Theories of corporate social responsibility suggest that there ought to be a balance between what business takes from society and what it gives back in return. Recently, the practice literature within the insurance industry has been heavily pushing for the development of the Internet as a tool for commerce while virtually ignoring the role it could play in terms of information disclosure to stakeholders. This study examines whether insurance firms themselves reflect this emphasis, or whether companies that (...) are industry leaders with respect to web innovation for product marketing are also leaders in using the web for information disclosure. A study of the web pages for 40 property and casualty firms drawn from Franzis (2000), shows that financial disclosure for the overall sample is at best moderate. The disclosure of social responsibility information on these web pages is quite low, on average. Further, and importantly from a social balance perspective, the web innovators in terms of product marketing are not industry leaders in terms of information disclosure. (shrink)

ABSTRACT:Drawing a framework from strategic stakeholder theory and using 1999 to 2010 panel data from the United Kingdom’s (UK) non-life insurance industry, we examine the effect of reinsurance on the decisions to donate to charities, and the amount given. We find that reinsurance substitutes for charitable giving as it optimizes the interests of multiple stakeholders. We further note that corporate giving is directly related to the size and age of insurers, proportion of female directorships and insider ownership, but generally (...) inhibited by chief executive officer (CEO) bonus plans, dominant shareholders, and financial experts on the board. Interestingly, when reinsurance interacts with board-level variables we find that the donations decision is positively related to CEO bonus plans, and negatively linked with inside ownership and the proportion of female board members. Our research results could have important implications for stakeholders. (shrink)

We use a controlled laboratory experiment to study firm’s protection against potential technological damages. The probability of a catastrophic event is known, and the firm’s costly investment in safety reduces it. The firm can also buy an insurance with full or partial refund against the consequences of the catastrophic event, which ultimately reduces the variance of the firm’s investment-in-safety lottery. The firm makes these two choices simultaneously, after observing the insurance contract proposed by an insurer who chooses this (...) contract within a set of premium–deductible combinations. We parametrize the insurer–firm game such that a risk-neutral insurer maximizes his expected profit by offering an actuarially fair contract with full insurance; a risk-neutral firm is indifferent between investing in safety and accepting a fair insurance contract. We aim at understanding whether investment in safety and insurance are substitutes or complements in the firm’s risk management of catastrophic events. In line with our predictions, the experimental results suggest that they are substitutes rather than complements: the firm’s investment in safety measures is affected by the insurer’s proposed contract, the latter usually involving only partial insurance. (shrink)

We study how changes in unemployment risk affect firms’ productivity and whether firm-initiated policies can mitigate the moral hazard problem created by increases in unemployment insurance benefits that might decrease workers’ incentives to work hard. We focus on state-specific changes in UIB levels as a quasi-natural experiment. While a large body of research has examined UIBs, including their effect on unemployed workers, few studies investigate whether UIBs have any impact on a firm’s overall productivity. Using data on firm-level (...) total factor productivity and state-level UIBs, we find a negative association between productivity and UIBs. We also find that the negative association is weaker for firms with higher employee-welfare indices than for firms with lower indices, suggesting that the adverse effect of higher UIBs on productivity is mitigated by policies that benefit workers’ welfare. More specifically, we find that among policies that are under the umbrella of corporate social responsibility, a subset of employee-welfare policies are more effective in managing moral hazard problems than other policies. (shrink)

Using a nationwide survey of randomly selected manufacturing firms in representative Chinese cities, we examine how firms’ compliance with social insurance policies is shaped by their historical imprinting, by their founding ownership structures, as well as by massive institutional changes. Our empirical results suggest that firms founded in the state socialist era and firms founded as Chinese state-owned enterprises (SOEs) were infused with socialist institutional logics of labor relations, and they tended to comply with social (...) insurance policies even in the present market socialist era. Chinese SOEs restructured into private and joint-ventured firms attenuated the lingering effect of organizational imprinting and provide social insurances for fewer workers. This research is among the first to probe the historical influence on labor protection in contemporary society. Through studying the stability and changes of socialist institutional logic of labor relations, our research leads to a better understanding of the situation of labor relations in contemporary China. (shrink)

In the 1990s, large insurance companies failed in virtually every major market, prompting a fierce and ongoing debate about how to better protect policyholders. Drawing lessons from the failures of four insurance companies, When Insurers Go Bust dramatically advances this debate by arguing that the current approach to insurance regulation should be replaced with mechanisms that replicate the governance of non-financial firms.Rather than immediately addressing the minutiae of supervision, Guillaume Plantin and Jean-Charles Rochet first identify a (...) fundamental economic rationale for supervising the solvency of insurance companies: policyholders are the "bankers" of insurance companies. But because policyholders are too dispersed to effectively monitor insurers, it might be efficient to delegate monitoring to an institution--a prudential authority. Applying recent developments in corporate finance theory and the economic theory of organizations, the authors describe in practical terms how such authorities could be created and given the incentives to behave exactly like bankers behave toward borrowers, as "tough" claimholders. (shrink)

Prior studies have extensively explored factors that drive misselling behavior in life insurance markets, but considered little the influences of attributes of clients (particularly vulnerable clients) on unethical sales. Our study that is based on the neoclassical theory of the firm aims to investigate the relationships between attributes of life insurance clients and unethical selling behavior of salespeople. Applying logit and probit models to a sample of 35,075 observations from a Chinese life insurance company, our study finds (...) that salespeople are more likely to perform unethical selling to ill-educated clients. Further, when salespeople’s sex and education are considered, the result shows that male or poorly-educated salespeople are more likely to make unethical selling. These findings enrich the literature of misselling of life insurance and offer some practical implications for both insurers and regulators to manage life insurance markets and control misselling behaviors. (shrink)

We examine the relationship between social insurance contributions and earnings management for publicly listed firms in China. Our empirical results show that the social insurance contributions burden significantly reduces the degree of earnings management by reducing the level of free cash flow. Additionally, the negative relation between social insurance contributions burden and earnings management is more pronounced when the internal and external social insurance pressures are high and when the firms are large non-state-owned enterprises. (...) We also discuss the heterogeneity among firms for different financing constraints, external financing environment, regional marketization, and internal and external corporate governance. Finally, we further find that under the dual collecting system, although the social security administration is a better collecting agency, the local tax bureau acting with full responsibility is more effective than the collecting system. (shrink)

We investigate the effectiveness of corporate social responsibility disclosure in protecting corporate reputation following financial restatements. As expected under legitimacy theory, firms can signal their legitimacy via nonfinancial disclosure after the negative effects of financial restatements. Our results show that restating firms make substantial improvements to overall CSR disclosure quality by changing their standalone reports to a more conservative tone, increasing readability and report length, even though they strategically disclose less forward-looking and sustainability-related content. Such improvements are more (...) pronounced in restating firms with prior low-quality CSR disclosure. Moreover, restating firms with CSR disclosure have smaller forecast errors than non-CSR disclosers, yet the change in CSR disclosure after restatements does not further improve analyst forecast accuracy. Finally, we find that compared with nondisclosers, restating firms with CSR disclosure suffer smaller firm value losses. Overall, the evidence supports the view that consistent CSR reporting alleviates reputational damage and plays an insurance-like or value protection role during crisis periods. (shrink)

COLI – company owned life insurance – is often purchased by firms on employees in whom the firm has no demonstrable insurable interest. Though no immediate harm comes to individuals insured in this way, purchasing such policies raises moral questions. From a Kantian framework, questions arise about reciprocity and fairness, the deception of employees, the generation of mistrust, and the use of the employee’s life as a means to profit. No compensating social good is served by the sale (...) of these policies. (shrink)

Drawing on attribution theory and expectancy violation theory, this study investigates the effect of corporate social responsibility (CSR) on stock market reactions in the context of intentional crises, during which stakeholders are likely to attribute crisis responsibility to the focal firm. Using a sample of Chinese listed firms from 2012 to 2022, we find that in the context of an intentional crisis, the stock market reacts more negatively to firms with higher prior CSR performance. Two contingency factors (i.e., (...) media attention and state ownership) strengthen this negative relationship. This study contributes to the CSR literature by broadening knowledge of the insurance-like effects of CSR and by identifying a “boomerang effect” of CSR in the context of intentional crises. (shrink)

This paper presents an empirical analysis of the determinants of quantity of health insurance in the context of employer-based health insurance using the micro-level data from the 1987 National Medical Expenditure Survey (NMES). It extends the previous research by including additional factors in the analysis, which significantly affect health insurance offers by employers. This paper emphasizes two determinants of employers’ insurance offer decisions that are particularly relevant: union membership and selfinsured versus not self-insured health plans. The (...) conducted empirical analysis reported in this paper reveals the following predictors of higher health insurance coverage: union membership, not self-insured health plan(s), union membership in Midwest or South, as well as self-insured union membership. Further, other factors such as: age, male, income, for profit and other employer organizational forms, and firm’s size determine a higher level of health insurance. (shrink)

