Search Results (13)

This study investigates how an increase in the quality of business ventures, measured as their success probability, affects trust and return on investment (ROI) in situations where the investor–entrepreneur interaction is affected by moral hazard and asymmetric information. We model a repeated trust problem between investors and entrepreneurs, featuring moral hazard and adverse selection. Hidden Markov techniques and computer simulations are used to derive the main results. We find that trust and ROI may decline as quality improves. Although lenders tend to reduce the requirements for granting initial credit, they nevertheless become less tolerant of current borrowers who fail to pay back. Additionally, we demonstrate a novel substitution effect, where lenders prefer new borrowers over existing borrowers that experienced early failures. The main conclusions of our study are that while impressing early on is effective in gaining first access to credit, it may nevertheless hurt the cause of getting credit in subsequent periods, following an early failure. In business environments plagued with ex post moral hazard, entrepreneurs might do better by gaining trust first and impressing later. Furthermore, our results imply that in a thriving economy, not only are bad loans made, but good loans are lost as well. Full article

Public sector digitalisation is transforming public governance at an accelerating rate. Digitalisation is outpacing the evolution of the legal framework. Despite several strands of international efforts to adjust good administration guarantees to new modes of digital public governance, progress has so far been slow and tepid. The increasing automation of decision-making processes puts significant pressure on traditional good administration guarantees, jeopardises individual due process rights, and risks eroding public trust. Automated decision-making has, so far, attracted the bulk of scholarly attention, especially in the European context. However, most analyses seek to reconcile existing duties towards individuals under the right to good administration with the challenges arising from digitalisation. Taking a critical and technology-centred doctrinal approach to developments under the law of the European Union and the Council of Europe, this paper goes beyond current debates to challenge the sufficiency of existing good administration duties. By stressing the mass effects that can derive from automated decision-making by the public sector, the paper advances the need to adapt good administration guarantees to a collective dimension through an extension and a broadening of the public sector’s good administration duties: that is, through an extended ex ante control of organisational risk-taking, and a broader ex post duty of automated redress. These legal modifications should be urgently implemented. Full article

With the decisive results of poverty alleviation in China, figuring out how to consolidate the results and transform them into the driving force of rural revitalization is an important adjustment for rural revitalization and high-quality development. The efficiency of policy implementation as well as the sustainable development of the areas out of poverty are both reflected in rural households’ satisfaction with the ex-suit poverty alleviation policy for relocation. Based on survey data collected from 293 households in County M, Sichuan Province, this paper selects 23 indicators of satisfaction with post-relocation support policies from livelihood capital, political trust, policy participation, and public service perception. On this basis, we use the multinomial logistic model to analyze the impact of each influencing factor on the post-relocation support policy’s satisfaction degree for rural households. The results show that the satisfaction degree of relocated households with post-relocation support policies is upper-middle. Among the livelihood capital of relocated households, the proportion of non-agricultural income, cultivated land area, infrastructure conditions, number of family workers, and number of civil servants are all factors that positively affect policy satisfaction. In addition, with regard to relocating households’ engagement in political trust, policy participation, and public service perception, it should be pointed out that policy results trust, policy understanding, opinions expressed, local government, back-up personnel, policy process, and support funds all have appreciably positive effects on policy satisfaction. These evaluation results can serve as a reference for the revision of post-relocation support policies in China and other developing countries. Full article

In this paper, we present the results of an experiment conducted in Italy on trusting behaviour. Our subjects participated in a trust game and filled in a questionnaire on trust and trustworthiness based on the attitudinal questions reported in the European Value Survey. The aims of the research are twofold. Firstly, using the experimental dataset, we construct two measures of trustworthiness among all recipients in the experiment, one based on the questionnaires’ answers and another based on the strategy method. We then compare the ex-ante behavioural decision to trust (before participants are allocated to a group) with the ex-post decision to trust (after participants are allocated to a group and trustors are informed of the level of trustworthiness of all the recipients who have been randomly allocated to each group). Our main finding is that trust strongly varies once the information is disclosed to trustors. The effect on trust is greater when the strategy method is used. Secondly, we compare the behavioural measure of trust with the attitudinal measures of trust and trustworthiness and find that there is only a weak correlation between the two measures, thus confirming, for the Italian case, similar findings in country-based studies on trust. Full article

