Conservatism Of Optimization Research Articles

Influence of ply angle and length on buckling behavior of composite shells under hydrostatic pressure

This paper is devoted to the buckling problem of the composite cylindrical shell subjected to hydrostatic pressure. Both analytical and numerical methods are applied to investigate the buckling behavior. Based on the study of analytical formulas, it is found that the composite cylindrical shells with the same length-to-diameter ratio, diameter-to-thickness ratio, and type of layup have the same buckling pressure. Thus, a scale model experiment method is then proposed, which uses the scale model to replace the full-scale model in pressure test experiment to reduce the manufacturing cost of the test specimen. The feasibility of this method is verified by numerical calculation. The influences of ply orientation angle and length of shell on buckling shape and critical buckling pressure have been investigated numerically and demonstrated by several examples. Based on the study of the influence of shell length on critical buckling pressure, a modified finite element model, which can overcome the conservatism of optimization result due to the stress concentration caused by boundary conditions, is combined with the genetic algorithm to optimize the laminations for mass reduction.

Optimal Conservatism with Earnings Manipulation

AbstractThis paper examines the role of conservatism when an agent can manipulate upcoming earnings before all uncertainty is resolved. An increase in conservatism, by reducing the likelihood of favorable earnings, requires steeper performance pay to maintain the same level of incentives, which in turn increases the equilibrium earnings manipulation. Trade‐offs between inducing effort and curbing manipulation predict an interior level of conservatism as optimal. The optimal level of conservatism is positively associated with enforcement, economic profitability and earnings quality, and negatively associated with agency frictions. In particular, we show that more economically profitable firms choose to be more conservative. We also establish that the association between performance pay and manipulation identifies whether conservatism is optimally chosen or exogenously imposed. In an application to debt contracting, we show that optimal conservatism is negatively associated with borrowers’ bargaining power.

Discussion of “Optimal Conservatism with Earnings Manipulation”

AbstractIn this discussion, I briefly summarize the key features of Bertomeu, Darrough, and Xue's (hereafter BDX) model. I then examine the four key assumptions that BDX employ to arrive at their results: (i) firms contract only on earnings; (ii) conservative earnings are better for contracting; (iii) conservatism motivates upward earnings manipulation; and (iv) conservatism is endogenous. I then briefly conclude.

Optimal Conservatism and Collective Monetary Policymaking under Uncertainty

We study how the optimal degree of conservatism relates to decision-making procedures in a Monetary Policy Committee (MPC). In our framework, central bank conservatism is required to attenuate the volatility of monetary decisions generated by the presence of uncertainty about the committee members’ output objective. We show how this need for conservatism varies according to the number of MPC members, the MPC’s composition as well as its decision rule. Moreover, we find that extra central bank conservatism is required when there is ambiguity about the MPC’s true decision rule.

Optimal Conservatism and Collective Monetary Policymaking Under Uncertainty

Optimal Conservatism and Collective Monetary Policymaking Under Uncertainty

Agency Conflicts, Earnings Management, and Conservatism

This paper examines the role of conservatism when an agent can manipulate upcoming earnings before all uncertainty is resolved. An increase in conservatism, by reducing the likelihood of favorable earnings, requires steeper performance pay to maintain the same level of incentives, which in turn increases the equilibrium earnings manipulation. Trade-offs between inducing effort and curbing manipulation predict an interior level of conservatism as optimal. The optimal level of conservatism is positively associated with enforcement, economic profitability and earnings quality, and negatively associated with agency frictions. In particular, we show that more economically profitable firms choose to be more conservative. We also establish that the association between performance pay and manipulation identifies whether conservatism is optimally chosen or exogenously imposed. In an application to debt contracting, we show that optimal conservatism is negatively associated with borrowers’ bargaining power.

The Effects of Transmission Uncertainty on the Flexibility-Credibility Tradeoff in Monetary Policy

In this paper we address the issue of how parameter uncertainty affects the optimal degree of central bank conservatism. The analysis is conducted in the standard macroeconomic model of a monetary policy game embedding an expectational Phillips-curve. Multiplicative Brainard uncertainty is added to the model. This means that the central bank's policy instrument has a stochastic impact on inflation. This type of uncertainty is particularly interesting, since it affects the credibility-flexibility tradeoff in monetary policymaking. We show that if the flexibility problem dominates, an increase in uncertainty reduces optimal conservatism. However, increases in uncertainty can also require increases in the optimal degree of conservatism. This happens when the central bank has a sufficiently large credibility problem. This is particularly clear in the case of the introduction of uncertainty at the margin. Furthermore, the coefficient of variation of inflation appears to contain useful information about the relative size of the credibility problem and, hence, about how incipient uncertainty can affect optimal conservatism in actual economies.

A Theory of Conservatism

A free‐rider problem arises when a group choice between two alternatives has to be made on the basis of privately collected evidence, leading to insufficient effort in gathering evidence and an ex ante welfare loss for the group. To alleviate the free‐rider problem, the group can commit to a “conservative” rule, whereby the decision is made against the alternative favored by the group’s preference or prior when evidence supports it but is not preponderant. Optimal conservatism increases private incentives to gather evidence and improves the quality of the group decision. My result explains why sometimes groups appear overly cautious toward favored alternatives.