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  • Articles  (57)
  • 550 - Earth sciences
  • Electronic structure and strongly correlated systems
  • uncertainty
  • Economics  (53)
  • Chemistry and Pharmacology  (4)
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  • Articles  (57)
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  • 1
    Electronic Resource
    Electronic Resource
    Springer
    Environmental and resource economics 16 (2000), S. 253-262 
    ISSN: 1573-1502
    Keywords: endogenous future preferences ; stock of the environmental asset ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract A dynamic optimization model is developed in whichuncertainty about future preferences is endogenous,namely depending on the state of the environment atthe time the change in preferences occurs.Endogeneizing preferences not only provides economicintuition to previous results but also implies thatoptimal policies are less conservative.
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  • 2
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    Journal of risk and uncertainty 18 (1999), S. 165-188 
    ISSN: 1573-0476
    Keywords: moral hazard ; unemployment insurance ; workers' compensation ; risk ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract This paper examines how the Workers' Compensation (WC) and Unemployment Insurance (UI) programs interact to influence the duration of claims due to workplace accidents. We use longitudinal WC administrative micro-data on more than 30,000 workers in the Canadian construction industry for the period 1976–1986. For the estimations, we use the Meyer (1990) semi-parametric proportional hazard model. Our results show, in particular, that a reduction in the UI replacement ratio is associated with an increase in the duration of claims due to severe accidents that are difficult to diagnose. Moreover, the duration of spells on WC is much higher when an accident occurs in December, a month which corresponds to the beginning of the lay-off season in the construction sector. This result is consistent with the fact that WC benefits are more generous than UI benefits in Canada.
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  • 3
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    Environmental and resource economics 14 (1999), S. 75-94 
    ISSN: 1573-1502
    Keywords: CGE ; Costa Rica ; environmental indicators ; Monte Carlo ; parameter values ; trade policy ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract This study explores the role of parameter uncertainty in CGE modeling of the environmental impacts of macroeconomic and sectoral policies, using Costa Rica as a case for study. A CGE model is constructed which includes eight environmental indicators covering deforestation, pesticides, overfishing, hazardous wastes, inorganic wastes, organic wastes, greenhouse gases, and air pollution. The parameters are treated as random variables drawn from prespecified distributions. Evaluation of each policy option consists of a Monte Carlo experiment. The impacts of the policy options on the environmental indicators are relatively robust to different parameter values, in spite of the wide range of parameter values employed.
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  • 4
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    Computational economics 14 (1999), S. 237-253 
    ISSN: 1572-9974
    Keywords: cooperative games ; production ; core ; uncertainty ; stochastic programming ; distribution
    Source: Springer Online Journal Archives 1860-2000
    Topics: Computer Science , Economics
    Notes: Abstract The main objects below are transferable-utility games in which each agent faces an optimization problem, briefly called production planning, constrained by his resource endowment. Coalitions can pool members' resources. Such production games are here extended to accommodate uncertainty about events not known ex ante. Planning then takes the form of two-stage stochastic programming. Core solutions are sought, described, and computed via aggregate dual programs. The analysis is motivated by practical applications. Examples include stochastic production and regional distribution with random demand and supply, illustrated by a numerical example.
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  • 5
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    Review of industrial organization 15 (1999), S. 149-163 
    ISSN: 1573-7160
    Keywords: Firm information ; stochastic frontier estimation ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract The role of firm information about product and financial markets is the subject of considerable research. Typically empirical research measures information through price dispersion. However, the dispersion represents an imperfect measure of information. Several studies utilize stochastic frontier estimation techniques to measure worker information about the labor market. This paper determines whether the frontier information measure can be applied to the measurement of firm information about product markets. Several intuitive hypotheses are tested concerning the relationship between firm characteristics and information investments. The results are consistent with expectations and provide support for using stochastic frontier techniques to measure firm information.
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  • 6
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    Environmental and resource economics 13 (1999), S. 435-458 
    ISSN: 1573-1502
    Keywords: bioeconomics ; multiple stocks ; humane values ; Minke whales ; Monte Carlo analysis ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract Most bioeconomic models of efficient renewable resource management are constructed for a single harvesting ground. A bioeconomic model is developed in this paper to study the optimal management of renewable resources that are found in spatially distinct harvesting grounds. The model is applied to Minke whale management. Important inter-regional substitution effects are shown to exist. In addition, comparison with previous studies shows that multiple stock management is necessary for efficient management. Finally, the current Minke whale moratorium is shown to be inefficient unless significant nonmarket values exist.
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  • 7
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    The Geneva risk and insurance review 23 (1998), S. 151-165 
    ISSN: 1554-9658
    Keywords: environmental management ; uncertainty ; public goods ; voluntary contributions ; precaution ; risk
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract This article presents a model in which production causes pollution that diminishes the welfare of its agents. Each agent is concerned with the quality of its environment and may voluntary contribute to improve it by financing depollution technology. The effectiveness of this technology on the quality of the environment is uncertain. We show that if an agent is sufficiently risk averse, voluntary contribution is a decreasing function of the average efficiency of depollution technology. If, on the contrary, the pollution effect is weaker than the substitution effect, the opposite holds. We show that precaution about environmental quality has two possible consequences that depend on agents' risk aversion. Therefore, the implications of a precautionary attitude lead us to consider the agents' risk-aversion characterization, which implies knowledge about prudent attitude.
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  • 8
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    Journal of risk and uncertainty 17 (1998), S. 151-167 
    ISSN: 1573-0476
    Keywords: Pari-mutuel game ; uncertainty ; gambler's fallacy
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract This paper investigates biases in the perceptions of probabilities using data from the 1989 and 1994 seasons at the Woodlands greyhound park in Kansas City, Kansas. Results reveal consistent evidence that the gambler's fallacy exists. The results also reveal that gamblers overestimate the probability of a win by the favorite and the dog in the “lucky” seven position. However, the comparison also suggests some learning by bettors between the first season of operation in 1989 and the 1994 season.
