This paper is concerned with the design of non-cooperative game forms for economic decision problems. A decision problem is presented which admits non-dictatorial game forms with the following properties: Nash equilibria exist and all Nash equilibrium outcomes are Pareto optimal; or dominant strategies exist and all dominant strategy equilibria are Pareto optimal; but not both. This is, any (non-dictatorial) game form whose Nash equilibria are well behaved does not have dominant strategies, and any game form with well behaved dominant strategy equilibria must have at least one non-optimal non-dominant strategy Nash equilibrium.

This paper presents a theory of competition among pressure groups for political influence. Political equilibrium depends on the efficiency of each group in producing pressure, the effect of additional pressure on their influence, the number of persons in different groups, and the deadweight cost of taxes and subsidies. An increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers. This analysis unifies the view that governments correct market failures with the view that they favor the politically powerful: both are produced by the competition for political favors.

Economic theorists have interpreted the "efficient markets hypothesis" to assert that equilibrium asset prices reveal all decision-relevant information in the market. This paper establishes conditions on investors' utility functions of future wealth which are necessary for the efficient markets hypothesis to be satisfied and be robust to slight perturbations of endowments and the joint distribution of current information and future asset values. The main result states that over the relevant range of future wealth values, there are three possible cases: (i) all investors are risk-neutral; (ii) modulo a change in the wealth origin, each investor has constant relative risk aversion with the same constant for all investors; or (iii) all investors have constant absolute risk aversion.

Because it concentrates on the co-movements of jointly determined endogenous variables, the traditional analysts of labor productivity does not directly address the question of the causes of productivity change.This problem is solved by a modelling approach in which productivity and other choice variables are assumed to respond optimally to five broad classes of exogenous (causal) shocks.Although these shocks are unobservable to the econometrician, maximum likelihood estimates of their relative importance in the determination of productivity change are obtained.

Thomas S. Y. Ho, Anthony Saunders, Fixed Rate Loan Commitments, Take-Down Risk, and the Dynamics of Hedging with Futures, The Journal of Financial and Quantitative Analysis, Vol. 18, No. 4 (Dec., 1983), pp. 499-516

Quarterly earnings, Predictive ability, Time-series, Goodness-of-fit

Abstract ABSTRACT: Problems with the performance of U.S. manufacturing firms have become obvious in recent years. Japanese and Western European manufacturers are able to produce higher quality goods with fewer workers and lower inventory levels than comparable U.S. firms. The ability of foreign firms to become more efficient producers has gone largely unnoticed in the education and research programs of many U.S. business schools. A much greater commitment to understanding the factors critical to the success of manufacturing firms is needed. While an understanding of the determinants for successful manufacturing performance will require contributions from many disciplines, accounting can play a critical role in this effort. Accounting researchers can attempt to develop non-financial measures of manufacturing performance, such as productivity, quality, and inventory costs. Measures of product leadership, manufacturing flexibility, and delivery performance could be developed for firms bringing new products to the marketplace. Expanded performance measures are also necessary for capital budgeting procedures and to monitor production using the new technology of flexible manufacturing systems. A particular challenge is to deemphasize the current focus of senior managers on simple, aggregate, short-term financial measures and to develop indicators that are more consistent with long-term competitiveness and profitability.

Abstract The article presents the author's opinions on organization theory and auditing. The articles: "Auditing: Perspectives From Multi-Person Decision Theory," by Robert Wilson, and "Organization Theory and Methodology," by Michael C. Jensen, were published in the April 1, 1983 issue of the periodical "Accounting Review." The two articles have much in common. Both emphasize the fact that research on intra- and inter-organization equilibrium behavior is mushrooming and now able to accommodate accounting questions in a way never before feasible, or perhaps even imaginable. Wilson suggests that cost allocation may reflect rational (equilibrium) obfuscation in a financial-reporting context. Wilson emphasizes the importance of "reputation" as an explanatory variable in many economic relationships. Reputation-building is the major factor contributing to economies of scale in auditing. According to Jensen, accounting methods are chosen according to organizations' policies. The use of mathematics as a factor of production in the research process comes into the fore with Jensen's vision of two agency models.