Fluent Essays

Each article summary must list the citation(APA format) for the article being summarized and provide 800-1000 words i which the student summarizes the main questions and conclusions of the paper and explains how the conclusions of the paper are useful to someone working in financial management of a corporation in the students current or proposed career path. The text of each summary must be 12-point Times New  Roman font, with one-inch top, bottom, left, and right margins, and each summary must begin on a new page.Did the Great Recession keep bad drivers off the road? Vikram Maheshri1 & Clifford Winston2 Published online: 28 July 2016 # Springer Science+Business Media New York 2016 Abstract Motorists’ fatalities and the fatality rate (roadway deaths per vehicle-mile traveled (VMT)) tend to decrease during recessions. Using a novel data set of individ- ual drivers, we establish that recessions have differential impacts on driving behavior by decreasing the VMT of observably risky drivers, such as those over age 60, and by increasing the VMT of observably safer drivers. The compositional shift toward safer drivers associated with a one percentage point increase in unemployment would save nearly 5000 lives per year nationwide. This finding suggests that policymakers could generate large benefits by targeting new driver-assistance technology at vulnerable groups. Keywords Automobile safety. Motorists’ fatalities . Risky drivers . Vehicle miles traveled . Autonomous vehicles JEL Classifications I1 . R4 Highway safety has steadily improved during the past several decades, but traffic fatalities, exceeding more than 30,000 annually, are still one of the leading causes of non-disease deaths in the United States. The United States also has the highest traffic accident fatality rate in developed countries among people of age 24 and younger, despite laws that ban drinking until the age of 21. In addition to those direct costs, traffic accidents account for a large share of highway congestion and delays (Winston and Mannering 2014) and increase insurance premiums for all motorists (Edlin and Karaca-Mandic 2006). It is not an exaggeration to suggest that reducing traffic accidents and their associ- ated costs should be among the nation’s most important policy goals. The top line in Fig. 1 shows that automobile fatalities have followed a downward trend since the J Risk Uncertain (2016) 52:255–280 DOI 10.1007/s11166-016-9239-6 * Clifford Winston [email protected] 1 Department of Economics, University of Houston, Houston, TX 77204, USA 2 The Brookings Institution, 1775 Massachusetts Ave., NW, Washington, DC 20036, USA http://crossmark.crossref.org/dialog/?doi=10.1007/s11166-016-9239-6&domain=pdf 1970s, and have fallen especially rapidly during recessions, which are shaded in the figure. A natural explanation is that those declines are simply a consequence of the decrease in vehicle miles travelled (VMT) that typically accompanies a recession. With a smaller labor force commuting to work, fewer goods being shipped along overland routes, and less overall economic activity, a decline in traffic facilities is no surprise. But the heavier line in the figure shows that the fatality rate (fatalities per VMT) has also decreased more sharply during recessions than during other parts of the business cycle.1 This implies that factors other than declining VMT contribute to the reduction in fatalities that tends to occur when real economic activity contracts. The purThe effect of ambiguity on risk management choices: An experimental study Vickie Bajtelsmit1 & Jennifer C. Coats1 & Paul Thistle2 Published online: 24 July 2015 # Springer Science+Business Media New York 2015 Abstract We introduce a model of the decision between precaution and insurance under an ambiguous probability of loss and employ a novel experimental design to test its predictions. Our experimental results show that the likelihood of insurance purchase increases with ambiguous increases in the probability of loss. When insurance is unavailable, individuals invest more in precaution when the probability of loss is known than when it is ambiguous. Our results suggest that sources of ambiguity surrounding liability losses may explain the documented tendency to overinsure against liability rather than meet a standard of care through precaution. The results provide support for our theoretical predictions related to risk management decisions under alternative probabilities of loss and information conditions, and have implications for liability, environmental, and catastrophe insurance markets. Keywords Liability. Imperfect information . Design of experiments . Laboratory experiments JEL Classifications K130 . D81 . C9 . C920 Two apparently conflicting puzzles consistently arise out of the empirical observation of insurance markets. Both involve a tendency to make suboptimal insurance decisions and have important implications for environmental risk mitigation, consumer decision making, public finance, and firm profit maximization. First, there is substantial evi- dence that individuals and businesses