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  • 9
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    Journal of population economics 11 (1998), S. 1-20 
    ISSN: 1432-1475
    Keywords: JEL classification: D63 ; D71 ; D81 ; Key words: Population ethics ; uncertainty ; critical levels
    Source: Springer Online Journal Archives 1860-2000
    Topics: Sociology , Economics
    Notes: Abstract This paper analyzes variable-population social-evaluation principles in a framework where outcomes are uncertain. We provide characterizations of expected-utility versions of critical-level generalized utilitarian rules. These principles evaluate lotteries over possible states of the world on the basis of the sum of the expected values of differences between transformed utility levels and a transformed critical level, conditional on the agents‘ being alive in the states under consideration. Equivalently, the critical-level utilitarian value functions applied to weighted individual expected utilities can be employed. Weights are determined by the anonymity axiom.
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  • 10
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    Journal of economics 68 (1998), S. 271-293 
    ISSN: 1617-7134
    Keywords: H53 ; D81 ; social-welfare programs ; wage distance ; shadow economy ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract It is often argued that low-skilled workers have an incentive to escape to the unofficial sector if welfare benefits come too close to the net wage in the official sector. Upper limits of welfare benefits often serve as an instrument to ensure a sufficiently high income differnetial between sectors. However, if unofficial-sector income is insecure, and if a change of sectors is costly, an option value of working in the official sector has to be taken into account. This option value reduces the incentive for lowly skilled workers to give up official-sector jobs. Upper limits of welfare benefits might therefore be defined less restrictively.
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  • 11
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    Environmental and resource economics 11 (1998), S. 635-646 
    ISSN: 1573-1502
    Keywords: damages ; global warming ; irreversibility ; optimal stopping ; timing ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract Although there is widespread agreement about the dangers of global warming and the resulting need to cut down emissions, there does not seem to be general agreement about the exact form the policy should take or the timing of its adoption. Failure to adopt and implement policies against global warming reflects the complexity of the problem, the uncertainties of climate change and the cost of policy adoption. Issues associated with the interactions between uncertainties and irreversibilities in determining the timing of policy adoption are analyzed by using the methodology of optimal stopping rules. Optimal policy functions are derived for cooperative and noncooperative solutions, with differential game representation. Issues associated with the empirical application of the optimal policy rules are also considered.
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  • 12
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    Environmental and resource economics 11 (1998), S. 177-195 
    ISSN: 1573-1502
    Keywords: uncertainty ; externalities ; Pigouvian taxes ; nuclear power
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract The external effects arising from the use of nuclear power are, in a fundamental way, related to uncertainty. In this paper we locate these external effects and derive a dynamic Pigouvian tax in order to make the decentralized economy support the command optimum. Another interesting result is that a small constant energy tax (which we interpret as a second best policy) can take the decentralized economy reasonably close to the command optimum.
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  • 13
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    Accreditation and quality assurance 2 (1997), S. 186-192 
    ISSN: 1432-0517
    Keywords: Key words Traceability ; Quality ; Measurement ; uncertainty ; Clinical reference ; materials ; Clinical photometric ; system
    Source: Springer Online Journal Archives 1860-2000
    Topics: Chemistry and Pharmacology
    Notes: Abstract  It is well known that erroneous data reported to a physician may strongly affect medical decision making. For routine clinical chemistry purposes, different instrumentation can be used to compare measurements of unknown samples with standard reference materials. Currently, acceptable limits of accuracy and precision are poorly defined in the field of clinical chemistry laboratories. In this article, problems associated with spectrophotometric measurements, both manual and automated, are discussed. The task of the validation of photometric systems for clinical analyses is currently of considerable interest. Some practical aspects of this validation and the use of reference materials for this activity in the national area are discussed.
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  • 14
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    Computational economics 10 (1997), S. 89-100 
    ISSN: 1572-9974
    Keywords: input-output models ; uncertainty ; interval arithmetic.
    Source: Springer Online Journal Archives 1860-2000
    Topics: Computer Science , Economics
    Notes: Abstract Input-output models are subject to uncertainty. If these models are solved without regard to the effects of the uncertainty the solutions can be substantially in error. Interval arithmetic offers a means by which the effects of this uncertainty can be assessed. They also offer a means of evaluating changes in the technical coefficients and a means of determining inverse important coefficients.
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  • 15
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    Environmental and resource economics 9 (1997), S. 451-466 
    ISSN: 1573-1502
    Keywords: global warming ; uncertainty ; learning ; irreversibility ; value of information ; dynamic games ; international agreements
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract In this paper we construct a simple model of global warming which captures a number of key features of the global warming problem: (i) environmental damages are related to the stock of greenhouse gases in the atmosphere; (ii) the global commons nature of the problem means that these are strategic interactions between the emissions policies of the governments of individual nation states; (iii) there is uncertainty about the extent of the future damages that will be incurred by each country from any given level of concentration of greenhouse gases but there is the possibility that at a future date better information about the true extent of environmental damages may become available; an important aspect of the problem is the extent to which damages in different countries may be correlated. In the first part of the paper we consider a simple model with two symmetric countries and show that the value of perfect information is an increasing function of the correlation between damages in the two countries in both the cooperative and non-cooperative equilibria. However, while the value of perfect information is always non-negative in the cooperative equilibrium, in the non-cooperative equilibrium there is a critical value of the correlation coefficient below which the value of perfect information will be negative. In the second part of the paper we construct an empirical model of global warming distinguishing between OECD and non-OECD countries and show that in the non-cooperative equilibrium the value of perfect information for OECD countries is negative when the correlation coefficient between environmental damages for OECD and non-OECD countries is negative. The implications of these results for international agreements are discussed.
