necessary to ensure its function can be identified and carried out. This formulation of the safety case helps in thinking about the relationship between component performance and resources allocated to that component. Understanding this relationship is essential to optimizing the use of safety resources.The number of combinations (possible prevention sets) that must be examined grows very rapidly as the number of design elements and minimal cutsets increases. Therefore, many realistic problems will be very demanding computationally. To some extent, this could be considered a drawback of TEPA, but it should be understood that the underlying problem is combinatorially very difficult, and actual solutions to it should not be expected to come easily in all cases. Fortunately, as illustrated by the practical applications summarized above, many real large-scale problems have specific features that permit their solution by adaptations of the general approach.

Notizen: This paper raises two questions, i.e., Are some people more prone to perceive hazards than others embedded in the same dangerous working environment?, and—if so—Is it possible to find distinguishing characteristics allowing us to profile this worker segment? A survey study was conducted among catering personnel working on a drilling platform at the continental shelf in the North sea. It was observed that some people more than others perceived hazards in their working environment. By contrasting the extreme groups, i.e., the high and low hazards perceivers it was found that sociodemographics, e.g., gender, marital status, age and working experience possessed no descriptive power. However, the findings revealed that the worker segment prone to perceive high hazards also reported higher degree of burnout, anxiety and depression than did the low hazards perceivers. They (the high hazards perceivers) were also less satisfied with their stay on the platform, and they reported more health problems as well. The findings indicate that hazards perceptions of hazards go beyond mere “cold cognition,” also tapping into negatively feelings and emotional states. Theoretical and practical implications are highlighted.

Notizen: This paper presents estimates of daily average per capita fish consumption by age and gender for the 48 conterminous states. The estimated consumption rates are reported for three fish habitats: freshwater/estuarine fish, marine fish, and all fish. The estimates were generated from the combined 1989, 1990, and 1991 Continuing Survey of Food Intake by Individuals (CSFII), a national food consumption survey conducted by the United States Department of Agriculture (USDA). Point and interval estimates of per capita fish consumption were generated from the empirical distribution of daily average per capita consumption. The point estimates include the mean, 50th, 75th, 90th, 95th, and 99th percentiles. Ninety percent confidence intervals are provided for the estimated mean and 90% bootstrap intervals are provided for percentile estimates. Information in a recipe file provided by USDA was used to calculate the amount of fish in recipes which contain fish. The estimated consumption rates are based on the weight of fish in its prepared or “as consumed” condition. The estimated mean consumption rate for all fish for the U.S. population of the 48 conterminous states was 15.65 grams/person/day (C.I.:14.67–16.63) of which 4.71 grams/person/day (C.I.:4.17–5.25) was freshwater/estuarine fish and 10.94 grams/person/day (C.I.: 10.14–11.73) was marine fish.

Notizen: The combination of radon and smoking produces a synergistic risk of lung cancer. Lay understanding of this risk was examined from the perspectives of mental models theory, the psychometric approach to risk perception, and optimistic bias. As assessed by interview, participants (N= 50) had more extensive mental models for the risks of smoking than for the risks of radon or the combination of radon and smoking; 32% knew little or nothing about radon. Despite reading an informational brochure, their risk-perception ratings of the three hazards showed no perception of the synergy between smoking and radon risk, although the combined hazard was rated as less familiar but more controllable than the average of the single hazards (p 〈 .01). No evidence of optimistic bias for the health consequences of radon, or the combination of radon and smoking was observed. Participants appeared to be combining the single-hazard risks subadditively to arrive at their combined-hazard risk perceptions. Further research on the integration of perceived risks would be beneficial for designing optimal communications about synergistic risk.

Notizen: This paper investigates the role that performance-based regulations can play in linking a firm's environmental, health, and safety concerns with their corporate strategy. The specific focus is on the performance standards required by the Clean Air Act Amendments (CAAA) which require firms that store or use certain chemicals to develop a Risk Management Plan (RMP) for reducing the likelihood and impact of accidents at their plants. Data from a series of case studies and interviews of executives in chemical firms reveal that proactive companies integrated many of the requirements of the CAAA into their management systems prior to the regulatory requirements. Most of these firms tend to be large ones. Small firms often lack the resources to implement these regulations and hence have tended to have a more difficult time with compliance.

Notizen: Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life, by Avinash Dixit and Barry Nalebuff

Notizen: In this comment on James Emshoff's (1993) paper,/〉 I will begin by briefly summarizing the paper. Then I will give my reaction to the issues raised in the paper from the perspective of an economist and professor of business strategy. As I discuss later, it is the work of Alfred Chandler, Jr., rather than work of economists, that is most relevant to the issues raised by Emshoff. In my view economists must understand the limitations of standard economic approaches to organizational issues in order to begin to make progress on issues raised by Chandler and Emshoff.

Notizen: The paper analyzes a regulatory game between a public and a private payer to finance hospital joint costs (mainly capital and technology expenses). The public payer (inspired by the federal Medicare program) may both directly reimburse for joint costs (“pass-through” payments) and add a margin over variable costs paid per discharge, while the private payer can only use a margin policy. The hospital chooses joint costs in response to payers' overall payment incentives. Without pass-through payments, under provision of joint costs results front free-riding behavior of payers and the first-mover advantage of the public payer. Using pass-through policy in its self-interest, the public payer actually may moderate the under provision of joint costs; under some conditions, the equilibrium allocation may be socially efficient. Our results bear directly on directly Medicare policy, which is phasing out pass-through payments.

