A systems approach to policy analysis and development planning: Construction sector in the Turkish 5-year development plans

In this study, we propose a new model for systems analysis ‘of’ policy and systems analysis ‘for’ policy with the example of construction sector in the Turkish 5-year development plans.Our proposed model—integrated development management model (IDMM)—is conceptually based on the principles of systems thinking and integrated management approach.We present and discuss the results of our work in which we extracted all construction-related policies and strategies from eight 5-year development plans and analyzed them using the IDMM. In the light of the analyses, we give several answers to the question: “Why did the development plans fail to meet their targets in Turkey?” We propose that any development plan has to have claritas–unitas–integritas–consonantia between the management levels (normative, strategic, and operational) and components (goals, structures, and behavior) of IDMM.The paper is the first work that brings the concepts of development planning and foresight together. In a complementary stance, the time of integrating foresight and development planning has come.     

Counting combinatorial choice rules

I count the number of combinatorial choice rules that satisfy certain properties: Kelso–Crawford substitutability, and independence of irrelevant alternatives. The results are important for two-sided matching theory, where agents are modeled by combinatorial choice rules with these properties. The rules are a small, and asymptotically vanishing, fraction of all choice rules. But they are still exponentially more than the preference relations over individual agents—which has positive implications for the Gale–Shapley algorithm of matching theory.     

Simple search methods for finding a Nash equilibrium

We present two simple search methods for computing a sample Nash equilibrium in a normal-form game: one for 2-player games and one for n-player games. Both algorithms bias the search towards supports that are small and balanced, and employ a backtracking procedure to efficiently explore these supports. Making use of a new comprehensive testbed, we test these algorithms on many classes of games, and show that they perform well against the state of the art—the Lemke–Howson algorithm for 2-player games, and Simplicial Subdivision and Govindan–Wilson for n-player games.     

Capturing the pharmaceutical value of biodiversity in a developing country

The conservation of biodiversity is increasingly being defined as a process made up of three components—saving, studying and sustainably using biodiversity. If the conservation of process is expanded to incorporate the need for both the protection of biodiversity—either in situ or ex situ—and the generation of valuable information about biodiversity, an important issue is the correct balance of investment in these two types of activities. This paper explores this issue by focusing on efforts in a developing country to capture the pharmaceutical potential of biodiversity and species information. A model of biodiversity investment choice is developed, and an analysis of royalty returns to effort in biodiversity protection, taxonomic information and the collection of biotic samples is conducted based on data from Costa Rica. The results suggest that although a country can be adequately compensated for its investment in the generation of taxonomic information, it is unlikely that pharmaceutical prospecting alone will cover the high opportunity costs of biodiversity protection.     

Eliciting experts' knowledge: A comparison of two methods

This paper reports on a detailed comparison of the practical application of two well-known forecasting methods—a surprisingly rare exercise. Delphi and cross-impact analyses are among the best-known methods that apply quantitative approaches to derive forecasts from expert opinion. Despite their prominence, there is a marked shortage of clear guidance as to when and where–and how–particular methods can be useful, or as to what their costs and benefits are. This study applied the two methods to the same area, future European transport systems, using the same expert knowledge base. The results of the implementation of the two techniques were assessed and evaluated, in part through two evaluation questionnaires completed by the experts who participated in the study. This paper describes these encounters with methodology and evaluation, presents illustrative results of the forecasting study, and draws lessons as to good practice in use of these specific methods, as well as concerning methodological good practice in general—for example, stressing the need for systematic documentation, and the scope for debate about established practices.     

Asymmetric evolutionary games with non-linear pure strategy payoffs

In this paper, I extend the analytical framework of evolutionary game theory to games with two distinct types of players where the type-specific payoff functions are nonlinear on the right—bi-player-type nonlinear (BNL) evolutionary games. That is, asymmetric games where the payoffs for pairwise interactions are influenced by the ambient frequencies of the pertinent strategies of both types of players.While this paper is motivated by my interest in inter- and intra-gender conflicts of interest in sexual reproduction, BNL games also arise just as naturally in most two-species interactions. Thus, the methodology may provide a novel approach to investigating such classical ecological phenomena as prey–predator/host–parasite interactions and interspecies competition for resources.Finally, given the growing tendency to utilize evolutionary games in economic modeling, a case can be made for the current paper being of interest to traditional game-theoretic modelers in connection with situations such as buyer/seller or employer/employee interaction.     