The importance of project governance in curbing opportunistic behavior (OB) has been clearly established in the project literature. Although contract governance and trust are considered critical factors that explain project governance, there is a lack of understanding regarding their interplay at various stages of project development. The current study takes a dynamic perspective and breaks down contract governance into contract completeness (CC) and contract enforcement (CE), while differentiating ex-ante trust from ex-post trust. As such, the current study takes a dynamic perspective and the Grossman-Hart-Moore (GHM) model, which aims to investigate how each of the two facets of contract governance and trust intertwine during the management of construction projects as well as their effects on OB. We undertook a questionnaire survey of individuals involved in 342 construction projects in China, and our research results show that, first of all, governance mechanisms at different stages have different inhibitory effects on OB. Taking contract-signing as the boundary, the governance effect of a contract is gradually enhanced, while the governance effect of trust is gradually reduced. Second, ex-ante trust is more important than ex-post trust: the former moderates not only the relationship between CE and OB, but also the influence of CC on OB. Finally, a contract that is overly complete is not conducive to precluding OB, as such completeness can give the contract parties a sense of security that is guaranteed. The current study not only garners insights into project governance research but also provides implications for architectural practitioners in deploying resources that relate to governance mechanisms. Full article

The prevailing informal contracts of farmland transfer in China are facing frequent disputes and defaults, which call for effective self-enforcement mechanisms operating through transactors’ reputations and social networks. However, the effects of reputation on contract choice and self-enforcement have not been thoroughly considered and examined by existing research in the case of farmland transfer. This study explores the reputation’s ex-ante signaling effect on farmers’ contract choices and the ex-post penalty effect on farmers’ performance in informal contracts. Based on 403 transfer contracts obtained from a field survey conducted in the Hebei province of China, we apply the multinomial logit model and Heckman probit model to perform empirical analysis. The results show that, affected by the penalty effect, farmers with good reputations are more likely to fulfill informal contracts to avoid reputation damage and the resulting loss of future trading opportunities. However, in the ex-ante stage of contract choice, a farmer’s reputation has no significant signaling effect on the formation of informal contracts. The informal contracts are chosen due to farmers’ trust in the close social network and the demand for reduced transaction costs. These findings highlight the importance of personal reputation serving as a form of relational governance in the self-enforcement of informal contracts, which provides a means of enhancing the informal contract’s effectiveness in terms of farmland transfer in the rural acquaintance society. It also provides insights into the necessity of creating a supportive environment for informal rules. Policies should encourage the building of personal reputation and establishment of good social norms to form a long-term, stable and reasonable contractual relationship for farmland transfer. Full article

Experimental studies show that the Nash equilibrium and its refinements are poor predictors of behavior in non-cooperative strategic games. Cooperation models, such as ERC and inequality aversion, yield superior predictions compared to the standard game theory predictions. However, those models are short of providing a general theory of behavior in economic interactions. In two previous articles, we proposed a rational theory of behavior in non-cooperative games, termed Economic Harmony theory (EH). In EH, we retained the rationality principle but modified the players’ utilities by defining them as functions of the ratios between their actual and aspired payoffs. We also abandoned the equilibrium concept in favor of the concept of “harmony,” defined as the intersection of strategies at which all players are equally satisfied. We derived and tested the theory predictions of behavior in the ultimatum game, the bargaining game with alternating offers, and the sequential common-pool resource dilemma game. In this article, we summarize the main tenets of EH and its previous predictions and test its predictions for behaviors in the public goods game and the trust game. We demonstrate that the harmony solutions account well for the observed fairness and cooperation in all the tested games. The impressive predictions of the theory, without violating the rationality principle nor adding free parameters, indicate that the role of benevolent sentiments in promoting fairness and cooperation in the discussed games is only marginal. Strikingly, the Golden Ratio, known for its aesthetically pleasing properties, emerged as the point of fair demands in the ultimatum game, the sequential bargaining game with alternating offers, and the sequential CPR dilemma game. The emergence of the golden ratio as the fairness solution in these games suggests that our perception of fairness and beauty are correlated. Because the harmony predictions underwent post-tests, future experiments are needed for conducting ex ante tests of the theory in the discussed games and in other non-cooperative games. Given the good performance of economic harmony where game theory fails, we hope that experimental economists and other behavioral scientists undertake such a task. Full article