Notizen: We augment efficiency-based theories of ownership by including influence costs. Our principal conclusion is that the prospect of organizational decline and layoffs creates additional influence costs in multiunit organizations that would be absent if there was no prospect of layoffs and would be lessened or eliminated in focused organizations. This helps explain the tendency of firms to divest poorly performing units, as well as the pattern of sales of such units to firms already in businesses related to that of the divested unit.

Notizen: This paper interprets private label marketing as a retailer instrument for overcoming the double-marginalization problem inherent in the distribution of well-known manufacturer brands. Retailers with some degree of market power carry private label substitutes for popular national brands in order to capture more profit from the vertical structures they share with brand manufacturers. The net effect of private label marketing is to improve the performance of distribution channels. After presenting a formal model and deriving analytical results, the paper gathers some empirical evidence that supports these results.

Notizen: This paper studies the hypothesis that large firms have more bargaining power with suppliers than do small firms, using data from the cable television industry. Employing techniques from the “new empirical lo,” the effect of owner size on marginal costs is inferred from the effect of owner size on observable product market choices. In the cable industry, the downstream firms decide how many subscriptions of cable to sell and how many channels to offer in the cable package. lf large firms have lower costs than small firms, then large firms should be willing to supply more than small firms, at all prices. The effects of bargaining power are identified separately from the effects of scale economies by exploiting the structure of the cable industry. Scale economies, in the cable industry, are likely to stem from regional size, while bargaining power is likely to stem from national size. By controlling for regional size, estimates of the effect of owner national size on the willingness to supply cable subscriptions and to offer channels indicate that large downstream firms offer significantly more subscriptions and channels at all prices than do small downstream firms. These results provide some of the first systematic, industry-specific, evidence consistent with the bargaining-power hypothesis.

Notizen: The role of product warranty in segmentation of consumer durable product markets is highlighted. I demonstrate that consumer moral hazard and heterogeneity in product usage create variation in the valuation of product warranties by the different segments in the market. In this context, the firm, by offering a self-selecting menu of base warranty and extended warranties, satisfies the warranty demands of the various segments of the population. The consumer choice behavior prediction of the theory with regard to extended warranty is empirically validated with data from a survey of new car buyers.

Notizen: Research on durable goods has shown that because of a time inconsistency problem, a monopolist manufacturer prefers to rent rather than sell its product. We reexamine the relative profitability of renting versus selling from a marketing perspective. In particular, using a simple linear demand formulation, we assume a durable goods monopolist has to use downstream intermediaries to market its product. In contrast to the case of an integrated monopolist, we find that when the monopolist has to rely on intermediaries, then it prefers to go through an intermediary that sells rather than one that rents its product. Similarly, the intermediary that sells the product is more profitable than the intermediary that rents the product. However, if the monopolist can commit to a set of prices, then the intermediary that rents is more profitable than the intermediary that sells.

Notizen: Empirically validating and testing the specification of game theoretic models has received limited attention in the marketing literature. The authors provide an econometric framework for estimating the parameters of response functions when the observed data in the market place are the Nash equilibrium outcomes of an underlying dynamic duopoly game specification. Specifically, the estimation procedure accounts for the joint endogeneity of market shares and marketing efforts of market rivals using a system of simultaneous equations that included the market response function and the Nash equilibrium conditions. A formal statistical test is used to detect model misspecification. The empirical analysis is carried out using data from four product markets: pharmaceutical, soft drink, beer, and detergent. Comparisons are provided with conventional estimation of the response function parameters in which the equilibrium conditions are ignored in the estimation. Managerial implications of the empirical results are discussed.

Notizen: When it was legal, resale price maintenance (RPM) was commonly observed on items such as aspirin, pens, pencils, toothpaste, soap, shaving cream, and milk. In providing a theory that is based on compensating retailers for their opportunity cost of shelf space, and that does not hinge on the existence of externalities in nonprice competition, this article explains why a manufacturer might impose RPM on these and many other products. By contrast, the use of RPM on food, grocery, and drug store items is not easily explained by standard theories such as free riding on presale services and quality certification by high-priced retailers.〈blockFixed type="quotation"〉The typical supermarket has room for fewer than 25,000 products. Yet there are some 100,000 available, and between 10,000 and 25,000 items aye introduced each year./〉

Notizen: Why does the cost of organizing particular activities differ across competitors? This article explores in detail the organization of Nucor, a steel minimill that has sustained a significant cost advantage over its competitors. Nucor's past success highlights the complementarities among organizational policies and competitive advantage as well as barriers to the imitation of apparently superior organizational arrangements. The case study also suggests avenues for additional empirical and theoretical research.

