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(2022)ThesisThe stochastic optimal decision-making problem concerns the process of dynamically deciding actions to optimize pre-specified criteria based on specific stochastic models. It is, however, common that a decision-maker is unable to obtain complete information to formulate fully reliable models and faces the issue of model uncertainty. Existing empirical studies have shown that ignoring model uncertainty leads to improper decisions and causes losses in the financial market. Thus, it is important to incorporate model uncertainty into decision-making. To our best knowledge, no existing works on dividend optimization have taken model uncertainty into consideration. This thesis is an early attempt to fill such a gap in the actuarial literature. This thesis studies three popular optimization problems in the framework of model uncertainty, which involve different models with multiple control variables and various assumptions. It consists of three projects. The first project investigates an optimal risk exposure-dividend control problem under a diffusion model with model uncertainty. Due to the concerns about model uncertainty, the ambiguity averse insurer aims at finding the robust strategies such that a penalized reward function is maximized in the worst-case scenario. The problem is formulated as a zero-sum stochastic differential game between the insurer and the market. Explicit expressions for the value functions are obtained and the optimal dividend strategies are identified as barrier strategies. The second project incorporates model uncertainty into a dividend optimization problem of a singular type under the classical risk model with general assumptions on the claim size distribution. Using the standard stochastic control techniques, we characterize the value function as the smallest viscosity supersolution to the existing Hamilton-Jacobi-Bellman equation and show that the optimal strategies are of band type. The third project extends the second project by incorporating fixed and proportional transaction costs on dividend payments. The problem is an impulse control problem and the optimal dividend strategies are shown to be n-level lump sum strategies. Numerical studies are provided for each project and the economic implications of model uncertainty on insurer’s decision-making are discussed. It is shown that the insurer who is more averse to ambiguity tends to be more conservative in the optimal strategies.
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(2022)ThesisAs collaborative agents are implemented within everyday environments and the workforce, user trust in these agents becomes critical to consider. Trust affects user decision making, rendering it an essential component to consider when designing for successful Human-Agent Collaboration (HAC). The purpose of this work is to investigate the relationship between user trust and decision making with the overall aim of providing a trust calibration methodology to achieve the goals and optimise the outcomes of HAC. Recommender systems are used as a testbed for investigation, offering insight on human collaboration with dyadic decision domains. Four studies are conducted and include in-person, online, and simulation experiments. The first study provides evidence of a relationship between user perception of a collaborative agent and trust. Outcomes of the second study demonstrate that initial trust can be used to predict task outcome during HAC, with Signal Detection Theory (SDT) introduced as a method to interpret user decision making in-task. The third study provides evidence to suggest that the implementation of different features within a single agent's interface influences user perception and trust, subsequently impacting outcomes of HAC. Finally, a computational trust calibration methodology harnessing a Partially Observable Markov Decision Process (POMDP) model and SDT is presented and assessed, providing an improved understanding of the mechanisms governing user trust and its relationship with decision making and collaborative task performance during HAC. The contributions from this work address important gaps within the HAC literature. The implications of the proposed methodology and its application to alternative domains are identified and discussed.
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(2022)ThesisPolicy capacity implies the presence of a range of individual skills, work activities and organisational abilities that combine to facilitate high-level performance of the policy function in an organisation. In the context of increasingly complex public policy issues and processes, high-level policy capacity is a key objective for public sector development in Australia and internationally. Since the late 1970s, several administrative reviews have assessed the ability of the Australian Public Service (APS) to meet the demands of a changing and increasingly complex public governance environment. Policy capacity has persistently been identified as an area for improvement in these reviews, resulting in repeated attempts to address deficiencies. Why APS policy capacity has failed to improve despite these attempts is unclear; however, persistent negative assessments of APS policy capacity suggest a failure of reformers to identify critical obstacles to the development of policy capacity in the APS environment. The importance of policy capacity to policy performance necessitates clarifying how the conditions for effective policy capacity can be shaped by environmental factors and how conditions might be engineered for improved performance. This study considers these issues through examination of policy capacity in APS social policy agencies. Performance and accountability instruments are key tools for establishing performance and behaviour in an institutional setting and have acted as key tools for reform of policy performance within the APS. However, how performance and accountability instruments determine the level of policy capacity in the APS environment, how policy capacity is built and the influence of contextual factors on policy capacity remain under-examined, implying some assumptions underlying past reforms of these instruments are untested. Performance and accountability instruments, like all administrative instruments, must meet multiple objectives in their implementation including administrative functionality and political ideological objectives. Those designed since 1980 are likely to have New Public Management (NPM) objectives at their core, such as efficiency and effectiveness, avoiding risk and performance measurement. However, these may be at odds with other objectives for policy work, such as the development of specialist skills, power-sharing, working across portfolios and systems, and working closely and responsively with the public. Social policy work objectives, in particular, can be hard-to-measure social wellbeing objectives that require working in ways that may be challenging for administrative