Individuals in capitalist societies are increasingly exposed to market risks. Luck egalitarian theories, which advocate neutralizing the influence of luck on distribution, fail to cope with this problem, because they focus on the wrong kinds of distributive constraints. Rules of distributive justice can specify (1) acceptable procedures for allocating goods, (2) the range of acceptable variations in distributive outcomes, or (3) which individuals should have which goods, according to individual characteristics such as desert or need. Desert-catering luck egalitarians offer (...) rules of the third type. Their theories fail because considerations of market efficiency, freedom, and dignity undermine the claims of desert to inform standards of justice for society as a whole. Responsibility-catering luck egalitarians offer rules of the first type. Their theories fail because such rules don’t constrain the downside risks of market choices. To solve this problem, we need rules of the second type, which allow market forces, and hence luck, to influence distributive outcomes, but only within an acceptable egalitarian range. The ideal of equality in social relations helps us devise acceptable constraints at the top, bottom, and middle of the income range. (shrink)

This paper investigates one of Anderson’s (2007) objections to individually-allocating principles of distributive justice: that they are incompatible with the free market. I argue that Anderson’s objection applies only to the specific principle she discusses, associated with luck egalitarianism, and not to individually-allocating principles generally. I then discuss different individually-allocating principles, the precepts of justice, broached by Rawls (1971,1999) but never developed by him. The precepts determine people’s distributive entitlements based on their contributions, efforts, and needs. I offer an (...) interpretation of each precept, explain why its distributive standard is compelling, show how the precepts avoid Anderson’s objection, and address Rawls’s rationale for not using the precepts in his account of distributive justice. I conclude by comparing the precepts to the kind of principle that Anderson prefers, range-constraining rules, arguing that the precepts meet the key standard associated with those rules. (shrink)

Prior research suggests that Corporate Environmental Performance enables businesses to build strong corporate image and reputation, thus leading to improved firm financial performance. However, studies relating to the relationship between CEP and firm risk are scarce. This research intends to bridge the gap in the literature by examining whether CEP helps firms to reduce their financial risk. Results of the Ordinary Least Squares regression with fixed effects provide strong evidence that environmental performance is negatively associated with firm volatility (...) and firm downside risk. The results are robust after controlling for moderating effects such as financial, institutional and environmental management. (shrink)

The article presents a problem of proper hedging strategy in expected utility model when forward contracts and options strategies are available. We consider a case of hedging when an investor formulates his own expectation on future price of underlying asset. In this paper we propose the way to measure effectiveness of hedging strategy, based on optimal forward hedge ratio. All results are derived assuming a constant absolute risk aversion utility function and a Black-Scholes framework.

In the wake of the current financial crises triggered by risky mortgage-backed securities, the question of ethics and risk-taking is once again at the front and center for both practitioners and academics. Although risk-taking is considered an integral part of strategic decision-making, sometimes firms could be propelled to take risks driven by reasons other than calculated strategic choices. The authors argue that a firm's risk-taking propensity is impacted by its ethical climate (egoistic or benevolent) and its emphasis (...) on output control to manage its marketing function. The firm's long-term orientation is argued to moderate the control–risk propensity relationship. The authors also extend research on risk and performance and argue that the association of risk-taking propensity and firm performance is contingent on the ownership (publicly traded versus privately held) structure of the firm. Based on survey data from a sample of manufacturing industries in the United States, the results show significant impact of ethical climate and marketing output control on a firm's risk-taking propensity; also risk-taking propensity shows a stronger association with firm performance in privately held firms than in publicly traded firms. (shrink)

The current study sought to assess the mediating role of green market orientation dimensions in the relationship between social risk and new product performance among European Multinational Enterprises (EMNEs). We also assessed the moderating role of entrepreneurial orientation in the relationship between green market orientation and new product performance. The study was based on primary data gathered from 317 EMNEs in Ghana. After various validity and reliability checks, ordinary least squares (OLS) analysis was performed to estimate the (...) various relationships hypothesized in the study. The study finds that social risk has a negative effect on the success of EMNEs' new products. This negative effect is however nullified by the positive mediating effects of strategic green market orientation, tactical green market orientation and internal green market orientation. Entrepreneurial orientation also played a significant moderating effect in the relationship between green market orientation dimensions and EMNEs' new product performance. Based on this, theoretical and managerial contributions were made. (shrink)

