Ellsberg Paradox and Second-order Preference Theories on Ambiguity: Some New Experimental Evidence

We study the two-color problem by Ellsberg (1961) with the modification that the decision maker draws twice with replacement and a different color wins in each draw. The 50-50 risky urn turns out to have the highest risk conceivable among all prospects including the ambiguous one, while all feasible color distributions are mean-preserving spreads to one another. We show that the well-known second-order sophisticated theories like MEU, CEU, and REU as well as Savage’s first-order theory of SEU share the same predictions in our design, for any first-order risk attitude. Yet, we observe that substantial numbers of subjects violate the theory predictions even in this simple design

Ellsberg Paradox and Second-order Preference Theories on Ambiguity: Some New Experimental Evidence

We study the two-color problem by Ellsberg (1961) with the modification that the decision maker draws twice with replacement and a different color wins in each draw. The 50-50 risky urn turns out to have the highest risk conceivable among all prospects including the ambiguous one, while all feasible color distributions are mean-preserving spreads to one another. We show that the well-known second-order sophisticated theories like MEU, CEU, and REU as well as Savage’s first-order theory of SEU share the same predictions in our design, for any first-order risk attitude. Yet, we observe that substantial numbers of subjects violate the theory predictions even in this simple design.Ellsberg paradox, Ambiguity, Second-order risk, Second-order preference theory, Experiment

Responding to the Pandemic: A Multicountry Study on Social-Political Factors and Health Outcomes of COVID-19

Introduction. Coronavirus Disease 2019 (COVID-19) poses a major global threat to human beings, which has caused devastating consequences of population health, political, and economic crises in many countries. This dissertation was composed of three research activities to study the following aims: (1) review the existing literature focusing on political factors and health outcomes of COVID-19; (2) assess the relationship between democracy and case fatality rate of COVID-19 by controlling for the effect of age, comorbidity, health expenditure, healthcare workforce, and population density; and (3) identify the trajectory pattern cases peak days, deaths peak days, and peak periods. Methods. We accessed data from the World Health Organization (WHO), World Bank, Johns Hopkins University, and the Democracy Index 2019 database. First, we conducted a systematic review that searched three databases and synthesized the articles about democracy and health outcomes of COVID-19. Second, we analyzed data from 148 countries with at least 2,000 confirmed cases of COVID-19 by October 25, 2020. Multiple linear regression was used to examine the association between the Democracy Index and case fatality rate of COVID-19 while controlling for other variables, most notably the age distribution of the population. Lastly, we used the patterns of data at the early onset of COVID-19 from seven countries to estimate the time lag between peak days of cases and deaths. Results. Our first research found that of 170 publications in the databases search, 12 publications were screened for systematic review. Among them, one study reported no association between democracy and health outcomes of COVID-19. Eleven articles claimed there was a relationship between democracy level and outcomes of COVID-19. Two papers reported negative associations between democracy and adverse outcomes of the population, while the other nine articles claimed there were positive associations between democracy and the poor health status of populations. When examining the relationship between democracy and health outcomes of COVID-19, the second research demonstrated that the number of hospital beds, the proportion of population above age 65, and current health expenditure as a percentage of the gross domestic product (GDP) are significantly related to the case fatality rates of COVID-19 across 148 countries (p \u3c 0.05). The Democracy Index was not statistically related to the case fatality rates of COVID-19 when considering all 148 countries analyzed but was negatively associated with case fatality rates among 47 high-income countries. In addition, the healthcare workforce, population density, and comorbidity were not statistically significant among the 148 countries. Finally, the findings in the last research suggested that comparative analyses of data from different regions and countries reveal the differences between peaks of cases and deaths caused by COVID-19 and the incomplete and underestimated cases in Wuhan. Different countries may show different patterns of cases peak days, deaths peak days, and peak periods. Error in the early COVID-19 statistics in Brazil was identified. Conclusions. This research is the first to our knowledge to study the relationship between democracy and health outcomes of COVID-19 across countries with large sample sizes. According to the multicountry data, the cross-sectional study suggests that enhancing healthcare system facilities is vital to improving clinical outcomes. Protecting the population older than 65 and adjusting the health expenditure budget may need to be considered. The findings suggest that in high-income countries the higher democracy index is associated with more deaths from COVID-19, perhaps due to the decreased ability of the government to control the movement and behavior of its citizens. Besides, the simulated graphical trajectory method identifies statistical biases in surveillance data. This approach incorporates all sources of available data and provides a robust method to characterize the time course of an infectious disease. Regions and countries beginning with high mortality rates from the COVID-19 epidemic will suffer a long, painful period of the disease epidemic. Where the mortality rate is relatively high, healthcare professionals should prepare for a longer period of fighting this pandemic. Data quality is key to case fatality rate estimation which is needed by policymakers to make correct and timely critical decisions

Do Consumers Trust the National Inspection Exemption Brands? Evidence from Infant Formula in China

Consumers are often uncertain about product quality and have to rely on different information, either given or pursued, to assess quality. Developing countries may lack institutional and technical resources to rigorously monitor and enforce product quality standards and/or to implement market-based instruments where market failures are common. The information-based instruments on product quality may work well in these countries as they reduce information asymmetry between firms and consumers. This study investigates one particular information-based instrument, the National Inspection Exemption (NIE) system in China. China launched the National Inspection Exemption (NIE) System in various industries in 2000 to award firms who are in compliance with the quality standards, to inform consumers of product quality, and to lessen the pressure on regulatory monitoring and enforcement of product quality standards. Once a firm is granted the NIE title by China's National Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), its products are exempted from quality inspections by all governmental agencies at different levels for three years; but it is obligated to report the product quality condition to the local AQSIQ office annually. The NIE titled firms are also allowed to include the title in the product label and to use the status in the advertisement campaign. Based on the theoretical framework, we establish the hypothesis that consumers are more willing to buy the product with the NIE title and the NIE title is likely to increase sales revenue when consumers lack of means to assess quality. The empirical application of China dairy industry supports the theoretical hypothesis. In particular, using the firm-level panel data, we find that the NIE title boots sales revenue and the impact is both statistically and economically significant based on the difference-in-difference estimate and the random-fixed effect estimations. Furthermore, using the survey data collected right after the 2008 China milk scandal regarding the brand choice of infant formula among 1,228 mothers with infants and young children, we find that consumers’ preference for the NIE title still present even the NIE titled firms are involved in a food scare event. The positive NIE preference is particularly strong among highly educated consumers and those who buy domestic brands.brand choice, food safety, product quality, national inspection exemption, quality standards, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics,