Mathematics Commons^™

So How To Make Group Decisions? Arrow's Impossibility Theorem 70 Years After, Hung T. Nguyen, Olga Kosheleva, Vladik Kreinovich

Departmental Technical Reports (CS)

In 1951, Kenneth Arrow proved that it is not possible to have a group decision making procedure that satisfies reasonable requirements like fairness. From the theoretical viewpoint, this is a great result -- well-deserving the Nobel Prize that was awarded to Professor Arrow. However, from the practical viewpoint, the question remains -- so how should we make group decisions? A usual way to solve this problem is to provide some reasonable heuristic ideas, but the problem is that different seemingly reasonable idea often lead to different group decision -- this is known, e.g., for different voting schemes. In this paper, …

Is It Fair That Advanced Workers Get Paid Disproportionally More: Economic Analysis, Olga Kosheleva, Sean R. Aguilar

Departmental Technical Reports (CS)

On the one hand, everyone agrees that economics should be fair, that workers should get equal pay for equal work. Any instance of unfairness causes a strong disagreement. On the other hand, in many companies, advanced workers -- who produce more than others -- get paid dispropotionally more for their work, and this does not seem to cause any negative feelings. In this paper, we analyze this situation from the economic viewpoint. We show that from this viewpoint, additional payments for advanced workers indeed make economic sense, benefit everyone, and thus -- in contrast to the naive literal interpretation of …

What Is Wrong With Micromanagement: Economic View, Sean R. Aguilar, Olga Kosheleva

Departmental Technical Reports (CS)

Purpose: It is well known that micromanagement -- excessive control of employees -- is detrimental to the employees' morale and thus, decreases their productivity. But what if the managers keep people happy -- will there still be negative consequences of micromanagement? This is the problem analyzed in this paper.

Design/methodology/approach: To analyze our problem, we use general -- but simplified -- mathematical models of how productivity depends on the working rate.

Findings: We show that even in the absence of psychological discomfort, micromanagement is still detrimental to productivity. Interestingly, the negative effect of micromanagement increases as the population becomes more …

Randomized Tax Deadlines Can Help Economy, Julio C. Urenda, Olga Kosheleva

Departmental Technical Reports (CS)

Purpose: While the main purpose of reporting -- e.g., reporting for taxes -- is to gauge the economic state of a company, the fact that reporting is done at pre-determined dates distorts the reporting results. For example, to create a larger impression of their productivity, companies fire temporary workers before the reporting date and re-hire then right away. The purpose of this study is to decide how to avoid such distortion.

Design/methodology/approach: We want to make our solution applicable for all possible reasonable optimality criteria. Thus, we use a general formalism for describing and analyzing all such criteria.

Findings: We …

Use Of Symmetries In Economics: An Overview, Vladik Kreinovich, Olga Kosheleva, Nguyen N. Thach, Nguyen Duc Trung

Departmental Technical Reports (CS)

In this paper, we show that many semi-heuristic econometric formulas can be derived from the natural symmetry requirements. The list of such formulas includes many famous formulas provided by Nobel-prize winners, such as Hurwicz optimism-pessimism criterion for decision making under uncertainty, McFadden's formula for probabilistic decision making, Nash's formula for bargaining solution -- as well as Cobb-Douglas formula for production, gravity model for trade, etc.

Bhutan Landscape Anomaly: Possible Effect On Himalayan Economy (In View Of Optimal Description Of Elevation Profiles), Thach N. Nguyen, Laxman Bokati, Aaron A. Velasco, Vladik Kreinovich

Departmental Technical Reports (CS)

Economies of countries located in seismic zones are strongly effected by this seismicity. If we underestimate the seismic activity, then a reasonably routine earthquake can severely damage the existing structures and thus, lead to huge economic losses. On the other hand, if we overestimate the seismic activity, we waste a lot of resources on unnecessarily fortifying all the buildings -- and this too harms the economies. From this viewpoint, it is desirable to have estimations of regional seismic activities which are as accurate as possible. Current predictions are mostly based on the standard geophysical understanding of earthquakes as being largely …

An Ancient Bankruptcy Solution Makes Economic Sense, Anh H. Ly, Michael Zakharevich, Olga Kosheleva, Vladik Kreinovich

Departmental Technical Reports (CS)

While econometrics is a reasonable recent discipline, quantitative solutions to economic problem have been proposed since the ancient times. In particular, solutions have been proposed for the bankruptcy problem: how to divide the assets between the claimants? One of the challenges of analyzing ancient solutions to economics problems is that these solutions are often presented not as a general algorithm, but as a sequence of examples. When there are only a few such example, it is often difficult to convincingly extract a general algorithm from them. This was the case, for example, for the supposedly fairness-motivated Talmudic solution to the …

Are Permanent Or Temporary Teams More Efficient: A Possible Explanation Of The Empirical Data, Francisco Zapata, Olga Kosheleva, Vladik Kreinovich

Departmental Technical Reports (CS)

It is known that in education, stable (long-term) student teams are more effective than temporary (short-term) ones. It turned out that the same phenomenon is true for workers working on a long-term project. However, somewhat surprisingly, for small-scale projects, the opposite is true: teams without any prior collaboration experience are more successful. Moreover, it turns out that if combine in a team members with prior collaboration experience and members without such experience, the efficiency of the team gets even lower. In this paper, we provide a possible explanation for this strange empirical phenomenon.

Why Clayton And Gumbel Copulas: A Symmetry-Based Explanation, Vladik Kreinovich, Hung T. Nguyen, Songsak Sriboonchitta

Departmental Technical Reports (CS)

In econometrics, many distributions are non-Gaussian. To describe dependence between non-Gaussian variables, it is usually not sufficient to provide their correlation: it is desirable to also know the corresponding copula. There are many different families of copulas; which family shall we use? In many econometric applications, two families of copulas have been most efficient: the Clayton and the Gumbel copulas. In this paper, we provide a theoretical explanation for this empirical efficiency, by showing that these copulas naturally follow from reasonable symmetry assumptions. This symmetry justification also allows us to provide recommendations about which families of copulas we should use …