This paper explores how luck egalitarianism fares in capturing our intuitions about the fairness of market-generated outcomes. Critics of luck egalitarianism have argued that it places no restrictions on what outcomes are acceptable, at least when all agents are equally situated before entering the market, and that this gives us a reason to reject it as an account of fairness. I will argue that luck egalitarianism does make specific judgements about which market-generated outcomes are compatible with maintaining (...) a fair distribution. In addition, I will argue that luck egalitarian prescriptions accord with our pre-theoretical intuitions about the (un)fairness of certain market-generated outcomes. Securing these points both speaks in favour of luck egalitarianism as an ethical principle and provides a framework within which to analyze the fairness of practical, real world cases. (shrink)

This study investigates the volatility risk premium on the emerging financial market. We also consider the expected return and ESG sentiment. Based on the SSE 50 ETF 5-minute high-frequency spots and daily options data from 2016 to 2021, we adopt nonparametric model-free approaches to calculate realized and implied volatilities. And the volatility risk premium is constructed by subtracting these volatility series. We examine the relations between the volatility risk premium and future excess returns as well as (...) ESG sentiment through multifactor specifications. We find that the volatility risk premium also exists in the Chinese market and is significantly negative. In addition, the statistically positive correlation between the volatility risk premium and aggregate returns is an outlier compared to the empirically negative pattern in developed markets. At last, ESG sentiment is positively associated with the volatility risk premium, especially the impact of environmental and social. This evidence supports the agency theory, which indicates that investors perceive ESG investments as waste resources in a short term and become potentially risky. (shrink)

The argument from inductive risk claims that judgments about the moral severity of errors are relevant to decisions about what should count as sufficient evidence for accepting claims. While this idea has been explored in connection with evidence required for the approval of pharmaceuticals, the role of inductive risk in the post-approval process has been largely neglected. In this article, we examine the ethics of inductive risk in connection with revisions to the product monograph for OxyContin in (...) Canada, which understates the risks of addiction and abuse associated with this drug. Using the concept of inductive risk, we consider what evidence should have been sufficient for Health Canada to revise the product monograph for OxyContin. Given the stakes involved, we argue that a less strict standard of evidence would have been appropriate, yet HC in fact took the opposite course, insisting upon a higher standard of evidence than it normally requires. In addition to providing a novel perspective on the opioid crisis in Canada, this article contributes to existing philosophical work by demonstrating that inductive risks in the post-approval stage are important and linked to pre-approval inductive risks. (shrink)

How important is the experience of risk in business endeavors for self-respect and moral development? Tomasi prompts this question with his attempt to reconcile Rawls’s theory of justice as fairness with free-market capitalism, by claiming that economic activity is a way for people to exercise their autonomy, responsibility, and self-authorship, including through voluntary risk-taking. Critics argue that the social environment generated through market institutions is ill-suited for developing a sense of responsibility and autonomy among citizens. We (...) refine the case for economic liberty by looking at the link between risk-taking and attitudes toward democratic citizenship. We highlight the critical role of ethical business practice as a contributor to the stability of liberal-democratic societies. (shrink)

(2013). Beyond mechanical markets – asset price swings, risk and the role of the state. Journal of Economic Methodology: Vol. 20, Methodology, Systemic Risk, and the Economics Profession, pp. 69-75. doi: 10.1080/1350178X.2013.774856.

This paper contributes to the growing discussion about how to mitigate pharmaceutical pollution, which is a threat to human, animal, and environmental health as well as a potential driver of antimicrobial resistance. It identifies market approval of pharmaceuticals as one of the most powerful ways to shape producer behavior and highlights that applying this tool raises ethical issues given that it might impact patients’ access to medicines. The paper identifies seven different policy options that progressively give environmental considerations increased (...) priority in the approval process, identifies ethically relevant interests affected by such policies, and makes explicit tensions and necessary tradeoffs between these interests. While arguing that the current European regulation gives insufficient weight to environmental considerations, the paper highlights concerns with the strongest policy options, on the grounds that these may very well endanger patients’ access to effective medication. (shrink)

