[The rational expectations hypothesis in a life cycle context asserts that agents seek to keep the marginal utility of discounted expenditure constant across time. In this paper we present estimates of a demand system that takes explicit account of this hypothesis. We show how the restrictions from demand theory enable us to identify the model despite the presence of an unobservable variable that can be interpreted as revisions to the marginal utility of discounted expenditure. This allows us to take explicit account of the different effects of anticipated and unanticipated price changes. An important check on our model is the derivation of expenditure elasticities despite the fact that the demand system does not have expenditure on the right hand side. Our estimates are "sensible" and we find that we can reject the hypothesis that revisions to the marginal utility of discounted money are orthogonal to the past values of our variables. We interpret this to be a rejection of the rational expectations hypothesis.]

The existing finance literature assumes the real operating cash flows from leasing or owning are invariant to the ownership of the asset and focuses on tax-related incentives for corporate leasing policy. Our analysis suggests that taxes are important in identifying potential lessees and lessors, but are less important in identifying the specific assets leased. We provide a unified analysis of the various incentives affecting the lease-versus-purchase decision. We then show how these incentives explain the use of contractual provisions such as maintenance clauses, deposits, options to purchase the asset, and metering.

This paper examines the implications of the joint effects of insurance and taxes for the optimal corporate pension strategy. It is shown that neither the “mini-max” nor the “maxi-min” strategy advocated by previous authors is necessarily best in corporate pension management. In the presence of capital market imperfections, the analysis via a single-period contingent-claims model indicates that optimal corporate pension strategy in both asset-allocation and funding decisions can be a noncorner interior solution.

The existing finance literature assumes the real operating cash flows from leasing or owning are invariant to the ownership of the asset and focuses on tax‐related incentives for corporate leasing policy. Our analysis suggests that taxes are important in identifying potential lessees and lessors, but are less important in identifying the specific assets leased. We provide a unified analysis of the various incentives affecting the lease‐versus‐purchase decision. We then show how these incentives explain the use of contractual provisions such as maintenance clauses, deposits, options to purchase the asset, and metering.

This paper examines the implications of the joint effects of insurance and taxes for the optimal corporate pension strategy. It is shown that neither the “mini‐max” nor the “maxi‐min” strategy advocated by previous authors is necessarily best in corporate pension management. In the presence of capital market imperfections, the analysis via a single‐period contingent‐claims model indicates that optimal corporate pension strategy in both asset‐allocation and funding decisions can be a noncorner interior solution.

Our approach to Heiner's thesis is shaped by interest in the processes of cognition, other sources of human behavior, and the implications of knowledge growth for man and the biosphere. His work is illustrative of uncomfortable implications and problems created by the explosive growth of knowledge in the modern era. Many of us work inside large organizations where our responsibility is to promote a kind of intelligent, flexible, and adaptive behavior that Heiner says must emerge as a condition of increased organizational complexity. From that perspective we were attracted to two of Heiner's major points about human behavior: first, that people cannot cope with all the information available; second, that knowledge creates uncertainty. We affirm these statements, but are uncertain of Heiner's view on how increasingly complex, viable, social structures evolve. One of our initial impressions was that he attributes consciousness to subhuman forms of life, even though his article claimed to be imputing only sensory or perceptual powers, not cognitive or conceptual ones. There remains nonetheless an impression that some kind of economic or biological (i.e., success or survival) rationality is the outcome of successful behavior. If Heiner is not attributing consciousness, he is at least observing development of behaviors that permit survival. Economic reasoning might call such behaviors from a retrospective viewpoint. As organisms and organizations become more complex, rationality of this kind seems to require more and more nearly conscious effort. Heiner calls optimization a special case occurring when uncertainty (the C-D gap) approaches zero. Optimization would be rational and also conscious, we infer, since it implies deliberate decision taking. At lower levels of certainty, rule-governed behavior prevails. The choice of rules and of behavior within them could be rational without full consciousness. This we infer is Heiner's meaning and we do not necessarily disagree (as some of our examples will demonstrate). We believe an implication of Heiner's work is that rational (i.e., enabling survival or success) behavior requires increasing degrees of conscious effort. We are given to understand that he is aiming at a more general theory of human behavior, one that subsumes optimization, or economic rationality, as special cases. He aims at illumination rather than revolution he says, but we think the implications are revolutionary. If he is not preserving economic man, then he is destroying the Invisible Hand. From the anthropological perspective, Heiner has situated economic debate squarely into the mainstream of Continental intellec*Wilde: Economist/Strategic Planner, Canada Department of Agriculture, Ottawa, Ontario, KIA 0C5 Canada; LeBaron and Israelsen: Resource Economist and Economist, respectively, Utah State University, Logan, UT 84322. 'This is the summary of a longer paper by A. H. Esser, Psychiatrist, Editor & Publisher, New York City; R. W. Jackson Physicist/Policy Advisor, Science Council of Canada; S. Miles, Policy Consultant, Toronto; J. Mitchell, Anthropologist/Information Manager, Canada Department of Agriculture; R. A. Schulz, Faculty of Management, University of Calgary; W. H. C. Simmonds, Engineer/Sociologist/Futurist, National Research Council of Canada (retired); G. Spraakman, Organizational Design Analyst, Government of Alberta; J. A. Wojciechowski, Philosopher of Science, University of Ottawa.