[This paper presents a reliability model of a control system with control components in series. The results show that output reliability may increase or decrease as new control components are added to the series, depending on the characteristic reliability parameters of the control components. The results are compared with Bodnar's [1975] results that led him to the paradoxical conclusion that fewer control components are better than more in a serial system. It is observed that no such paradox exists when the controls are modeled properly.]

Suppose that the consumer has the choice among (a) a zero-yield and zero-risk asset, (b) a high-yield and excessively risky asset, (c) a low-yield and zero-risk asset, and (d) some real asset. If we restrict the consumer to the first two, he will select the first one, called In our world in which the consumer has all four choices, he will never select these balances. One economist (see my 1976 paper) wasted almost two pages of the Journal of Economic Literature proving that a consumer will prefer a positive risk-free income to zero income. Three economists (Winston Chang, Daniel Hamberg, Junichi Hirata, 1983) wasted eight pages and some matrix algebra on a renewed effort to persuade the profession of the same thing. Linear extrapolation suggests that a renewed effort will become due in 1990. But the problem is more serious. Given that the demand for speculative balances must be zero, Chang et al. ask (p. 46) why so many texts analyze the demand for them. I would add that these texts go on to raise the specter of a price-theoretic monstrosity-an infinite demand for speculative balances ( the liquidity trap) and its devastating consequences for monetary policy. This is not unusual. Texts give much space to the theory that current consumption is deternmined by unmeasurable future income, about which each of us forms only vague and changeable guesses (see my 1979 paper). The Pigou is explained to undergraduates even though its currency base (Don Patinkin, 1969, p. 1154) is a microscopic fraction of national wealth, and even though the effect is theoretically superfluous (see my 1982 paper). Many other such cases could be mentioned. Let me speculate why pedagogic failures litter our texts. The suppliers prefer to sell thick (expensive) books. Many of the intermediaries attract and impress students by endowing our field with more scientific content than it actually has. And, the captive demanders are not given protection by rigorous and extensive journal reviews of what should be the cornerstone of economics, the textbooks. Thus they are forced-to use Frank Knight's felicitous phrase-to know too many things that just ain't so.

This paper presents a macroeconomic model containing optimizing, inventory-holding firms that is consistent with a number of prominent empirical regularities concerning fluctuations in output, exchange rates, relative prices, and money. Prices are sticky, but they are not predetermined. Still, our model is consistent with exchange rate overshooting in the sense of Dornbusch. Typical sticky-price models allow a divergence between current production and current demand, but this divergence is never allowed to feed back into the model. Our optimal inventory adjustments reconcile divergences between current demand and production, and the inventory stock movements provide expected future dynamics.

Since 1964 all the increase in female labor force participation in Australia can be attributed to married women. About 90% of the increase can be attributed to women employed part time. The paper argues that aggregate female participation rate equations cannot be regarded as labor supply curves. The female wage rate relative to that of males is exogenously determined by wage-fixing authorities above market-clearing rates, and the excess supply of labor is not adequately measured by the unemployment rate. Married women and part-time workers have a high propensity to bypass the unemployment pool when leaving or seeking a job. Participation equations are dominated by employment demand for sex-segregated jobs.

Assumptions serve as the basis from which we reason and therefore pervasively influence the nature of our understanding of any substantive area. Auditing is no exception. Yet, the core assumptions that underlie auditing thought have largely been left unexamined. The purpose of this paper is to examine the core ontological assumptions, (assumptions as to the primitive elements of what constitutes reality), and epistemological assumptions, (assumptions as to how knowledge is attained), that underlie contemporary auditing thought. It is concluded: 1) that auditing is characterized by an overwhelming domination of a functionalist paradigm, which views reality as concrete and objective (rather than uncertain and subjective) and which emphasizes a regularized, patterned existence (rather than one characterized by intrinsic tension and contradiction); and 2) that this paradigm ultimately influences and constrains our understanding of auditing. Alternative paradigms are used to examine the concepts of audit evidence and auditor consensus to dramatize the effects of making alternative assumptions of reality. Implications for practitioners and for researchers are also explored. Résumé. Les hypothèses servent de fondement à nos raisonnements et par conséquent, influencent l'essence de notre compréhension de tout domaine. La vérification n'est pas une exception et les hypothèses essentielles qui sous‐tendent la pensée en vérification, n'ont pas vraiment été examinées. L'objectif de cet article est d'examiner les hypothèses essentielles ontologiques (hypothèses concernant les éléments primitifs de ce qui constitue la réalité) et les hypothèses épistémologiques (hypothèses relatives au comment de l'atteinte de la connaissance) qui sous‐tendent la pensée contemporaine en vérification. On y conclut: 1) que la vérification est caractérisée par une domination écrasante d'un paradigme fonctionnel qui voit la réalité comme étant concrète et objective (plutôt qu'incertaine et subjective) et qui met l'emphase sur une existence régularisée et modelée (plutôt qu'une existence caractérisée par la contradiction et une tension intrinsèque); et 2) que ce paradigme influence et contraint ultimement notre compréhension de la vérification. Des paradigmes alternatifs sont utilisés pour examiner les concepts d'information probante et de consensus du vérificateur afin de dramatiser les effets d'utiliser des hypothèses alternatives de la réalité. Les implications pour les practiciens et les chercheurs sont également considérées.

Certain characteristics of managerial employment arrangements and of the managerial labor market make shareholder wealth dependent on an executive's continued employment. These wealth effects are investigated by examining the common stock price reaction to unexpected deaths of senior corporate executives. Abnormal stock price changes are documented for a sample of fifty-three events. These abnormal stock price changes are associated with the executive's status as a corporate founder and with measures of the executive's ‘talents’ and decision-making responsibility, and of the transaction costs associated with renegotiating or terminating the employment agreement.

Douglas B. Stewart, Yiannis P. Venieris, Sociopolitical Instability and the Behavior of Savings in Less-Developed Countries, The Review of Economics and Statistics, Vol. 67, No. 4 (Nov., 1985), pp. 557-563