As an alternative protein product to animal meat, plant-based meat is considered to play an essential role in improving animal welfare and protecting the environment. However, why do a few consumers choose plant-based meat but others do not? Despite the increasing research on plant-based meat marketing, little is known about the psychological mechanism by which plant-based meat marketing affects consumers’ purchasing decisions. We utilize dual-system theory to understand how social media marketing of plant-based meat influences cognitive fluency, customer inspiration, perceived (...) risk, and purchase intention. Four studies show that social media marketing can increase young people’s purchase intention of plant-based meat more than traditional marketing. In Studies 1 and 2, increased intensity of social media marketing can enhance young people’s cognitive fluency and further promote purchase intention. Study 3 explores how cognitive fluency relates to purchase intention through two psychological mechanisms. We suggest that a higher level of cognitive fluency increases customer inspiration and improves purchase intention. However, a lower level of cognitive fluency reduces purchase intention by increasing perceived risk. Study 4 manipulated members’ in-group or out-group status to show a boundary condition for the effect of brand community identity on purchase intention. These studies provide insight into how brand marketers can use social media to promote consumer inspiration and advertising engagement, how managers can offer fluency-increasing mechanisms to ensure a low level of perceived risk, and how enterprise practitioners may want to consider brand community publicity to attract out-group members. (shrink)

Due to the advent of deglobalization and regional integration, this article aims to adopt LASSO-based network connectedness to estimate the multiscale tail risk spillover effects of global stock markets. The results show that tail risk varies across frequencies and shocks. In static analysis, the risk is centered mostly on the developed European and North American markets at a low frequency, and regionalization is imposed on the moderate frequency. Moreover, emerging markets could be sources of risk spillover, (...) especially at the highest frequency where there is no absolute risk center. In dynamic analysis, we use rolling window estimation and find that different frequencies identify distinct episodes of shocks, which provides us with the reason for the diverse risk centers at different time scales in static analysis. Our findings provide heterogeneous financial practitioners, regulators, and investors with diverse characteristics of stock markets under multiple time horizons and help them operate their own trading strategies. (shrink)

This paper studies the entry strategies of firms on risky markets. We focus on markets where demand is affine and cost is linear; moreover, the demand includes a normally distributed random variable. In such a model, we show that the leader’s strategy changes with the level of market risk even when firms are risk neutral. Therefore, the availability of future information for a Stackelberg follower has a feedback effect on the leader’s strategy. We also show that compared (...) with traditional markets with no risk, the basic trade-off between flexibility and pre-commitment is only slightly changed in the qualitative game where firms are free to choose when to enter the market. (shrink)

Ronald Dworkin's theory of equality of resources makes extensive use of markets. I show that all these markets rely on one specific neoclassical conception of the ideal market in full equilibrium, as analyzed by Debreu. This market must be understood as operating under circumstances of certainty, and this is incompatible with several components of Dworkin's account. In particular, it does not allow one to hold people responsible for their option luck, and it implies a high social safety net (...) rather than insurance schemes for addressing brute luck. I conclude by outlining an interpretation of equality of resources that takes the ideal market seriously. (shrink)

Here we reconsider teachers’ changing subjectivities as autonomous agents whose practices acknowledge risk as an essential element in intellectual inquiry. We seek alternative descriptions to the limiting language of teachers’ current practices within the primacy of the market. We are convinced by Levinas’s claim that ethics is the first philosophy with its concomitant responsibility for the Other. This provides a valuable point of departure and our understanding of its relevance is expanded by Biesta and Todd. This perspective allows (...) interruption of the global reform ensemble with its reductionist understandings of teachers’ subjectivities within concerns for a ‘visible pedagogy’ and performativity. We illustrate how this global policy imperative is reworked in policies in the Republic of Ireland and share reflexive insights from our tutoring of teachers studying for a Master’s degree in Education. We show that teachers’ autonomy, which we understand as the capacity of teachers to facilitate risk and make ethically informed local judgements, is severely restricted by imposed standards, codes and laws to which there is tightly policed adherence. Instead we describe teachers’ practices occurring within an Invisible Pedagogy, which is not concerned with totalising and limited performativity but instead, explores risks associated with existential possibilities beyond commodification. (shrink)

The COVID-19 pandemic has caused a dramatic reshaping of passenger risk perception for airline industry. The sharp increase in risk aversion by air passenger has caused a disastrous impact on the tourism service industry, particularly airline industry. Although the existing literature has provided a lot of studies on the impact of the pandemic on travel industry, there are very few studies discussing the impact of change in passenger risk perception on the stock market performance of airline (...) industry. This study considers two types of airline companies, full-service and low-cost. In order to overcome the traditional problem of the Chow test, Quandt–Andrews test is used to identify structural change points during the pandemic in the stock prices of United States airline companies. The result shows that an industry-wide structural change in the stock market performance indeed is found to take place during the pandemic for United States airline companies. Meanwhile, no significant difference is found in the structural change date between the two types of airline companies. The selected airline companies are found to be clustered toward the end of 2020 in their structural change dates. Although the strike of the COVID-19 pandemic on airline industry has proven to be widespread and profound, our investigation implies that air passengers have gradually adapted to the new normal of travel activities at some level and partly rebuild their sense of safety under the strict epidemic-control measures. (shrink)

