Risk and Uncertainty: Proceedings of a Conference held by the International Economic Association

461 Pages·1968·39.967 MB·English

by  Professor Karl Borch, Dr. Jan Mossin (eds.)

INTERNATIONAL ECONOMIC ASSOCIATION
CONFERENCE VOLUMES, Numbers1-50
NUMBER 24
Risk and Uncertainty
RISK AND
UNCERTAINTY
Proceedings of a Conference
held by the International Economic Association
EDITED BY
KARL BORCH
AND
JAN MOSSIN
M
S
TOCKTON
P R E S S
81}
© International Economic Association 1968
Softcover reprint of the hardcover 1st edition 1968 978-0-333-40652-6
All rights reserved. No reproduction, copy or transmission
of this publication may be made without written permission.
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or transmitted save with written permission or in accordance
with the provisions of the Copyright Act 1956 (as amended).
Any person who does any unauthorised act in relation to
this publication may be liable to criminal prosecution and
civil claims for damages.
First published 1968
This 50-volume set reprinted 1986 jointly by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
and
YUSHODO CO. LTD
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Distributed exclusively in Japan
through Publishers International Corporation (P.I.C.)
Published in the United States and Canada by
STOCKTON PRESS
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50-volume set ISBN 978-0-333-40626-7
ISBN 978-1-349-15250-6 ISBN 978-1-349-15248-3 (eBook)
DOI 10.1007/978-1-349-15248-3
CONTENTS
AcKNOWLEDGEMENTS ix
LIST OF PARTICIPANTS xi
INTRODUCTION. Karl Borch xiii
PART I
ECONOMIC DECISIONS UNDER UNCERTAINTY
1. DESCRIPTIVE AND NORMATIVE IMPLICATIONS OF THE
DECISION-THEORY PosTULATES. Kenneth R. MacCrimmon 3
Discussion 24
2. AN EMPIRICAL ANAL;YSIS OF RISK-TAKING BY FIRMS IN THE
SAVINGS AND LoAN INDUSTRY. Donald D. Hester 33
Discussion 61
3. MEASURING THE PERCEPTION OF RISK. Richard N. Rosett 68
Discussion 85
4. INVESTMENT BEHAVIOUR WITH UTILITY A CONCAVE FUNCTION
of WEALTH. Marshall Freimer and Myron J. Gordon 94
Discussion 109
PART II
GENERAL DECISION THEORY
5. UNCERTAINTY AND THE COMMUNICATION OF INFORMATION.
C. B. Winsten 123
Discussion 135
6. ON SOME OPEN QUESTIONS IN STATISTICAL DECISION THEORY.
G. Menges 140
Discussion 155
7. A THEORY OF BINARY DECISIONS. Petru L. lvanescu 163
Discussion 181
8. PROGRAMMES FOR HuMAN DECISION-MAKING. Pavel Pelikan 183
Discussion 193
v
Contents
9. GENERALIZATION OF CLASSICAL DECISION THEORY. Werner
Leinfellner 196
Discussion 210
PART Ill
GROUP DECISIONS AND MARKET MECHANISMS
10. PSYCHOLOGICAL VARIABLES AND COALITION-FORMING
BEHAVIOUR. Reinhard Selten and Klaus G. Schuster 221
Discussion 240
11. GENERAL EQUILIBRIUM IN THE EcoNOMics oF UNCERTAINTY.
Karl Borch 247
Discussion 259
12. INDIVIDUAL, CO-OPERATIVE, AND COMPETITIVE PRICING OF
RISKS. Hans Biihlmann 265
Discussion 274
13. MINIMAX BEHAVIOUR AND PRICE PREDICTION. Edmond
Baudier 283
Discussion 305
14. CoMPUTATION IN ORGANIZATIONS: CoMPARISON OF PRicE
MECHANISMS AND OTHER ADJUSTMENT PROCESSES.
T. A. Marschak 311
Discussion 350
PART IV
UNCERTAINTY AND NATIONAL PLANNING
15. RISK AND UNCERTAINTY IN THE MANAGEMENT OF SoVIET
FIRMS. Ivan M. Siroyezhin 359
Discussion 364
16. SoME PROBLEMS OF RISK IN A SociALIST EcoNOMY. Ladislav
Uncovsky 375
Discussion 381
17. THE PoWER ELEMENT IN THE CoNTROL oF AN EcoNOMY.
Anton Klas 383
Discussion 390
18. MoDERN THEORIES OF EcoNOMIC FoRECASTING. Arkadiy A.
G retchikhin 39 5
vi
Contents
PART V
SEQUENTIAL DECISION PROBLEMS
