LIKE any livestock industry, the Canadian beef and dairy cattle industry is characterized by a cyclical pattern in terms of the number of cattle on farm, the number of cattle slaughtered and the number of cattle exported. Traditionally, the analysis and forecast of cattle stocks are based either on econometric models which often include the biological life cycle of cattle or on the pure biological nature of cattle.' In this paper, we investigate the behavior of the cattle industry through the use of a third approach-the Markov chain technique. The Markov chain technique is by itself a very mechanical procedure, but one which can incorporate economic justifications. It can then, in our view, provide a very fruitful view of the industry. Basically, the Markov chain technique allows us to construct flow matrices of beef and dairy cattle according to their biological sequences. For instance, a male calf born during any time period t can, in the same period, be slaughtered, exported, die or remain on farm as a calf. The decision to retain a calf as a steer (for future slaughter) or as a bull (for future reproductive purposes), to export the calf, or to slaughter the calf (for veal), is basically an economic decision. The outcome of such decisions is translated into the elements of the Markovian transition flow matrix. Based upon the biological sequences of the different categories of cattle and the structure of the beef and dairy cattle industry, we can set up transition matrices for Western and Eastern Canada. Table I indicates the structure of such matrices for Western Canada. Cells representing possible flows are identified by numbers while cells representing impossible flows are left blank.2 Transition probability matrices of cattle movement can be constructed by dividing each row element in the matrix by its corresponding row total. These probabilities reflect the probabilities of cattle moving from one category to another. It is also through the use of such probabilities that we will carry out our simulation analysis. This paper is divided into seven sections. In the second section a model of demand, supply and inventory for beef and dairy cattle is presented. Section III discusses some general empirical results based on the transition probability matrices. Section IV discusses the procedures for simulation using the conditional transition probability matrices. Section V presents the results of the historical simulation while section VI presents the results of some sensitivity analysis experiments. The last section is for concluding remarks.

Auditing, Uncertainty, Group decision making, Loss contingencies

The form of the Pareto optimal general insurance contract has been investigated by Borch [5], Arrow [3], and Raviv [16]. This paper extends their work to the consideration of the optimal investment portfolio insurance contract. This is a contract whose payoff depends upon the investment performance of some specified portfolio of common stocks. Portfolio insurance differs from general insurance in two important ways. First, investment portfolio insurance lacks the property of stochastic independence between losses on different contracts which is characteristic of general insurance, and this has led some actuaries to question whether portfolio insurance contracts should be sold in view of the risks they pose for the solvency of insurance companies. Recent developments in the theory of option pricing suggest, however, that under certain assumptions an insurance company will be able to eliminate the risks associated with portfolio insurance contracts by following an appropriately defined investment strategy. Secondly, there exists a market for the pricing of investment risks, the securities market; and, under appropriate assumptions, the equilibrium price of portfolio insurance contracts may be determined without specification of the preferences of insurance companies. This permits consideration of insurance company preference functions to be dispensed with, in marked contrast to the earlier literature concerned with general insurance, which treats insurance company preferences symmetrically with those of the insurance purchaser. In addition, since the characteristics of the insured portfolio are known to the insurer, and the performance of the portfolio is beyond the control of the insured, portfolio insurance is not prone to the problems of adverse selection and moral hazard which are liable to arise in general insurance.

[The purpose of this paper is to provide a method for characterizing efficient allocation processes and efficient allocations for a large class of environments in which asymmetric information is an important factor. This method is based on a rigorous application of statistical decision theory and makes explicit both the information available to agents ex ante and the way in which information is transmitted during any multistage allocation process.]

Reviews the book "Introduction to Federal Taxation," by William L. Raby and Victor H. Tidwell.

In this study, an exploratory analysis of the work of the audit manager was undertaken using the critical incident methodology. Eighty-eight critical requirements of managerial work were identified from a total of 582 critical incidents that were reported in a series of 69 structured interviews involving partners, managers, and senior field staff from five national and international public accounting firms in Canada. Critical task requirements were assigned to one of ten managerial roles originally identified by Mintzberg [1973] by a panel of seven judges. Analysis of the pattern with which critical incidents were reported was undertaken. Significant differences were found to exist in the pattern with which partners, managers, and field staff reported particular incidents. The role of the individual within the firm thus seemed to be associated with the character of the incident reported. When the pattern of critical incidents reported was analyzed for partners, managers, and senior field staff on a firm-by-firm basis, only the character of the incidents reported by senior field personnel seemed to be associated with their firm affiliations.

In this article, the author responds to comments of the analyst Paul A. Ryder on his research paper "The Nature of Managerial Work." The author says that Ryder raises a number of general methodological issues about organizational research and the critical incident methodology which have been well documented in the literature. Issues raised are ones regularly revisited by organizational theorists and are, in general, issues which have not been unambiguously resolved. Measures which intrude may elicit atypical roles and responses, and, to the extent that they do, these measures are said to be reactive. Research methods may be obtrusive without necessarily being reactive, and conversely research methods may be reactive while not being particularly obtrusive. For the purpose of describing the nature of managerial work in large organizations, a number of research methodologies have been used. Suggestions that stereotyped perceptions from different organizational levels is a product of the methodology applied, is a critique which provides some cause for concern.