p-Dominance and Equilibrium Selection under Perfect Foresight Dynamics

This paper studies equilibrium selection based on a class of perfect foresight dynamics and relates it to the notion of p-dominance. A continuum of rational players is repeatedly and randomly matched to play a symmetric n×n game. There are frictions: opportunities to revise actions follow independent Poisson processes. The dynamics has stationary states, each of which corresponds to a Nash equilibrium of the static game. A strict Nash equilibrium is linearly stable under the perfect foresight dynamics if, independent of the current action distribution, there exists a consistent belief that any player necessarily plays the Nash equilibrium action at every revision opportunity. It is shown that a strict Nash equilibrium is linearly stable under the perfect foresight dynamics with a small degree of friction if and only if it is the p-dominant equilibrium with p<1/2. It is also shown that if a strict Nash equilibrium is the p-dominant equilibrium with p<1/2, then it is uniquely absorbing (and globally accessible) for a small friction (but not vice versa). Set-valued stability concepts are introduced and their existence is shown. Journal of Economic Literature Classification Numbers: C72, C73.     

ROBUST RATIONALIZABILITY UNDER ALMOST COMMON CERTAINTY OF PAYOFFS

An action is robustly rationalizable if it is rationalizable for every type who has almost common certainty of payoffs. We illustrate by means of an example that an action may not be robustly rationalizable even if it is weakly dominant, and argue that robust rationalizability is a very stringent refinement of rationalizability. Nonetheless, we show that every strictly rationalizable action is robustly rationalizable. We also investigate how permissive robust rationalizability becomes if we require that players be fully certain of their own payoffs.     

Emergent foresight processes: industrial activities in wireless communications

Technology foresight has received growing attention among those involved in the shaping and implementation of science and technology (S&T) policies. However, although evaluative analyses of foresight exercises have supplied evidence on acclaimed benefits—such as the generation of future-oriented knowledge and strengthening of collaborative networks—they also point to challenges in translating foresight results into actions within research and technology development (RTD) organizations. In this article, we address these challenges by considering the work of the Wireless World Research Forum (WWRF), which has sought to promote the conception, development, and diffusion of wireless communication technologies. Specifically, by contrasting this work with well-known government-initiated foresight exercises, we typify so-called explicit, emergent, and embedded foresight activities and explore their interrelationships. Our comparative analysis points to conditions under which policy interventions may not be needed for the emergence of foresight activities that exert a major influence on RTD agendas. It also suggests several context-dependent roles for public policy, among which government-driven foresight exercises and the catalysis of more narrowly focused activities are but two examples.     

Perfect foresight models and the dynamic instability problem from a higher viewpoint

Dynamic macroeconomic models incorporating perfect foresight expectations can display a dynamic instability of the saddle point type. So that unless the initial values happen to place the system on the stable arm of the saddle point, the economic variables will diverge ever more from the equilibrium. We consider the dynamic instability problem in a simple model of monetary dynamics which is non-linear and assumes adaptive expectations which are characterized by an expectations time lag. This model is shown to have a stable limit cycle. By considering perfect foresight as the limit as the expectations time lag tends to zero we are able to view the perfect foresight model from a dimension higher than that from which is it is normally viewed. We are thus able to see that the stable limit cycle continues to exist for the perfect foresight model as well. In this framework there is no longer a dynamic instability problem since whatever the intial values time paths are tending to the stable limit cycle.     