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  • 16
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    Environmental and resource economics 9 (1997), S. 103-124 
    ISSN: 1573-1502
    Keywords: climate change ; uncertainty ; irreversibility ; intergenerational ; stochastic dynamic programming ; resource extraction
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract A three-generation planning model incorporating uncertain climate change is developed. Each generation features a production activity based on capital and an exhaustible resource. An irreversible climate change may occur in period two or three, reducing the productivity for this and the remaining generation. The model is solved by stochastic dynamic programming. If the climate impact and climate change probability is constant, the optimal period one (and two) resource extraction is larger than for the reference case of climate stability. If, however, climate impact and climate change probability increases with increased aggregate resource use, this result is reversed.
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  • 17
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    Environmental and resource economics 9 (1997), S. 451-466 
    ISSN: 1573-1502
    Keywords: global warming ; uncertainty ; learning ; irreversibility ; value of information ; dynamic games ; international agreements
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract In this paper we construct a simple model of global warming which captures a number of key features of the global warming problem: (i) environmental damages are related to the stock of greenhouse gases in the atmosphere; (ii) the global commons nature of the problem means that these are strategic interactions between the emissions policies of the governments of individual nation states; (iii) there is uncertainty about the extent of the future damages that will be incurred by each country from any given level of concentration of greenhouse gases but there is the possibility that at a future date better information about the true extent of environmental damages may become available; an important aspect of the problem is the extent to which damages in different countries may be correlated. In the first part of the paper we consider a simple model with two symmetric countries and show that the value of perfect information is an increasing function of the correlation between damages in the two countries in both the cooperative and non-cooperative equilibria. However, while the value of perfect information is always non-negative in the cooperative equilibrium, in the non-cooperative equilibrium there is a critical value of the correlation coefficient below which the value of perfect information will be negative. In the second part of the paper we construct an empirical model of global warming distinguishing between OECD and non-OECD countries and show that in the non-cooperative equilibrium the value of perfect information for OECD countries is negative when the correlation coefficient between environmental damages for OECD and non-OECD countries is negative. The implications of these results for international agreements are discussed.
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  • 18
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    Environmental and resource economics 9 (1997), S. 103-124 
    ISSN: 1573-1502
    Keywords: climate change ; uncertainty ; irreversibility ; intergenerational ; stochastic dynamic programming ; resource extraction
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract A three-generation planning model incorporating uncertain climate change is developed. Each generation features a production activity based on capital and an exhaustible resource. An irreversible climate change may occur in period two or three, reducing the productivity for this and the remaining generation. The model is solved by stochastic dynamic programming. If the climate impact and climate change probability is constant, the optimal period one (and two) resource extraction is larger than for the reference case of climate stability. If, however, climate impact and climate change probability increases with increased aggregate resource use, this result is reversed.
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  • 19
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    The Geneva risk and insurance review 21 (1996), S. 179-189 
    ISSN: 1554-9658
    Keywords: uncertainty ; investment ; newsboy problem ; increase in risk ; optimal capacity
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract In this article we study the effect of uncertainty on an entrepreneur who must choose the capacity of his business before knowing the demand for his product. The unit profit of operation is known with certainty, but there is no flexibility in our one-period framework. We show how the introduction of global uncertainty reduces the investment of the risk-neutral entrepreneur and, even more, that of the risk-averse one. We also show how marginal increases in risk reduce the optimal capacity of both the risk-neutral and the risk-averse entrepreneur, without any restriction on the concave utility function and with limited restrictions on the definition of a mean preserving spread. These general results are explained by the fact that the newsboy has a piecewise-linear, and concave, monetary payoff with a kink endogenously determined at the level of optimal capacity. Our results are compared with those in the two literatures on price uncertainty and demand uncertainty, and particularly, with the recent contributions of Eeckhoudt, Gollier, and Schlesinger [1991, 1995].
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  • 20
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    Microchimica acta 123 (1996), S. 231-240 
    ISSN: 1436-5073
    Keywords: measurement errors ; reference materials ; validation ; uncertainty ; method evaluation
    Source: Springer Online Journal Archives 1860-2000
    Topics: Chemistry and Pharmacology
    Notes: Abstract Quality assurance and method validation are needed to reduce false decisions due to measurement errors. In this context accuracy and standard uncertainty for the analytical method need to be considered to ensure that the performance characteristics of the method are understood. Therefore, analytical methods ought to be validated before implementation and controlled on a regular basis during usage. For this purpose reference materials (RMs) are useful to determine the performance characteristics of methods under development. These performance parameters may be documented in the light of a method evaluation study and the documentation related to international standards and guidelines. In a method evaluation study of Pb in blood using reference samples from the Laboratoire Toxicologie du Quèbec, Canada, a difference between the systematic errors was observed using a Perkin-Elmer Model 5100 atomic absorption spectrometer and a Perkin-Elmer Model 4100 atomic absorption spectrometer, both with Zeeman background correction. For measurement of blood samples, the performance parameters obtained in the method evaluation studies, i.e. slopes and intercepts of the method evaluation function (MEF), were intended to be used for correcting the systematic errors. However, the number of MEF samples was insufficient to produce an acceptable SD for the MEF slopes to be used for correction. In a method evaluation study on valproate in plasma using the SYVA's EMIT assay on COBAS MIRA S a significant systematic error above the concentration 300 mmol dm−3 was demonstrated (slope 0.9541) and consequently the slope was used for correction of results. For analytes, where certified RMs (CRMs) exist, a systematic error of measurements can be reduced by correcting errors by assessment of the trueness as recommended in international guidelines issued by ISO or the National Institute of Standards and Technology (NIST). When possible, the analysis of several RMs, covering the concentration range of interest, is the most useful way to investigate measurement bias. Unfortunately, until recently only few RMs existed and only few had been produced and certified by specialized organizations such as NIST or the Standards, Measurements and Testing (SMT, previously BCR) programme. Due to the lack of such RMs, network organizations are nowadays established with the aim of supporting the correct use and production of high-quality CRMs.