While the existing literature finds that corporate social responsibility (CSR) can provide insurance-like protection in negative events, it remains unclear how CSR buffers firms from market penalties for negative events. To address this concern, we conduct event studies and regressions using data from the environmental violations by Chinese publicly traded companies and their interlocked companies from 2009 to 2021. Our results show that the market reacts negatively to environmental violations. The market penalty diffuses through director networks and leads (...) to the collective punishment of interlocked firms. CSR has an insurance-like effect that buffers market penalties and collective punishment for environmental violations. Long-term CSR has a stronger insurance-like effect than short-term CSR. Additionally, the insurance-like effect of CSR still exists during repeated environmental violation events. This paper contributes to the literature on the insurance-like effect of CSR and provides a reference for corporate CSR practice and investors' CSR decisions. (shrink)

This book presents startling evidence that state monopolies can produce better outcomes than the free market. It provides an empirical comparison of the property insurance market in five European countries: Britain, Spain, France, Switzerland, and Germany. The market and cost structures of insurers in each country are described, and particular features of each market and the outcomes for customers examined. The regulatory frameworks vary widely from country to country and so do the market outcomes, both in terms of premium (...) level and in terms of available insurance cover.In view of the increase in major floods and other forms of natural damage over the last decades, the non-availability of insurance cover in many competitive insurance systems is likely to become a major political issue. This book shows that state monopoly is an adequate policy response. Competitive insurance systems are shown to provide incomplete cover at a substantially higher cost. In mixed systems, where the private sector can obtain reinsurance from the state the state tends to end up paying most of the costs while the private insurance companies keep most of the premium income.The book will be of interest to academic economists interested in privatization, regulation, the theory of the firm, and insurance; Policy-makers concerned with regulation and privatization; Insurance companies, regulators, and analysts. (shrink)

As we enter the new century, humanity wields increasing power to understand, alter, and control the world in which we live. The mysteries of our genetic code provide remarkable new insights into our unique human characteristics. Rapid developments in information technology provide instant access to limitless data. The information age has taken hold, and the genetic revolution is in full swing. With apologies to Aldous Huxley, we stand at the precipice of a brave new world.It has been just 50 years (...) since James Watson and Francis Crick's groundbreaking discovery of the double helix. Since then, profound developments in the science of genetics have been staggering. More staggering still are the potential benefits, the boundless horizons, the promised and unimagined applications of their work, and the work of the many scientists involved in the sequencing of the human genome. There can be no doubt that a firm and unwavering commitment to the betterment of humankind has fueled this tireless effort. (shrink)

Policyholders and other claimants in insurance companies are interested in solidity, i.e., the ability of insurers to meet their claims obligations in both the short run and the long run. Insurance regulators exist in order to represent the interests of consumers. Great emphasis is placed by the regulators of the market on the mandatory and uniform disclosure of relevant financial and operating aspects of insurers. This paper employs simple gametheoretic techniques to address two aspects of the general issue (...) of the desirability of establishing a regulator to assess the solidity of insurers. First, why would uniform information about insurers be desirable? Given that uniformity is desirable, it could be achieved by voluntary agreement of insurers or via regulation. The second issue is how that uniformity is to be achieved; that is, what is the value of a regulator in achieving uniformity? Insurance provides an interesting instance of the general problem. A key determinant is the structure of costs and benefits of securing voluntary agreements across firms. (shrink)

This article applies the concept of prudence to develop the characteristics of responsible risk-modeling practices in the insurance industry. A critical evaluation of the risk-modeling process suggests that ethical judgments are emergent rather than static, vague rather than clear, particular rather than universal, and still defensible according to the discipline’s established theory, which will support a range of judgments. Thus, positive moral guides for responsible behavior are of limited practical value. Instead, by being prudent, modelers can improve their ability (...) to deal with the ethical and technical complexity of the risk-modeling process. While the application of prudence to resolve ethical challenges in risk modeling, an issue of practical importance to managers, is a first in the literature, the practice of applying an ethical lens to issues of pragmatic importance for managers is well established in Maak and Pless (J Bus Ethics 66:99–115, 2006a ; Responsible leadership, 2006b ) among others. (shrink)

We examine whether the behavior of institutional investors representatives on boards leads to observable differences in corporate finance. We find that directors representing pressure-sensitive investors prefer lower financial leverage whereas pressure-resistant directors show no particular preference. When analyzed separately, directors appointed by banks and insurance firms have different attitudes. Bank representatives on boards increase both the financial leverage and the banking debt. This result suggests that some types of institutional directors provide financial resources to the firms on (...) whose board they sit, supporting the view that boards manage the uncertainty associated with strategic decision making and provide firms with preferential access to resources and financial expertise. This research has interesting academic and policy implications for the debate over the proper degree of institutional involvement in corporate governance. Different institutional investors have different agendas and incentives for corporate governance, and, therefore, both researchers and policy makers should no longer consider institutional investors as a whole. In addition, our paper calls for new research on the causes and implications of institutional investor involvement in the corporate governance of nonfinancial firms. This new research could require new insights on the dynamics within the boards and on the interplay among the knowledge, incentives and attitudes of quite different directors. (shrink)

While previous studies have discussed how much should be given by firms, less is known about how firms would spend these investments, such as strategically allocating these philanthropy activities across geographic markets. This study examines the impact of multimarket contact on corporate philanthropy in different geographic markets. Using Chinese property insurance firms from 2007 to 2015 as samples, the results show that firms are less likely to initiate philanthropy activities in geographic markets with high multimarket (...) contact. We also found that the negative impact of multimarket competition on corporate philanthropy is stronger in highly concentrated markets. Moreover, this negative relationship is stronger when institutional distance at a firm level is low. Our study contributes to the literature on corporate philanthropy and multimarket contact. (shrink)

Economics is one of the disciplines of inquiry that interested C. S. Peirce throughout his life. As is well known, Peirce dabbled in mathematical economics in the 1870s. In 1903 Peirce offered one more instance of a mathematical economic model in his Harvard Lectures on Pragmatism. A model of the profit-maximizing insurance firm is found in the very first lecture where it is offered as his most elaborate example of the pragmatic maxim. Peirce’s reasons for including a mathematical economic (...) model of the insurance firm in this lecture have never been fully explored. The economic model also seems odd given that the audience mostly would have been students and faculty interested in psychology and philosophy. Here it will be argued that there are two main argumentative functions of the economic model. One is to underscore Peirce’s more mathematical and non-psychological conception of pragmatism as compared to that of his benefactor and host, William James. The other is to illustrate a role for mathematical models that is consistent with his conception of pragmatism. (shrink)

Theoretical arguments regarding the effect of corporate social responsibility (CSR) on firm liability risk are abundant; however, empirical evidence about this relationship is scarce. We investigate the relationship between CSR and the personal liability risk of a firm’s directors and officers. We argue that companies with better CSR performance represent a better underwriting risk for directors’ and officers’ (D&O) insurance providers and, therefore, have a lower cost of insurance. Our results show that firms with better CSR performance (...) are more likely to purchase D&O insurance and have a lower premium-to-coverage ratio, known as the insurance rate-on-line. We also show that this risk-reduction effect is stronger for firms that operate in a high-risk environment and have higher sales growth. These results provide evidence that CSR can be used as a risk management tool to mitigate liability risk and suggest which firms benefit most from this effect. (shrink)

Respect for confidentiality is firmly established in codes of ethics and law. Medical care and the patients' trust depend on the ability of the doctors to maintain confidentiality. Without a guarantee of confidentiality, many patients would want to avoid seeking medical assistance The principle of confidentiality, however, is not absolute and may be overridden by public interests. On some occasions (birth, death, infectious disease) there is a legal obligation on the part of the doctor to disclose but only to the (...) appropriate authorities. Permissible disclosure can be granted by the patients' consent, for example, for the purpose of insurance they may wish to take out. Moreover, there are some ambivalent situations (such as criminal acts, or notification of sexual partner in case of a patient with AIDS) for which Greek law does not include relevant provisions, and the Codes of Medical Ethics do not offer clear guidelines. Therefore, the Greek doctor is called to estimate the situation and assume full responsibility for his decision. Finally, new considerations have arisen in the context of the recent advances in the field of telemedicine and electronic archiving. The paper discusses the current situation and legislation in Greece. (shrink)

Democracy and justice are often mutually antagonistic ideas, but in this innovative book Ian Shapiro shows how and why they should be pursued together. Justice must be sought democratically if it is to garner legitimacy in the modern world, he claims, and democracy must be justice-promoting if it is to sustain allegiance over time. _Democratic Justice_ meets these criteria, offering an attractive vision of a practical path to a better future. Wherever power is exercised in human affairs, Shapiro argues, the (...) lack of democracy will be experienced as injustice. The challenge is to democratize social relations so as to diminish injustice, but to do this in ways that are compatible with people’s values and goals. Shapiro shows how this can be done in different phases of the human life cycle, from childhood through the adult worlds of work and domestic life, retirement, old age, and approaching death. He spells out the implications for pressing debates about authority over children, the law of marriage and divorce, population control, governing the firm, basic income guarantees, health insurance, retirement policies, and decisions made by and for the infirm elderly. This refreshing encounter between political philosophy and practical politics will interest all those who aspire to bequeath a more just world to our children than the one we have inherited. (shrink)