Foresight: A major tool in tackling sustainable development

For many decades, the concept of sustainability has been highly successful in public policies and even in the business world.¹ Nowadays, all initiatives must be sustainable and are primarily assessed on that criterion. However, the efforts made to construct specific methods dedicated to building sustainable strategies seem rather weak. Futurists themselves underestimate the relationship between sustainable development and foresight, even if they are talking about sustainable planning.² They remain generally unaware that foresight could be a major tool in tackling sustainability as well as one of the best methods of preparing sustainable strategies and policies.Indeed, one of the biggest problems in sustainability approaches is the simplistic way used to define the concept, for instance, by using only the very first part of the 1987 the Bruntland report Our Common Future and by limiting the fields of activity on sustainability to the three pillars of the OECD model: economy, social questions, environment.At the Copenhagen United Nations Climate Change Conference (December 2009), it seemed forgotten that sustainability is already an old issue in which futurists were heavily involved at the time of the United Nations Stockholm Environment Conference (1972), in the Limits to Growth Report, published by the Club of Rome (1972)³ and in the OECD Interfutures Foresight, spurred on by Jacques Lesourne (1978).⁴Since that time (forty years ago!) researchers and consultants have learned how to deal with the concept of sustainability, how to analyze it as an ultimate aim for society as a whole as well as a complex object that needs to be approached with adequate methods such as systemic analysis.As Christian Stoffaës said, the aim of foresight is sustainable development in a changing world. As a result, the ultimate aim of strategic foresight appears to be clear: it is sustainability. This article highlights that fundamental relationship as we see it today.⁵     

Strategic foresight and organizational learning: A survey and critical analysis

Learning phenomena are a growing concern for strategic foresight, especially with respect to the question of integration of reflection and action. Although an agreement seems to emerge between practitioners and theorists about strong ties linking strategic foresight and learning (in particular organizational learning), the true nature of this link remains ambiguous. This article seeks to shed light on this link and to analyze the cognitive dimensions of foresight through a critical survey. The investigation follows the original ambivalence between foresight attitude and activity thus underscoring not only the virtues of foresight in learning phenomena, but also the limits of the usual literature.     

Mutually acceptable courses of action

We offer a game-theoretic framework that enables the analysis of situations whereby rational individuals with different beliefs and views of the world agree to a shared course of action. We introduce a new solution concept: a mutually acceptable course of action, which can be viewed as an (incomplete) contract or a social norm that free rational individuals would be willing to follow for their own diverse reasons. We show that by varying the degree of completeness of the underlying course of action, our concept can be related to commonly used solutions, such as perfect equilibrium, perfect Bayesian equilibrium, (rationalizable) self-confirming equilibrium, and rationalizable outcomes. We are grateful to the editor and an anonymous referee for very useful and helpful comments and suggestions. Earlier versions of this paper were circulated under the title “Towering over Babel: Worlds Apart but Acting Together”. We thank participants at the World Congress of Game Theory Society (2004), the International Conference on Game Theory (2004), the European Meeting (2004), and the Econometric Society World Congress (2005). Financial support from SSHRC and NSERC of Canada, and the National Science Council of Taiwan are gratefully acknowledged.     

Corporate foresight in Europe: from trend based logics to open foresight

The paper analyses the role of corporate foresight (CF) as a future intelligence gathering process, which has come into widespread use in a business context where it is confronted with specific contextual, processual and methodological challenges. The results of a 2005/2006 survey on CF by the University of St Gallen in co-operation with Z_punkt are used as a starting point to provide insights into the goals, methods and use of CF in large corporations. Taking into account the challenges facing CF and the factors considered critical for its success, the paper outlines a historical contextualisation of CF practices from the 1980s onward, identifying the underlying assumptions – the ‘dominant logic’ – and opting for a new model of CF as ‘open foresight’.     

Learnability and rationality of choice

In this paper we study the learnability of the class of rationalizable choice functions using the basic concept of PAC-learnability from statistical learning theory. We prove that the class of rationalizable choice functions on N alternatives is learnable from O(N) examples and is optimal in terms of PAC-learnability among classes which are invariant under permutations of the elements.     

Future-oriented technology analysis as a driver of strategy and policy

The methodology known as strategic foresight is an important tool to be used in long-term strategic planning activities and in support of the decision making process in public as well as private sectors. This article addresses the use of strategic foresight applied to the strategic management plan for an agency that deals with the funding and promotion for the development of science, technology and innovation in Brazil, and the logic that permeated its construction, promoting an alliance of the concepts of strategy and foresight. It has as key elements the long-term vision and the adoption of participatory approach and qualitative and quantitative methods. The methodological framework involved the use of different techniques, methods and tools, including, among others, web survey, diagnosis, SWOT, future timeline, interviews, workshops and strategic roadmap.     