Notizen: What accounts for the diversity and limited concentration that has long characterized the organization of the advertising agency industry? This question is addressed by treating an advertising agency as a multiproduct firm. The firm's product line or service mix is defined in terms of the set of different media categories where an agency places the advertising messages that it creates on behalf of its clients. Evidence is presented indicating that the structure of demand and costs in the advertising agency industry conforms to the conditions that MacDonald and Slivinski showed were required for an industry to sustain an equilibrium with diversified firms.Building on this framework, we formulate a set of three hypotheses relating to the realization of product-specific scale and scope economies. The first two hypotheses posit that given low fixed costs and minimal entry barriers, both media-specific scale and scope economies are available and can be exploited by relatively small-size agencies. The third hypothesis suggests that large agencies may experience diseconomies of scope as a consequence of excessive diversification induced by two pervasive industry institutional phenomena: (1) “bundling” of agency services to match client demand for a mix of media advertising, and (2) “conflict policy,” which prohibits an agency from serving competing accounts and operates as a mobility constraint.Utilizing a multiproduct cost function, we estimate media-specific scale and scope economies for a cross section of 401 U.S. agencies in 1987. The results obtained support the set of three hypotheses outlined above. The paper concludes with a discussion of the implications of these findings for the restructuring currently underway in this industry.

Notizen: Recent advances in the theoretical literature have greatly expanded our understanding of the forces that shape the competitive dynamics of research and development, but a paucity of sufficiently detailed empirical data has left these insights relatively untested. We draw on unusually detailed qualitative and quantitative infernal data provided at the research program level by 10 major pharmaceutical firms to explore the usefulness of the modern literature as a source of insight into the dynamics of competition in ethical drug discovery.Our analysis focuses on one particularly compelling aspect of the literature: the suggestion that in “winner take all situations,” competition in R&D becomes a Prisoner's Dilemma, leading to overinvestment in research. Without adequate measures of the social return to innovation, we can say nothing about whether there is “too much” or “too little” research undertaken by the industry, but our results do not support the suggestion that R&D investment in drug discovery is driven by the “tit-for-tat” or simple reaction function models hinted at by the institutional literature. First, R&D investment is only weakly correlated across firms once common responses to exogenous shocks are accounted far, and second, rivals' R&D results are positively correlated with own research productivity, which we interpret as evidence for extensive R&D spillovers rather than the depletion externality implied by “winner take all” models.These results are not, of themselves, sufficient to reject the hypothesis that investment behavior in the industry is driven by strategic considerations since there is theoretical support for a wide variety of observable behavior as equilibrium outcomes of strategic interaction. Nonetheless, they suggest that the more extreme forms of rent dissipation identified in the literature are probably poor characterizations of the reality of competition in pharmaceuticals. Our results point both to the need to develop theories that incorporate richer models of possible payoff structures, adjustment costs, and firm heterogeneity and to the need to collect empirical data that is comprehensive enough to enable one to test them.

Notizen: Empirical work has failed to keep pace with recent advances in transaction cost theory and the theory of contract. The first econometric analysis of its kind is reported by using a new data set of small subcuntractors making specific inputs for customers in the engineering industry. The use of formal contracts is found to be strongly associated with specific investment and other variables measuring technological complexity and vulnerability to potential opportunism by customers. Furthermore, despite typically long-term relationships, over half of subcontractors avoid making efficient, specific investments. Overall, we find strong support for the transaction cost theory of contracts.

Notizen: This paper develops a theory of capital structure based on the attempts of a firm to alleviate a holdup problem that arises in its bilateral relationship with a buyer. It is shown that by issuing debt to outsiders, the firm can improve its ex post bargaining position vis-a-vis the buyer and capture a larger share of the ex post gains from trade. Debt, however, is costly because the buyer may find the required price too high and refuse to trade. Since debt raises the payoff of claimholders, it strengthens the firm's incentive to make relationship-specific investments, and therefore alleviates the well-known underinvestment problem. A comparative static analysis yields a number of testable hypotheses regarding the firm's financial strategy.

Notizen: Whether vertical integration between a downstream oligopolist and an upstream oligopolist is profitable for an integrated pair of firms is shown to depend on whether one means by this that profits increase no matter what other firms do, that all integrated firms are better off when all firms are integrated than when none are, or simply that no downstream-upstream pair of firms has an incentive to deviate from a situation where all firms are integrated. It is also shown to depend on the number of firms in each oligopoly and on the type of interaction that is assumed between firms that are integrated and firms that are not. In particular, it is shown that if no restriction is put on trade between integrated and nonintegrated firms, integrated firms may continue to purchase inputs from the nonintegrated upstream firms, with the goal of raising their downstream rivals' costs. Furthermore, even though firms are identical, asymmetric equilibria, where integrated and nonintegrated firms coexist, may actually arise as an outcome of the integration game.

Notizen: This paper considers the incentives of a firm with power in a market for one good to tie in the sale of a complementary good even though the complementary good is produced in a zero profit market. If the zero-profit price of the tied good is greater than the marginal cost (which occurs for example when the technology is characterized by a fixed cost and a constant marginal cost), a firm will fie in order to increase the sales of the complementary good, which at the margin is profitable. We show that such tying will lower the effective prices paid by customers and increase welfare. This incentive exists if the firm with market power is a monopolist or one of several competing oligopolists.

Notizen: This paper examines the effect of a middleman on the search and trading behavior of the traders. It is shown that the buyer and seller types with middle valuations choose to search for each other, while the buyer and seller types with high or low valuations drop out of the search market and choose to trade directly with the middleman. The ask and bid prices of the middleman act as an outside option for the buyer and seller, and influence the outcome of the bargaining between the two. The model generalizes Gehrig (1993) by endogenizing the traders' search intensities, by allowing the traders to go to an intermediary even if thy have engaged in search, and by enabling the intermediary to provide the service of immediacy.