This study examines whether penalties issued to Chinese listed companies by securities regulators for violations of corporate law affect the cost of debt, and the moderating role of corporate social responsibility fulfillment on this relationship. Our sample consists of firms listed on Shanghai and Shenzhen stock exchanges from 2011 to 2017 and the data are collected from the announcements of China Securities Regulatory Commission. The findings are as follows: punishment announcements by regulatory authorities increase the cost of debt; and (...) the effect of punishment announcements on the cost of debt is partially offset by prior CSR performance. These findings are shown to be robust. The reputation insurance effect of CSR is more pronounced in state-owned enterprises and in an institutional environment with low marketization, a weak legal environment, and low information transparency. The findings support the reputation insurance hypothesis of CSR and employ the cost of debt as a governance mechanism. (shrink)

To date, the value of corporate social responsibility (CSR) activities has primarily been measured through the company’s reputation, with little attention given to exploring whether there are internal influences between CSR and other management practices. We argue that the efficacy of CSR extends beyond a company’s reputation for managing social and environmental concerns; in particular, it can influence other business practices such as risk management. Our results suggest that (a) overall, firms with better CSR performance are more likely to (...) adopt integrated risk management practices and (b) CSR activities that target both primary stakeholders and secondary stakeholders are equally important in facilitating the adoption of such risk management practices. Theoretically, we contribute to the CSR literature by providing a possible mechanism for risk reduction and insurance-like effects of CSR. Practically, we provide managerial implications demonstrating that the efficacy of CSR should not be viewed in isolation of other business practices. (shrink)

Making transformative services such as healthcare accessible to low-income consumers is an ethical challenge of vital importance to marketers. However, most low-income consumers across the world are excluded from the market for such transformative services because of financial constraints arising from poverty. In this paper, instead of focusing on the micro-interplay between firms and consumers, we examine the macro-interplay among firms, consumers, and public policy in addressing the ethical challenge of market inclusion at the base of the pyramid. (...) Specifically, we examine how the Vietnam government used a policy of free and universal health insurance for children under the age of six as a means of lowering affordability barriers and fostering market inclusion in the healthcare market. Overnight in 2005, all children under the age of six living anywhere in Vietnam became eligible for free health insurance. Using this policy intervention as a natural experiment, we compare market inclusion outcomes of children under the age of six with older children who were ineligible before and after the program was implemented. We show that lowering affordability barriers through public policy increases access to target services, increases consumers’ overall out-of-pocket spending, and increases access to complementary services. By adopting a macromarketing lens, this study makes a strong case for collaboration among firms, governments, and communities in addressing the ethical challenge of system-wide market inclusion in base-of-the-pyramid markets. (shrink)

Clinical bioethics is big business. There are now hundreds of people who bioethics in community and university hospitals, nursing homes, rehabilitation and home care settings, and some who play the role of clinical ethics consultant to transplant teams, managed care companies, and genetic testing firms. Still, there is as much speculation about what clinically active bioethicists actually do as there was ten years ago. Various commentators have pondered the need for training standards, credentials, exams, and malpractice insurance for (...) ethicists engaged in clinical consultation. Much of the discussion seems to accept an implicit presumption that all clinical ethics consultation practices look pretty much alike. But is this accurate? What do clinical ethicists do, how and where do they do it, and what kind of clinical ethics is useful in the hospital and in other settings? (shrink)

State ownership, worker ownership, and household ownership are the three main forms in which productive assets (firms) can be held. I argue that worker ownership is not wise in economies with high capital-labor ratios, for it forces the worker to concentrate all her assets in one firm. I review the coupon economy that I proposed in 1994, and express reservations that it could work: greedy people would be able to circumvent its purpose of preventing the concentration of corporate wealth. (...) Although extremely high corporate salaries are the norm today, I argue these are competitive and market determined, a consequence of the gargantuan size of firms. It would, however, be possible to tax such salaries at high rates, because the labor - supply response would be small. The social-democratic model remains the best one, to date, for producing a relatively egalitarian outcome, and it relies on solidarity, redistribution, and private ownership of firms. Whether a solidaristic social ethos can develop without a conflagration, such as the second world war, which not only united populations in the war effort, but also wiped out substantial middle-class wealth in Europe - thus engendering the post-war movement towards social - insurance is an open question. (shrink)

There is a growing literature on corporate social responsibility, but few have focused on the implications of business groups for CSR. We examine the antecedents and outcomes of CSR behaviors of group firms in Korea. We find that group affiliation is associated with higher CSR overall and for its major societal and environmental components. However, the ownership disparity between cash flow and control by controlling inside shareholders is associated with lower CSR, consistent with opportunistic rent expropriation theory. We further (...) find that CSR initiatives can impact group firms positively in the event of bad events, consistent with insurance theory. This motive for CSR as a means of enhancing reputation capital to buffer the bad events is pronounced for group firms because of group-wide dissemination of negative reputational externality. (shrink)