Attitude toward imprecise information

This paper presents an axiomatic model of decision making under uncertainty which incorporates objective but imprecise information. Information is assumed to take the form of a probability–possibility set, that is, a set P of probability measures on the state space. The decision maker is told that the true probability law lies in P and is assumed to rank pairs of the form (P,f) where f is an act mapping states into outcomes. The key representation result delivers maxmin expected utility (MEU) where the min operator ranges over a set of probability priors—just as in the MEU representation result of Gilboa and Schmeidler [Maxmin expected utility with a non-unique prior, J. Math. Econ. 18 (1989) 141–153]. However, unlike the MEU representation, the representation here also delivers a mapping, , which links the probability–possibility set, describing the available information, to the set of revealed priors. The mapping is shown to represent the decision maker's attitude to imprecise information: under our axioms, the set of representation priors is constituted as a selection from the probability–possibility set. This allows both expected utility when the selected set is a singleton and extreme pessimism when the selected set is the same as the probability–possibility set, i.e., is the identity mapping. We define a notion of comparative imprecision aversion and show it is characterized by inclusion of the sets of revealed probability distributions, irrespective of the utility functions that capture risk attitude. We also identify an explicit attitude toward imprecision that underlies usual hedging axioms. Finally, we characterize, under extra axioms, a more specific functional form, in which the set of selected probability distributions is obtained by (i) solving for the “mean value” of the probability–possibility set, and (ii) shrinking the probability–possibility set toward the mean value to a degree determined by preferences.     

Finite Horizon Bargaining and the Consistent Field

We explore the relationships between noncooperative bargaining games and the consistent value for nontransferable utility (NTU) cooperative games. A dynamic approach to the consistent value is introduced: the consistent vector field. The main contribution is to establish that theconsistent fieldis intimately related to the concept ofsubgame perfectionfor finite horizon noncooperative bargaining games, as the horizon goes to infinity and the cost of delay goes to zero. We then show that in the general NTU case—unlike the transferable utility and pure bargaining cases—the finite horizon subgame perfect equilibria need not approach the consistent value.Journal of Economic LiteratureClassification Numbers: C71, C72.     

Economic theory and comparative economic systems: A partial literature survey

This paper surveys the more abstract literature on the newly developing theory of economic systems. Works from both pure economic theory and comparative economics are discussed. The principal thesis is that, while these two literatures have developed rather independently, they share an amazingly similar framework. What is emerging is a full-fledged theory of economic systems. Emphasis is placed on the three component structures of economic systems—the information, decision-making, and incentive structures–and the normative evaluation of economic systems. J. Comp. Econ., Dec. 1978, 2(4), pp. 355–381. Wayne State University, Detroit, Michigan. Journal of Economic Literature Classification Numbers: 024,053.     

Multinationals and the gains from international diversification

This paper employs mean–variance spanning tests to examine the diversification potential of multinational firms and foreign market indices from the perspective of investors in the G7 countries over the 1984–1995 period. We find evidence that multinational corporations may have provided diversification benefits for investors in Germany and the United States. We find that the addition of foreign market indices to a domestic portfolio—inclusive of multinationals—provided substantial diversification benefits in all countries. The economic importance of the shift of the portfolio frontier varied considerably across markets.     

Egalitarianism and Efficiency in Repeated Symmetric Games

We analyze the symmetric equilibria of repeated symmetric games where there is a conflict of interests over equilibria—the battle-of-the-sexes or the hawk–dove game are key examples. If one restricts attention to symmetric equilibria, efficient equilibria must be egalitarian. For finitely repeated games, and generic discount factors, there is a unique outcome path which ensures efficiency within the class of symmetric equilibria. This is also true for the infinitely repeated games if the players are sufficiently impatient. Journal of Economic Literature Classification Numbers: C72, C73.     

Generalised weakened fictitious play

A general class of adaptive processes in games is developed, which significantly generalises weakened fictitious play [Van der Genugten, B., 2000. A weakened form of fictitious play in two-person zero-sum games. Int. Game Theory Rev. 2, 307–328] and includes several interesting fictitious-play-like processes as special cases. The general model is rigorously analysed using the best response differential inclusion, and shown to converge in games with the fictitious play property. Furthermore, a new actor–critic process is introduced, in which the only information given to a player is the reward received as a result of selecting an action—a player need not even know they are playing a game. It is shown that this results in a generalised weakened fictitious play process, and can therefore be considered as a first step towards explaining how players might learn to play Nash equilibrium strategies without having any knowledge of the game, or even that they are playing a game.     

Technical efficiency measures for olive-growing farms in Crete, Greece

This study attempts to contribute to the productivity literature of the agriculture of developing countries by exploring the distribution of technical efficiency over time among olive-growing farms operating in the southern part of Greece—specifically, the island of Crete. A balanced panel data set during the period 1987–93 is utilized for the estimation of the stochastic production frontier. The results show decreasing efficiency for farms since 1987 and suggest the need for a development strategy to improve their economic performance in the context of expected major changes in the Common Agricultural Policy. A further result is that farm size, the farmer's education, the existence of an improvement plan, and land fragmentation are the most important factors explaining inter-farm variation in efficiency.     

Sunspots and incomplete financial markets: The general case

Summary This paper examines the effects of extrinsic uncertainty or sunspots on competitive equilibrium when financial markets are incomplete. For the canonical two-period, pure-exchange model with bonds (or so-called nominal assets, yielding fixed overall returns specified in units of account, and including pure inside money), the following result is established: Generically in endowments, if there areS sunspot states in the second period, but only 0<I<S distinct types of bonds, then — corresponding to the inherent deficiency in the financial markets — sunspots will generateD=S–I dimensions of consumption allocation or real (as well as spot price or nominal) indeterminacy.     