underinsure catastrophe risk (Kunreuther and J Risk Uncertain (2015) 50:249–280 DOI 10.1007/s11166-015-9218-3 * Jennifer C. Coats [email protected] Vickie Bajtelsmit [email protected] Paul Thistle [email protected] 1 Department of Finance and Real Estate, Colorado State University, Fort Collins, CO 80523, USA 2 Department of Finance, University of Nevada Las Vegas, Las Vegas, NV 89154, USA http://crossmark.crossref.org/dialog/?doi=10.1007/s11166-015-9218-3&domain=pdf Pauly 2004; 2005). The devastating cost of a failure to insure against catastrophe is highlighted repeatedly with each natural disaster. Second, individuals and firms pur- chase liability insurance even when neither law nor contract requires they do so. Given that injurers are held liable under U.S. law only if they have failed to meet a reasonable standard of care, expenditure on care could be a less expensive alternative to purchasing actuarially unfair liability insurance. In the absence of the ability to take precaution against accident, theory suggests that risk-averse individuals will fully insure when actuarially fair insurance is available. In situations where insurance is not fairly priced or where precaution is an alternative, the optimal choice depends on risk aversion, insurer profit and risk loading, and the cost of precaution. Although negligence liability C© Risk Management and Insurance Review, 2005, Vol. 8, No. 1, 141-150 THE COLUMBIA SPACE SHUTTLE TRAGEDY: THIRD-PARTY LIABILITY IMPLICATIONS FOR THE INSURANCE OF SPACE LOSSES Piotr Manikowski ABSTRACT Space flights are no longer rare events, but the commonplace is not necessarily safe. When disaster strikes, as in the Columbia Space Shuttle disaster of 2003, third parties as well as those directly involved are financially affected. This article considers how these issues are treated under international law. It also analyzes what products the insurance markets offer as protection against such third-party liabilities. INTRODUCTION On February 1, 2003 the Columbia space shuttle, the oldest of a fleet of four, was destroyed during reentry into the earth’s atmosphere, causing the death of all seven crew. The total damage is estimated at about US$3 billion. During the International Space Insurance Conference that took place in Florence (April 3–4, 2003), Paul Pastorek, General Counsel of U.S. space agency NASA reported the latest findings of the investigations into the loss of the Columbia space shuttle (Stahler, 2003). NASA had recovered 45,000 pieces of wreckage from an area 100 miles long and 10 miles wide. The material recovered comprised in terms of weight almost half the lost shuttle. The initial suspicion was that one of the brittle ceramic tiles on the underside of the wing had been damaged during take-off, allowing heat to enter into the wheel chamber. A video tape was recovered, but this stopped transmitting shortly before the crew realized that there were problems with the re-entry. NASA subsequently recovered an instrument used on the shuttle to record a multitude of technical data during each flight. These data revealed that the build-up of heat inside the right wing came from the leading edge of the wing, which was made of an extremely hard and tough material. The initial ceramic-tile theory thus seemed to be disproved. However, the official report has yet to be released. Was Columbia the victim of a collision with space debris, of which thousands of items are now littering the earth’s orbital paths? It may never be established with absolute certainty what really happened Piotr Manikowski is with the Poznań University of Economics, Insurance Department, al. Niepodleglosci 10, 60-967 Poznań, Poland (e-mail: [email protected]). This ar- ticle was subject to anonymous peer review. The author wishes to thank Peter Birks for his language revision of the text. 141 142 RISK MANAGEMENT AND INSURANCE REVIEW at a speed of 21,000 kilometers an hour in the upper layers of the atmosphere above Texas. Debris from the space shuttle fell to the ground, but did not cause serious damage. However, it remains possible that space exploration could inflict harm on third parties on the ground. This could evoke the civil liability of the guilty party. It is possible to buy third-party liability insurance for space losses. GENESIS OF SPACE (SATELLI336 The Journal of Risk and Insn^rance TEACHERS, COMPUTERS, AND TEACHING James A. Wickman An increasingly familiar sight along the the paths of academia are a number of hunched figures with output paper and punch cards askew, invoking do-loops, diagnostics and Hollerith counts. Computer technology is an unsettling innovation to many who have only re- cently acquired creditable speed and ac- curacy in using a desk calculator. Fur- thermore, the reactions of colleagues and students can often be predicted by refer- ence to the Cee Whiz Syndrome. The nature of the Cee Whiz Syndrome can be approximated by imagining the follow- ing conversation: COMPUTER USER: I wrote this pro- gram in FORTAN, rather than FAP becau. . . LISTENER: Cee whiz! COMPUTER USER: . . . so it took me twelve runs to