Free market environmentalists believe that the extension of private property rights and market transactions is sufficient to address environmental difficulties. But there is no invisible hand operating in markets that ensures that environmentally sound practices will be employed just because property rights are in private hands. Also, liability laws and the court systems cannot be relied upon to force polluters to internalize the social costs of pollution. Third, market prices do not provide an objective measure of environmental (...) matters. Finally, there is a right to a livable environment that justifies regulations protecting the public from unreasonable environmental risks. (shrink)

Risk analysis as a regulatory driver has now become firmly entrenched in public health and environmental protection. Risk analysis at any level essentially has to accommodate two gut feelings of the constituency: whether society should be risk-prone or risk averse, and whether government and its institutions can be trusted to make the necessary decisions with a high or a low degree of discretion. The precautionary principle (or rejection thereof) arguably is the ultimate reflection of the promotion (...) of risk to a societal value. There is no doubt that especially amongst the representatives of the Member States (as opposed to the officials at the European Commission), public (pre)caution with respect to the long-term environmental and public health implications of gene technology influenced the reluctance to allow marketing of GM foods and feeds until a strict regulatory regime had been rolled out. Industry would argue that the delay in regulation, as well as the eventual regime was of such a nature as to stifle the technology. This contribution reviews a number of features of standard EU risk analysis decisions, so as to assess its current propensity towards smothering rather than smoothing the introduction of new technology. The current development of a regulatory framework for nanotechnology serves as a case study. (shrink)

Since market scoring rules have become popular as a form of market maker, it seems worth reviewing just what such mechanisms are intended to do. The main function performed by most market makers is to serve as an intermediary between people who prefer to trade at different times. Traders who have the same favorite times to trade can show up together to an ordinary continuous double auction, and then make and accept offers to trade. But when traders (...) have different favorite times, a market maker can help them by first making offers that some of them will accept, and then later making opposite offers which others will accept. By adjusting prices in his favor, a market maker can even profit from providing this service. By making offers, however, a market maker opens himself up to the risk of losing to informed traders who know more than he about asset values. It is a complex and difficult task to choose the price and duration of offers in order to profit the most from intermediary trades while suffering the least from informed trades. This task requires subtle judgments about the relative fraction of informed and intermediary trades at different times, prices, quantities, and trading histories. No simple algorithm could reasonably claim to do this task optimally. Very active markets have little need for market makers, as anyone can trade at anytime. In markets with large but sporadic trades, a human will likely find it profitable to apply their considerable intelligence to the complex task of market making. The question is what to do for smaller less-active markets, which cannot afford such human attention. Trading may simply not happen there if no intermediary can be found to make such markets. A computer program with less than human intelligence that attempts to make markets runs the risk of being out-smarted by human traders. Humans might even figure out how to turn that program into a money pump, giving up cash each time it is run through some cycle of trades.. (shrink)

In der Diskussion über Ökonomisierung im Gesundheitswesen werden oft wesentliche Begriffsunterscheidungen außer Acht gelassen. Um feststellen zu können, in welchem Fall die Rede von Ökonomisierung oder Ökonomismus im negativen Sinn angemessen ist, muss zwischen dem Gesellschaftsbereich Wirtschaft und der ökonomischen Dimension in allen Gesellschaftsbereichen (wie dem Gesundheitswesen) unterschieden werden. Es muss geklärt werden, wo ökonomische Ziele verfolgt werden sollen und wo andere Ziele mit ökonomischen Mitteln verfolgt werden sollen. Im Blick auf die Frage nach einer Marktsteuerung des Gesundheitswesens ist zu (...) unterscheiden zwischen dem Gut Gesundheit und Gesundheitsgütern sowie zwischen öffentlichen, privaten und meritorischen Gütern. Außerdem ist die Frage nach einer Marktsteuerung des Gesundheitswesens zu unterscheiden von der Frage nach der Verwendung marktwirtschaftlicher Instrumente zur Steuerung des Umgangs mit bestimmten Gesundheitsgütern durch den Staat. Erst diese begrifflichen Differenzierungen können zu einer angemesseneren Beurteilung der komplexen wirtschaftsethischen Fragen jenseits von wirtschaftsfeindlichen oder ökonomistischen, von marktfeindlichen oder marktradikalen Ideologien führen. (shrink)