Notizen: This paper discusses the supplier power of medical specialists. We argue that a combination of factors, including the structure of health care delivery, reimbursement systems, the presence of option demand, and high consumer switching costs, create circumstances in which medical specialists may be able to exercise significant seller power. We explore the implications of this for the pricing and organization of medical care.

Notizen: This paper offers an exact definition of the value created by firms together with their suppliers and buyers. The “added value” of a firm is similarly defined, and shown under certain conditions to impose an upper bound on how much value the firm can capture. The key to a firm's achieving a positive added value is the existence of asymmetries between the firm and other firms. The paper identifies four routes (“value-based” strategies) that lead to the creation of such asymmetries. Our analysis reveals the equal importance of a firm's supplier and buyer relations. Cooperative game theory provides the underpinnings of the analysis.

Notizen: The recent emergence of total quality management (TQM) in the U.S. has spawned a great deal of interest in management circles as well as in the mass media. However, despite the growing number of firms that have adopted this management technique, few formal tests exist concerning the pattern of adoption as well as the changes that accompany the adoption of TQM. This paper contrasts models of production for TQM and non-TQM firms in order to explore reasons why some firms but not others have adopted the TQM approach to quality improvement. Predictions arising from such a comparison are tested using a unique data set that combines data on firms from three different sources. Our findings tend to support the proposed theory of systematic differences between firms that find it advantageous to adopt TQM and firms that do not. We also find evidence that firms adopting TQM experience greater growth in sales, employment, and capital stock.

Notizen: Private information creates a cost of operating a hierarchy, which becomes larger as the hierarchical distance between the information source and the decision maker increases. When information about a firm's capabilities is dispersed among the individuals in the firm, production is inefficient even though everyone behaves rationally. Because hierarchies need rents in order to function, a firm with a long hierarchy may not be viable in a competitive industry.

Notizen: A dynamic model of product rivalry is developed for a market in which firms choose price and advertising intensity. The model, a state-space game, is implemented using data that consist of weekly price, sales, and promotional activity for four brands of saltine crackers sold by four chains of grocery stores in a small town. A number of questions can be asked of this data. First, is advertising predatory (merely changing market shares) or cooperative (shifting out market demand)? Second, are price and advertising own and cross-strategic complements or substitutes? And finally, do investments in stocks of goodwill and in price reductions make firms tough and aggressive or soft and accommodating?

Notizen: Why are moving sales a successful and widespread phenomenon? How can it be optimal for a seller to disclose her low valuation for the item to be sold? We propose an explanation based on the “lemons problem” in bargaining with asymmetric information about quality. Disclosing a low valuation signals that there are significant gains from trade, so that trade takes place when it wouldn't otherwise, and all agents are made better off.

Notizen: I present tests of a competitive rationale for price promotions. In a model with a population of informed and uninformed customers, price competition yields a static equilibrium in which each seller draws a price from a specified density function. Price data on coffee and saltine crackers products are used to test whether the sample of prices on each product could have possibly come from the theoretically specified density function. The results suggest that some markets are indeed consistent with the marginal distributions of prices predicted by the model. Furthermore, in the process of testing this rationale for price promotions, estimates are obtained for the marginal cost of each product, the number of competing goods, and the percentage of informed consumers. The resulting excess variability of these estimates across competing brands can also raise questions with respect to the empirical validity of the model.

Notizen: We examine the relationship between chief executive officer (CEO) compensation and acquisition activity subsequent to corporate restructurings in a sample of 152 firms created by a voluntary corporate spin-off. We also investigate the linkage between these relationships and the stock market reaction to the initial restructuring announcements. Surprisingly, CEO wealth in the form of stock and options is strongly related to friendly and hostile acquisition activity, respectively. Moreover, the stock market appears to anticipate this subsequent acquisition activity. These results ask us to rethink our understanding of the motivational properties of equity ownership and the stock market's reaction to voluntary corporate spin-off announcements.

Notizen: This paper studies the firm's choice between implicit and explicit contracts as alternative methods of assuring product quality. The relationship between these two contractual forms is studied using a dynamic model with imperfect monitoring and team moral hazard where both the firm and the consumer take unobservable actions that affect product performance. The firm chooses the contractual arrangement that maximizes expected profit. Identified are conditions on the primitive attributes of the transactions and on the firm's environment that can help explain why firms might decide to use explicit contracting, implicit contracting, or a combination of the two. I also show that there are conditions under which the introduction of reputation causes explicit contracts to be more uniform and less sensitive to the details of the transaction than implied by static models.

Notizen: We study the firm's incentives to engage in research for pollution-control technologies and to adopt new technologies that if discovers or that are discovered by other firms. Licensing of discoveries is assumed possible. We also study the regulator's problem in designing optimal environmental regulations that both control pollution and provide incentives for research. Technology adoption standards are part of the optimal regulation. Another finding is that making the adoption standard stricter reduces research.

