upon establishing a means of distinguishing which of two alternative disclosure treatments is the more -useful. The traditional means of attempting to make such distinction is through rational argumentation. Rational argumentation is very useful in exploring and drawing out the logical implications of alternative treatments, but may not be sufficient to enable selection of the better treatment. Recently attempts have been made to employ the Predictive as the means of distinguishing the better of two alternative accounting measurements. This criterion selects as the better of two alternative accounting measurements the one which has the greater to predict a given event considered to be of particular importance.' Surely the application of the predictive ability criterion in accounting research can accomplish much, but continual effort should be made to bring other research methods to bear on the problem of improving accounting disclosure. This paper presents an effort to develop a criterion

Journal Article The Measurement of Utility Get access C. Hillinger C. Hillinger Case Western Reserve University, Cleveland Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 36, Issue 1, January 1969, Pages 111–116, https://doi.org/10.2307/2296348 Published: 01 January 1969 Article history Received: 19 February 1968 Revision received: 15 July 1968 Published: 01 January 1969

Journal Article Response of Paid Student Subjects to Differential Behaviour of Robots in Bifurcated Duopoly Games Get access A. C. Hoggatt A. C. Hoggatt University of California, Berkeley Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 36, Issue 4, October 1969, Pages 417–432, https://doi.org/10.2307/2296468 Published: 01 October 1969 Article history Received: 15 February 1969 Revision received: 15 May 1969 Published: 01 October 1969

Journal Article Imperfect Competition with Unknown Demand Get access J. Hadar, J. Hadar Case Western Reserve Search for other works by this author on: Oxford Academic Google Scholar C. Hillinger C. Hillinger University, Cleveland Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 36, Issue 4, October 1969, Pages 519–525, https://doi.org/10.2307/2296474 Published: 01 October 1969 Article history Received: 15 September 1967 Revision received: 15 April 1969 Published: 01 October 1969

I. The growth maximization hypothesis, 644. — II. The demand and supply of firms when managers maximize stockholder welfare, 648. — III. The demand and supply of firms when managers and stockholders have different expectations, 653. — IV. Differences in discount rates as a cause of mergers, 654. — V. Growth maximization in light of recent merger history, 657.

that the size coefficient (i8jl) was statistically significant at the 0.05 level in thirty-five of the 118 industries examined.6 The results for these industries are reported in table 1. The range of variation in the magnitude of i,/3 is considerable; the high, in Perfume and Cosmetics, is 0.114, and the low, 0.014, is found in Men's Clothing. The mean coefficient for the thirty-five industries is 0.0405 suggesting that on the basis of this group one would expect the rate of return to rise by 1.2 per cent if size doubles, and by 4.05 per cent for a ten-fold increase in size. VI Conclusions

OST models of portfolio selection have M been one-period models. I examine the combined problem of optimal portfolio selection and consumption rules for an individual in a continuous-time model whzere his income is generated by returns on assets and these returns or instantaneous growth rates are stochastic. P. A. Samuelson has developed a similar model in discrete-time for more general probability distributions in a companion paper [8]. I derive the optimality equations for a multiasset problem when the rate of returns are generated by a Wiener Brownian-motion process. A particular case examined in detail is the two-asset model with constant relative riskaversion or iso-elastic marginal utility. An explicit solution is also found for the case of constant absolute risk-aversion. The general technique employed can be used to examine a wide class of intertemporal economic problems under uncertainty. In addition to the Samuelson paper [8], there is the multi-period analysis of Tobin [9]. Phelps [6] has a model used to determine the optimal consumption rule for a multi-period example where income is partly generated by an asset with an uncertain return. Mirrless [5] has developed a continuous-time optimal consumption model of the neoclassical type with technical progress a random variable.