Commercial genetic testing offered over the internet, known as direct-to-consumer genetic testing (DTC GT), currently is under ethical attack. A common critique aims at the limited validation of the tests as well as the risk of psycho-social stress or adaption of incorrect behavior by users triggered by misleading health information. Here, we examine in detail the specific role of advertising communication of DTC GT companies from a medical ethical perspective. Our argumentative analysis departs from the starting point that DTC (...) GT operates at the intersection of two different contexts: medicine on the one hand and the market on the other. Both fields differ strongly with regard to their standards of communication practices and the underlying normative assumptions regarding autonomy and responsibility. Following a short review of the ethical contexts of medical and commercial communication, we provide case examples for persuasive messages of DTC GT websites and briefly analyze their design with a multi-modal approach to illustrate some of their problematic implications. We observe three main aspects in DTC GT advertising communication: (1) the use of material suggesting medical professional legitimacy as a trust-establishing tool, (2) the suggestion of empowerment as a benefit of using DTC GT services and (3) the narrative of responsibility as a persuasive appeal to a moral self-conception. While strengthening and respecting the autonomy of a patient is the focus in medical communication, specifically genetic counselling, persuasive communication is the normal mode in marketing of consumer goods, presuming an autonomous, rational, independent consumer. This creates tension in the context of DTC GT regarding the expectation and normative assessment of communication strategies. Our analysis can even the ground for a better understanding of ethical problems associated with intersections of medical and commercial communication and point to perspectives of analysis of DTC GT advertising. (shrink)

Solar radiation management (SRM) has been proposed as a means of mitigating climate change. Although SRM poses new risks, it is sometimes proposed as the ‘lesser evil’. I consider how research and implementation of SRM could be regulated, drawing on what I call a ‘precautionary checklist’, which includes consideration of the longer term political implications of technical change. Particular attention is given to the moral hazard of ‘regulatory drift’, in which strong initial regulation softens through complacency, deliberate deregulation (‘regulatory gift’) (...) and the limited constituency of people with the skills to regulate (‘thin markets’). I propose the strengthening of civil society groups to keep regulators in check. (shrink)

Game-theoretic solution concepts such as Nash and Bayesian equilibrium start from an assumption that the players’ sets of possible payoffs, measured in units of von Neumann–Morgenstern utility, are common knowledge, and they go on to define rational behavior in terms of equilibrium strategy profiles that are either pure or independently randomized and which, in applications, are often taken to be uniquely determined or at least tightly constrained. A mechanism through which to obtain a common knowledge of payoff functions measured in (...) units of utility is not part of the model. This paper describes an operational method of constructing a state of common knowledge of the key parameters of the players’ utility functions in terms of conditional small bets on the game’s outcome. When the rationality criterion of joint coherence is applied in this setting, the solution of a game is typically characterized by a convex set of correlated equilibria. In the most general case, where players are risk averse, the parameters of the equilibria are risk-neutral probabilities, interpretable as products of subjective probabilities and relative marginal utilities for money, as in financial markets. Risk aversion generally enlarges the set of equilibria and may present opportunities for Pareto-improving modifications of the rules of the game. (shrink)

Those who advocate higher out-of-pocket spending, especially high deductibles, to keep health care costs better controlled without losing quality use market language to talk about how people should think about health care. Consumers—that is, patients—should hunt for bargains. Clip coupons. Shop around. Patients need to have more “skin in the game.” Consumer-patients will then choose more carefully and prudently and use less unnecessary health care. Unfailingly, “skin” refers to having money at stake. Usually, those arguing for high deductibles express (...) dismay or frustration that patients do not face the full cost of the health services they receive. Unfortunately, a lack of price transparency, the need to unbundle bundled groups of services to discover total price, and the challenge of validly and reliably measuring and disclosing quality make shopping for health care a challenge for even the savviest patient. Urgency, fear, and sickness that impairs peak cognitive function and other aspects of emotionally laden decision-making, even when “shared” with a physician, add obstacles to coupon clipping and tire kicking. Who has more at stake in health decisions than patients? Whose flesh is literally, not just figuratively, at risk? (shrink)