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  • 21
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    Microchimica acta 123 (1996), S. 303-309 
    ISSN: 1436-5073
    Keywords: accuracy ; quality assessment ; instrumental neutron activation analysis ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Chemistry and Pharmacology
    Notes: Abstract Neutron activation analysis is one of the analytical techniques often used for certification of reference materials. The k0-based method of instrumental neutron activation analysis can also be applied in intercomparison runs in the certification process and therefore it is desirable to know its accuracy in advance. Possible systematic errors related to the application of nuclear data at given neutron flux rate parameters, that can affect the uncertainties of the results obtained by this specific method, are elucidated and error propagation factors calculated for a typical irradiation position in the TRIGA Mark II reactor of the Jozef Stefan Institute. It was found that these uncertainties are at the level of 1–2% on the average.
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  • 22
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    Journal of risk and uncertainty 13 (1996), S. 53-71 
    ISSN: 1573-0476
    Keywords: risk ; uncertainty ; ambiguity ; self-protection ; self-insurance ; framing ; D81
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract We build two experimental markets to examine individual valuations of risk reductions with two risk-management tools: self-insurance and self-protection. We find no positive evidence that the risk-reducing mechanisms constitute a “frame.” Ambiguity in the probability on average affects valuation only weakly, and changes in the representation of ambiguity do not alter valuation. Finally, unlike the results obtained by Hogarth and Kunreuther for the case of market insurance, our findings do not provide a strong support for the “Anchoring and Adjustment” ambiguity model.
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  • 23
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    Journal of risk and uncertainty 13 (1996), S. 5-17 
    ISSN: 1573-0476
    Keywords: risk ; uncertainty ; decision weights ; subadditivity
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract Professional options traders priced risky prospects as well as uncertain prospects whose outcomes depended on future values of various stocks. The prices of the risky prospects coincided with their expected value, but the prices of the uncertain prospects violated expected utility theory. An event had greater impact on prices when it turned an impossibility into a possibility or a possibility into a certainty than when it merely made a possibility more or less likely, as predicted by prospect theory. This phenomenon is attributed to the subadditivity of judged probabilities.
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  • 24
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    Environmental and resource economics 8 (1996), S. 39-61 
    ISSN: 1573-1502
    Keywords: tropical forests ; irreversibility ; uncertainty ; Thai parks
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract This paper develops a framework for the valuation and management of tropical forests that reflects their ecological and economic characteristics. The analysis demonstrates the importance of modeling the feasible use patterns and the information structure in tropical forest management decisions. The model predicts that cases exist where the foresighted management of forests leads to more preservation than the traditional expected value approach. An application in Thailand provides evidence that such cases occur in relevant ranges of benefit flows. The model focuses tropical forest management on assessments of sustainability and feasible sequences in light of uncertainty and information flows.
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    The journal of real estate finance and economics 12 (1996), S. 37-58 
    ISSN: 1573-045X
    Keywords: liability ; uncertainty ; industrial redevelopment
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract The paper explores the effects of current liability law on real estate transactions involving properties with potential environmental contamination. Sources of uncertainty and their likely impact on transactions are identified. Liability-driven market distortions are likely to be due less to legal uncertainty than to problems arising from asymmetric information and imperfect detection.
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    Review of quantitative finance and accounting 6 (1996), S. 133-147 
    ISSN: 1573-7179
    Keywords: cost-volume-profit analysis ; uncertainty ; risk aversion ; fixed cost effect
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract Cost-volume-profit analysis has focused on the firm's short-run output decision assuming that the manager maximizes the firm's objective function rather than his or her own. This study argues that the decision problem facing the manager is to determine not only the level of output, but also the level of investment in risky assets in such a way that the expected utility of the manager's own end-of-period wealth can be maximized when the manager's wealth function is dependent on vested interests both within and outside of the firm, possibly in competition with the firm. Through analytical work, it is demonstrated that a change in fixed costs of the firm affects not only the production decision of a manager, but also his orher decision to invest in risky assets. The direction of this fixed cost effect depends on the particular type of risk aversion displayed by the manager. From the analytical work, five propositions are developed for empirical investigation in the future.
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    Environmental and resource economics 8 (1996), S. 399-416 
    ISSN: 1573-1502
    Keywords: environmental taxes ; tradable permits ; excess burden ; tax revenues ; uncertainty ; secondbest policy
    Source: Springer Online Journal Archives 1860-2000
    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract This paper analyses the optimal choice of second-best optimal environmental policies. Using a partial equilibrium model, the paper first reconfirms the well-known result that the existence of a double dividend (in its weak definition) favours environmental policy instruments which maximise tax revenues for a given improvement in environmental quality. Additional revenues can be used to reduce the distortion of existing taxes such as taxes on labour and capital income. Without uncertainty, environmental taxes and auctioned permits are equally appropriate. In the presence of uncertainty, however, the optimal choice of taxes or tradable permits depends on the relative magnitudes of the marginal environmental damage and the marginal benefit from consuming a polluting good. In the second part, the paper, therefore, analyses how the revenue capacity affects the optimal choice of environmental policy instruments in the presence of uncertainty. The paper shows that the first-best choice rule between price and quantity regulation (Weitzman, 1974) remains valid in a second-best world with distortionary taxation.