Monetary policy in Germany: A cointegration analysis on the relevance of interest rate rules

The paper attempts to identify an empirical relationship that characterizes the way the Bundesbank adjusted its short-term rate with respect to various objectives. By building on a careful exploration of the properties of the variables involved, it is established that interest rate rules —often remarkably similar to the Taylor rule— remain valid and relevant in a Vector Error Correction framework, and thereby proposing a distinctive interpretation of German monetary policy during the period 1975–1998.     

Strong equilibrium in cost sharing connection games

We study network games in which each player wishes to connect his source and sink, and the cost of each edge is shared among its users either equally (in Fair Connection Games—FCG's) or arbitrarily (in General Connection Games—GCG's). We study the existence and quality of strong equilibria (SE)—strategy profiles from which no coalition can improve the cost of each of its members—in these settings. We show that SE always exist in the following games: (1) Single source and sink FCG's and GCG's. (2) Single source multiple sinks FCG's and GCG's on series parallel graphs. (3) Multi source and sink FCG's on extension parallel graphs. As for the quality of the SE, in any FCG with n players, the cost of any SE is bounded by H(n) (i.e., the harmonic sum), contrasted with the Θ(n) price of anarchy. For any GCG, any SE is optimal.     

Planning for the Australian information economy

This study spotlights the inadequacy of the sectoral modeling used hitherto to analyse structural change in Australia. Although the multiplier and key-sector results demonstrate that contemporary Australia is predominantly an industrial economy, in the next decade the growth of the information intensiveness of economic activity or informatization will accelerate. A sectoral model clearly identifying the information sector is proposed to study the implications of the growing information intensiveness of the Australian economy. A methodology to identify the primary information economy or information commodities traded in the market is explained. The macroeconomic scenarios—income and price implications—of programming for various targets of information sector activities are analysed. Three plausible informatization targets are hypothesised: Luddite or zero growth; laissez-faire or continuing the status quo and sunrise or accelerated performance. The significance of Leontief accounting prices based on competitive equilibria and the shadow prices connoting opportunity costs of the linear programming dual are examined. Fiscal policies to subsidise positive externalities generated by informatization, in the fase of intractability of the Pigouvian ideal taxes are briefly reviewed. Finally, the need for anticipatory policy decisions in Australia to harness the full benefits of informatization is emphasised.     

The market response to product safety litigation

This paper examines the stock market impact of 29 product liability lawsuits reported in the Wall Street Journal from 1970–1985, an additional series of Agent Orange events, and a set of regulatory events involving product risks. If these events and the costs associated with them were fully anticipated, then there would be no effect on the stock market price. Adverse stock market effects increase if the event involves a product liability action, bodily injury, or a court decision. Lengthy newspaper coverage and initial reports also have a strong effect. If there are multiple defendants, the market cost per firm is reduced. One widely publicized good news event—the final Agent Orange decision—led to a dramatic increase in stock prices.     

Theorie der Spiele und ökonomische Entscheidungsprozesse II

Ohne ZusammenfassungDer vorliegende Besprechungsaufsatz, der eine Fortsetzung der Rezensions-Miszelle im vorigen Heft dieser Zeitschrift (Band XXI, Heft 2, 1961, S. 255 ff.) ist bezieht sich aufa)|R. D. Luce and H. Raiffa:Games and Decisions. Introduction and Critical Survey. 509 S. New York: John Wiley & Sons, Inc. — London: Chapman & Hall Ltd. 1957. $ 8,75;b)|S. Karlin:Mathematical Methods and Theory in games, Programming, and Economics. vol. I: Matrix Games, Programming, and Mathematical Economics. X, 427 S. Vol. II: The Theory of Infinite Games. XI, 386 S. Reading, Mass. London: Addison-Wesley Publishing Company, Inc. 1959. Je Band $ 10,75;c)|M. shubik:Strategy and Market Structure. Competition, Oligopoly and the Theory of Games. X, 387 S. New York: John Wiley & Sons, Inc. — London: Chapman & Hall Ltd. 1959. $ 7,–.     

Unfolding Social Hierarchies

Consider a large population of finitely-lived agents organized into n different hierarchical levels. Every period, all those placed at each level are randomly matched to play a given symmetric game. Based on the resulting outcome, a ρ-fraction of agents who (within their own level) attain the highest payoffs are promoted upwards. On the other hand, newcomers replacing those who die every period enter at the lowest level and choose irreversibly the strategy to be played for the rest of their life. This choice is made, with some noise, by imitating one of the strategies adopted at the highest level.  In this setup, the unique long-run behavior of the system is fully characterized for the whole class of 2×2 coordination games and two alternative variations of the model. The results crucially depend on the key “institutional” parameters ρ and n. In particular, it is shown that inefficient behavior prevails in the long run (even when risk-dominated) if promotion is only mildly selective—high ρ—and the social system is quite hierarchical—large n. In a stylized manner, these parameter conditions may be viewed as reflecting a sort of institutional deficiency that impairs economic performance. Journal of Economic Literature Classification Numbers: C70, C72, C73, D72.