Logic in Action/Doron Avital Nothing is more difficult, and therefore more precious, than to be able to decide (Napoleon Bonaparte) Introduction -/- This book was born on the battlefield and in nights of secretive special operations all around the Middle East, as well as in the corridors and lecture halls of Western Academia best schools. As a young boy, I was always mesmerized by stories of great men and women of action at fateful cross-roads of decision-making. Then, like as today, (...) I felt the full weight of the moment of truth as it confronts the individual, the man or woman of action, with the imminent necessity to decide. Alongside, as I was climbing up the ladder of education, I found myself just as well captivated by the great intellectual stories of our times, in particular 20th century analytic philosophy and, at its core, the machinery of modern logic. How do then the cool contemplative modes of the philosophical and analytic outlooks, that are better fitting of the philosopher's armchair at the fireplace, hang together with the heat of the battlefield or the angst of the ticking clock of time left to the completion of a daring special operation? Growing up I was pondering exactly that. Not accidently, and in fact as consequence, I have chosen a course in life that challenged me to visit the poles of both theory and practice. I set myself on a mission to unravel the tension between the contemplative inquiry, supposedly theoretical, aiming at the logical structure of things, and the uncompromising test of life and action. The puzzle of the gap between theory and practice has become ever since the guiding question of my life. -/- Not long ago, I met two friends, Avner Shor, a veteran combat soldier of the special forces unit I eventually commanded, and Aviram Halevi, a fellow officer with whom I served. Why will we not put into writing the ideas that guided us during our years of military action, we wondered. At that time, I used to deliver the keynote lectures to the senior officers' course of Israel central intelligence organization, the Mossad. For this I already had to put some of these ideas in writing. Avner was quick to introduce me with a notable publisher and even helped me write the first chapter. With Aviram I sat to many meetings, where he would challenge me with key questions, and we followed them with memories of operations and battles, aiming to draw the required lessons. This served me well when I finally sat down to write the first draft of the book. The result was more extensive than me and my friends had expected. I had to add a particularly long chapter dealing with the story of modern philosophy and logic. This was required, I felt, as no decision-making process lives in an intellectual vacuum. Knowingly or subconsciously, the intellectual climate of the time guides us for better or worse with the decisions we finally take. The initial draft was naturally cumbersome and inaccessible. But here I had the privilege of meeting a particularly talented editor, Rami Rothholtz. I found in Rami both an editor and a critical reader. As an infantry combat soldier at youth and now a senior journalist and editor, Rami insisted on simplifying and refining my ideas. Had it not been for his work, this book would have been literally unreadable. *** I opened my book with a brief description of a single night of a special operation deep at the Lebanon Bekaa valley, far away from Israel northern border. The mission was to kidnap a senior terror leader known to be holding in captivity an Israeli pilot. This was also the last special operation I commanded in my military career. A single special operation night, but what had to precede it? For sure, many months of intense and skillful preparations. What is Planning? This is the question with which I open up chapter (2) of the book. I confront in this chapter two approaches to planning. The first is the one I saw as a mission to myself to cultivate in my many years of military service. The second is the one I saw as representing a deep-rooted fallacy that holds a firm grip on today's conventional wisdom about planning. To further examine the logic of the competing models, I was required in chapter (3) to analyze the concept of "The Standard". I argue that the false model of planning has its roots in an attitude of an uncompromising adherence to the power of literal obedience to standards and rules. The standard, or what is outlined by a rule as prescribing a future course of action, is seen as an answer to the fundamental tension between theory (planning) and practice (execution). I argue in contrast that the standard does not produce an answer but rather what I call: "A Well-Defined Question". In essence, it is a meticulously-well-planned invitation to exercise a fresh judgment. A judgement that has as an anchor the default answer that the standard produces but is open to extension as it confronts the new frame of reference of the test of reality. In chapter (4), I present a new tool for planning and execution: "The Polygon of Risks" or "The Polygon of Execution". The Polygon is a geometric illustration of the underlying tension that exists between all dimensions of the operational project. The construction and conceptualization of the trade-offs that exist between the various dimensions - segments of the polygon - is the first topic on the planner's agenda. I position the concepts of "Daring" and "Taking Proactive and Well-Informed Risks" as necessary logical constituents of the polygon and show how in contrast the false model of planning is responsible for an operational culture that is risk-averse. It encourages, in fact, the piling up of false securities at the segments' level that eventually lead to the collapse of the polygon. The necessary trade-offs relationships that exist between the segments of the polygon express the fundamental tension between partnership and competition: partnership in a joint goal and competition over resources, both material and abstract. When this tension is not managed well, that is, when the players' local optimizations overshadow the global optimization required for the success of the project, the execution polygon collapses. In this scenario, we may find the setting of the bar of "High Standards" in a players' spheres of responsibility to conceal a hidden agenda of personal insurances taken against a possible failure. Once the overall risk is not mitigated by way of collaborative joint executional dialogue, the process that leads to a collapse of the polygon is literally unstoppable. *** In chapter (5), I discuss "(Fateful) Decisions". I examine the way in which we should translate the polygon into sequential critical decisions on the timeline. The execution polygon is not a rigid scaffolding but a dynamic conceptual illustration of the -/- project. It will need now to be converted into successive decision junctions. We will find the content of a decision and its timing on the timeline to be inseparable. The right decision is the one that is taken at the right time. The moment of decision is in fact the last moment of deliberation, the first moment available for action, i.e. the first possible "Can" is also the latest possible "Must". Deciding too soon is analog to the "Jumping of the Gun". The decision maker is forcing a pre-conceived answer to a state of affairs not ripe for an answer, e.g. the target in the shooting range is not yet erected. Late to decide and the decision maker may envision what he or she should have done but reality is no longer available for them to harness it right, e.g. consider a tennis player's frustration when reviewing a too-late-to-react move in the video replay. I review in this chapter many fateful decisions, both historical, from Napoleon's Waterloo, to a Bridge Too Far of WWII, to the failed rescue attempt of American hostages at the time of the Iranian Revolution, as well as fateful decisions I had to take in the course of my military life, both in combat and in special operations, and show the sense in which they all answer to our analysis. The theme of chapter (6) is "The Moment of Truth". This is the moment when everything is on the line and from which there is no turning back. I discuss the formative repetitive structure of the schooling and simulation phase and contrast it with the "One Shot, One Opportunity" nature of the moment of truth. This is extremely helpful when we analyze the logical structure of failures as unwarranted repetitions of past lessons. The schooling curriculum indeed consists of important abstractions drawn from lessons of the past. However, it is when we project them in a fashion that is literal or mechanical that we cross path with the possibility of a failure. The paradox of education is that what we must repeat in school and simulation must be extended and not repeated in real life. What is required of us so we do not fall into the fallacy of repetition in face of the moment of truth is the core subject of the discussion of this chapter. In chapter (7), I took a lengthy philosophical detour surveying the intellectual drama of modern logic, and in general, the story of 20th century analytic philosophy. Readers who choose to bypass the somehow demanding narrative of this drama can do so and still keep the argumentative thread of the book. However, even by way of skipping the more technical parts, I would still urge the readers to delve into the discussion in this chapter as I believe this would grant them a deeper understanding of the overall conceptual framework. I explore here the work of two key figures: the logician Kurt Gödel and the philosopher Ludwig Wittgenstein, both were crowned in 2000 by TIME Magazine, as the leading Logician and Philosopher, respectively, of the 20th Century. I review the fascinating logical result of Gödel's Incompleteness Theorem and examine its relevance as setting a theoretical limit to the power of formalization. This amazing logical result - a result that shakes the logical foundations of 20th century thought in as much as the discovery of irrational numbers shook the foundations of the Pythagorean program of the ancient Greeks - bears significantly on the question of action and the blind trust we place in the power of formalization in the form of protocols and rules. It is here that Wittgenstein's philosophy enters in full force. We follow Wittgenstein as he dismantles our conception of rules as if there were "Railroads to Infinite", i.e. as prescribing for us in-advance their proper employments in all possible -/- future eventualities. Instead we propose that the dilemma of action demands of us an extension of rules rather than a mechanical or blind repetition of their literal imperative. In turn, this extension can serve as a new lesson added to the curriculum of school and simulation. The theme of chapter (8), the concluding chapter, is Strategy, Logic, and Ethics. The chapter comes to place the ethical dilemma in the conceptual map we presented in the book. I discuss here the tension between strategy as a process of setting goals and deriving backward as it were the steps that are necessary for achieving these goals, to the inescapable dictation of the ethical imperative. This unavoidable tension is particularly important against the backdrop of contemporary culture that is guided by a vision of personal success and achievement that may threaten our ability to do what is right. Most of all, I am troubled in this chapter, with the role logic may play, first as a liberating force enabling a change that is tuned to the ethical imperative, and second, as a force designed to justify on logical grounds, as it were, the existing power structure. It is in this junction that brave individuals will be called to challenge the governing logic of the zeitgeist - logic that operates now as an oppressive force that serves the vested interest of beneficials of the existing order. When success is favored over doing what is right, as we must admit is the prevailing cultural mood of our times, that the words of Emanuel Kant carry their full weight: "Do the Right thing and leave the Consequences to God". For this we need heroes and heroines that challenge the time by bearing the full weight of responsibility that comes with the doing of what is Right. *** This book was written more than anything from the perspective of the heroes and heroines of action. Sometimes they may be missing the exact words or the full insight into the solid logical complexity that stands between them and the doing of what is right. They feel what is right to do on the battlefield of life, whether in real battle, in political or economic life or whether in the life of creativity and the quest of the intellect. They do need, in analogy, proper logical and intellectual artillery. I hope they will find the logical cannons they require as they travel through the pages of this book. The rest is in their hands at the Moment of Truth. -/- Doron Avital, Tel Aviv 2011 -/- . (shrink)

Fraud is a pervasive and challenging problem that costs society large amounts of money. By no means all fraud is committed by ‘professional criminals’: much is done by ordinary people who indulge in small-scale opportunistic deception. In this paper, we set out to investigate when people behave dishonestly, for example by committing fraud, in an online context. We conducted three studies to investigate how the rejection of one’s efforts, operationalized in different ways, affected the amount of cheating and information falsification. (...) Study 1 demonstrated that people behave more dishonestly when rejected. Studies 2 and 3 were conducted in order to disentangle the confounding factors of the nature of the rejection and the financial rewards that are usually associated with dishonest behavior. It was demonstrated that rejection in general, rather than the nature of a rejection, caused people to behave more dishonestly. When a rejection was based on subjective grounds, dishonest behavior increased with approximately 10%, but this difference was not statistically significant. We subsequently measured whether dishonesty was driven by the financial loss associated with rejection, or emotional factors such as a desire for revenge. We found that rejected participants were just as dishonest when their cheating did not led to financial gain. However, they felt stronger emotions when there was no money involved. This seems to suggest that upon rejection, emotional involvement, especially a reduction in happiness, drives dishonest behavior more strongly than a rational cost-benefit analysis. These results indicate that rejection causes people to behave more dishonestly, specifically in online settings. Firms wishing to deter customers and employees from committing fraud may therefore benefit from transparency and clear policy guidelines, discouraging people to submit claims that are likely to be rejected. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:Human Genome Research in an Interdependent WorldAlexander Morgan Capron (bio)This has been the year of agenda-setting conferences for the ambitious ELSI (ethical, legal and social issues) program of the Human Genome Project (HGP). But of the dozen or more major meetings of this sort held across the country, the one held at the National Institutes of Heakh (NIH) in Bethesda, MD, June 2-4, 1991, was distinctive in several respects.1As (...) its name implies, "Human Genome Research in an Interdependent World" was a global look at the issues raised by gene mapping and sequencing. Unlike previous conferences, however, this meeting looked beyond a comparative analysis of clinical and domestic legal issues, and concentrated on topics that may require responses on a truly international level if they are to be successfully resolved.The meeting's organizers gathered an impressive group of more than seventy participants from fifteen countries, including the first significant contingent of Soviet and Japanese scientists, physicians, and philosophers at an ELSI meeting. In addition to talks by the heads of the genome projects in the Soviet Union, Japan, and the United States, the meeting was keynoted by Dr. James Wyngaarden, director general of the Human Genome Organization (HUGO), and I had the honor of serving as its general chairman.The goal of the meeting was to consider an array of issues that scientists, philosophers, and lawyers from around the world suggested might have international significance, with an eye to deciding three things: (1) Does the issue deserve further attention? (2) Is the issue best addressed in an international or domestic context? and (3) Do structures exist to which the issue can be referred for resolution? In the final sessions, the entire group debated proposed resolutions on the various topics and narrowed the list needing further, intensive exploration.To provide an international framework for this process, the conference [End Page 247] established a Global Steering Committee on Ethical and Social Issues in Genome Research, which will coordinate the efforts of several task forces charged with refining the tentative resolutions adopted by the conference participants on June 4. The task forces are expected to be able to complete work on some topics by the time of the steering committee's first meeting, which was described by one participant as a "check point," probably within the coming year; on other topics, the task forces will provide interim reports and arrange to continue their analysis. Several topics—less complex or more embryonic—were referred directly to the steering committee. On all issues, a major objective will be to ascertain what existing or newly created structure or structures are capable of implementing the group's recommendations and then to monitor the issue to ensure that appropriate implementation is occurring.Issues to be Explored by Task ForcesInsurance and EmploymentWhile individuals may derive medically useful information from the expanded range of genetic tests that will flow from the HGP, they could also be harmed if test results become a basis for discrimination. An area of particular concern at the conference in Bethesda was whether genetic information should be used to decide eligibility for employment or the scope and cost of health and life insurance. The complexity of this issue is increased as barriers to worker migration fall (especially in Europe) and as more firms carry on business internationally. Furthermore, questions arise about the limits of required testing and whether individuals may decline to be informed of the results of tests.The task force will not only gather information on practices and legal standards throughout the world—especially in light of the differences among nations with regard to the linkage of employment and various forms of insurance—but will also examine international anti-discrimination laws as a possible means of supplementing domestic statutes and regulations. As a starting point, the Bethesda meeting agreed on a set of principles for the task force to refine.2ForensicsAlthough their legal status is not fully resolved, DNA tests are being used increasingly in judicial proceedings and civil and criminal investigations as a highly probative means to identify people. Most forensic uses of "DNA fingerprints" are domestic, but international cooperation among investigative bodies... (shrink)