efficiency such as working in consultative and inclusive ways and across multiple portfolios and their policy settings To examine policy capacity in APS social policy agencies, this exploratory study employs qualitative methods for content analysis of key APS performance and accountability documents and thematic analysis of interviews with APS social policy workers. The research framework is underpinned by critical realist principles and institutional theories. This study shows that while the APS performance and accountability framework builds social policy staff knowledge about policy capacity, it fails to enable social policy through an effective combination of hard and soft structures. This thesis argues that this failure to structure appropriately for policy capacity derives from competition between core expectations in the politico-administrative environment regarding the APS’ role in policy work and visions of policy capacity, suggesting that policy capacity is unrealistic in certain political and administrative systems. This argument suggests that policy capacity can face an uphill battle against the competing demands of political and administrative settings, even as the concept of policy capacity becomes more entrenched as desirable in academic and public sector discourse. This study contributes knowledge about building policy capacity, how context influences policy capacity and how performance and accountability instruments contribute to policy capacity, this study confirms principles in the extant public administration and institutional literature on the functioning and efficacy of administrative frameworks and NPM tools in shaping behaviour, knowledge, performance. The study also contributes new knowledge to the policy capacity and public administration literature regarding a concept of social policy capacity, how different types of performance and accountability structures shape the potential for policy capacity and can inform structural planning principles for developing policy capacity, and the influence of the politico-administrative context on policy capacity.
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(2022)ThesisResearch in computational statistics develops numerically efficient methods to estimate statistical models, with Monte Carlo algorithms a subset of such methods. This thesis develops novel Monte Carlo methods to solve three important problems in Bayesian statistics. For many complex models, it is prohibitively expensive to run simulation methods such as Markov chain Monte Carlo (MCMC) on the model directly when the likelihood function includes an intractable term or is computationally challenging in some other way. The first two topics investigate models having such likelihoods. The third topic proposes a novel model to solve a popular question in causal inference, which requires solving a computationally challenging problem. The first application is to symbolic data analysis, where classical data are summarised and represented as symbolic objects. The likelihood function of such aggregated-level data is often intractable as it usually includes a high dimensional integral with large exponents. Bayesian inference on symbolic data is carried out in the thesis by using a pseudo-marginal method, which replaces the likelihood function with its unbiased estimate. The second application is to doubly intractable models, where the likelihood includes an intractable normalising constant. The pseudo-marginal method is combined with the introduction of an auxiliary variable to obtain simulation consistent inference. The proposed algorithm offers a generic solution to a wider range of problems, where the existing methods are often impractical as the assumptions required for their application do not hold. The last application is to causal inference using Bayesian additive regression trees (BART), a non-parametric Bayesian regression technique. The likelihood function is complex as it is based on a sum of trees whose structures change dynamically with the MCMC iterates. An extension to BART is developed to estimate the heterogeneous treatment effect, aiming to overcome the regularisation-induced confounding issue which is often observed in the direct application of BART in causal inference.
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(2022)ThesisEssay 1. Since the GFC, banking regulators are increasing regulations to lower the risk of banking crises occurring in the future. These have focused on liquidity, asset composition, and capital requirements. This paper focuses on the loan rate effects of raising bank capital requirements. Previous calculations of loan rate effects predominately use the WACC formula, which implicitly assumes perfect competition. Banking is an industry where firms have market power. This paper develops a tractable model of an imperfectly competitive banking market, where the implicit cost of capital is naturally included in the optimization problem of the bank. I find that the magnitude of loan rate changes depends on the market structure and provide estimates for a calibrated Australian market. %This provides some validation of studies that use a blended MM approach. Essay 2. Using a tractable two-loan type banking model I analyse recent changes in capital regulation in Australia and NZ. My modelling shows, IRB banks were significantly advantaged by Basel II in generating ROE, but that subsequent changes in capital settings have slowly moved towards competitive neutrality. In addition, I analyse the minimum average risk weight policy for IRB banks (2016) and find that IRB banks are motivated to hold a higher proportion of risky loans and undoing composition efficiency. Moving back to risk-sensitive risk weights is desirable, but using a scalar multiple or correlation adjustment, reinstates the large advantage IRB banks have in low-risk loans. Lastly, I analyse RBNZ's proposed large increase in capital requirements using a two-country banking model. Due to NZ's dependence on IRB Australian banks, I find the loan rate impact of these changes depends on APRA's approach, with the loan rate effect much smaller than documented by the RBNZ. Essay 3. In Australia, mortgage brokers (MB) are paid by banks an upfront commission and a trail commission, rewarding the length of time a borrower stays with a bank. Both Hayne (2019) and PC (2018) recommend banning the trail commission but differ regarding who should pay the upfront commission, banks or customers. This paper uses a 2-period IO model of a mortgage market to analyse different MB remuneration options. I find if aggregator/MB firms are efficient, borrowers will benefit from banks' paying an upfront commission, with aggregator/MB firms no worse off and bank profits lower. In contrast, customers paying an upfront commission can be better for borrowers but will be worse for both aggregator/MB and banks. If a proportion of borrowers balk at paying MBs the commission, borrower gains are diminished, aggregator/MB firms are worse off, and some bank profits recouped.