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    Journal of risk and uncertainty 10 (1995), S. 37-55 
    ISSN: 1573-0476
    Keywords: uncertainty ; intertemporal choice ; life-cycle ; stochastic dominance ; temporal dominance
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract Intertemporal choice has obvious similarities with choice under uncertainty. However, because of technical difficulties in mapping results between the two domains, theoretical analysis of these topics has proceeded independently. In this article, we show that, using Rank Dependent Expected Utility rather than Expected Utility as the basic uncertain choice model, numerous analogies between the two fields may be identified and exploited. The key result is the derivation of a natural analogy between risk-aversion and impatience. This permits the reinterpretation of well-known results on stochastic dominance and comparative risk-aversion in the context of intertemporal choice. It is also possible to reinterpret results on intertemporal optimization in order to derive new results for portfolio choice problems under uncertainty.
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    Journal of risk and uncertainty 10 (1995), S. 15-36 
    ISSN: 1573-0476
    Keywords: ambiguity ; uncertainty ; risk ; ignorance ; cognitive processes
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    Topics: Economics
    Notes: Abstract The metaphor of gambling has had great influence on the topic of choice under uncertainty. However, in many real-world situations, people must make choices when they lack information about the relevant economic features of gambles, i.e., probabilities and outcomes. We refer to this as choice under ignorance as opposed to choice under risk or uncertainty. We propose that people handle these decisions by generating rationales or arguments that allow them to resolve the choice conflict. Moreover, these rationales often do not correspond to principles derived from the cost-benefit framework of economic models. These ideas are explored in two experiments in which subjects simulated the purchase of warranties for consumer durables. Our principal findings are, first, that observable behaviors differ between situations where subjects do and do not have information on probabilities and outcomes. Second, economic cost-benefit models did not yield good descriptions of our subjects' decisions. Third, the nature of arguments used, and thus the processes invoked, differed as a function of the information available to subjects. And fourth, subjects' arguments indicated two types of strategies for reaching decisions. In one, they processed the particular characteristics of each choice option; in the other, they invoked a “meta-rule” or principle that resolved the choice conflict and was insensitive to the particular features of different options. Finally, we discuss the implications of our results. This includes questioning the appropriateness of using the gamble as a metaphor for choice in future research.
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    Journal of risk and uncertainty 10 (1995), S. 143-156 
    ISSN: 1573-0476
    Keywords: uncertainty ; insurance ; renewability ; competition
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    Topics: Economics
    Notes: Abstract We propose a guaranteed renewability (GR) insurance in which a sequence of premiums would enable insurers to break even and would be chosen by both low- and high-risk buyers, whether or not they had suffered a loss. The premium schedule would continually decline over time, as the insurer collects more information to determine who the low-risk buyers are. The highest premiums are charged initially to protect the insurer if low-risk individuals leave for the spot market. The concluding portion of the article discusses the limitations of a GR policy in the health and environmental liability area, the most serious being instability in estimates of underlying loss trends.
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    Environmental and resource economics 5 (1995), S. 353-374 
    ISSN: 1573-1502
    Keywords: Climate change damage costs ; cost functions ; uncertainty
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    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract It is argued that estimating the damage costs of a certain benchmark climate change is not sufficient. What is needed are cost functions and confidence intervals. Although these are contained in the integrated models and their technical manuals, this paper brings them into the open in order to stimulate discussion. After briefly reviewing the benchmark climate change damage costs, region-specific cost functions are presented which distinguish tangible from intangible losses and the losses due to a changing climate from those due to a changed climate. Furthermore, cost functions are assumed to be quadratic, as an approximation of the unknown but presumably convex functions. Results from the damage module of the integrated climate economy modelFUND are presented. Next, uncertainties are incorporated and expected damages are calculated. It is shown that because of convex loss functions and right-skewed uncertainties, the risk premium is substantial, calling for more action than analysis based on best-guess estimates. The final section explores some needs for further scientific research.
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    Review of industrial organization 10 (1995), S. 269-288 
    ISSN: 1573-7160
    Keywords: Oligopoly ; uncertainty ; fuzzy mathematics ; Herfindahl-Hirschman ; antitrust
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    Topics: Economics
    Notes: Abstract This paper provides a brief sketch of fuzzy mathematics. It employs this relatively new mathematical tool to define and describe oligopoly markets and to quantitatively establish the impacts of uncertainty on the decision making that is intrinsic to oligopolistic industries. It illustrates how the technique would be used, for example, by applying fuzzy mathematics to the Herfindahl-Hirschman Index.
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    Theory and decision 39 (1995), S. 51-77 
    ISSN: 1573-7187
    Keywords: Ambiguity ; competence ; knowledge ; decision making ; uncertainty
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    Topics: Sociology , Economics
    Notes: Abstract Competence has recently been proposed as an explanation for the degree of ambiguity aversion. Using general knowledge questions we presented subjects with simple lotteries in which they could bet on an event and against the same event. We show that the sum of certainty equivalents for both bets depends on the judged knowledge of the class of events. We also elicited the decision weights for events and complementary events. We found a similar effect of knowledge on the sum of decision weights.
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    Environmental and resource economics 5 (1995), S. 71-82 
    ISSN: 1573-1502
    Keywords: Externality ; greenhouse ; estimation ; uncertainty
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    Topics: Energy, Environment Protection, Nuclear Power Engineering , Economics
    Notes: Abstract The shadow price of carbon dioxide is the value of the external damage caused by an emission. A shadow price model for calculating the present value of the external damage of a carbon dioxide emission is derived explicitly. Sixteen experts provided subjective high, low and most likely parameter estimates because correct values for the eight model parameters are uncertain. The estimation procedure retains parameter uncertainty while generating the main result, which is a distribution of shadow price estimates. Major assumptions made in the estimation identify the basis for the results. Of the eight model parameters, the discount rate dominates the determination of the shadow price. For comparison, expert estimates of the shadow price itself provide a second distribution of shadow price estimates.
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    Journal of risk and uncertainty 8 (1994), S. 153-165 
    ISSN: 1573-0476
    Keywords: regret theory ; stochastic dominance ; choice ; uncertainty ; 026
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    Topics: Economics
    Notes: Abstract The regret theory of choice under uncertainty proposed by Loomes and Sugden has performed well in explaining and predicting violations of Expected Utility theory. The original version of the model was confined to pairwise choices, which limited its usefulness as an economic theory of choice. Axioms for a more general form of regret theory have been proposed by Loomes and Sugden. In this article, it is shown that a simple nonmanipulability requirement is sufficient to characterize the functional form for regret theory with general choice sets. The stochastic dominance and comparative static properties of the model are outlined. A number of special cases are derived in which regret theory is equivalent to other well-known theories of choice under uncertainty.
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    Journal of risk and uncertainty 8 (1994), S. 197-216 
    ISSN: 1573-0476
    Keywords: expected utility theory ; belief functions ; lower probability ; uncertainty ; D81
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    Topics: Economics
    Notes: Abstract An uncertain and not just risky situation may be modeled using so-called belief functions assigning lower probabilities to subsets of outcomes. In this article we extend the von Neumann-Morgenstern expected utility theory from probability measures to belief functions. We use this theory to characterize uncertainty neutrality and different degrees of uncertainty aversion.
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    Journal of risk and uncertainty 6 (1993), S. 255-275 
    ISSN: 1573-0476
    Keywords: gambling ; risk ; uncertainty
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    Topics: Economics
    Notes: Abstract A tiny utility of gambling is appended to an expected utility model for a risk-averse individual. It is shown that the model can explain small payoff gambles, large prize lotteries, and patterns of risk-seeking in the experimental evidence that are puzzling from the viewpoint of standard theory. At the same time, the model maintains expected utility theory's ability to explain insurance purchase, portfolio diversification, and other risk-averting behavior. The tiny utility of gambling could equally well be appended to models of risky choice other than the expected utility model.
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    Journal of risk and uncertainty 7 (1993), S. 71-87 
    ISSN: 1573-0476
    Keywords: insurer ambiguity ; uncertainty ; market failure ; decision making
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    Topics: Economics
    Notes: Abstract A series of studies investigate the decision processes of actuaries, underwriters, and reinsurers in setting premiums for ambiguous and uncertain risks. Survey data on prices reveal that all three types of these insurance decision makers are risk averse and ambiguity averse. In addition, groups appear to be influenced in their premium-setting decisions by specific reference points such as expected loss and the concern with insolvency. This behavior is consistent with a growing analytical and empirical literature in economics and decision processes that investigates the role that uncertainty plays on managerial choices. Improved risk-assessment procedures and government involvement in providing protection against catastrophic losses may induce insurers to reduce premiums and broaden available coverage.
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    Journal of risk and uncertainty 5 (1992), S. 325-370 
    ISSN: 1573-0476
    Keywords: ambiguity ; uncertainty ; Ellsberg paradox ; nonexpected utility
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    Topics: Economics
    Notes: Abstract In subjective expected utility (SEU), the decision weights people attach to events are their beliefs about the likelihood of events. Much empirical evidence, inspired by Ellsberg (1961) and others, shows that people prefer to bet on events they know more about, even when their beliefs are held constant. (They are averse to ambiguity, or uncertainty about probability.) We review evidence, recent theoretical explanations, and applications of research on ambiguity and SEU.
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    Review of industrial organization 7 (1992), S. 83-90 
    ISSN: 1573-7160
    Keywords: Concentration ; performance ; index ; information ; uncertainty
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    Topics: Economics
    Notes: Abstract Industry indices, be they conduct or performance based, frequently guide government intervention activities and are used for both predictive and prescriptive purposes. Unfortunately, few existing indices of industrial concentration are based on underlying economic theory, and those that are based on theory are based on models of perfect information. We derive a general performance measure relevant for industries that experience imperfect information. We do so by specifying a social welfare function that reflects the objectives of the policymaker and maps characteristics of industry equilibria under uncertainty into a real number that summarizes industry performance. The importance of explicitly accounting for the information structure of an industry is illustrated by deriving a reduced form for the performance measure valid when a monopolist faces random demand.
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    Theory and decision 33 (1992), S. 41-69 
    ISSN: 1573-7187
    Keywords: Probability ; aggregation ; t-norm ; uncertainty ; ordered weighted average
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    Topics: Sociology , Economics
    Notes: Abstract We concern ourselves with the problem of determining the overall degree or measure of realization of an object based upon its occurrence in a collection of individual phenomena. We show that while probability is the classic measure of this type, it is but one of a whole family of possible such measures. We use the OWA operator to provide this family of measures. We investigate the situation in which our observations are both specific elements and subsets of some base set.
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    Theory and decision 32 (1992), S. 77-100 
    ISSN: 1573-7187
    Keywords: uncertainty ; experimental economics ; reduction principle
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    Topics: Sociology , Economics
    Notes: Abstract Segal (1987) suggested that the Ellsberg paradox might be explained in terms of individuals mentally representing the decision problem as a two-stage lottery which they evaluated according to a non-expected utility model. This paper describes an experiment involving an explicitly two-stage analogue to an Ellsberg-type problem. This design substantially reduces the frequency of classic Ellsberg behaviour, but reveals other systematic violations of conventional theory. The paper discusses the particular patterns of choice and raises the more general problem of modelling individual decisions when the reduction principle does not hold.
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    Journal of risk and uncertainty 4 (1991), S. 299-324 
    ISSN: 1573-0476
    Keywords: uncertainty ; probability ; rationality ; belief
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    Topics: Economics
    Notes: Abstract In this article, we first examine the various criticisms of the probabilistic model. Then we introduce capacities in order to show that if a probability measure corresponds to anesthetizing the belief of the agent's knowledge, it is then possible to suggest another type of rationality—namely, being able to describe a wise and a rash behavior when facing risk—and therefore another model of belief under uncertainty. While trying to specify various alternative measures, possibility, necessity, and measures resulting from a triangular norm or from a triangular conorm, we finally try to define the field of application of the probabilistic model as well as a sign of the rationality choice: constraint of mass-unity for traditional rationality, and constraint of duality for the one we present.