David Schweickart has challenged a number of claims that are central to my argument that market socialism would probably degenerate into something only nominally distinguishable from capitalism. Chief among these is the claim that competitive pressures would force the workers in a worker-controlled firm to create pay and authority differentials that would make such firms structurally homologous to capitalist firms. Schweickart challenges this on two fronts: He argues that there is no good reason to believe that market forces (...) under market socialism would create the pay and authority differentials characteristic of capitalism. He further argues that certain structural features of market socialism would insure that competition would not be as intense as it is under capitalism. Consequently, even if capitalistically structured firms were more efficient, it would not make much difference, since no sword of Damocles would hang over the heads of those firms whose workers prefer more collectivist methods of control. Let us consider each of these points in turn. (shrink)

Despite some improvements in access to evidence-based medications for opioid use disorder, treatment rates remain low at under a quarter of those with need. High costs for brand name products in these medication markets have limited the volume of drugs purchased, particularly through public health insurance and grant programs. Brand firm anti-competitive practices around the leading buprenorphine product Suboxone — including product hops, citizen petitions and Risk Evaluation and Mitigation Strategy abuses — helped to maintain high prices by extending (...) brand exclusivity periods and hindering generic drug entry. Remedies to address costly anti-competitive activities include adoption of the proposed CREATES Act and modernization of the Hatch-Waxman Act by the Congress, and implementation of substantive modifications to the Food and Drug Administration citizen petition filing procedures. Given the persistence of these abuses, prescriptive changes are favorable to the procedural and clarifying steps thus far favored by the federal government. Extrapolating from the 37% price declines attributable to generic entry for buprenorphine tablets in 2011, our calculations suggest that implementing these remedies to facilitate generic competition with Suboxone film would have resulted in savings of approximately $703 million overall and $203 million to Medicaid in 2017. (shrink)

Until very recently, the lack of health insurance has been viewed primarily as a problem of financial risk for uninsured individuals. This article documents far broader adverse effects, drawn from the work of the Institute of Medicine Committee on the Consequences of Uninsurance. It also synthesizes the Committee’s key findings, conclusions, and recommendations.In early 2004, following 3½ years of study, the IOM Committee on the Consequences of Uninsurance recommended that “...the President and Congress develop a strategy to achieve universal (...) insurance coverage and establish a firm and explicit schedule to reach this goal by 2010.” The Committee presented 5 principles to be used to assess various proposals for extending coverage or to guide the design of a new strategy, specifying that health care coverage should be universal, continuous, affordable to individuals and families, and affordable and sustainable for society. (shrink)

Ensuring access to clean water is one of the most important development and health challenges of the twenty-first century. Given the manifold impacts of business activities on water resources, corporate water actions should be of central concern to business ethics researchers. Yet so far we know too little about whether business activities that impact on water resources are noticed or how corporate water actions are valued by a firm’s stakeholders, including by financial markets. In response, we conduct an event study (...) to investigate the shareholder wealth effect of reports of corporate water actions. We explore stock market reactions to water actions by S&P 500 firms from 2005 to 2017, showing that the market reacts positively to reports of responsible water actions and negatively to irresponsible actions. We further explain that these abnormal returns to water actions are associated with a firm’s past performance on ethical issues, arguing that the reputational effects from prior corporate social responsibility and irresponsibility influence market reactions. Our analysis provides evidence that there are diminishing marginal returns to responsible water actions for firms with records of past responsibility and an offsetting effect for those with past irresponsibility. Similarly, we demonstrate an insurance effect that limits punishment for irresponsible water actions for firms with responsible performance records and diminishing negative marginal returns for those already seen to be irresponsible. This study is the first to show that shareholders recognize market value in corporate water actions and are prepared to award or punish firms in stock markets based on their impacts on water. (shrink)

In this article, we look at the contested role of in-house lawyers in regulated organisations in the financial sector. A recent Financial Conduct Authority consultation on whether to designate the head of legal of banks, insurance companies and other financial firms as ‘Senior Managers’ and the decision which flowed from it, reflected a flawed view of lawyers as a neutral technocracy of mere legal technicians; we show how the FCA’s decision is potentially damaging to the public interest and (...) failed to take into account that in-house lawyers are often important decision-makers and influencers within their organisations. We put the case for an alternative view; that in-house lawyers are professionals, with agency that requires them to act in accordance with ethical norms and means they should be made more accountable for their conduct. (shrink)

The moral ideology of banking and insurance employees in Spain was examined along with supervisor role modeling and ethics-related policies and procedures for their association with ethical behavioral intent. In addition to main effects, we found evidence supporting that the person–situation interactionist perspective in supervisor role modeling had a stronger positive relationship with ethical intention among employees with relativist moral ideology. Also as hypothesized, formal ethical polices and procedures were positively related to ethical intention among those with universal beliefs, (...) but the relationship was much weaker among relativists. Thus, firms wishing to optimally promote ethical attitudes and behavior must tailor their organization-based initiatives to the individual characteristics of their employees. (shrink)

The novel COVID-19 has created an exogenous shock to capital markets and, hence, an ideal opportunity for researchers to assess whether CSR-related activities provide an insurance-like mechanism to protect firms against the shock. Using a large sample of 4361 firms domiciled in 40 countries, we investigate the roles of CSR reporting and assurance in the negative consequences of COVID-19 on firm value. The results confirm that prior CSR reporting experience buffers firms against the adverse effects of (...) the health crisis. The results also support that not only does the assurance on CSR reports create a buffering effect against the health crisis, but it also intensifies the buffering effects of prior CSR reporting experience against the pandemic. Moreover, using difference-in-difference method for testing the link between CSR reporting and firm value, we show that the positive association of reporting and assurance with firm value is more pronounced during the pandemic as compared with the years preceding it. The results of this study are robust to various analyses. Replicating the analyses to the context of the global financial crisis, we find that prior CSR reporting experience and assurance provide similar buffering effects when a market is exposed to various exogenous shocks. The results also hold for the mandatory disclosure regimes. By distinguishing first and subsequent reports and assurance, we show that, unlike subsequent CSR reports and assurance, the initial ones cannot mitigate the negative effects of the crisis on firm value, indicating that stakeholders take into account longer-term CSR reporting experiences. Aside from reporting and assurance aspects of CSR, we analyze the role of CSR report's quality and accuracy and show that the adoption of Global Reporting Initiatives (GRI) frameworks can enhance socially responsible firms' resilience against systematic shocks. (shrink)

This paper considers a one-stage Cournot duopoly of R&D. We characterize the Nash equilibrium of the one-stage game and provide a comparison with the two-stage version of the same Cournot model of R&D/product market competition. We look at R&D expenditures, profits, output and welfare. Under perfect symmetry, the one-stage model always leads to higher profits when the spillover parameter is not equal to 1/2. Moreover, the one-stage model implies more R&D expenditure and higher welfare if and only if the spillover (...) parameter is greater than 1/2. The insights are robust to an n -firm generalization, but the differences between the one-stage game and the two-stage game disappear as the market becomes perfectly competitive. (shrink)