Globalization of financial markets led to the enormous growth of volume and diversification of financial transactions. Financial derivatives were the basic elements of this growth. Derivatives play a useful and important role in hedging and risk management, but they also pose several dangers to the stability of financial markets and thereby the overall economy. Derivatives are used to hedge and speculate the risk associated with commerce and finance. When used to hedge risks, derivative instruments transfer the risks from (...) the hedgers, who are unwilling to bear the risks, to parties better able or more willing to bear them. In this regard, derivatives help allocate risks efficiently between different individuals and groups in the economy. Investors can also use derivatives to speculate and to engage in arbitrage activity. Speculators are traders who want to take a position in the market; they are betting that the price of the underlying asset or commodity will move in a particular direction over the life of the contract. In addition to risk management, derivatives play a very useful economic role in price discovery and arbitrage. Financial derivatives trading are based on leverage techniques, earning enormous profits with small amount of money. (shrink)

This paper merges the non-expected utility approach (Tversky and Kahneman, J Risk Uncertain 5:297–323, 1992 and Quiggin, J Econ Behav Organ 3:323–343, 1982) into Akerlof’s (Quart J Econ 84:488–500, 1970) model of Market for Lemons. We derive the results for different probability weighting functions and analyze the phenomenon of market failure in light of non-expected utility maximization. Our main finding suggests that when the proportion of traded lemons is high (low), the problem of market failure is (...) mitigated (enhanced). In addition, for the case of Cumulative Prospect Theory, we show that (a) the higher the loss aversion is, the more pronounced is the market failure; (b) gain-domain elevation is negatively related to the extent of market failure; and (c) the value function is (i) negatively monotonic in the gain-domain diminishing sensitivity parameter when the market is characterized by a high proportion of “peaches,” and (ii) positively monotonic in the loss-domain diminishing sensitivity parameter when the market is characterized by a high proportion of “lemons.”. (shrink)

Public decisions on environmental risk have traditionally been weighed in terms of the principle of efficiency and its methodologies, such as cost-benefit and risk-benefit analysis. These original essays argue for moving beyond the market paradigm toward making policy that incorporates environmental values. Scholars representing a broad range of disciplines present a thorough analysis and methodological investigation of environmental risk and the potential for integrating environmental values into the policymaking process. They address the normative and theoretical roots (...) of environmental risk, describe the distinct domain that exists for environmental values as opposed to economic values, and look at the conflicts between economic and environmental values within the applied context of the NIMBY (not in my back yard) phenomenon. (shrink)

ABSTRACT This article critically examines Axel Honneth’s account of social freedom by paying particular attention to the conceptual apparatus of normative reconstruction that is supposed to lend social freedom its explanatory force. More specifically, the article demonstrates, through an immanent critique, that Honneth is unable to follow through with his ambitious view of the capitalist market as an institutional expression of social freedom. Furthermore, Honneth’s inability to derive robust relations of cooperative solidarity from the actuality of contemporary liberal democratic (...) ethical life leads him to posit socialism as a regulative idea. Honneth’s idea of socialism risks succumbing to the very pitfalls that he continues to associate with neo-Kantian proceduralism. Such an aporia poses a particular challenge for Honneth’s attempt at advancing a persuasive neo-Hegelian alternative to neo-Kantian proceduralism. As a means of addressing this aporia, I suggest a possible strategy that Honneth could adopt to retrieve his historically informed and radically reformist conception of justice without unwittingly rendering socialism a purely regulative idea. Such a strategy involves re-Hegelianizing Honneth’s socialism and the idea of social freedom that it seeks to actualize. (shrink)

Medical practitioners owe much of the significant progress made in the diagnosis and treatment of disease to industrial research. Hence, co-operation between providers of medical services, most notably medical practitioners, and the pharmaceutical industry is in the best interest of patients. Yet, empirical evidence shows how well-directed influence exerted by the pharmaceutical industry impacts physicians’ decision-making. Profit-motivated inducement by the pharmaceutical industry may expose patients to considerable risks. Against what many think to be based on overwhelming evidence, Joao Calinas-Correia takes (...) the view that the criticism levelled at the pharmaceutical industry as well as the call for transparency in the relationships between physicians and the industry are exaggerated. In his polemic he praises “Big Pharma” as a success and espouses the view that the undesired consequences of its activities are allegedly inherent in the underlying market environment shaped by politics. Moreover, he believes that the proposals made to control and eliminate such undesired effects will lead to mediocrity. Astonishingly, his polemic reaches out to contest the appropriateness of setting rules at all—even if being set by a democratic process. Calinas-Correia’s assertions are based on the wrong premises. They fail to recognize that today individual civil rights and liberties often enough do not have to be defended against encroachments by governmental authorities. Rather, it is incumbent on the state to create rules designed to defend the individual against infringements by overly powerful non-governmental institutions, in our case the medical-industrial complex. Given the power exercised by physicians and the special nature of their role in public health, clear-cut rules have to be enacted and implemented with respect to their relationship to Big Pharma. (shrink)