Notizen: We investigate the role of price advertising in a market where consumers are imperfectly informed about prices. We consider a monopolist whose demand depends on price and advertising expenditure. This demand function is derived from optimizing behavior of consumers. Uninformed consumers may pay a cost to visit the seller and obtain price information. Advertising enables the monopolist to increase the number of informed consumers. In equilibrium the uninformed consumers form rational price expectations, and the seller necessarily adopts a random pricing and advertising strategy.

Notizen: A model of advertising is presented in which consumption experience is an imperfect indicator of product quality. In equilibrium, neither price nor advertising signal the quality of newly introduced goods. Advertising of established products can be a signal of quality, but if it is, it must be an imperfect signal leaving residual uncertainty that influences consumers’ repurchase decision. A set of observable implications follow.

Notizen: A model of procedural decision making in firms is combined with an oligopoly model to study the effect of limited managerial cognition on firm flexibility. It is argued that a firm may vary its flexibility, and, hence, that there exists a trade-off between decision-making costs and costs due to imperfect adjustment to the environment. The main conclusions are the following: (1) The level of flexibility chosen by firms tends to be too low, from a social welfare point of view. (2) Entry reduces firm flexibility. Aggregated flexibility in the market may, however, increase in which case consumers are unambiguously better off. (3) Integration of isolated markets increases firm flexibility and consumer welfare.

Notizen: This paper studies a model in which two payers contract with one hospital. True costs per patient are not a possible basis for payment, and contracts can only be written on the basis of allocated cost. Payers choose a contract that is fully prospective or fully based on cost allocation, or a payment scheme that would give some weight to each of these two. We characterize the payers'equilibrium contracts arid show how in equilibrium hospital input decisions are distorted by the payers’ incentives to engage in cost shifting. Two cost-shifting incentives work in opposite directions, and equilibrium can be characterized by too little or too much care relative to the socially efficient level.

Notizen: This paper compares the cost and quality incentive effects of cost reimbursement and prospective payment systems in the health industry. When a provider cannot refuse patients who require high treatment costs or discriminate patients by qualities, optimally designed prospective payments can implement the efficient quality and cost reduction efforts, but cost reimbursement cannot induce any cost incentive. When the provider can refuse expensive patients, implementation of the first best requires a piecewise linear reimbursement rule that can be interpreted as a mixture of pure prospective payment and pure cost reimbursement, Under appropriate conditions, prospective payment can implement the first best even when the provider can use qualities to discriminate patients.

Notizen: Suppose that a residential neighborhood may have been contaminated by anearby abandoned hazardous waste site. The suspected contamination consistsof elevated soil concentrations of chemicals that are also found in the absence of site-related contamination. How should a risk manager decide which residential properties to sample and which ones to clean? This paper introduces an adaptive spatial sampling approach which uses initial observations to guide subsequent search. Unlike some recent model-based spatial data analysis methods, it does not require any specific statistical model for the spatial distribution of hazards, but instead constructs an increasingly accurate nonparametric approximation to it as sampling proceeds. Possible cost-effective sampling and cleanup decision rules are described by decision parameters such as the number of randomly selected locations used to initialize the process, the number of highest-concentration locations searched around, the number of samples taken at each location, a stopping rule, and a remediation action threshold. These decision parameters are optimized by simulating the performance of each decision rule. The simulation is performed using the data collected so far to impute multiple probable values ofunknown soil concentration distributions during each simulation run. This optimized adaptive spatial sampling technique has been applied to real data using error probabilities for wrongly cleaning or wrongly failing to clean each location (compared to the action that would be taken if perfect information were available) as evaluation criteria. It provides a practical approach for quantifying trade-offs between these different types of errors and expected cost. It also identifies strategies that are undominated with respect to all of these criteria.

Notizen: A call for risk assessment approaches that better characterize and quantify uncertainty has been made by the scientific and regulatory community. This paper responds to that call by demonstrating a distributional approachthat draws upon human data to derive potency estimates and to identify and quantify important sources of uncertainty. The approach is rooted in the science of decision analysis and employs an influence diagram, a decision tree, probabilistic weights, and a distribution of point estimates of carcinogenic potency. Its results estimate the likelihood of different carcinogenicrisks (potencies) for a chemical under a specific scenario. For this exercise, human data on formaldehyde were employed to demonstrate the approach. Sensitivity analyses were performed to determine the relative impact of specific levels and alternatives on the potency distribution. The resulting potency estimates are compared with the results of an exercise using animal data on formaldehyde. The paper demonstrates that distributional risk assessment is readily adapted to situations in which epidemiologic data serve as the basis for potency estimates. Strengths and weaknesses of the distributional approach are discussed. Areas for further application and research are recommended.

Notizen: The paper applies classical statistical principles to yield new tools for risk assessment and makes new use of epidemiological data for human riskassessment. An extensive clinical and epidemiological study of workers engaged in the manufacturing and formulation of aldrin and dieldrin provides occupational hygiene and biological monitoring data on individual exposures over the years of employment and provides unusually accurate measures of individual lifetime average daily doses. In the cancer dose-response modeling, each worker is treated as a separate experimental unit with his own unique dose. Maximum likelihood estimates of added cancer risk are calculated for multistage, multistage-Weibull, and proportional hazards models. Distributional characterizations of added cancer risk are based on bootstrap and relative likelihood techniques. The cancer mortality data on these male workerssuggest that low-dose exposures to aldrin and dieldrin do not significantlyincrease human cancer risk and may even decrease the human hazard rate for all types of cancer combined at low doses (e.g., 1μg/kg/day). The apparent hormetic effect in the best fitting dose-response models for this data set is statistically significant. The decrease in cancer risk at low doses ofaldrin and dleldrin is in sharp contrast to the U.S. Environmental Protection Agency's upper bound on cancer potency based on mouse liver tumors. The EPA's upper bound implies that lifetime average daily doses of 0.0000625 and 0.00625 pμg/kg body weight/day would correspond to increased cancer risks of 0.000001 and O.OOO1, respectively. However, the best estimate from the Pernis epidemiological data is that there is no increase in cancer risk in these workers at these doses or even at doses as large as 2 μg/kg/day.

