MODELLING HABIT PERSISTENCE*

The purpose of this paper is to derive the demand functions corresponding to an intertemporal linear expenditure system in which goods are durable, and in which there are penalty costs for changes in planned stocks. Taste changes over time can be interpreted as changes in the technology converting goods into characteristics.     

INFLATION,SECURITY VALUES,AND RISK PREMIA

The impact of stochastic inflation on the cross-sectional structure of nominal securities yields is examined. The analysis indicates that equilibrium required returns on debt and equity securities are affected differently by inflation and that the “Fisher Effect” is more likely to hold for equity returns than for debt yields. Implications for empirical investigations of portfolio performance and the real interest rate are explored.     

R and D tactics: applications of RPD decision analysis

Abstract: The application of RPD decision analysis to R & D tactics is discussed and the role of the technique as an aid to self-consistent decision making is enaphasized. RPD decision analysis is used to define limits to its own cost effectiveness.
Two example problems are analysed in detail. Simple priority ratings are defined for two special cases: the sequence of independent tests all of which must succeed, and the sequence of independent problem solving attempts, any of which may succeed. The compromise between project duration and project cost is analysed in terms of time dependence of the value of success.
The discrimination study is defined as an investigation which aims to provide information for an improved assessment of project success probability.
It is shown that such a study is never worth more than one quarter of the total expected benefits of the project.     

Discipline by objectives

Modern discipline is not punishment, but a shaper of behavior; it requires rules to be reviewed periodically against objectives to see if they are still productive in changing conditions and it allows the exceptional performer who is achieving exceptional results to be treated with far greater tolerance when it comes to violations.     

The care and feeding of MBA's

Hiring MBA's represents an investment at a significant risk level, and data on the firm's historical experience with MBA investments should be maintained and evaluated. The characteristics of the MBA which count toward performance should be discovered. The authors suggest several: maturity measures, quantitative orientation, educational specialty, attitude toward work.