Showing papers in "The Review of Economic Studies in 1969"

The Efficiency Analysis of Choices Involving Risk

Abstract: Publisher Summary The choice of an individual decision maker among alternative risky ventures may be regarded as a two-step procedure. The decision maker chooses an efficient set among all available portfolios, independently of his tastes or preferences. Then, the decision maker applies individual preferences to this set to choose the desired portfolio. The subject of this chapter is the analysis of the first step. It deals with optimal selection rules that minimize the efficient set by discarding any portfolio that is inefficient in the sense that it is inferior to a member of the efficient set, from point of view of each and every individual, when all individuals' utility functions are assumed to be of a given general class of admissible functions. The analysis presented in the chapter is carried out in terms of a single dimension such as money, both for the utility functions and for the probability distributions. However, the results may easily be extended, with minor changes in the theorems and the proofs, to the multivariate case. The chapter explains a necessary and sufficient condition for efficiency, when no further restrictions are imposed on the utility functions. It presents proofs of the optimal efficiency criterion in the presence of general risk aversion, that is, for concave utility functions.

Efficiency analysis of choices involving risk

Abstract: Presents an efficiency analysis of choices involving risk in portfolio selection. Description of a necessary and sufficient condition of efficiency; Computations for the optimal efficiency criterion in the presence of general risk aversion; Analysis of the conditions under which the mean-variance criterion is a valid efficiency criterion. (Из Ebsco)

On the concept of optimum population.

Abstract: The economic welfare of a community is affected by policies that determine both the rate of capital accumulation and the rate of growth of population. The optimum size of population at any point is time will depend on the size of the existing capital stock and the optimum rate of savings will depend on the existing number of people. Consequently in this sense a population policy cannot be developed without a concurrent savings policy. The criterion of optimality that will be used is the ma ximization of the total discounted welfare of all generations from now to infinity. The problem will be to select that rate of savings and that size of population at every moment which will achieve this maximum welfare if in fact a maximum exists. An inquiry is made into the existence of an optimum policy under various circumstances. An attempt is made to evaluate the consequences of various ethical beliefs.

The Timescale of Economic Model How Long is the Long Run

Abstract: Although models of economic growth have been intensively studied in recent years, relatively little attention has been given to the underlying timescale of these models.2 While in many cases we know how the major variables of the models change over time, in very few cases do we know how quickly they will change. Yet the speed of change is a prediction of the model, and by examining this we have a further test of the model’s properties. For example, in many cases it is shown that all paths converge to a long-run equilibrium, but we also want to know how soon the paths will reach the vicinity of this equilibrium. The speed of convergence makes a great deal of difference to the way in which we think about the model. Alternatively, where a model gives rise to oscillations, we need to have some idea as to their probable period. If we throw away information about the time dimension, we are reducing still further our limited understanding of the relationship between these models and the real world.

Planning without Prices

Abstract: Discussions of decentralized planning procedures are not new in the economic literature: they date back to Lange [6], who seems to have found inspiration in the even earlier writings of Walras [13]. However, it is during the last decade that a number of the most important contributions have been made, by Arrow, Hurwicz and Uzawa [2], Arrow and Hurwicz [1] and Malinvaud [8]. Excellent though this work is, it leaves room for extension of the subject in a number of ways