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This article examines how reinsurance coupled with new financial instruments can expand coverage to areas exposed to catastrophe losses from natural disasters, and demonstrates how reinsurance and the catastrophe‐linked financial instruments can be combined to lower the price of protection from its current level. A simple example illustrates the relative advantages and disadvantages of pure catastrophic bonds and pure indemnity reinsurance in supporting a structure of payments contingent on certain extreme events occurring. The authors suggest ways to combine these two instruments using customized catastrophe indices to expand coverage and reduce the cost of protection. This article states six principles for designing catastrophic risk transfer systems and discusses practical issues for implementation, and then concludes with suggestions for future research.

In this article, the authors develop an arbitrage approach to valuing insurance‐linked securities (ILS) for non‐catastrophic events within a framework of stochastic interest rates. The prices of these transactions are driven by both an interest rate process and a non‐trivial actuarial risk process. The authors find that the duration of ILS is, in most cases, higher than the Macaulay duration of risk‐free bonds, which implies that the alleged relative out‐performance of ILS is illusory.

This paper examines strategies to meet the communication challenge of change brought on through planned transitions, by the stress of a crisis, or as a result of the social transformation in work and the nature of work. It explores the cycles of change to create a foundation for understanding the communication of change to individual people in an organisation. It examines the impact of reengineering as a change vehicle, the role of trust in reengineering, and some reasons reengineering appears to have shortcomings for individuals coping with change. A reengineering case study is also presented. Successful communication of change demonstrates an understanding of the cycle of change, the importance of trust in the communication process, the essential personal nature of change, the necessity for continuous face‐to‐face communication, and a recognition that current global changes are symptoms of a shift in the human condition.

How should economists incorporate culture into their economic analysis? What empirical approaches to identifying, measuring, and analyzing the relationship between culture and economic action are most appropriate for economists? In particular, what can experimental economists learn from the methods of economic anthropologists, sociologists, and historians who study culture? We argue that while both quantitative and qualitative approaches can reveal interesting relationships between culture and economic actions/outcomes, especially in experimental research designs, qualitative methods help economists better understand people’s economic choices and the economic outcomes that emerge from those choices. This is because qualitative studies conceptualize culture as a pattern of meaning, take the relevant cultural data to be people’s thoughts and feelings, treat the market as a cultural phenomenon, and allow for novel explanations.

The tremendous relevance of societal discrimination to special education of the learning disabled cannot be gainsaid. Mistreatment of disabled children in public and private educational institutions is a bad reflection on the moral and egalitarian values of the society at large. “Many students, regardless of race, who are deemed eligible to receive special education services [mandated by federal laws] are unnecessarily isolated, stigmatized, and confronted with fear and prejudice” (Losen & Welner, 2001, p. 407). According to the U.S. Congress, “poor African-American children are 2.3 times more likely to be identified by their teacher as having mental retardation than their white counterpart” (20 U.S.C. §1400 (8)(c) Individuals with Disabilities Education Act (IDEA)). Congress has also found that a highly disproportionate number of elementary and secondary special education students are African-Americans (IDEA §1400 (8)(D)) and their social disadvantage stems from “lack of opportunities in training and educational programs, undergirded by the practices in the private sector that impede their full participation in the mainstream society” (IDEA §1400 (10)).

Recent experiments show that feedback transmission can mitigate opportunistic behavior in repeated social dilemmas. Two nonexcludable explanations have been investigated: strategic signaling and nonmonetary sanctioning. This literature builds on the intuition that under both partner matching (where the same groups of players interact many times) and stranger matching (where groups change continuously), feedback may work as a nonmonetary sanctioning device, but only the former also allows for strategic signaling. Empirical evidence on the two explanations is mixed. Moreover, the usual design may give rise to confounding matching protocol effects.

My experiment provides a novel empirical testbed for different channels by which feedback – costless disapproval points – may affect behavior in a repeated public goods game. In particular, it is based on a random matching scheme that neutralizes the confounding effects of different matching protocols on behavior.

The transmission of feedback is found to foster prosocial behavior. The data favor the nonmonetary sanctioning explanation rather than the signaling hypothesis.

This study provides a novel set of evidence that (i) communication may mitigate selfishness in social dilemmas and (ii) the source of this phenomenon may be linked to the emotional reaction that communication evokes in humans.

The purpose of this paper is to evaluate whether trust and distrust in upper-level managers exert different influences on the budgetary proposals of middle managers. Such proposals involve different levels of managerial effort that impact overall budgetary slack.

This paper is based on a laboratory experiment with 160 business managers.

The results show that the more (less) middle managers trust (distrust) their upper-level managers, the more (the less) effort they commit to budgetary proposals. The authors also find that middle managers with low trust are prone to invest more effort and thus create less budgetary slack than managers with high distrust. The results also show that the introduction of suspicion does not vary this initial choice of effort and budgetary slack.

This paper shows the importance of trust and distrust as informal control systems in organizations. The findings support the importance of extrinsic motivation for enhancing effort and reducing budgetary slack. There are a wide range of exogenous variables that have an effect on the development of trust and distrust.

Practitioners may improve their management control by facilitating trust and preventing distrust in interpersonal relationships because both are informal controls that can reduce and increase, respectively, dysfunctional behaviors in organizations, such as budgetary slack.

This paper is among the first to show the distinct effects of trust and distrust (high and low) in the efforts of middle managers. This study provides a dynamic viewpoint of trust through the introduction of suspicion in a budget negotiation.

Discusses principles of equality and justice in order to justify affirmative action and clarify its need. Posits that in both the USA and South Africa, issues of segregation and discrimination are not new and both countries have had the opportunity to address their past policies by way of affirmative action programmes. Looks at what determined the denouncement of the affirmative action in the USA and why the answer to this question may have a great impact on South Africa’s attempt to improve its own affirmative action programmes. Concludes that, although 30 years of affirmative action was deemed unconstitutional, how can South Africa derive and make use of the knowledge gained to help in stopping reverse discrimination.

The recent trend of integrated risk management has resulted in corporations reassessing their risk management practices. Insurance derivatives and insurance‐linked securities are emerging as alternatives or complements to traditional resisurance capacity. Despite its theoretical benefits, the market for insurance‐linked transactions has not matured, due to problems of information asymmetry and lack of transparency. This article proposes a solution to resolve the conflicting interests preventing insurers/reinsurers and investors from more widely trading insurance risk.