Assigning the moniker stakeholder to the planet has stirred a rather interesting debate in recent years. Proponents have insisted that the Earth is both the ultimate source of economic resources and the ultimate sink for economic wastes, meaning that it “affects or is affected by the achievement of the organization’s objectives” (Freeman, 1984, p. 46). They have said that giving the Earth stakeholder status can effectively tie the ecological health of the planet to the economic survival of the firm, and (...) they have demonstrated this by focusing primarily on the economic benefits which can accrue to firms that effectively respond to the ecological concerns of regulators, consumers, investors, lenders, insurers, and so forth. However, others have questioned assigning the Earth stakeholder status. They have said that doing so convolutes the definition of stakeholder too much by expanding it to something other than “person[s] and groups” (Freeman, 1984, p. 46), and they have said that referring to the planet as a stakeholder is an idealistic view which defies the realities of the relationship between economic activity and the Entropy Law. Regardless of the side, the arguments in this debate have focused primarily at the economic level. Does the Earth’s central place in humanity’s economic survival suffice to give it stakeholder status? Does the Earth have voices on boards of directors? Is the underlying assumption made by those who advocate giving the Earth stakeholder status—that economic activity is ecologically sustainable—truly reflective of the relationship between economics and entropy? However, for us this debate took an interesting turn away from the economic level at the 1997 Ruffin Lectures in Business Ethics when Ian Mitroff said, “The Earth is a stakeholder, but it is a spiritual stakeholder.”. (shrink)