In this paper, we present the potential of Explainable Artificial Intelligence methods for decision support in medical image analysis scenarios. Using three types of explainable methods applied to the same medical image data set, we aimed to improve the comprehensibility of the decisions provided by the Convolutional Neural Network (CNN). In vivo gastral images obtained by a video capsule endoscopy (VCE) were the subject of visual explanations, with the goal of increasing health professionals’ trust in black-box predictions. We implemented two post hoc interpretable machine learning methods, called Local Interpretable Model-Agnostic Explanations (LIME) and SHapley Additive exPlanations (SHAP), and an alternative explanation approach, the Contextual Importance and Utility (CIU) method. The produced explanations were assessed by human evaluation. We conducted three user studies based on explanations provided by LIME, SHAP and CIU. Users from different non-medical backgrounds carried out a series of tests in a web-based survey setting and stated their experience and understanding of the given explanations. Three user groups (n = 20, 20, 20) with three distinct forms of explanations were quantitatively analyzed. We found that, as hypothesized, the CIU-explainable method performed better than both LIME and SHAP methods in terms of improving support for human decision-making and being more transparent and thus understandable to users. Additionally, CIU outperformed LIME and SHAP by generating explanations more rapidly. Our findings suggest that there are notable differences in human decision-making between various explanation support settings. In line with that, we present three potential explainable methods that, with future improvements in implementation, can be generalized to different medical data sets and can provide effective decision support to medical experts. Full article

Despite the emerging contribution of machine automation, artificial intelligence and information systems, humans remain yet the most fragile ring of any organization. Decision support systems are widespread, supporting us to decide among uncertainties, such as weather conditions, suppliers’ performances and financial opportunities, but how humans take into account this information and, most of all, how they trust their own management knowledge is a controversial issue. This paper assesses, by means of a controlled experiment and ex post interviews, how individuals consider and use decision support systems in the context of the Newsvendor Problem. In accordance with prior research, the results show that individuals’ order quantities are pull-to-center biased. Moreover, ex post direct interviews suggest that (i) the individuals’ trust in decision support systems is not blind; (ii) individuals do not play the business game as a real task, (iii) they are biased by the type of incentive promised and (iv) they seem not skilled or trained enough. Ex post interviews shed a new light on controlled human experiments: they should be better analyzed and re-engineered. Full article

Advances in the trusted autonomy of air-traffic management (ATM) systems are currently being pursued to cope with the predicted growth in air-traffic densities in all classes of airspace. Highly automated ATM systems relying on artificial intelligence (AI) algorithms for anomaly detection, pattern identification, accurate inference, and optimal conflict resolution are technically feasible and demonstrably able to take on a wide variety of tasks currently accomplished by humans. However, the opaqueness and inexplicability of most intelligent algorithms restrict the usability of such technology. Consequently, AI-based ATM decision-support systems (DSS) are foreseen to integrate eXplainable AI (XAI) in order to increase interpretability and transparency of the system reasoning and, consequently, build the human operators’ trust in these systems. This research presents a viable solution to implement XAI in ATM DSS, providing explanations that can be appraised and analysed by the human air-traffic control operator (ATCO). The maturity of XAI approaches and their application in ATM operational risk prediction is investigated in this paper, which can support both existing ATM advisory services in uncontrolled airspace (Classes E and F) and also drive the inflation of avoidance volumes in emerging performance-driven autonomy concepts. In particular, aviation occurrences and meteorological databases are exploited to train a machine learning (ML)-based risk-prediction tool capable of real-time situation analysis and operational risk monitoring. The proposed approach is based on the XGBoost library, which is a gradient-boost decision tree algorithm for which post-hoc explanations are produced by SHapley Additive exPlanations (SHAP) and Local Interpretable Model-Agnostic Explanations (LIME). Results are presented and discussed, and considerations are made on the most promising strategies for evolving the human–machine interactions (HMI) to strengthen the mutual trust between ATCO and systems. The presented approach is not limited only to conventional applications but also suitable for UAS-traffic management (UTM) and other emerging applications. Full article

