The State of Maine recently imposed an additional regulation on the maturity of small loans offered by finance companies, presumably to protect the consumer. The effectively restricted the maturity of these high interest rate loans to 36 months. Within five years, the number of licensees (finance company offices) declined from 116 to 24. Within another five years, all of these lenders had completely ceased operations. Hypotheses on the effect and value to consumers of the regulation are stated operationally and tested empirically. This study includes estimation of the loan companies' cost function, (accounting) profit rates and output and a survey of the individuals directly affected by the demise of the companies. The analysis indicates (1) that the maturity restriction made ordinary operations unprofitable, (2) why this occurred, and (3) that half of the consumers did not obtain funds elsewhere.

Replacement cost, Rule 3-17, Inventories, Estimators of replacement costs

Edwin J. Elton, Martin J. Gruber, Manfred W. Padberg, Simple Rules for Optimal Portfolio Selection: The Multi Group Case, The Journal of Financial and Quantitative Analysis, Vol. 12, No. 3 (Sep., 1977), pp. 329-345

[This paper describes a market in which firms vary their quantities of production according to a new adjustment process. Each firm bases its new production entirely upon a knowledge of its own previous productions and profits. It has no knowledge of the payoff functions of the market. Numerical analysis of the process indicates an approach to equilibrium for all initial states. The set of allowed limit points is rigorously characterized, and determined explicitly in the case of two firms. Some exact solutions are found. The process can be regarded as a way of playing a continuous game with a minimum of information.]

A theoretical analysis of optimum population, 179.—Empirical evidence from the Franc Zone, 183.—Possibilities of bias, 189.—Conclusion, 191.

For decision makers, we emphasize that it is feasible to consider multiple subjective criteria in a capital budgeting problem. The applicability of the procedures outlined is enhanced by the limited data base necessary to obtain subjective rankings, remembering that here we are only concerned with side criteria.In this paper, we have formulated the capital investment problem in a graph theoretic framework. We characterized the problem as being composed of a set of finite alternatives, a set of subjective criteria, and a set of resource constraints. This formulation leads to an integer programming problem in which the rankings of sets of alternatives on the multiple subjective criteria are aggregated into a single index. It is stressed that we used a single budgetary constraint in the example but that the procedure can accommodate additional constraints. We also assumed that management has specific side criteria and that it is possible for the decision makers to rank all alternatives for each of those criteria.The application of the above procedure to any problem involves three steps:1) From the decision maker, or groups of decision makers, the agreement matrix π is developed. This involves:a) defining the alternatives, b) defining the side criteria, c) asking management to rank each alternative under each criterion, andd) if appropriate, asking management to weigh the relative importance of each of the side criteria.2) From the technical considerations of the problem, determine the resource constraints. In our example, this included the investment requirements of each alternative and the total resources available.3) Solve the problem as posed above as a group of m integer programming problems.

The work of Black and Scholes [2] and Merton [4] suggests that analysis of hedged positions in a continuous time random walk model yields powerful insights into the valuation of financial securities. The present paper extends this methodology in a straightforward fashion to foreign exchange transactions. By adopting the device of hedging in a secondary market for forward currency contracts against a long position in spot currency, a simple statement of boundary conditions for the forward position can be detailed. This allows a direct solution of the continuous time valuation problem that yields the interest rate parity theory.

J. L. Sharma, Robert E. Kennedy, A Comparative Analysis of Stock Price Behavior on the Bombay, London, and New York Stock Exchanges, The Journal of Financial and Quantitative Analysis, Vol. 12, No. 3 (Sep., 1977), pp. 391-413

In recent studies of the temporary competitive equilibrium, agents' current decision correspondences are derived using a standard recursion procedure, which is only applicable when the planning horizon is finite. This paper presents a general derivation of the current decision rule without restrictions on the time horizon or the number of states of the world in any period. It is shown that if utility is continuous in the product topology and if, in each period, expectations and the current constraint correspondence are continuous, then the current decision rule is upper semi-continuous. This result is obtained by associating with each current decision a set of feasible future plans. The expected utility of a current decision is then the expected utility of the best feasible future plan. The feasible future plan correspondence is shown to be continuous and the Maximum Theorem completes the proof.

This paper studies conditions under which aggregate demand behavior will satisfy the usual revealed preference axioms. Assuming a fixed distribution of income and the hypothesis that individual demand is homogeneous in income, it is shown that the weak axiom of revealed preference or the congruence axiom will hold in the aggregate if each individual demand satisfies the corresponding axiom. It is also shown that the hypothesis of homogeneity in income is not necessary for the weak axiom to hold in the aggregate. 1. INTRODUCrION THE PURPOSE OF THIS PAPER is to establish conditions under which aggregate demand behavior will have properties normally associated with individual demand when the distribution of income remains fixed. The best-known result of this type is that if each individual has a homogeneous concave utility function, and the distribution of income is fixed, then the aggregate demand correspondence will be one derived from a homogeneous concave utility function. This was first established by Eisenberg [4], though not in the context of demand theory, who employed duality theory of concave programming. More recently Chipman [1] interpreted Eisenberg's results from the point of view of demand theory and gave a proof of the aggregation theorem based in part on earlier work of Chipman and Moore [2 and 3]. In this paper utility functions will not be employed; instead, a revealed preference approach is taken. Strengthened forms of the weak axiom of revealed preference, the strong axiom of revealed preference, and the congruence axiom are used which are preserved in aggregation, and it is shown that demand correspondences homogeneous of degree one in income which satisfy the regular revealed preference axioms will also satisfy the strengthened versions. One advantage of this approach is that it shows the Eisenberg-Chipman aggregation theorem is a purely algebraic problem and does not require continuity or convexity assumptions. It will also be shown that there are demand functions not homogeneous of degree one in income which satisfy the strengthened form of the