Notizen: Ethylene oxide (EO) research has significantly increased since the 1980s, when regulatory risk assessments were last completed on the basis of theanimal cancer chronic bioassays. In tandem with the new scientific understanding, there have been evolutionary changes in regulatory risk assessment guidelines, that encourage flexibility and greater use of scientific information. The results of an updated meta-analysis of the findings from 10 unique EO study cohorts from five countries, including nearly 33,000 workers, and over 800 cancers are presented, indicating that EO does not cause increased risk of cancers overall or of brain, stomach or pancreatic cancers. The findings for leukemia and non-Hodgkin's lymphoma (NHL) are inconclusive. Two studies with the requisite attributes of size, individual exposure estimates and follow up are the basis for dose-response modeling and added lifetime risk predictions under environmental and occupational exposure scenariosand a variety of plausible alternative assumptions. A point of departure analysis, with various margins of exposure, is also illustrated using human data. The two datasets produce remarkably similar leukemia added risk predictions, orders of magnitude lower than prior animal-based predictions under conservative, default assumptions, with risks on the order of 1 × 10−6 or lower for exposures in the low ppb range. Inconsistent results for “lymphoid” tumors, a non-standard grouping using histologic information from death certificates, are discussed. This assessment demonstrates the applicability of the current risk assessment paradigm to epidemiological data.

Notizen: The human toxicity potential, a weighting scheme used to evaluate toxicemissions for life cycle assessment and toxics release inventories, is based on potential dose calculations and toxicity factors. This paper evaluatesthe variance in potential dose calculations that can be attributed to the uncertainty in chemical-specific input parameters as well as the variabilit in exposure factors and landscape parameters. A knowledge of the uncertainty allows us to assess the robustness of a decision based on the toxicity potential; a knowledge of the sources of uncertainty allows us to focus our resources if we want to reduce the uncertainty. The potential dose of 236 chemicals was assessed. The chemicals were grouped by dominant exposure route, and a Monte Carlo analysis was conducted for one representative chemical in each group. The variance is typically one to two orders of magnitude. For comparison, the point estimates in potential dose for 236 chemicals span ten orders of magnitude. Most of the variance in the potential dose is due to chemical-specific input parameters, especially half-lives, although exposure factors such as fish intake and the source of drinking water can be important for chemicals whose dominant exposure is through indirect routes. Landscape characteristics are generally of minor importance.

Notizen: To assess soil and groundwater quality two generic (i.e. multifunctional) risk-based standards, Target and Intervention Value, have been developed, in the framework of the Dutch Soil Protection Act. These standards allow soil and groundwater to be classified as clean, slightly contaminated or seriously contaminated. The Target Value is basedon potential risks to ecosysystems, while the Intervention Value is based oqpotential risks to humans and ecosystems. In the case of serious soil contamination the site has, in principle, to be remediated, making it necessary to determine the remediation urgency on the basis of actual (i.e. site-specific) risks to humans and ecosystems and, besides, actual risks due to contaminant migration.

Notizen: The Waste Isolation Pilot Plant (WIPP) is a geological repository for disposal ofU.S. defense transuranic radioactive waste. Built and operated by the U.S. Departmentof Energy (DOE), it is located in the Permian age salt beds in southeastern New Mexico at a depth of 655 m. Performance assessment for the repository's compliance with the 10,000-year containment standards was completed in 1996 and the U.S. Environmental Protection Agency (EPA) certified in 1998 that the repository meets compliance with the EPA standards 40 CFR 191 and 40 CFR 194. The Environmental Evaluation Group (EEG) review of the DOE'S application for certification identified a number of issues. These related to the scenarios, conceptual models, and values of the input parameters used in the calculations. It is expected that these issues will be addressed and resolved during the first 5-year recertification process that began with the first receipt of waste at WIPP on March 26, 1999, and scheduled to be completed in March 2004.

Notizen: The estimation of health risks from exposure to a mixture of chemical carcinogens is generally based on the combination of information from several available single compound studies. The current practice of directly summing the upper bound risk estimates of individual carcinogenic components as an upper bound on the total risk of a mixture is known to be generally too conservative. Gaylor and Chen (1996, Risk Analysis) proposed a simple procedure to compute an upper bound on the total risk using only the upper confidence limits and central risk estimates of individual carcinogens. The Gaylor-Chen procedure was derived based on an underlying assumption of the normality for the distributions of individual risk estimates. In this paper we evaluated the Gaylor-Chen approach in terms of the coverage probability. The performance of the Gaylor-Chen approach in terms the coverages of the upper confidence limits on the true risks of individual carcinogens. In general, if the coverage probabilities for the individual carcinogens are all approximately equal to the nominal level, then the Gaylor-Chen approach shouldperform well. However, the Gaylor-Chen approach can be conservative or anti-conservative if some or all individual upper confidence limit estimates are conservative or anti-conservative.