In recent years leading figures in a variety of fields - political, financial, medical, and organizational - have become acutely aware of the need to effectively incorporate aspects of risk into their decision-making. This book addresses a wide range of contemporary issues in decision research, such as how individuals deal with uncertainty and complexity, gender-based differences in decision-making, what determines decision performance and why people choose risky activities. The book presents results from academic research carried out over the last (...) twenty years. A common theme is the study of decisions made in horserace betting markets, a research medium which offers a rich insight into decision-making in general and one which enjoys particular methodological advantages over laboratory-based simulations. This set of naturalistic studies explores the variety of individual motivations for betting, how people perceive and respond to the presence of uncertainty, the challenges of complex and turbulent information and the use of heuristics as a response, how decision-making performance is affected by structural or process-related features of the decision environment, and how men and women differ in their decision behaviour. The authors’ interesting and novel findings offer a richer understanding of the psychological and economic underpinnings of betting behaviour which should inform practitioners, policymakers and regulators in an industry which is undergoing unprecedented global growth. The book is also relevant to courses covering subject areas such as financial markets, decision-making and behavioural finance. (shrink)

Building on earlier work on the relationship between corporate social performance (CSP) and a firm’s financial performance, this integrative empirical study supports the theoretical argument that the higher a firm’s CSP the lower its financial risk. Specifically, the relationship between CSP and risk appears to be one of reciprocal causality, because prior CSP is negatively related to subsequent financial risk, and prior financial risk is negatively related to subsequent CSP. Additionally, CSP is more strongly correlated with (...) measures of market risk than measures of accounting risk. Of all CSP measures, reputation for social responsibility appears to be the most important one in terms of its risk implications. (shrink)

The study analyzes the influential factors of consumers’ willingness to purchase gray-market smartphones by considering the model of novelty seeking, status consumption, integrity, and perceived risk. Attitude toward counterfeit is used as mediation in the model. The causalities in the model of problematic willingness of consumer to purchase gray-market smartphones are hypothesized. A total sample of 350 respondents with 238 effective samples is collected by interviewing with questionnaires at the service counters of telecommunications operators. Structure equation modeling (...) (SEM) is adopted in the analysis. Consumers’ attitude toward counterfeit goods is found to be positively related to the willingness of consumers to purchase gray-market smartphones, but perceived risk is negatively related to consumers’ willingness to purchase. As for personality constructs, integrity and status consumption are found to be negatively related to consumers’ attitude toward counterfeit goods, but novelty seeking is positively related to the attitude. Further, managerial implications for branded smartphone manufacturers and telecommunications regulators are provided by the research. (shrink)

In this text, our question is what is the current regulatory trend in countries that are not considered central in the development of artificial intelligence, such as Brazil: a preventive approach, or an experimental approach? We will analyze the bills (PL) that are being processed in legislative houses at the state level, and at the federal level, highlighting some elements, such as: Delimitation of the object (conceptualization), fundamental principles, ethical guidelines, relationship with human work, human supervision, and guidelines for public (...) authorities. Based on these elements, we identified how the issues that drive the contemporary debate on AI have been addressed in these legislative initiatives. The results indicate that the strongest national regulation proposal mentions risks, rights, governance, economic agents; these mentions dialogue with the concerns discussed by researchers around the world, regarding the mitigation and prevention of risks, regarding the preservation of individual and collective rights, the role of the State as a regulator and supervisor, and, as was to be expected, the maintenance of economic policies that possibly tend to protect the market; proposes that the foundations of the development, implementation and use of AI have values consistent with ‘human centered AI’ (Bingley et al. 2023), but also points to the neoliberal matrix; introduces human supervision as an effective element in the AI systems cycle; the trend that we can observe in Brazil is the configuration of a regulation that harmonizes articles that favor the preventive approach, with the presence of articles that favor the experimentation approach. (shrink)

