This paper seeks to get behind specific contextual referents of risky situations to consider characteristics of risk that apply to many situations. It is guided by previous theoretical and empirical research in perceived risk, and focuses on the joint effects on risk of loss probability and the distribution of losses. The approach taken follows modern axiomatic theory by proposing conditions on a relation “is at least as risky as” between pairs of probability distributions over an outcome variable. Several sets of axioms for risk that characterize different forms for risk measurement are presented.

This paper examines why group norms are enforced and how group norms develop. It is argued here that groups are likely to bring under normative control only those behaviors that ensure group survival, increase the predictability of group members' behavior, avoid embarrassing interpersonal situations, or give expression to the group's central values. Group norms develop through explicit statements by supervisors or co-workers, critical events in the group's history, primacy, or carry-over behaviors from past situations.

Recent statistics indicate that more than one-third of all new marriages will end in divorce. This evidence suggests that even the most happily couples may be wise to view their lifetime choices within a framework that recognizes that periodically each selects one of two strategies: married or not married. When both select the married strategy, the couple remain married. If either party (or both) elect the not-married strategy, the outcome will be divorce. Election of the not-married strategy thus creates a twoperiod world in which each party is married in the first period and divorced in the second. When a marriage dissolves, the couple divides all marital property either by mutual consent or according to the division rules imposed upon them by the state in which they reside. The law separately defines both marital property and the formula used to divide the property. This paper focuses on the interaction of the two variables, specifically, the effect of the state's division rule on the savings-consumption decisions of a divorcing couple.' Savings are of interest because they represent the couple's marital assets; the division rule is important because the amount each party receives at divorce affects the postmarriage economic well-being of each. The analysis can improve our understanding of the economic behavior of couples and will provide insight into the effect of divorce law on family savings patterns. Since law views divorcing spouses as adversaries, the analysis of marital savings and the resulting property division is carried out in a noncooperative game framework in which couples facing divorce each protect their self-interest by maximizing separate lifetime utility functions.2 Three noncooperative games are discussed: Cournot, Stackelberg, and Nash bargaining.

A social choice procedure is developed for selecting an alternative from a finite set on the basis of paired-comparison voting. Ballot data are used to construct a lottery on the alternatives that is socially as preferred as every other lottery. The constructed lottery is then used to select a winner. An axiomatization of social preferences among lotteries that justifies the procedure is included. The procedure will always select a consensus majority alternative when one exists, and it will never select an alternative that is Pareto dominated by another alternative.

Independence axioms similar to those proposed for multiattribute von Neumann–Morgenstern linear utility theory are examined in the context of new nonlinear utility theories developed by Chew and MacCrimmon, and Fishburn. These new theories weaken the independence axiom of von Neumann and Morgenstern, and Fishburn's theory does not require preferences to be transitive. The paper shows that axioms for independence between attributes lead to decompositions of utility for the nonlinear theories that are related to standard decompositions for linear utility.

This paper shows the distorting effects of different tax regulations on the effective absolute and relative costs of long-term borrowing in different currencies. In particular, if expected borrowing costs are equal before tax, then the process of minimizing expected after-tax borrowing costs generally involves borrowing the weakest currency.

The article discusses research pertaining to the effect of race on age stereotyped attitudes. Black and white business students were asked to rate 30-year old and 60-year old workers based on work-related dimensions including performance capacity, potential for development, stability, and interpersonal skills. In the study black students always rated older workers lower than younger workers. The results indicate that black respondents held more extreme age stereotypes than their white counterparts. Experts speculate that the differences may be due to scholastic achievement factors.

This paper models and characterizes investment incentive problems associated with debt financing. The decision problem of residual claimants is explicity formulated and their investment policies are characterized. The paper also analyzes the use of conversion features and warrants to control distortionary incentives. These claims reverse the convex shape of levered equity over the upper range of the firm's earnings, and this mitigates the incentive to take risk. It is shown that, under certain conditions, such claims can be constructed to restore net present value maximizing incentives and simultaneously meet the financing requirements of the firm.

This paper demonstrates the strong linkages that exist between currency risk, represented by inflation risk and exchange rate changes, and relative price risk. These linkages affect the optional quantities of forward exchange contracts, nominal debt, and fixed price sales (purchase) contracts to use in hedging against these risks. It is shown that the existence of as many hedging mechanisms as there are forms of price risk allows for the precise targeting of specific price risks with specific hedging instruments. Moreover, even though each hedging mechanism specializes in protecting against a particular form of price risk, the optimal quantitiy of each influences and is influenced by the optimal quantities of the others.