In the present generational context, talent management approaches and practices have evolved from the stage of “war for talent”, defined by competitiveness and elitism, to a more collaborative and inclusive “post-war stage”. Innovative solutions are increasingly important. In this framework, the main aim of the paper is to confirm that reverse mentoring, a talent management practice which appeared as a response to the necessity to bridge the present generational gap, can be considered a valuable approach in hospitality. Two case studies on the successful implementation of reverse mentoring in Swiss hospitality are presented: the Shadow Comex (Accor) and the ExCom-Y (Mövenpick). Results of a focus-group discussion on the topic of identifying the attitudes and opinions of Romanian employees regarding the implementation of reverse mentoring in hotels are further analyzed. Results support the idea that reverse mentoring has developed and offers great potential for innovation. The present study offers interesting and useful ideas to companies in hospitality on how to implement reverse mentoring. Results from the group discussion demonstrate that Romanian employees have high expectations and innovative approaches regarding the implementation of reverse mentoring, similar to the employees from Switzerland, but they lack trust in their employers regarding the real possibility to implement it. Full article

We show that a Bayesian game where the type space of each agent is a bounded set of m-dimensional vectors with non-negative components and the utility of each agent depends linearly on its own type only is equivalent to a simultaneous competition in m basic games which is called a uniform multigame. The type space of each agent can be normalised to be given by the $(m-1)$ -dimensional simplex. This class of m-dimensional Bayesian games, via their equivalence with uniform multigames, can model decision making in multi-environments in a variety of circumstances, including decision making in multi-markets and decision making when there are both material and social utilities for agents as in the Prisoner’s Dilemma and the Trust Game. We show that, if a uniform multigame in which the action set of each agent consists of one Nash equilibrium inducing action per basic game has a pure ex post Nash equilibrium on the boundary of its type profile space, then it has a pure ex post Nash equilibrium on the whole type profile space. We then develop an algorithm, linear in the number of types of the agents in such a multigame, which tests if a pure ex post Nash equilibrium on the vertices of the type profile space can be extended to a pure ex post Nash equilibrium on the boundary of its type profile space in which case we obtain a pure ex post Nash equilibrium for the multigame. Full article

The culture of risk is 2000 years old, although the term “risk” developed much later. The culture of merchants making decisions under uncertainty and taking the individual responsibility for the uncertain future started with the Roman “Aleatory Society”, continued with medieval sea merchants, who made business “ad risicum et fortunam”, and sustained to the culture of entrepreneurs in times of industrialisation and dynamic economic changes in the 18th and 19th century. For all long-term commercial relationships, the culture of honourable merchants with personal decision-making and individual responsibility worked well. The successful development of sciences, statistics and engineering within the last 100 years led to the conjecture that men can “construct” an economical system with a pre-defined “clockwork” behaviour. Since probability distributions could be calculated ex-post, an illusion to control risk ex-ante became a pattern in business and banking. Based on the recent experiences with the financial crisis, a “risk culture” should understand that human “Strength of Knowledge” is limited and the “unknown unknown” can materialise. As all decisions and all commercial agreements are made under uncertainty, the culture of honourable merchants is key to achieve trust in long-term economic relations with individual responsibility, flexibility to adapt and resilience against the unknown. Full article