de-bug this.. . LISTENER: Cee Whiz! COMPUTER USER: . . . and now I can do two plus two three thousand times in 37 microseconds. LISTENER: CEE WHIZ! On the other hand, worship of peri- pheral input-output devices and central processing units is not the inevitable result of using the high speed data-manipulation powers of data processing systems. The relative newness of computers and the obvious complexity of their inner mechan- isms do seem to reduce some causal users of computer facilities to a state of hysteria bordering upon absolute reverence. One can raise psychological defenses against these forms of idol-worship by in- sisting and believing that the modem computer is essentially a large, ultra-high speed, printing calculator with logical ca- pacity to make yes-no decisions. A com- puter can be instructed to do various com- putational series, has the power to remem- ber what it has calculated and to use these values in later calculations. These com- prise a fair intuitive understanding of the basic elements of raodern computer technology. Increasing familiarity with computers can even breed a feeling akin to contempt when the computer slav- ishly follows illogical instructions to pro- duce meaningless answers. To student and professor alike, there is utility (and per- haps sanity) in becoming acquainted with the powers and shortcomings of data proc- essing equipment. Becoming a Computer User Happily, it is not necessary to become a computer programmer to be a success- ful and prolific computer user, any more than it is necessary to become a proficient automobile mechanic to be a capable auto- mobile driver. One who wants to try his hand at using the computer will often find that an existing set of computer instruc- tions can be utilized to solve his problem. There are a great many such canned pro- grams available which will solve general or specialized types of problems. Information About Programs One of the more useful families of canned programs is the BMD series of computer programs.^ These cover a broad range of typical statistical computations, as well as several advanced statistical com- putation programs. An132 The Journal of Risk and Insurance way of financing care and also to expand the amount of medical care received by some parts of the population. The final consensus of the conference may be stated in the words of one of the participants, When I came into the con- ference the other day I said We are going to come out of here with a recommenda- tion that the situation be further stud- ied.^ With the unresolved questions concerning this type of program still be- fore us, it is hoped many of these studies will be completed before the politicians make their decision. This is a most useful book for any person interested in the implications of a national health insurance program. Many changes have taken place since November 1970, but the conference pro- ceedings provide a most helpful source of information. INFLATION, TECHNOLOGY AND GROWTH: POSSIBLE LONG RANGE IMPLICATIONS FOR INSURANCE. By Robert I. Mehr and Seev Neumann. Grad- uate School of Business, Bloomington, Indiana: Division of Research, Indiana University, 1972, $15.00. Reviewer: J. D. Hammond, Professor of Business Administration, The Pennsyl- vania State University. The general title of this new book sug- gests a rather traditional macro level re- view of the insurance industry as it is beset by economic and technological forces. Such is not the case. Professor Mehr, the senior author of the book, and Professor Neumann have employed the Delphi technique in an attempt to iden- tify various characteristics of the insur- ance industry in the year 2000. Although the cynic may suggest this to be an easy task for the insurance industry, the Mehr Page 259. and Neumarm approach is a serious at- tempt to apply a relatively new forecast- ing device (the Delphi Technique) to a particular set of questions about the in- surance industry. As such, it deserves seri- ous attention. The volume was written as a part of the 1970 Sesquicentennial celebration of Indiana University. The Mehr-Neumann volume is one of four companion pieces representing the School of Business con- tribution to the celebration. The three other works are not identified. Financial assistance for the series came from sev- eral grants from insurance companies. The stated purpose of the book is to make some cautious, documented speculations about the long-range effects of infiation, technology, and growth on private insur- ance in the United States. Its objective, we are told, is to identify both the pres- ent characteristics that are hkely to pre- vail until the end of the century and any new characteristics that are Hkely to emerge sometime between now and then. A statement by a University executive in the foreword gives added scope. Mr. George Pinnell, Vice President and Treas- urer of Indiana University states: I fully anticipate that in the years to come these volumes will be increasingly useful to planners and will clearly demonstrate the insight and vision of the authors. Whether time will corroborate their pr