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(2022)ThesisThis study investigates the tax compliance costs of small and medium enterprises operated by individuals (individual SMEs) in Indonesia. It estimates and compares these costs under two different tax regimes operated in Indonesia: a presumptive tax regime that applies a single, final tax rate on annual turnover; and the regime that applies a more conventional, progressive tax rate schedule on calculated taxable income. The estimation and comparison involve all components of tax compliance costs, including explicit, implicit, and psychological costs. The research is motivated by two main considerations. First, it focuses on individual SMEs because personal income taxpayers are by far the largest group of all taxpayers in Indonesia (91 per cent in 2018; see (DGT, 2019a)) and the contribution of SMEs is significant for Indonesia’s Gross Domestic Product (63 per cent in 2018; see (Indonesia, 2019)). Secondly, despite their obvious importance, and despite significant research that has been conducted in many parts of the world (Alm, 2019, p. 32), the issue of tax compliance costs borne by individual SMEs in Indonesia has remained a relatively unexplored topic. Moreover, research into the psychological costs of tax compliance and research comparing the compliance costs of two different tax regimes in the same tax system has in each case been particularly limited. Thus, this study proposes a systematic analysis to address a series of research questions related to these under-explored areas relating to the tax compliance costs of individual SMEs in Indonesia. By applying a mixed-modes research method, the study not only reveals the average costs to comply for each taxpayer under different tax regimes, but also identifies the significance of the total costs and the potential drivers of those costs. In addition, further analysis provides a novel understanding of aspects of tax compliance costs by showing how the components of the costs interact with each other. Finally, the findings may be useful for policymakers in Indonesia given that the presumptive tax regime will cease to exist in 2025.
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(2022)ThesisRegulators have expressed concerns about the level of professional scepticism of auditors, especially when performing remote auditing. This thesis examines the effect of virtual coaching guidance to enhance professional scepticism of auditors with varying levels of audit experience. Given the importance of communication to reinforce professional scepticism, Study 1 examines the effectiveness of the expression of virtual coaching guidance, expressed either to promote desirable behaviours that positively affect audit quality (promotive coaching) or to prohibit undesirable behaviours that negatively affect audit quality (prohibitive coaching). The results show that the effect of the type of coaching varies with the experience of the coachee. After controlling for coaching goal relevance, less experienced auditors provide marginally more sceptical judgments when receiving promotive coaching, but this is not the case for more experienced auditors. More experienced auditors select actions they believe to be marginally more sceptical when receiving prohibitive coaching, but this is not the case for less experienced auditors. Given the changing nature of auditors to work partially or fully remotely, Study 2 examines the effectiveness of the delivery of virtual coaching guidance, delivered virtually via either video or audio. Study 2 provides evidence that video coaching can be more effective than audio coaching in enhancing sceptical judgments of less experienced auditors but not of more experienced auditors. This thesis contributes to the literatures on auditors’ learning and on professional scepticism by showing that, when coaching methods match with audiences and tasks, coaching can enhance professional scepticism. This thesis should also be of interest to auditors, audit firms, and audit regulators. This thesis informs auditors that it is important that they consider audit experience of coachees when providing coaching. It also provides guidance of how audit firms should train auditors to provide coaching. and informs audit regulators about the importance of the design of coaching activities in audit firms.