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    Journal of risk and uncertainty 4 (1991), S. 5-28 
    ISSN: 1573-0476
    Keywords: ambiguity ; uncertainty ; preferences
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    Topics: Economics
    Notes: Abstract We investigate the relation between judgments of probability and preferences between bets. A series of experiments provides support for the competence hypothesis that people prefer betting on their own judgment over an equiprobable chance event when they consider themselves knowledgeable, but not otherwise. They even pay a significant premium to bet on their judgments. These data connot be explained by aversion to ambiguity, because judgmental probabilities are more ambiguous than chance events. We interpret the results in terms of the attribution of credit and blame. The possibility of inferring beliefs from preferences is questioned.1
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    The journal of real estate finance and economics 4 (1991), S. 225-265 
    ISSN: 1573-045X
    Keywords: Land market ; uncertainty ; rational expectations ; urban growth
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    Topics: Economics
    Notes: Abstract This paper presents a simple model of urban spatial growth under uncertainty with an infinite time horizon. The rational expectations equilibrium path (REE path) of the urban land market is obtained in explicit form as a function of exogenously given stochastic processes of future population, transport and household income in the city. Spatial and temporal characteristics of asset prices along the REE path are examined in detail.
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    Review of quantitative finance and accounting 1 (1991), S. 399-407 
    ISSN: 1573-7179
    Keywords: tender offers ; uncertainty ; shareholder wealth ; gains measurement
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    Topics: Economics
    Notes: Abstract Uncertainty concerning the ultimate outcome of tender offers may affect the measurement of changes in shareholder wealth. The uncertainty regarding the outcome of tender offers is measured by estimating the probability of acceptance of tender offers during the period when the tender offers are outstanding. The estimated probability of acceptance of tender offers implies that the amount of uncertainty prior to knowledge of the ultimate outcome is substantial and affects the measurement of expected equity gains. The uncertainty-adjusted measure of the change in shareholder wealth indicates that previous studies may have underestimated the gains expected to result from tender offers.
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    Theory and decision 31 (1991), S. 159-173 
    ISSN: 1573-7187
    Keywords: ambiguity ; uncertainty ; Ellsberg Paradox ; information
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    Topics: Sociology , Economics
    Notes: Abstract This paper reports on the responses of 646 individuals to environmental risk information involving different forms of risk ambiguity. Recipients of more than one set of risk information do not simply average the risk levels provided. Rather, a variety of aspects of the nature of the risks that are communicated influence their probabilistic beliefs. Individuals' perceptions of the risk levels to which they are exposed are likely to be greater: (i) for more ambiguous risks, (ii) for risks for which the unfavorable risk evidence is presented last even when there is no temporal order, (iii) for risks for which the most unfavorable risk studies have been performed most recently, and (iv) for risks where there is asymmetry in the risk ambiguity that imposes substantial potential downside risks. Although these effects are modest for the median individual, the potential for extreme responses that reflect only the most adverse or the most favorable piece of information provided is quite prevalent. These findings are of interest more generally in that they indicate how individuals form their risk perceptions in the presence of risk ambiguity.
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    Journal of risk and uncertainty 3 (1990), S. 65-82 
    ISSN: 1573-0476
    Keywords: risk ; uncertainty ; mean-preserving spreads ; star-shape
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    Topics: Economics
    Notes: Abstract A characterization of comparative risk, parallel to but more restrictive than the Rothschild-Stiglitz (1970) characterization, is developed. As in Rothschild and Stiglitz, we develop a four-way characterization that consists of generating processes (a noise condition and generation by a sequence of special mean-preserving spreads), integral conditions, and preferences. The building blocks of this new order, Mean-preserving increases in risk about ν, where ν is any constant, are mean-preserving spreads whose centers have a nonempty intersection. If this intersection contains the mean of the distribution, the induced order, or mean-preserving increase in risk about the mean, conveys a particularly meaningful notion of an increase in risk as a buildup of the tails of the distribution.
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    Theory and decision 28 (1990), S. 143-172 
    ISSN: 1573-7187
    Keywords: Entropy ; decision analysis ; information economics ; uncertainty
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    Topics: Sociology , Economics
    Notes: Abstract This essay intends to define the role of entropy, in particular, the role of the maximum entropy criterion with respect to decision analysis and information economics. By considering the average opportunity loss interpretation, the basic hypothesis for Shannon's derivation can be derived from properties of decision problems. Using the representation Bayes Boundary it is possible to show that selecting a single probability from a set by the Maximum Entropy Criterion corresponds to a minimax criterion for decision-making. Since problems of randomly accessing and storing information as well as communicating information can often be stated in terms of coding problems, this result might be used to develop strategies for minimizing retrieval time or communication costs.
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    Journal of risk and uncertainty 2 (1989), S. 189-212 
    ISSN: 1573-0476
    Keywords: Risk ; choice ; perception ; control ; adjustment ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Economics
    Notes: Abstract Experienced executives frequently try to modify the risky situations they face in order to make them more favorable rather than simply choosing from among available decision options. This article investigates several types of risk adjustments such as trying to influence the situation through bargaining and spending resources, gathering information, developing new options, and consulting one's superiors. A theoretical framework is presented that characterizes different types of adjustments and relates them to variables such as perceived risk, perceived control, perceived responsibility, decisiveness, and risky choice. The framework is tested using experienced decision makers who respond to four simulated risky business decisions.
