The problems associated with interpersonal comparisons are particularly intractable. This paper presents a procedure whereby the relative importance of any particular individual varies over the set of social states. In one sense, the stronger (relative to some norm) a person feels about any particular pairwise decision, the larger his say in that outcome. This procedure leads to a nested sequence of aggregate partial orderings which reflects this strength of preference. Under the assumptions presented it is also possible, given any two social states, to characterize the minimal amount of interpersonal comparison which is necessary in order to arrive at an aggregate ordering.

In decision analysis we normally consider the value of information to be a constant against which the cost of information is compared. However, when it is possible to buy information sequentially, the value of information is not a constant. Rather, it is a function of the prices of the various pieces of information, or “observables.” When we are faced with a decision and learn one observable, this information not only helps us make the original decision, but also helps us decide if we should pay for more observables. For this reason, the first observable has a value above and beyond that which we would assign if there were no possibility of obtaining additional information. To decide whether or not to buy one observable we must know the prices of all the observables.

Generalizing the Sharpe-Lintner capital asset pricing model, Dieffenbach [4] presents a model of securities markets in a private enterprise economy in a multiperiod competitive equilibrium with uncertainty. Risk premiums on securities depend on the covariances of holding period returns with the return on the market portfolio and with a multiperiod cost-of-living index. This paper develops a quantitative theory of that relationship suitable for empirical estimation and testing. Whether the Arrow-Pratt relative risk aversion of a representative investor is greater or less than one is important in the theory; the empirical results for the United States suggest that this value exceeds one. A theoretical and empirical application of the theory to the term structure of United States Treasury securities concludes the paper. Mean observed returns are consistent with theoretical predictions for medium and long term securities, but the differences of mean observed returns among bills of different maturities exceed the theoretical predictions.

The financial experiences of the last two years impel a careful and wide-ranging review of the stability of our major types of financial institutions. That review ought to be followed by actions to redress weaknesses or proclivities that, upon analysis, are judged to contribute an undesirable degree of instability within the financial system.

Richard C. Aspinwall, Discussion: Implications of Recent Banking Developments for Financial Stability, The Journal of Financial and Quantitative Analysis, Vol. 10, No. 4, 1975 Proceedings (Nov., 1975), pp. 611-613

Journal Article An Asymptotic Theory of Growth Under Uncertainty Get access Robert C. Merton Robert C. Merton Massachusetts Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 42, Issue 3, July 1975, Pages 375–393, https://doi.org/10.2307/2296851 Published: 01 July 1975

[A one-way expected utility representation has the expected utility of one probability measure greater than the expected utility of another probability measure whenever the first is preferred to the second. It requires preferences to be acyclic but not necessarily transitive, and does not require indifference to be transitive. Preference axioms which are sufficient for one-way expected utility for sets of simple probability measures have been presented before (see [8]). This paper uses additional axioms to extend the one-way representation to sets of discrete and more general probability measures.]

This paper presents a methodology for determining the true costs of alternative sources of financing for the multinational corporation when the risk of exchange rate changes is present and different tax rates and regulations are in effect. The cost formulas presented can then be used to calculate the cheapest financing source given the expected exchange rate changes.

Canonical correlation analysis of manufacturing firm data demonstrated that organizational ?competence? (executive ratings of organizational performance and executive turnover) was not strongly related to situational variables like organization size, structure, and technology. Instead, ?competence? was related primarily to management's values regarding the firm's publics, such as customers, suppliers, employees, and government.