As the gap between the need for and supply of human organs continues to widen, the aim of securing additional sources of these “gifts of the body” has become a seemingly overriding moral imperative, one that could—and some argue, should—override the widespread ban on organ markets. As a medical practice, organ transplantation entails the inherent risk that one human being, a donor, will become little more than a means to the end of healing for another human being and that (...) he or she will come to have a purely instrumental value. With the establishment of organ markets, not only will the harms of instrumentalization be a reality—the ends of medicine will be further compromised and confused. (shrink)

It is widely claimed that climate change has increased the magnitude and the frequency of natural phenomena such as storms, droughts, and floods with the concomitant costs in terms of damages and victims. This paper using weekly data from global stock market indices in a Fama–French model, examines how and to what extent market agents and investors react to such events. As a yardstick for comparison purposes, the possible market impact of industrial accidents is also incorporated and (...) examined in the empirical investigation. The study uses in a comparative approach the STOXX Global ESG Environmental Leaders index and the STOXX Global index diversified across 1800 top companies. Results reported herein seem to indicate that natural and anthropogenic adversity have no immediate impact on the stock indices, while wildfires have an immediate reduction impact on market risk in the case of the ESG Environmental Leaders index. Moreover, wildfires and industrial accidents appear to cause a significant reduction of systematic risk over the next week following the incident. However, the magnitude of the effect is higher in the case of the ESG Environmental Leaders stock index. Finally, the effect on systematic risk by industrial accidents is temporarily without any lasting imprint. (shrink)

abstract Cowen and I agree that rational‐expectations theory is unrealistic and that risk is difficult to quantify. However, we continue to disagree about the riskiness of consumption as opposed to investment. Since more investment might lead to a recession if investment is relatively risky, Cowen's use of rational‐expectations theory to buttress the Austrian school's claim that market economies can shift toward relatively more investment without experiencing macroeconomic disruption remains suspect.

As the economy has grown increasingly financialized, the relationship between financial innovation and instability has attracted more attention. Previous research finds that the proliferation of complex financial innovations, like asset securitization and new financial derivatives, helped to erode the market governance arrangements that kept excessive bank risk-taking in check, inviting instability. This article presents an alternative way of understanding how financial innovations and market governance arrangements combine to shape instability. Market governance arrangements also shape how financial (...) firmsreceiveinnovations, leading to greater or lesser instability at particular times and places. I illustrate this argument by tracing the effects of changing corporate governance arrangements at large US banks in the 1990s and 2000s. Like non-financial firms in the preceding decade, banks adopted reforms associated with the shareholder value model of corporate governance. These changes to internal bank governance arrangements affected the agendas of bank executives in ways that encouraged expanded use of securitization and derivatives. Drawing from this case, I argue that a full understanding of instability in the financialized era requires closer attention to the (institutionally-structured) interests of financial innovationusers—not just to features of financial innovations themselves. (shrink)

This paper examines the market response to the events leading up to the passage of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to explore whether investors value mandatory human rights disclosures of conflict mineral usage. Using a sample of 3639 US registrants from January 1, 2008 to September 30, 2014, we document a significant negative stock market reaction to the passage of the Act. Using a sample of 1206 filers, we also find a (...) negative market reaction to conflict mineral disclosures under the Act. The market reaction is more negative and limited to companies that source their minerals from the DRC and adjoining countries, companies with prior records of human rights violations, and companies with ambiguous disclosures. However, the market appears to reward firms that use risk-mitigation strategies. This paper provides preliminary evidence that the mandatory disclosure of conflict mineral information on Form SD poses a threat to firms’ legitimacy, resulting in a net cost to investors. The results of this study provide economic justification for companies with poor records of conflict mineral sourcing to improve their practices for the purpose of avoiding the high costs that will arise if they are forced to disclose human rights abuses related to conflict mineral use. (shrink)

This book by one of America's preeminent legal theorists is concerned with the conflict between the goals of justice and economic efficiency in the allocation of risk, especially risk pertaining to safety. The author approaches his subject from the premise that the market is central to liberal political, moral, and legal theory. In the first part of the book, he rejects traditional "rational choice" liberalism in favor of the view that the market operates as a rational (...) way of fostering stable relationships and institutions within communities of individuals with broadly divergent conceptions of the good. However, markets are needed most where they are most difficult to create and sustain, and one way to understand contract law in liberal legal theory, according to Professor Coleman, is as an institution designed to reduce uncertainty and thereby make markets possible. Another target of this book is the prevalent view that tort law helps rectify market failures when transaction costs are too high to permit contracting. The author argues instead that tort law should be understood as a way of rectifying wrongful losses not inefficient exchanges. (shrink)