Since 2008 I have been closely following the conceptual/performance/video work of Daniel Peltz. Gently rendered through media installation, ethnographic, and performance strategies, Peltz’s work reverently and warmly engages the inner workings of social systems, leaving elegant rips and tears in any given socio/cultural quilt. He engages readymades (of social and media constructions) and uses what are identified as interruptionist/interventionist strategies to disrupt parts of an existing social system, thus allowing for something other to emerge. Like the stereoscope that requires two (...) identical images to create an illusion of a three-dimensional image, Peltz sometimes visualizes two separate elements to create an object or moment that requires space and depth to focus on its varied layers. They say your brain has to process and make meaningful sense out of all that visual information before it can accept the illusion. I say your brain has to do a similar thing when looking and seeing the divine, magical, and faithful (social) art making of Daniel Peltz. Daniel Peltz is Associate Professor of Film/Animation/Video at RISD. He divides his time between Rhode Island and Sweden and is currently at work on an exhibition at Botkyrka Konsthall, Stockholm opening February 2013 and a new project to be included in the IASKA: Spaced Biennial (Australia) in 2014. This interview took place on Skype and is part one of a two-part interview. Feliz Lucia Molina: Are you in Providence, RI? Daniel Peltz: I’m at my house in Providence. I’ve been back for six days teaching winter session at RISD and doing this workshop series—these investors’ drum circles with a group of wealth managers. a client of the firm, 2013, photo Shirin Adhami FLM: The wealth managers were all drumming together? DP: They were all drumming in response to the performance of their retirement portfolios. FLM: Is this part of the “Unrealized Gain/Loss” piece? DP: Yes, it’s part of a show I’m working on in Sweden. I can show you because it was just today. I’ll show you some of this. Lets see—share screen [click, click, click]. This is the room. I’ve been using the camera system that’s already installed in the conference rooms to record them. So the video is being recorded directly by the wealth management office’s tech staff. These are the people I worked with in the last workshop. This conference table is less wondrous. They’ve been learning to drum in response to their retirement portfolios. I started by bringing in my little bit of wealth for them to propose a management strategy, I came to the follow-up meeting with a counter proposal, which was this workshop. So they agreed to do this series of workshops instead of managing my wealth. FLM: Does everybody in the room manage your wealth? That’s kind of a lot of people. DP: That woman in the back there and Craig —they handle new client business. So when you come there with your wealth, they sit down with you and suggest to you how they would manage it. They’re very nice, responsible people. FLM: And where is this? DP: This is in Providence and the one I was showing you is in Waltham, where I was today. Then I’m going to Newport for the last one on Friday. So I will have done four of them. This is the group in Waltham that I just played with today. I played directly with the two groups in Providence and I’m working with an ethnomusicologist at Brown, Asha Tamarisa, who is facilitating the last two. She’s helped develop the workshop in terms of figuring out how to train a group to do this and thinking about the compositional challenges of working in response to retirement portfolio data. FLM: Screensharing helps me to figure out tiny bits here and there about the project. DP: I might even be able to play you a little of the audio I’ve also been working with a group of professional percussionists on what will become a quarterly public investors’ drum circle event. Their stuff was really nice, but I want you to hear what we sounded like in the workshops. They’ve all been recorded by the a/v system in the offices. We use a simple structure where the drummer investors interpret the sensation of gain or loss as embellishments to a base heartbeat rhythm. The group holds the heartbeat and, as each person experiences gain or loss, they embellish that rhythm. "Screensharing helps me to figure out tiny bits here and there about the project" FLM: Is the process all very spontaneous? DP: Its actually quite structured. We produce a custom stock ticker that shows the performance of their collective portfolios. In advance of the workshop each participant submits assets in their retirement portfolio. Then we make a stock ticker that shows the real-time performance of their assets so that they can respond to almost live data. FLM: Are they reading the stock ticker projected up on the screen in the room? Do people drum in correspondence to the visual live data of the performance of their assets? DP: Exactly. They’re looking at the stock ticker as opposed to each other, so it’s a slightly shifted drum circle. They’re looking at the ticker but they’re listening to each other—that’s what we’re practicing. For example, NVO—the price is 172.08 but it’s down -1.16 and as that moves across the screen, the person who’s retirement is invested in that asset starts to embellish when that arrow first appears, based on their experience of loss. They stop when it exits the screen and return to the heartbeat. You could have one ticker for each retirement portfolio, but the way the workshop is constructed is that we just isolate one asset from each person’s portfolio so that everyone in the group is represented in a single ticker. So they’re drumming and looking at the ticker, but they’re hearing each other experience gain and loss. We’ve removed direct visual engagement from the social structure of a drum circle but the oral engagement is still there. FLM: So they had their own sound interpretation of gain and loss? DP: Yeah and that part is quite spontaneous as you were saying. In some of the preparatory exercises we’ve been working to give the participants more strategies for interpreting the sensations of gain and loss. We’re trying to develop their capacity to embellish a heartbeat or base rhythm but I’m not invested in having a melodious result. I’m quite curious about what this kind of structure will result in without any desire for a particular result. FLM: For context, can you talk about the project you did a couple years ago in Bali, “Unrealized Gain/Loss” in relation to this current wealth management project? DP: The workshops I’ve been doing use a similar strategy to the other components in this project. It started in Indonesia on my sabbatical and I was really trying to understand where I was physically and where I was being on sabbatical—this kind of strange jubilee structure where every seventh year you’re supposed to renew your self. And it was around the time of the global financial crisis. I was on sabbatical for the global financial crisis. I remember watching my father, in particular, respond to the financial crisis by monitoring his retirement portfolio and trying to make sense of it. I realized on a visit to their home that he checked his retirement portfolio every single day and I was really struck by that because in some way our parents are mysteries to us as children, especially their moods. We know how important their moods are but we don’t know what governs them. And somehow it was like I’d figured it out, it’s the performance of the DOW! So I think there was something in that. Then I was in Indonesia and I had been drawn there by an interest in their highly ritualized Hindu culture, where so much of life is driven by a ceremonial calendar. I was interested in Bali as this predominantly Hindu pocket within a predominantly Islamic country and life there being organized by this ritual calendar functioning as a kind of resistance to the dominant global religion of free-market capitalism. So I started to explore that correlation between the ways in which this culture that I was living in was sort of “living for the afterlife” and this idea within certain segments of American society of “living for the afterwork life”. The idea that your wellbeing in the “afterwork life” is tied to forces that are unseen and largely beyond your control has strong similarities to many religious understandings of the universe. So I started to explore that and the crafts and materials that were around me were primarily Batik and percussion. Percussion is a huge part of daily life in Bali. These gamelan troupes were everywhere. And I also happened to be there for Nyepi, the day of silence, which is preceded by a very elaborate procession and construction of demonic statues. These were the things that were around me and I started studying Batik with one of the Batik artists there and also started a conversation with two master Batik artists, one who is American and her Indonesian husband. I developed these patterns that were based on symbols from the performance of my retirement portfolio and worked with the batik artists to produce two sarongs. d. peltz - 2012 In producing the designs, I treated the performance of my retirement portfolio since my arrival at RISD [7 years] as a significant interval and then I looked at the ways in which decisions are made within retirement portfolios as having an extension outwards from the individual assets that underlie the retirement portfolio, which are kind of like the base elements of the retirement world. Then there’s the allocation of your assets, which is a global way of understanding an individual according to typologies, which are often referred to in terms of risk—this notion of a ‘risk profile’. What type of ‘person’ you are is determined by your attitude towards risk, or potentiality, and I found that to be a really fascinating way of understanding the universe. I remember looking at the tabs in my retirement portfolio and finding this one for viewing ‘Unrealized Gain/Loss’ and that’s often how I work—is just going through the Cambridge Parking Code, for example, and finding this section of the code that was called ‘Crossing Non-Signalized Locations’ and just feeling “I can’t do any better than that,” you know? That’s what I was talking about in terms of ready-mades that exist in the social sphere. So I found that tab, actually, a long time ago, and I pulled it out of a journal when I was there [in Bali] working on these pieces and I wound up making these two sarongs and later on a series of porcelain vessels for holding one’s unrealized gains and losses. At the time, I knew that I wanted a performance to come out of them, but I wasn’t sure what it was. I was inspired very much by this sort of thing: Pulls out a TIAA-CREF brochure with a man in a suit seated at a table. This guy is probably an actor, and [the brochure] says “TIAA-Cref announces “Individual counseling sessions at the Rhode Island School of Design. Individual counseling sessions at no additional cost to you. You can discuss your personal financial situation with an experienced TIAA consultant on a confidential basis. We are available to help you discuss how to achieve your financial goals by investing in financial solutions such as mutual funds, brokerage, life insurance, and annuities...etc....What retirement benefits best fits your situation?” Often I encounter this and I think O.K., this is one way to prepare for the after-work life and it seems inadequate to me. But, I also find it really inspiring. I really like the visual language of it. I kind of want to be that man. I’d like to see if I could maybe buy his clothes. FLM: What it is about the man on the brochure that interests you? DP: He’s offering personalized objective advice and a detailed evaluation of everything you need to know and do. Who wouldn’t want that? But he’s also something of a contemporary priest or priestess, mediating between the unseen all-powerful universe of global capitalism and the common worker. So I started off developing Unrealized Gain/Loss directly from the charts that represent the performance of my retirement portfolio. Then I came home and I wanted to use those. I had this word in my journal “unrealized gain/loss vessel.” I had this notion of vessels that would contain unrealized gains and losses. That felt really important to me that they would have somewhere to go. I had been thinking a lot about altars and making offerings—that somehow this really fickle, massive, difficult-to-comprehend-universe of the financial world—that somehow it might be nice if you could making an offering to it. [In Bali] they made such beautiful elaborate offerings. So I studied offering making as well with one of the women there and she taught me some of the standard forms created by folding leaves and the significance of the floral arrangements. I started working in clay and then moved to porcelain and I made these unrealized gain/loss vessels. I made a few of them, they have holes on either side that you can’t get your fingers in. But something can go in there and something can go out of there. It’s a nice size for putting on an altar. Then I got this commission from Artists in Context who was interested in my doing something for this project “Artists Perspectives for the Nation” project. I proposed initiating these investors’ drum circles as a new public performance form. I’m interested in bringing together those two symbols—the symbol of the djembe and the drum circle. unrealized gain/loss vessel - d.peltz - 2012 FLM: I can imagine the public digital stock ticker performing like a soft fleeting stream of information, a kind of (meaningless) illusory comfort blanket. DP: In some way you have to understand its relevance outside of the obvious, right? Because the obvious is illogical. Nobody is actually using that data to day trade, for example. People aren’t sitting there with their computers watching the market data in Times Square or setting up an outdoor office and being like “OK it’s up 3 points or it’s up 1.56, trade! Ok now buy, Ok now sell!” That would be a kind of a nice performance, actually. But actual day traders would want more up to date data than that. To understand what that data is doing is really important. And that’s something I’ve realized—that I’m interested in a particular kind of data visualization, which is not about what data can tell people, but what data can tell people who are visualizing it. For example, in the Cambridge Project “Crossing Non-Signalized Locations” I was interested in the 10,000 excuses archive of data recording five years worth of excuses for why people thought they shouldn’t have received their parking ticket. I was not interested in making that excuse wall so that the public could see and understand this data. Inevitably the data will be seen by others but I was really interested in what the action of visualizing the data told those who were visualizing it. The parking attendants themselves were writing those excuses on the wall—I was interested in what that kind action of writing the excuses on the wall told them about the data. Similarly, I’m interested in designing a way to allow people to pass this data from the unseen universe of the market, through their own bodies, which happens through the merging of the drum and the stock ticker. I’m interested in those two also as symbols; the drum as this symbol of the earth, the body and a pagan counterculture, and the stock ticker referring to the ethereal world of global markets—bringing those two together and making them dependent. I’m often drawn to conceptual propositions that I become invested in testing in a sincere way—at first they often they sound humorous to others, but I have to remember that there is humor in them. I don’t sit around and laugh about these things. I stop finding them funny at all. I’m interested in the proposition that we could know something about the after-work life by drumming in response to our retirement portfolio. So then I become really interested in how to craft that into a viable performance form for myself and others. FLM: The aspect of using sound in “Unrealized Gain/Loss” as a way of embodying the information to the asset holder is really intriguing—using sound as a means of embodying the asset data. Was sound a medium that made sense to use immediately or were you considering other means of attempting to embody it? DP: Well I do use other mediums within the project like textile, ceramic, and batik patterns. I was first drawn to the history of Batik patterns as a socio-economic stratification system and the vessels as a way of embodying or manifesting this data of unrealized gain and loss. My first approach was to work with meditation actually—a meditation workshop with my colleagues. I was going to offer this “Unrealized Gain/Loss” workshop where you would explore the sensations of gain and loss by adapting the way yogi-nidra brings you into contact with your physical surroundings and stretches your perception. FLM: At Naropa University there are/were business & compassion workshops—a sort of mash-up of business and compassion and how compassion could be incorporated into a business model. This process and engagement of “embodying data” also has to do with “Participatory Democracy and the Future of Karaoke” you created at the DNC in Denver in 2008. DP: That kind of appropriation and instrumentalization of spiritual practice could be disturbing and thus compelling as a strategy. For various reasons, I’ve come to be drawn to both the form of a quarterly public performance and the established performance form of a drum circle. Its something I’ve seen myself do before, that is to mess up a really good functional social system like a drum circle or karaoke. I remember I was developing language for the karaoke project and started calling it “Participatory Democracy and the Future of Karaoke” and one of my assistants on the project, who’s an incredible artist, said, “but don’t you think the future of karaoke is guitar hero?” and I realized that maybe he thought I was trying to improve the form. I’m just trying to get people to have this shifted embodied experience, I need to craft the performance context so that they can do that. In the case of the karaoke project, for example, what did I need in order to be able to do this [a person to stand up in front of a bar and deliver a karaoke speech]? I realized that the body is very vulnerable so I built a podium so that the speaker can feel secure enough to do this, otherwise you couldn’t get to this state achieved by passing these speeches through the body. Then I was, like, well you need to be able to practice the lyrics because you don’t know all the “songs” by heart, which became an insert to the massive track books carried by most karaoke VJs. And then sometimes the crowd in the bar isn’t there with me, so I needed to extract the voice of the crowd cheering from the original venue and I needed the local audience to cheer if they wanted to. I’m interested in both where the form succeeds and fails. In particular, one of the most interesting things is this auditory gap between the space where you are, the reduced scale of applause in your own little bar, and this grand scale of applause at the convention center where the speech was originally delivered. FLM: How did the concept of “Participatory Democracy Karaoke” come about and why did you use karaoke as a means of engaging what was happening at the DNC in 2008? DP: I was looking at a lot of different readymade media infrastructures within the city at the time. I was interested in the emergency broadcast systems and I developed a proposal to repurpose that system and karaoke became an important symbol because it was this populist form that was already engaged in exploring the sensation of celebrity but also visualizing the gap between ourselves and those with more power and influence. So it had this readymade capacity to play with power and celebrity and I felt like the Obama presidential campaign, the first one in particular, had some very curious overlaps with this culture of celebrity. Obama of course rose to power partly based on his oratory abilities and I was interested in how karaoke as a vehicle was so adept at offering people all that was left of authentic expression in a political speech. Managing a politician and constructing their identity is such a developed practice that it becomes, kind of automatically, a metaphor for the way that our own identities are constructed. Of course the Obama campaign was very hip and savvy and deploying this notion of grassroots. It was really pioneering in its use of social media and this deployment of notions of populism. I was interested at that time in the capacity of karaoke to track speech patterns, precise tempos of anyone’s delivery, and that to me was a way of thinking about what might be left of the authentic self. I was interested in karaoke’s capacity to extract that authentic component and offer it to others. So not just to stand up and be them, but to [literally] pass their speech patterns through your own body. A long time ago, it started to strike me as odd that one would make media at all. It struck me as a kind of un-contemporary way of going about making art in an age of media overflow. That logic extended into my thinking on delivery devices and installation as well. Why would one buy a screen or even set one up when there are so many out there? And the way in which these media displays function in karaoke bars and bars in general is very interesting to me. I’m drawn to this passive consumption of media where your primary social interaction is with the bartender or a few other individuals but these screens are around you and your attention is shifting back and forth between these spaces. So much political rhetoric is spoken to a half-listening audience. I was interested in what was happening in the slippage and that karaoke was a kind of slippage amplifier. So if you put people in a bar and they are delivering a Kucinich speech and Kucinich comes up on a screen then your getting a sound bite of Kucinich and an image of Kucinich and your friend is talking to you— FLM: A kind of magic takes place in that incongruency between sound and image and the karaoke participant who’s relaying the speech-text at the same time. DP: Exactly and there’s some kind of truth in that experience of reality. FLM: Yeah, there’s something uncanny about seeing the body close-up like that as though it can’t lie to you in that moment or context. It’s a weird moment of luminous clarity. The work you’ve done and all of what you’re saying about karaoke is so very interesting to me. Growing up, my dad and uncles sang karaoke a lot (and still do) and being first-generation Filipino American is a different cultural subtext entirely. I’m also seeing it from the position of witnessing family members who are carriers of these stories and songs. And seeing them cherish these Tony Bennett, Frank Sinatra, Elvis Presley songs so much, I also see how their bodies are literal vessels of popular music that signifies something greater—it signifies their cultural and socioeconomic place in the world. The way that they cherish these American 1950s and 1960s pop songs is similar to having a certain kind of reverence for their spiritual faith or Catholicism. It’s a similar kind of care, focus, and attention exerted in karaoke and Catholicism—that these two structures and systems give something to focus on. Setsuko, Seiji and Hitoshi in Obama, Japan as Obama in Indiana — d. peltz — 2008 DP: Sure there something about the relationship we have to our candidate or the way we go about choosing a candidate, which is very similar to a deity or idol. I learned a lot about karaoke culture through this project. I’d never done karaoke. I’d never been interested in it as a form and then I travelled to Japan as part of the project when I made “Setsuko, Seiji and Hitoshi in Obama, Japan as Barack Obama in Indiana” and it was quite fascinating because my image of karaoke had always been this very public forum in a karaoke bar and then I discovered there’s this whole other world of karaoke where people even go on their own, they go and rent a room or cubicle and sing, or they go on a date—just the two of them go and sit in a room and do karaoke together. FLM: I’m interested in issues that take place within or as a result of specific karaoke culture(s). In the Philippines within the last several years there’s been occurring the “My Way Killings” phenomenon. Apparently baklas or gay men are employed by karaoke establishments to help “smooth over conflicts over karaoke singing”—these social forms of conduct, or lack thereof that arise out of the infrastructures of this social sport. In this one rural part of the Philippines there’s a village karaoke machine that the whole village shares—the Aeta indigenous people have an appointed “keeper” of the karaoke machine. I also see karaoke as a proxy to the confessional box in Catholicism where one goes to pour out their sins (minus the penance and redemption). The karaoke machine enables one to literally sing out whatever’s going on internally, but through highly saturated popular song lyrics. While karaoke is a public and social sport, it can also be a private one. Karaoke is a means of communion with each other. DP: Right, this preference for this kind of mediated communication. In Japan I was trying to organize people to work on this project and I was talking about throwing a party and they were like, well, we have to rent a karaoke machine because what else are we going to do? And I think its kind of serving that function of surrogacy—emotional surrogacy. FLM: And karaoke tools can be read as ritual tools—the magic mic that holds everything. There’s got to be some overlap at some point—between religious ceremony and devotion to the karaoke machine. DP: The way I designed the piece was so that it could slip right on top of the ready-made karaoke infrastructure. There was a flat-packed podium and it was made of a single sheet of plywood with no fasteners that slotted into itself. Those were sent out to a network of karaoke bars that I invited to become “karaoke convention centers.” The local VJs downloaded our custom-made, speech-extracted tracks that were designed to play on their existing equipment. In this sense the piece is a permanent installation. If you go to Denver today, some of the VJs still have the tracks in their library of offerings, the Ramones and Romney. It was this notion of re-purposing readymade infrastructure to create a distributable populist form. Obama was coming and the convention was in the Pepsi Center and 30,000 people were coming including 10,000 journalists. The impetus behind the larger art project that commissioned international artists to make works in Denver, was that local people weren’t going to have much access to this convention. It was like an invasion, the city was being descended upon, but if you lived a block away from the site, you had the same access as people in Zimbabwe&mash;30 second media bits excerpted from the speeches. So it seemed to me that the fundamental gesture was how do I take that signal, which was travelling out of the convention center, and create a local interruption? FLM: Is that what you mean by ‘intervention’? The term is frequently used to help describe your work. DP: It depends on the day. Around that karaoke project I had a conversation with Krzysztof Wodiczko and he was proposing that maybe rather than intervention, we should consider the word interruption. Because intervention is kind of an overused term in the field of art and it has militaristic and therapeutic associations outside of the art context. Fundamentally, the idea of intervening speaks to the readymade social world as your primary material. So it’s basically suggesting a kind of subtractive process, which gets back to this question: what is the role of the contemporary media artist in a world that’s so saturated with media? You can’t work additively in a saturated field. If you want to make a visible mark you have to work subtractively. That’s what intervention is about to me, just another way of saying “to work subtractively.” FLM: So the interventions or interruptions aren’t necessarily adding or subtracting, but are they putting orange cones there? What are they doing exactly? DP: I think you’re right about that, they’re not really subtracting. They’re adding to the scope of possibility. I’ve been thinking (with this exhibition I’m mounting next month) about the work as explorations and expansions of social possibility. Maybe it’s more insertion. I started calling the pieces ‘insertions’ that I was making in Rejmyre—a small town in Sweden where I’ve been working for six years now. My favorite site to install there is the tourist bureau. I started calling the video pieces that I made for the tourist bureau, video insertions. This idea that you’re inserting something into the readymade media infrastructure of the world resonates with me. Insertion leverages a context, creating a possibility that the inserted object might be naturalized in the process — that someone can encounter my video in Rejmyre as tourist information. And then all of a sudden tourist information can include some American guy prostrating through town and it can include really bad relationship advice. Maybe insertion is a better word. tourist information – d. peltz 2009-present  . (shrink)