M ODERN investment functions, springing from the work of Jorgenson,' differ from earlier investment functions in that they start with an explicit assumption about the economy's aggregate production function. In particular, Jorgenson assumes a Cobb-Douglas production function. Starting with an explicit production function means that it is possible to calculate algebraically the impact of factors, such as interest rates, that could not be isolated in earlier investment functions. Choosing the correct production function is important in estimating partial effects, but the proper definition of the cost of capital variable is also central to their correct estimation. Formulations other than those of Jorgenson are possible. If one had priors about the differences in the opportunity cost of capital under the Duesenberry supply of funds hypothesis,2 the cost of capital could be defined to embody these priors. Doing so would lead to different estimates of the partial effects of tax rates, interest rates, and depreciation policies. Thus, the partial effects that emerge from a modern investment function are a product of the initial specifications of the production function and the cost of capital variable. In addition to choosing the correct production function and the correct definition of the cost of capital, there are other directions in which the modern investment function can be modified. In Jorgenson's neoclassical equilibrium world the cost of capital and the marginal product of capital are always identical. Thus, the desired capital stock at any moment of time is equal to output divided by the marginal product of capital (the cost of capital) multiplied by the elasticity of output with respect to capital. Thus, the only problems are ones of correct data measurement and estimation of the lag structure. This formulation has some theoretical problems. Introducing lags means that the economy is not in equilibrium. actual capital stock lags behind the desired capital stock. Therefore, the cost of capital and the marginal product of capital are not equal. Even if they were equal, the marginal product of capital will differ before and after expansion of the capital stock. Thus output should be divided by the expected cost of capital rather than the actual cost of capital to determine the desired capital stock.3 In a disequilibrium world, the cost of capital and the marginal product of capital can diverge. Profit maximizing firms invest to eliminate the gap between the marginal product of capital and the cost of capital. investment necessary to eliminate this gap depends upon the economy's production function. This paper investigates a disequilibrium investment function based on a Cobb-Douglas production function and Jorgenson's definition of the cost of capital. I was led to investigate such a model in the process of attempting to use the Jorgenson investment function.4 Several problems emerged in addition to those investigated elsewhere.5 (1) Although the Jorgenson investment function fit quarterly time series data for producers' * author would like to thank the referee for many useful comments. 'Dale W. Jorgenson, Anticipations and Behavior, in J. S. Duesenberry, E. Kuh, G. Fromm, and L. R. Klein (editors), Brookings Quarterly Econometric Model of the United States (Chicago: Rand McNally, 1965). Rational Distributed Lag Functions, Econometrica, XXXIV (Jan. 1966), 135-149. With Calvin D. Siebert, A Comparison of Alternative Theories of Corporate Behavior, American Economic Review, XVIII (Sept. 1968). Optimal Capital Accumulation and Corporate Behavior, Journal of Political Economy, LXXVI (Nov./Dec. 1968), 1123-1151. With J. A. Stephenson, The Time Structure of Behavior in United States Manufacturing, 1947-60, this REvIEw, XLIV (Feb. 1967), 16-27. Investment Behavior in U.S. Manufacturing, 1947-60, Econometrica, XXXV (April 1967), 169-220. 2J. Duesenberry, Business Cycles and Economic Growth (New York: McGraw-Hill, 1968), 87-112. 3This was pointed out to me by my colleague Duncan Foley. 'Anyone wishing the detailed econometric results of my attempts to fit the Jorgenson model to producer's durable equipment and nonresidential structures can have them by writing to me. 'Robert Eisner and M. I. Nadiri, Investment Behavior and Neoclassical Theory, this REvIEw, L (Aug. 1968).

There occurs on some occasions a difficulty in deciding the direction of causality between two related variables and also whether or not feedback is occurring. Testable definitions of causality and feedback are proposed and illustrated by use of simple two-variable models. The important problem of apparent instantaneous causality is discussed and it is suggested that the problem often arises due to slowness in recording information or because a sufficiently wide class of possible causal variables has not been used. It can be shown that the cross spectrum between two variables can be decomposed into two parts, each relating to a single causal arm of a feedback situation. Measures of causal lag and causal strength can then be constructed. A generalisation of this result with the partial cross spectrum is suggested.