The Quest for Meaning in Public Choice

Abstract . The logical foundations of constitutional government are of basic importance if people are to be self‐governing. All forms of political order are Faustian bargains subject to numerous risks. If constitutional choice applies to all patterns of human association, the complexity of associated relationships and the potential threats to the viability of associated relationships in the aggregate exceed the limits of human cognition. The development of analytical capabilities depends on using frameworks, theories, and models for formulating hypotheses about conditions and consequences, undertaking diagnostic assessments, and conceptualizing and designing alternative possibilities. The relationship of ideas to deeds in an experimental epistemology is necessary to achieve a warrantable art and science of association.     

The Asian Currency Crises: Vulnerability, Contagion, or Unsustainability

The Asian currency crises have been introduced by many economists as evidence that almost any country could be vulnerable to speculative attacks and to contagion effects, even with apparently good economic fundamentals. These financial crises have also been interpreted by other economists as rational market reactions to the unsustainability of domestic macroeconomic policies or structural weaknesses. The objective of this paper is to evaluate the relative importance of macroeconomic unsustainability, financial vulnerability, and crisis contagion in a model that explains and predicts the Asian currency crises. Out-of-sample forecasts based on two-stage panel and logit regressions provide evidence of a pure contagion effect, which significantly worsened the crises. They also show that Indonesia was the only one of the six Asian nations examined (India, Indonesia, Malaysia, Philippines, South Korea, Thailand) that was in an unsustainable economic situation, and that the other five nations were only vulnerable to a currency crisis.     

Static vs. dynamic priority rules for check processing in multiple dispatch-multiple branch banking

This paper presents a study comparing the use of four static and two dynamic priority rules for sequencing bundled checks in the check clearing operations in a bank's back office. The six priority rules are tested in a controlled computer simulation experiment, where bank factors of check bundle size, check bundle value, transit deadlines (dispatches), and destination proportions are systematically varied over prescribed levels. The results indicate that priority rule performance, measured by reduced float, is significantly affected by bank factors. The test results indicate that the two dynamic priority rules performed statistically better than three of the four static rules tested.The study reported here should prove useful to bank operation managers. The sequencing rules investigated here influence the level of float for a bank faced with multiple dispatches during the day. The test environments duplicated a variety of operating conditions that can be present in commercial banks. Therefore, the robustness of the tested static and dynamic rules were observed in reducing float under different conditions. Dynamic rules require recomputing priorities to reflect changes in time and create greater implementation effort to use effectively. Static rules require only one priority computation, resulting in easier implementation. This study indicates that one of the static priority rules tested provides comparable performance to the two dynamic rules.     

On the use of Markovian equilibrium distributions for land use policy evaluation

Using the Markov model of land use change as a framework for analyzing the impact of alternative land use policies, comparison of Markovian equilibrium distributions resulting from constrained simulations has been promoted as a means of evaluating the scope of land use policy impacts. Previous studies have not considered the question of measuring the confidence which can be placed in the predictions contained in the equilibrium distribution vector. This paper applies a method of assessing the levels of confidence in the predictions of the equilibrium distribution vector. Results suggest that use of equilibrium distributions of land use as a measure of policy impact has limited inferential value.     

Comparative statics at irregular extrema

This note shows that standard comparative statics techniques, properly reinterpreted, can be used to obtain correct qualitative results for irregular extrema, even though the conditions for application of the Implicit Function Theorem are not satisfied for them.     

ECONOMIC ASPECTS OF FARM POVERTY

The results of the Henderson Poverty Inquiry's 1973 farm household income survey are discussed and supplemented by income distributions based on taxation returns from 1968/69 to 1972/73. It is concluded that much low income 'poverty' is temporary, being the product of the instability of agriculture. A case is made for the inclusion of wealth in farm and non-farm welfare comparisons. Proposals aimed at directly increasing incomes are discussed and hypothetical income distributions are presented to indicate the impact of the Henderson Inquiry's guaranteed income scheme on farm income distributions.     

A STUDY OF OPINIONS CONCERNING METHOD AND CONTENT OF HOME ECONOMICS IN SECONDARY SCHOOLS

Which aspects of their school experience of home economics do housewives find most useful? Does this experience modify ways of caring for a home and family between successive generations? Are there marked differences between housewives in different social classes in their regard for home economics? This paper compares the responses to these questions and infers there is a need to give explicit recognition to the relationship between home economics education, social policy and the quality of home and family life.     

The Validity of Laboratory Research in Social and Behavioral Science

The validity of artificial situations is often questioned, and particularly so the possibility of transfer of findings to the real world. Such questions, or doubts, may stem from a rigid distinction between real and artificial situations or from too strict a notion of representation. This article will argue that `the real world' does not provide unambiguous criteria for representation and that, moreover, many experiments and simulation games do not have to represent `the real world' in any direct way. Both issues are usually treated under the heading of external validity, which means compliance to conventions that dominated thinking about validity over decades. These conventions need to be reconsidered. Quality standards for research must not be rigid, nor should be applied in a way that ignores the characteristics of a particular research project. Fixed notions about validity may prevent a researcher from adapting validation procedures to the circumstances at hand. The article takes issue with a conception of external validity as surface resemblance between artificial and real situations, advocates an active, non-routine approach to validity questions, and encourages individual researchers to develop a line of reasoning on these questions instead of adhering to standards that may not suit their particular research.     

The equivalence of the Dekel–Fudenberg iterative procedure and weakly perfect rationalizability

Summary. Two approaches have been proposed in the literature to refine the rationalizability solution concept: either assuming that a player believes that with small probability her opponents choose strategies that are irrational, or assuming that their is a small amount of payoff uncertainty. We show that both approaches lead to the same refinement if strategy perturbations are made according to the concept of weakly perfect rationalizability, and if there is payoff uncertainty as in Dekel and Fudenberg [J. of Econ. Theory 52 (1990), 243–267]. For both cases, the strategies that survive are obtained by starting with one round of elimination of weakly dominated strategies followed by many rounds of elimination of strictly dominated strategies. Received: 10 December 1998; revised version: 26 April 1999     

Integrating intuition and artificial intelligence in organizational decision-making

Artificial intelligence (AI) is fundamentally changing organizational decision-making processes. With the abilities to self-learn and to improve decision quality, AI is now taking over many decision responsibilities that were formerly assigned to humans alone. However, the effectiveness of AI for ill-structured and uncertain decision environments is still in question. In such decision contexts that have no precedent on which to base a solution, humans have historically relied on their intuition to make decisions. Yet intuition, too, has been found to have weaknesses that restrict decision quality. Therefore, this article introduces a decision-making model that effectively integrates the strengths of both intuition and AI while minimizing the vulnerabilities of each method. The model specifies when and how both modes should be combined for effective organizational decision-making. In addition, the article presents important future research considerations relating to AI for both practitioners and academics.