A probabilistic discovery model modified after Kaufman's earlier model is simplified to reduce computational demands and to reduce the sensitivity of the resulting estimates. The model is applied to the North Sea to estimate remaining oil reserves and forecast future discoveries. The simplification jeopardizes some informational detail, but the errors and approximations inherent in historical data sometimes overvalue the available information. A broader categorization scheme helps to control errors in this case. The model uses a stochastic production function based on a timing relationship between exploratory efforts and reservoir discovery and on a dynamic relationship of productivity and resource depletion. 21 references, 4 tables. (DCK)

The equilibrium value of a levered firm facing growth opportunities is shown to involve the valuation of a lottery over (cooperative) games rather than a lottery over specific monetary outcomes. In the absence of assumptions about negotiating risk, the value of the firm's claims is seen to be ambiguous even with zero transactions costs. This ambiguity is compounded if the core of the game is empty. This paper rationalizes specific financial instruments and institutions as means for attenuating negotiation costs and core existence problems. Furthermore, the valuation of these instruments requires determining the certainty-equivalent of a lottery over games.

This paper is an empirical extension of spatial price theory with results being established by selected statistical approaches, namely multiple linear regression and Chow's test. The locational pattern of competitors as well as varying intensities of competition at different spatial market points are found to play dominant roles in determining the pricing patterns of American firms. Differences in the price practices of firms of different states are identified, and price discrimination over geographic space is found to be the most prevalent pricing technique.

There are two well-known distinct aspects to the behavior of a risk-averse individual towards a risky proposition: the position he takes, long or short, with regard to the gamble, and the scale of the position taken–the amount by which he goes long or short. On one hand, the first aspect depends only on the individual's assessment of the expected return from the gamble relative to a safe return. The second aspect, on the other hand, will be influenced by the individual's degree of risk aversion and the level of risk of the gamble.

Leslie Young, James E. Anderson; The Optimal Policies for Restricting Trade under Uncertainty, The Review of Economic Studies, Volume 47, Issue 5, 1 October 198

Abstract Reviews the book "Written Contributions of Selected Accounting Practitioners," vol. 2, by Paul Grady.

Abstract The article presents reply by authors to comments by I. Solomon and P.J. Beck, in a paper titled "A Comparison of General Price Level and Historical Cost Financial Statements in the Prediction of Bankruptcy: A Comment," published in the July 1980 issue of the journal "The Accounting Review." According to authors, Solmon and Beck correctly indicated that other uses of general price level (GPL) information must be examined. Perhaps the focus of future research should be to determine whether GPL information is useful in assisting investors and creditors in predicting future cash flows in light of FASB's current focus. However, Solmon and Beck failed to illustrate that conclusion of authors of the present article related to GPL and HC "does not actually follow from the analysis and results." Authors also did not prove any serious deficiencies in the methodology used to reach those results. Authors of the article continue to contend that if the criterion of usefulness is the ability to predict bankruptcy, their study showed that GPL financial statements are equally useful as, but not more useful than, HC financial statements.

Abstract Reviews the book "Quantitative Planning and Control: Essays in Honor of William Wager Cooper on the Occasion of His 65th Birthday," by Yuji Ijiri and Andrew B. Whinston.