Notizen: Political context may play a large role in influencing the efficiency of environmental and health regulations. This case study uses data from a 1989 update of the Occupational Safety and Health Administration (OSHA) Permissible Exposure Limits (PELS) program to determine the relative effects of legislative mandates, costly acquisition of information by the agency, and pressure applied by special interest groups upon exposure standards. The empirical analysis suggests that federal agencies successfully thwart legislative attempts to limit agency discretion, and that agencies exercise bounded rationality by placing greater emphasis on more easily obtained information. The 1989 PEL were less significantly related to more costly information, contained “safety factors” for chemicals presenting relatively more ambiguous risks, and the proposed standard stringencies showed evidence of beinginfluenced by vying industry and labor interests.

Notizen: Monte Carlo methods in risk assessment are finding increasingly widespread application. With the recognition that inputs may be correlated, the incorporation of such correlations into the simulation has become important. Most implementations rely upon the method of Iman and Conover for generating correlated random variables. In this work, alternative methods using copulas are presented for deriving correlated random variables. It is further shown that the particular algorithm or assumption used may have a substantial effect on the output results, due to differences in higher order bivariate moments.

Notizen: In this paper, we review methods for assessing and managing the risk of extreme events, where “extreme events” are defined to be rare, severe, and outside the normal range of experience of the system in question. First, we discuss several systematic approaches for identifying possible extreme events. We then discuss some issues related to risk assessment of extreme events, including what type of output is needed (e.g., a single probability vs. a probability distribution), and alternatives to the probabilistic approach. Next, we present a number of probabilistic methods. These include : guidelines for eliciting informative probability distributions from experts; maximum entropy distributions; extreme value theory; other approaches for constructing prior distributions (such as reference or noninformative priors); the use of modeling and decomposition to estimate the probability (or distribution) of interest; and bounding methods. Finally, we briefly discuss several approaches for managing the risk of extreme events, and conclude with recommendations and directions for future research.

Notizen: It is common in catastrophic food-contamination events that consumers fail to adjust instantaneously to a normal consumption level. One explanation is that consumers only gradually accept new positive information as being trustworthy. The gradual establishment of the trustworthiness of the released information depends on both positive and negative media coverage over time. We examine the individual “trust” effects by extending the prospective reference theory (Viscusi, 1989) to include a dynamic adjustment process of risk perception. Conditions that allow aggregation of changes in risk perceptions across individuals are described. The proposed model describes a general updating process of risk perceptions to media coverage and can be applied to explain the temporal impact of media coverage on consumption of a broad range of goods (food or nonfood). A case study of milk contamination is conducted to demonstrate consumer demand adjustment process to a temporarily unfavorable shock. The results suggest that effects of positive and negative information to adjustment of consumption and risk perception are asymmetric over time.

Notizen: The scaling of administered doses to achieve equal degrees of toxic effect in different species has been relatively poorly examined for noncancer toxicity, either empirically or theoretically. We investigate empirical patterns in the correspondence of single oral dose LD, values across several mammalian species for a large number of chemicals based on data reported in the RTECSQ database maintained by the National Institute for Occupational Safety and Health. We find a good correspondence of LD, values across species when the dose levels are expressed in terms of mgadministered per kg of body mass. Our findings contrast with earlier analyses that support scaling doses by the 3/4-power of body mass to achieve equal subacute toxicity of antineoplastic agents. We suggest that, especially for severe toxicity, single- and repeated-dosing regimes may have different cross-species scaling properties, as they may depend on standing levels of defenses and rate of regeneration of defenses, respectively.

Notizen: This paper reviews existing data on the variability in parameters relevant for health risk analyses. We cover both exposure-related parameters andparameters related to individual susceptibility to toxicity. The toxicity/susceptibility data base under construction is part of a longer term research effort to lay the groundwork for quantitative distributional analyses of non-cancer toxic risks. These data are broken down into a variety of parameter types that encompass different portions of the pathway from external exposure to the production of biological responses. The discrete steps in this pathway, as we now conceive them, are:〈list xml:id="l2" style="custom"〉•Contact Rate (Breathing rates per body weight; fish consumption per bodyweight)•Uptake or Absorption as a Fraction of Intake or Contact Rate•General Systemic Availability Net of First Pass Elimination and Dilutionvia Distribution Volume (e.g., intial blood concentration per mg/kg of uptake)•Systemic Elimination (half life or clearance)•Active Site Concentration per Systemic Blood or Plasma Concentration•Physiological Parameter Change per Active Site Concentration (expressed as the dose required to make a given percentage change in different people, or the dose required to achieve some proportion of an individual's maximum response to the drug or toxicant)•Functional Reserve Capacity-Change in Baseline Physiological Parameter Needed to Produce a Biological Response or Pass a Criterion of Abnormal FunctionComparison of the amounts of variability observed for the different parameter types suggests that appreciable variability is associated with the final step in the process-differences among people in “functional reserve capacity.” This has the implication that relevant information for estimatingeffective toxic susceptibility distributions may be gleaned by direct studies of the population distributions of key physiological parameters in people that are not exposed to the environmental and occupational toxicants thatare thought to perturb those parameters. This is illustrated with some recent observations of the population distributions of Low Density Lipoprotein Cholesterol from the second and third National Health and Nutrition Examination Surveys.