The methodology combination of a national foresight process in Germany

In September 2007, the Federal German Ministry for Education and Research (BMBF) launched a new foresight process which aimed at four specific targets. To achieve them, a tailor-made combination of methods was applied. This paper focuses on the concept design of the process and explains one of the methods — the future online survey — in more detail.The German Foresight Process of the BMBF delivers results on different levels: broader future fields as well as single future topics. Both kinds are relevant and selected according to a set of criteria. Some of the results of this foresight process will be directly integrated into national policy activities, others are just more indirectly filtered into the innovation system of the specific sectors in the country. The future fields are all cross-cutting issues based on science and technology. All of them are specifically knowledge dynamic fields.     

Iterated potential and robustness of equilibria

For any given set-valued solution concept, it is possible to consider iterative elimination of actions outside the solution set. This paper applies such a procedure to define the concept of iterated monotone potential maximizer (iterated MP-maximizer). It is shown that under some monotonicity conditions, an iterated MP-maximizer is robust to incomplete information [A. Kajii, S. Morris, The robustness of equilibria to incomplete information, Econometrica 65 (1997) 1283-1309] and absorbing and globally accessible under perfect foresight dynamics for a small friction [A. Matsui, K. Matsuyama, An approach to equilibrium selection, J. Econ. Theory 65 (1995) 415-434]. Several simple sufficient conditions under which a game has an iterated MP-maximizer are also provided.     

Foresight in corporate organisations

Strategy formulation is strictly intertwined with the analysis of the likely evolution of the business environment, in order to detect promptly the opportunities and the threats brought about by emerging trends and to deal with them properly (strategic foresight). Today many companies put much effort into strategic foresight, and also in the literature on strategy there is a growing attention to strategic foresight. However, it still seems there is a lack of a general framework of analysis that clearly defines how all the foresight activities should be carried out in a firm and should be integrated in an organic way, in order to support strategic decision makers at corporate, business and functional levels. This is the main issue we have taken into account through the study of some relevant European and US firms that have established foresight units, in order to deliver support for long term strategy formulation.     

Developing a model to evaluate the impacts of science,technology and innovation foresight on policy-making

Technology foresight as a policy intelligence tool can offer vital inputs for policy-making in various domains. The relationship between foresight and policy-making has been presented in the literature by the policy-related functions of foresight, but the literature reflects a theoretical gap with the systematic evaluation model for the impact of foresight on policy-making. This research seeks to bridge the existing gap and uses the mixed method for this purpose. The mixed method approach used in this paper is the sequential exploratory design. First, the conceptual model is developed in the qualitative part of this research by using meta-synthesis and constant comparative method (CCM) of analysis. Second, in the quantitative part, quantitative tests are used to evaluate the dimensions and components of the developed theoretical model. The data collection tool is a questionnaire. The results confirm the proposed dimensions of the evaluation model.     

Technology foresight for a vision of energy sector development in Poland till 2030. Delphi survey as an element of technology foresighting

The security of energy supply at national level is one of the most fundamental missions of every government. This task becomes especially vital in view of the current situation on global energy markets. The planning of technological development in the energy and fuel sectors is a relevant element of energy security strategies. This in turn leads to a more rational and efficient energy use in the future. Technology foresight, which emerged as a proven instrument of technology policy during the 1950s, becomes nowadays one of the essential tools for the creation of the future technological development worldwide. A project entitled: “The Scenarios of Technological Development of Fuel and Energy Sector for National Energy Security” was the first foresight project in the field of energy technologies and at the same time the first technology foresight activity in Poland. This project was being carried out in the period of 2006-2007 by a consortium of research and development institutes on the request of the Polish Ministry of Economy. The aim of the project was to indicate energy and fuel sector development directions in the time horizon up to 2030 and identify key energy technologies of strategic importance. As a result of the foresight activity, technology development scenarios in the energy and fuel sector in Poland as well as corresponding roadmaps for their implementation were formulated. The project results should be helpful in drafting national energy policies and they will indicate priority pathways of research and development (R&D) activities in the next years.The energy foresight project was based mainly on a Delphi method that is nowadays widely applied as a valuable foresight tool. This future-oriented intuitive method was engaged for the qualitative and quantitative assessment of probable developments in the future and for their time scale evaluation as well. In this article, the results of the conducted two-round Delphi survey were presented.     