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    Theory and decision 27 (1989), S. 93-106 
    ISSN: 1573-7187
    Keywords: cognition ; decision ; graphs ; artificial intelligence ; risk ; uncertainty ; expert systems ; expected utility
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    Topics: Sociology , Economics
    Notes: Abstract In the first part, we try to give a representation of the process by which man endeavours to grasp uncertainty. We propose a backward exploration which we will modelize through an influence diagram and then we can draw a few conclusions from that representation for the axiomatics of Decision. In the second part, we deal with the processing of the information formatted in such a way, regarding both its temporal complexity and its elective complexity. The first part as the second one dealing with representation and the consequences for information processing of uncertainty cognition lead to a severe criticism of the expected utility hypothesis. To conclude, we suggest a few remarks on expert systems of decision aid under uncertainty.
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    Theory and decision 26 (1989), S. 1-35 
    ISSN: 1573-7187
    Keywords: research and development ; resource allocation ; project selection ; uncertainty ; data improvement ; control strategy
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    Topics: Sociology , Economics
    Notes: Abstract This paper deals with the problem of optimal control of R&D. The fundamental aspects of this problem are viewed as: uncertainty about economic parameters of new technology (or new activity, e.g. a search for new oil fields) explored by a group of parallel projects attempting to make advances in this technology as well as improve economic data; allocation of investments among rival projects under a given total budget; timing of the ultimate selection of new technology (activity) according to the most successful project. The process of data improvement (PDI) is described as a (random) process of reducing the intervals of uncertainty, the rate of data improvement being controlled, in effect, by the investment policy. A stationary dynamic model with infinite horizon of planning and with the criterion of total discounted costs is developed. The model is carefully investigated from the economic point of view, and some new effects are discovered. It is demonstrated that uncertainty may be the source of additional gain; the bigger the initial uncertainty, the bigger the gain may be under optimal control. This effect is based on PDI, the economic background of which is presented as multiplication of the expected gain over time, which is typical for the classical macromodels of economics. Optimal continuous control is constructed at every time moment, and answers to two main questions are given: (1) either to prolong R & D or to make ultimate selection of one project, (2) how to allocate resources among the rival projects in the case of R&D prolongation. The last question is answered on the basis of profitability indices that relate efficiencies of PDI for particular projects to the costs of information.
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    Theory and decision 26 (1989), S. 99-105 
    ISSN: 1573-7187
    Keywords: decision theory ; uncertainty ; betting system ; Dutch book ; belief function
    Source: Springer Online Journal Archives 1860-2000
    Topics: Sociology , Economics
    Notes: Abstract By considering situations of partially resolving uncertainty, a one-to-one correspondence between belief functions and coherent betting systems à la de Finetti is shown to exist.
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    Journal of risk and uncertainty 1 (1988), S. 267-283 
    ISSN: 1573-0476
    Keywords: Risk ; uncertainty ; expected utility ; nonlinear preference
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    Topics: Economics
    Notes: Abstract During the past generation, expected utility theory has been widely accepted as the normative standard for decision making under risk and under uncertainty. However, it is now known that reasonable people often violate its assumptions, and a number of generalizations of the theory have been developed to accommodate some of the more common violations. This essay recalls the origins of expected utility in the early 1700s, notes its axiomatizations on the basis of preference comparisons in the mid-1900s, describes violations of those axioms uncovered since then, outlines new theories stimulated by the violations, and suggests where the field might be headed in the next few decades.
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    Annals of operations research 9 (1987), S. 615-628 
    ISSN: 1572-9338
    Keywords: Bayesian paradigm ; Bayes ; statistical inference ; applied probability ; uncertainty
    Source: Springer Online Journal Archives 1860-2000
    Topics: Mathematics , Economics
    Notes: Abstract This paper is based on an invited lecture given by the author at the ORSA/TIMS Special Interest Group on Applied Probability Conference onStatistical and Computational Problems in Probability Modeling, held at Williamsburg, Virginia, January 7–9, 1985. The theme of this paper is twofold. First, that members of the above group should be seriously concerned with issues of statistical inference — they should not stop short upon proposing a probability model. Second, that inference be undertaken via a strict adherence to the rules of probability — the Bayesian paradigm. To underscore a need for emphasizing the first theme, it may be pertinent to note that an overwhelming majority of the papers dealing with statistical and inferential issues that were presented at this conference were authored by members who did not claim to belong to the ORSA/TIMS Special Interest Group on Applied Probability. The lecture was followed by a panel discussion, with Drs. Lyle Broemeling and Edward Wegman of the Office of Naval Research as discussants. Dr. Robert Launer of the Army Research Office served as a moderator. Discussions from the floor included comments by Professors D. Harrington of Harvard University, E. Parzen of Texas A & M University, and R. Smith of Imperial College, London, England. This paper, and the comments of the panelists, are published in this volume of theAnnals of Operations Research, which is going to serve as a Proceedings of the Conference.
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    Annals of operations research 2 (1984), S. 271-284 
    ISSN: 1572-9338
    Keywords: Search ; uncertainty ; economics ; exploration ; minerals
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    Topics: Mathematics , Economics
    Notes: Abstract A sequential method of modeling the increase in precision of expected net revenues for a proposed exploration and exploitation program has been developed. Embedded within a computer simulation model of the exploration process, which incorporates a method of learning about deposit characteristics, is a multi-stage stochastic optimization process model to determine the optimal exploitation pattern of the deposit. This approach stresses the interdependence of the planning of the exploration and exploitation processes. The model can be used to determine the amount of exploration which should be undertaken in an area by more precisely predicting the long-range profitability associated with the amount of exploration. Thus, decision makers are provided a capability which reduces the uncertainty in profitability outcomes over future production periods.
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    Radiation Physics and Chemistry 42 (1993), S. 731-738 
    ISSN: 0969-806X
    Keywords: Dosimetry ; radiation ; standards ; sterilization ; traceability ; uncertainty
    Source: Elsevier Journal Backfiles on ScienceDirect 1907 - 2002
    Topics: Chemistry and Pharmacology , Energy, Environment Protection, Nuclear Power Engineering , Physics
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