19. SoME PROBLEMS OF EcoNOMIC GROWTH IN A PLANNED
EcoNOMY. Ja romir Walter 407
Discussion 418
20. A DYNAMIC LEONTIEF MODEL WITH CHANCE-CONSTRAINTS.
Sten Thore 422
Discussion 434
21. APPLICATION OF STOCHASTIC CONTROL PROCESSES TO
EcoNOMics. Milan Ullrich 442
Discussion 44 7
INDEX 451
vii
ACKNOWLEDGEMENTS
THE International Economic Association wishes to express its grati
tude to all those organizations and persons who helped in arranging
the Conference reported in this volume. The Conference was held
and this volume has been prepared and published with the aid of
funds made available to the Association by UNESCO and by the
Ford Foundation. To both those bodies the Association owes great
gratitude for their support over a long period of years. A particular
word of thanks is due to the Czechoslovak Academy of Sciences,
who made it possible to hold the Conference in the beautiful setting
of Smolenice Castle, fifty kilometres north of Bratislava.
Our sincere thanks are due to those who wrote the papers for the
Conference, and to those who contributed to the discussions. A
special word of gratitude is due to Dr. Jana Sereghyova of the
Economic Institute of the Czechoslovak Academy of Sciences, who
was in charge of the secretariat and the local arrangements for the
Conference.
28 November 1966
A2 !X
LIST OF PARTICIPANTS
Professor Karl Borch (Chairman), Norwegian School of Economics and
Business Administration, Bergen, Norway.
Mr. F. Bessiere (Vice-Chairman), Electricite de France, Paris, France.
Professor Jaromir Walter (Vice-Chairman), Vysoka Skola Ekonomicka,
Prague, Czechoslovakia.
Professor Luc Fauvel (Secretary-General), Universite de Paris, France.
Dr. Jan Mossin (Rapporteur), Norwegian School of Economics and
Business Administration, Bergen, Norway.
Mr. M. Baret, Shell, Paris, France.
Mr. Edmond Baudier, Cermap, Paris, France.
Professor Hans Biihlmann, Federal Institute of Technology, Zurich,
Switzerland.
Professor Myron J. Gordon, University of Rochester, Rochester, U.S.A.
Dr. Arkadiy A. Gretchikhin, Association of Soviet Scientific Economic
Institutions, Moscow, U.S.S.R.
Professor Donald D. Hester, Yale University, U.S.A.
Dr. Petru L. lvanescu, Academia R.S.R., Bucharest, Rumania.
Professor Anton Klas, Vysoka Skola Economicka, Bratislava, Czecho-
slovakia.
Dr. J. Koerts, Econometrisch Instituut, Rotterdam, Netherlands.
Dr. Werner Leinfellner, lnstitut fiir Hohere Studien, Vienna, Austria.
Mr. Bjorn Leonardz, Stockholm University, Stockholm, Sweden.
Professor Kenneth R. MacCrimmon, Carnegie Institute of Technology,
Pittsburgh, U.S.A.
Dr. Zbigniew Madej, Polish Economic Society, Warsaw, Poland.
Professor Thomas A. Marschak, University of California, Berkeley, U.S.A.
Professor G. Menges, Universitiit des Saarlandes, Saarbriicken, West
Germany.
Dr. Pavel Pelikan, Academy of Sciences, Prague, Czechoslovakia.
Professor Richard N. Rosett, University of Rochester, Rochester, U.S.A.
Dr. Reinhard Selten, Goethe Universitiit, Frankfurt am Main, West
Germany.
Professor Ivan M. Siroyezhin, Leningrad University, Leningrad, U.S.S.R.
Mr. C. A. Stael von Holstein, Stockholm University, Stockholm,
Sweden.
Dr. Sten Thore, Norwegian School of Economics and Business Admini
stration, Bergen, Norway.
Dr. Milan Ullrich, Academy of Sciences, Prague, Czechoslovakia.
xi
List of Participants
Dr. Ladislav Uncovsky, University of Bratislava, Bratislava, Czecho
slovakia.
Dr. Christopher B. Winsten, Nuffield College, Oxford, England.