For applied geologists working in the minerals industry the tasks of problem formulation, observation and data collection, interpretation and modelling invoke various philosophical considerations whether the practitioner is aware of them or not. A primary goal of applied geologists is to build models that accurately predict reality to an acceptable degree. In this paper, we describe the key philosophical frameworks proposed for conducting scientific investigations and relate them to the field of applied geology. We consider the very important differences in (...) the types of problem confronted in experimental sciences compared to the historical sciences, such as geology, where the processes studied are unique and only evidential traces of past events are available. The prediction quality of models is likely to be materially improved if the geologist is firmly and consciously practiced in the scientific method. In addition, if the predictions are framed and presented in terms of the underlying science, the quality of decisions made based on those predictions will likewise be improved. The implications for creating additional value to a project or operation can be very significant when geological models are constructed and used by a practitioner with an understanding of the philosophical basis of the activities constituting a scientific investigation. The method of multiple working hypotheses is particularly important when working in historical sciences. We argue that working within the framework of multiple working hypotheses can provide a valuable insurance against the adoption of, or persistence with, flawed models. (shrink)

Microfinance is intended to combat the phenomenon of social and financial exclusion. We hope that the supportive political environment in the EU will meaningfully contribute to the betterment of this situation in Europe. The paper draws attention to the banking and non-banking institutions granting microloans which constitute the key element facilitating the creation and continued operation of firms. It is very important that microfinance is viewed as a weapon in the fight against poverty and inaccessibility of financial services.

This paper examines the ethical implications of "poison put" provisions included in bond offerings. A number of firms are using event-risk protections in bond offerings in an effort to attract investors back into the bond market. One of the most common event-risk protections is a "poison put" provision, which allows the bondholder to "put" the bond back to the firm at par or at a premium under certain specified conditions, such as a takeover effort or a downgrading of the (...) bond by rating agencies. While such a provision is obviously of value to the bondholders, there is a secondary effect that is not as obvious. Using such a provision helps to insure that boards of directors must put the interests of all of the stakeholders ahead of any personal interests of the board members, thus protecting the stakeholders. The use of event-risk protections helps to deter takeovers, induce bidders to negotiate with management in any takeover efforts, and avoid two-tier takeover offers. As a result, the "poison put" provisions have a positive impact on share values while simultaneously protecting the investments of bondholders. Such an impact makes the use of "poison put" provisions in bonds an ethical use of management power. (shrink)

The Bertrand oligopoly situation with Shubik’s demand functions is modeled as a cooperative transferable utility game in $$\beta$$ -characteristic function form. To achieve this, two sequential optimization problems are solved to describe the worth of each coalition in the associated Bertrand oligopoly transferable utility game. First, we show that these games are convex, indicating strong incentives for large-scale cooperation between firms. Second, the Shapley value of these games is fully determined by applying the linearity to a decomposition that involves (...) the difference between two convex games and two non-essential games. (shrink)

Recent empirical research demonstrates that cross-holding engenders significant anti-competitive effect even though it confers no decisive influence on the target firm. This research has obtained wide attention, which leads to both calls for and actual changes in antitrust policy. However, the effects of cross-holding on competition are not well established. This paper examines the collusive effect of cross-holding with asymmetry in cost functions across firms in an infinitely repeated Cournot duopoly game. The two firms have a different share (...) of capital that affects marginal costs. We find that cross-holding facilitates collusion when a small firm (i.e., a firm with a small capital capacity) increases its passive ownership in a big firm (i.e., a firm with a large capital capacity), and the size of initial ownership is relatively small. Unexpectedly, collusion becomes more difficult to be sustained when a big firm increases ownership in a small firm, or when a small firm increases ownership in a big firm but the initial ownership is relatively large. Our result that cross-holding may either facilitate or hinder collusion, under certain circumstances, generates important implications for antitrust policy. (shrink)