Notizen: Proposed in this article is one possible framework for classifying multiple types of ethical issues in risk communication research and practice to help continue a discussion initiated in 1990 by Morgan and Lave. Some of the questions that each stage of the process for planning risk communication strategies appears to pose for ethics are discussed (e.g., selecting issues to be communicated, knowing the issue, dealing with constraints). Also discussed briefly are some issues raised by the possibility that risk communicators aspire to the status of a profession. The purpose is to foster discussion rather than issue a conclusive statement on the topic, because its very nature makes a definitive pronouncement indefensible.

Notizen: The ultimate goal of the research reported in this series of three articles is to derive distributions of doses of selected environmental tobacco smoke (ETS)-related chemicals for nonsmoking workers. This analysis uses data from the 16-City Study collected with personal monitors over the course of one workday in workplaces where smoking occurred. In this article, we describe distributions of ETS chemical concentrations and the characteristicsof those distributions (e.g., whether the distribution was log normal for agiven constituent) for the workplace exposure. Next, we present population parameters relevant for estimating dose distributions and the methods used for estimating those dose distributions. Finally, we derive distributions of doses of selected ETS-related constituents obtained in the workplace for people in smoking work environments. Estimating dose distributions providedinformation beyond the usual point estimate of dose and showed that the preponderance of individuals exposed to ETS in the workplace were exposed at the low end of the dose distribution curve. The results of this analysis include estimations of hourly maxima and time-weighted average (TWA) doses of nicotine from workplace exposures to ETS (extrapolated from 1 day to 1 week) and doses derived from modeled lung burdens of ultraviolet-absorbing particulate matter (UVPM) and solanesol resulting from workplace exposures to ETS (extrapolated from 1 day to 1 year).

Notizen: Through surveys of students and junior professionals and interviews with business and government executives, we studied Chinese choices and fairness perceptions in risky health and safety decisions. The survey responses were compared with American responses from an earlier study by Keller and Sarin.The survey results show that the American and Chinese respondents had similar fairness perceptions, but the Chinese did not make decisions that were consistent with their fairness perceptions, whereas the Americans did. We found that the middle-age Chinese professionals tended to make choices that were more different from the Americans than were the choices of the young Chinese management students. It is likely that these discrepancies were caused by cultural differences, with the younger Chinese tending to face a stronger Western influence.The insights from the survey results were enriched by interviews that revealed fairness perceptions of Chinese business and government executives.A framework to interpret cultural influences on decision making was also proposed.

Notizen: The risk of catastrophic failures, for example in the aviation and aerospace industries, can be approached from different angles (e.g., statistics when they exist, or a detailed probabilistic analysis of the system). Each new accident carries information that has already been included in the experience base or constitutes new evidence that can be used to update a previous assessment of the risk. In this paper, we take a different approach and consider the risk and the updating from the investor's point of view. Based on the market response to past airplane accidents, we examine which ones have created a “surprise response” and which ones are considered part of the risk of the airline business as previously assessed. To do so, we quantify the magnitude and the timing of the observed market response to catastrophic accidents, and we compare it to an estimate of the response that would be expected based on the true actual cost of the accident including direct and indirect costs (“full-cost information” response). First, we develop a method based on stock market data to measure the actual market response to an accident and we construct an estimate of the “full-cost information” response to such an event. We then compare the two figures for the immediate and the long-term response of the market for the affected firm, as well as for the whole industry group to which the firm belongs. As an illustration, we analyze a sample of ten fatal accidents experienced by major US domestic airlines during the last seven years. In four cases, we observed an abnormal market response. In these instances, it seems that the shareholders may have updated their estimates of the probability of a future accident in the affected airlines or more generally of the firm's future business prospects. This market reaction is not always easy to explain much less to anticipate, a fact which management should bear in mind when planning a firm's response to such an event.

Notizen: This paper describes the application of two multimedia models, PRESTO and MMSOILS, to predict contaminant migration from a landfill that contains an organic chemical (methylene chloride) and a radionuclide (uranium-238). Exposure point concentrations and human health risks are predicted, and distributions of those predictions are generated using Monte Carlo techniques. Analysis of exposure point concentrations shows that predictions of uranium-238 in groundwater differ by more than one order of magnitude between models. These differences occur mainly because PRESTO simulates uranium-238 transport through the groundwater using a one-dimensional algorithm and vertically mixes the plume over an effective mixing depth, whereas MMSOILS uses a three-dimensional algorithm and simulates a plume that resides near the surface of the aquifer.A sensitivity analysis, using stepwise multiple linear regression, is performed to evaluate which of the random variables are most important in producing the predicted distributions of exposure point concentrations and health risks. The sensitivity analysis shows that the predicted distributions can be accurately reproduced using a small subset of the random variables. Simple regression techniques are applied, for comparison, to the same scenarios, and results are similar. The practical implication of this analysis is the ability to distinguish between important versus unimportant random variables in terms of their sensitivity to selected endpoints.