Rationalizable implementation

We consider the implementation of social choice functions under complete information in rationalizable strategies. A strict version of the monotonicity condition introduced by Maskin is necessary under the solution concept of rationalizability. Assuming the social choice function is responsive, i.e. in distinct states it selects distinct outcomes, we show that strict Maskin monotonicity is also sufficient under a mild “no worst alternative” condition. In particular, no economic condition is required. We discuss how our results extend when the social choice function is not responsive.     

Determinacy and Stability under Learning of Rational Expectations Equilibria

This paper studies relationships between the local determinacy of a stationary equilibrium in the perfect foresight dynamics, and its local stability in dynamics arising from econometric learning procedures. Attention is focused on linear scalar economies where agents forecast only one period ahead, and with an arbitrary, but fixed, number of predetermined variables. In such a framework, it is well known that there are no clear links between the determinacy of the stationary state in the perfect foresight dynamics on the levels of the state variable, and its stability under learning. The paper emphasizes, however, that this is not the right perfect foresight dynamics to look at whenever agents try to learn the coefficients of the perfect foresight dynamics restricted to an eigenspace of lower dimension. Indeed the paper introduces a growth rate perfect foresight dynamics on these coefficients and proves equivalence between determinacy in that dynamics and stability under learning provided that a simple sign condition is satisfied. Journal of Economic Literature Classification Numbers: E32, D83.     

Lessons from using scenarios for strategic foresight

Strategic foresight requires a longer and broader view of the environment and, as we at the Institute for Alternative Futures (IAF) would argue, a conscious attention to the organization's vision and visionary scenarios in the environment. Having promoted foresight on six continents for a wide range of governments, corporations, and non-profit organizations, we have developed lessons on the design and set-up of foresight efforts, their use and follow-through. Lessons include: Scenarios using ‘aspirational futures’ should include expectable, challenging, and visionary alternatives; beware of and understand ‘allergic reactions’ to foresight given some individuals', particularly leaders', psychological preferences; foresight is most effectively done by and for top leadership but foresight for units or regions of the organization can also be successful; to get the most value, it is important to err on the side of boldness and vision in developing scenarios; foresight efforts create a ‘safe space’ for exploring challenging situations; associations as collections of companies or professionals have unique foresight needs including elected leadership that rotates every year, and the need to communicate the results of foresight efforts to their members effectively; government and corporations have more similarities than differences in foresight, but companies have more resources and can move quickly to develop and use the foresight.     

Are environmental concerns drivers of innovation? Interpreting Portuguese innovation data to foster environmental foresight

The relationship between environmental concerns and innovation is analyzed in the context of Portuguese manufacturing firms, with the ultimate goal to foster measures of environmental foresight.Based on data from the Community Innovation Survey in Portugal, simple statistical tests, including Chi², t, and Levene's tests and contingency tables (adjusted standardized residuals), were used to study the relationship between firms' characteristics and the introduction of innovation aiming to reduce environmental damage. Environmental foresight is discussed based on three groups of variables that allow considering the industrial context that frames firm's actions, the economic performance of the firm and its innovation patterns.Results show that the development of innovation due to environmental concerns is positively associated with the firm's size and exports share, and negatively associated with its technological content. Moreover, it is shown that the firms that introduced innovations due to environmental concerns are likely to belong to an economic group, to have performed continuous R&D, or received public support. It is also shown that “lack of organizational flexibility” and “lack of receptivity by customers” are the two most relevant innovation barriers for these firms.     

Corporate foresight: Its three roles in enhancing the innovation capacity of a firm

In the last three decades much knowledge has been produced on how best to conduct foresight exercises, but little is known on how foresight should be integrated with the innovation effort of a company. Drawing on empirical evidence from 19 case studies and 107 interviews, we identify three roles that corporate foresight should play to maximize the innovation capacity of a firm: (1) the strategist role, which explores new business fields; (2) the initiator role, which increases the number of innovation concepts and ideas; and (3) the opponent role, which challenges innovation projects to increase the quality of their output.