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(2022)ThesisThis practice-based research focuses on traditional textile artisan communities in Kashmir, India, who create handcrafted products with expertise learnt through intergenerational observation and making. The research shows that the rich cultural heritage inherent in these communities has the potential for growth towards a sustainable future through co-design projects. Assumptions in contemporary co-design processes are, however, based on industrialised and technological contexts which need to be reconsidered when working with artisanal communities in India. As members of India’s informal economy, these artisans tend to have low socio-economic status and limited educational opportunities. Consequently, the future of their craft heritage is now becoming economically and practically unsustainable, owing particularly to the global impact of fast fashion and the younger generations leaving the industry. Yet, at the same time, more and more consumers or users are becoming interested in traditional design processes and their provenance, and the makers and the techniques they use to produce these products, prior to purchase. For this research, three co-design projects were conducted with the Kashmir shawl artisan community and Australian users and collectors of their products. Two embroidered pashmina shawls were created by artisans working directly with two customers in Australia, while the third co-design project reintroduced using natural dyes to the shawl community. This practice-based research on co-designing within the context of artisan craft heritage investigates and documents the role of ‘facilitators’ sourced from within the artisan community; a re-evaluation of ‘value’ as perceived by intercultural participants; and using digital technologies to connect user and maker through storytelling and lived experience. The relevance of relationship-building to sustainability, recognised within the frameworks of co-design theory and slow fashion, are key drivers of this research. Through the researcher’s Kashmiri connections, these co-design projects were built on rare and unique access to artisans in their work environment who shared their perceptions of their work, relationships and values, without commercial or social status concerns. This research proposes a new understanding of co-design methodologies in the Indian context and highlights the potential constraints of language differences and geographical distances between the intercultural participants. The research also contributes to a critical rethinking of assumptions within contemporary co-design practices, especially when working with participants whose culture and values differ. The emergent co-design strategies proposed in this research have significant application to projects in other traditional artisanal communities in India, and towards a more sustainable future for handmade crafts.
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(2022)ThesisInformation systems (IS) projects sometimes take a long time to complete. Particularly in the context of e-government projects in emerging countries where there is a lack of clarity as well as transparent structure and order, such projects may continue for many years. Moreover, it is not unusual for a seemingly non-performing e-government project to keep going. Running an IS project for an extended period of time requires the project team to navigate the present and future challenges. To do so, the project team need to have a sense of events and situations related to their project. The project team then can respond by taking appropriate action on what is happening (retrospectively) as well as anticipating what is yet to come (prospectively). Using qualitative methods, a longitudinal study was conducted using the interpretive approach to investigate the sensemaking process by the project team of an e-government project in Indonesia. The study focuses its investigations on two observed phenomena faced by the project team and related to sensemaking; escalation of commitment and prospective sensemaking. Escalation of commitment refers to situations where people continue with what appears to be a questionable endeavour regardless of its probability of achieving the expected outcome. On the other hand, prospective sensemaking refers to people trying to make sense of future events so they can anticipate them. Drawing from Goffman's framing theory and conceptualisation of frame alignment mechanisms, the study reveals how the project team sensemaking process includes a couple of mechanisms of frame alignment; frame transformation and frame extension. The aligned frame allows the project team to reacquire their sense of the project's situation, both recently and in the long run. This thesis seeks to make a theoretical contribution in several ways. First, the literature on the escalation of commitment by offering an alternative view of escalation phenomena as a resolution of the dilemma. Second, to the literature on sensemaking by providing empirical support for prospective sensemaking. Third, the literature on framing explaining how to frame alignment mechanism plays out as part of the sensemaking process, both retrospectively and prospectively, for an extended time; lastly, the literature on e-government by shedding more light on the social process behind e-government projects, particularly in the context of emerging countries.
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(2022)ThesisThe Operations Management (OM) and Environmental Psychology (EP) literature have examined consumers’ recycling behaviours to address the sustainability crisis. Social influence is a crucial driver impacting recycling behaviours that are identified by the EP literature but has been overlooked in OM research. In contrast, EP studies ignore a firms’ operational decisions when examining consumer recycling decisions. This research analyses both social influence and the firm’s optimal decisions to provide a comprehensive understanding of consumers’ recycling behaviours, which is essential for unlocking the full potential of remanufacturing. This research models a closed-loop supply chain consisting of a manufacturer selling a single product to a community of consumers. A consumer’s recycling decisions depend on the recycling reward offered by the manufacturer as well as sociallyinfluenced emotions of pride and guilt that arise from community interactions. These psychological factors are captured through a pair of coefficients representing the utility/disutility of feeling proud/guilty, and the community interactions are modelled using an evolutionary game. With a homogeneous community, stronger emotions of pride always increase the manufacturer’s profit, whereas stronger feelings of guilt can hurt the manufacturer when the prevailing recycling rate is low. Moreover, inducing a stronger emotion of pride increases (decreases) the overall recycling rate in equilibrium when this rate is low (high), and the impact is reversed for guilt. Interestingly, when consumers discount future recyclability, a win-win pathway benefiting the manufacturer and the environment exists. Furthermore, it is shown that the main results in this research can be extended to a heterogeneous community, with new insights derived regarding the impact of heterogeneity. Finally, this research considers the closed-loop supply chain problem subject to extended producer responsibility (EPR) legislation. It is shown that under some conditions the EPR legislation can encourage the manufacturer to undertake effective interventions to improve both profit and the recycling rate. This study bridges sustainable OM and EP literature by analysing how sociallyinfluenced emotions of pride and guilt affect the recycling rate and the manufacturer’s optimal decisions and profitability. The results provide essential insights fo rsocial planners in designing effective and efficient socially-influenced-based interventions to improve recycling rates.