Economists and psychologists have, on the whole, exhibited sharply different perspectives on the elicitation of preferences. Economists, who have made preference the central primitive in their thinking about human behavior, have for the most part rejected elicitation and have instead sought to infer preferences from observations of choice behavior. Psychologists, who have tended to think of preference as a context-determined subjective construct, have embraced elicitation as their dominant approach to measurement. This volume, based on a symposium organized by Daniel McFadden at the University of California at Berkeley, provides a provocative and constructive engagement between economists and psychologists on the elicitation of preferences.

For a number of years, I have been teaching and doing research in the economics of uncertainty, information, and insurance. Although it is now possible to find textbooks and books of essays on uncertainty and in formation in economics and finance for graduate students and researchers, there is no equivalent material that covers advanced research in insurance. The purpose of this book is to fill this gap in literature. It provides original surveys and essays in the field of insurance economics. The contributions offer basic reference, new material, and teaching supple ments to graduate students and researchers in economics, finance, and insurance. It represents a complement to the book of readings entitled Foundations of Insurance Economics - Readings in Economics and Finance, recently published by the S.S. Huebner Foundation of Insurance Education. In that book, the editors (G. Dionne and S. Harrington) disseminate key papers in the literature and publish an original survey of major contributions in the field."

A critical issue in research and development (R&D) management is the structure and use of evaluative efforts for R&D programs. The book introduces the different methods that may be used in R&D evaluation and then illustrates these methods by describing actual evaluation in practice using those methods. The book is divided into two sections. The first section provides an introduction and details on several popular methodologies used in the evaluation of research and development activities. The second half of the book focuses on evaluation in practice and is comprised of several chapters offering the perspectives of individuals in different types of organizations. The book concludes with an annotated bibliography of selected R&D evaluation literature, focusing on post-1985 literature, on research evaluation.

General equilibrium In this book we try to cope with the challenging task of reviewing the so called general equilibrium model and of discussing one specific aspect of the approach underlying it, namely, market completeness. With the denomination "general equilibrium" (from now on in short GE) we shall mainly refer to two different things. On one hand, in particular when using the expression "GE approach", we shall refer to a long established methodolog ical tradition in building and developing economic models, which includes, as of today, an enormous amount of contributions, ranging in number by several 1 thousands * On the other hand, in particular when using the expression "stan dard differentiable GE model", we refer to a very specific version of economic model of exchange and production, to be presented in Chapters 8 and 9, and to be modified in Chapters 10 to 15. Such a version is certainly formulated within the GE approach, but it is generated by making several quite restrictive 2 assumptions * Even to list and review very shortly all the collective work which can be ascribed to the GE approach would be a formidable task for several coauthors in a lifetime perspective. The book instead intends to address just a single issue. Before providing an illustration of its main topic, we feel the obligation to say a word on the controversial character of GE. First of all, we should say that we identify the GE approach as being based 3 on three principles .

Part I provides an introduction to this study of players' beliefs and decision rules in to obtain data in order to public good games. The experimental method will be used test theoretical ideas about beliefs and decision rules. Chapter 1 discusses some methodological issues concerning experimentation in the social sciences. In particular, this chapter focuses on the relationship between experimental economics and social psychology. Chapter 2 provides an overview of psychological and economic ideas concerning players' beliefs and decision rules in public good games. This chapter forms the theoretical foundation of the book. Chapter 3 discusses some basic experimental tools which will be used in the experiments to be reported in part II. These basic experimental tools make up two procedures, to obtain a measure of a player's social orientation and a measure of her or his beliefs. 1. Experimentation in the social sciences 1.1 Introduction The study of human behavior is an area where economics and psychology overlap. Although both disciplines are concerned with the same human beings, they often have different points of view on how people make choices and the motivation behind it.

Aggregation of individual opinions into a social decision is a problem widely observed in everyday life. For centuries people tried to invent the best' aggregation rule. In 1951 young American scientist and future Nobel Prize winner Kenneth Arrow formulated the problem in an axiomatic way, i.e., he specified a set of axioms which every reasonable aggregation rule has to satisfy, and obtained that these axioms are inconsistent. This result, often called Arrow's Paradox or General Impossibility Theorem, had become a cornerstone of social choice theory. The main condition used by Arrow was his famous Independence of Irrelevant Alternatives. This very condition pre-defines the local' treatment of the alternatives (or pairs of alternatives, or sets of alternatives, etc.) in aggregation procedures. Remaining within the framework of the axiomatic approach and based on the consideration of local rules, Arrovian Aggregation Models investigates three formulations of the aggregation problem according to the form in which the individual opinions about the alternatives are defined, as well as to the form of desired social decision. In other words, we study three aggregation models. What is common between them is that in all models some analogue of the Independence of Irrelevant Alternatives condition is used, which is why we call these models Arrovian aggregation models. Chapter 1 presents a general description of the problem of axiomatic synthesis of local rules, and introduces problem formulations for various versions of formalization of individual opinions and collective decision. Chapter 2 formalizes precisely the notion of rationality' of individual opinions and social decision. Chapter 3 deals with the aggregation model for the case of individual opinions and social decisions formalized as binary relations. Chapter 4 deals with Functional Aggregation Rules which transform into a social choice function individual opinions defined as choice functions. Chapter 5 considers another model &endash; Social Choice Correspondences when the individual opinions are formalized as binary relations, and the collective decision is looked for as a choice function. Several new classes of rules are introduced and analyzed.

Expected utility provides simple, testable properties of the optimum behavior that should be displayed by risk-averse individuals in risky decisions. Simultaneously, given the existence of paradoxes under the expected utility paradigm, expected utility can only be regarded as an approximation of actual behavior. A more realistic model is needed. This is particularly true when treating attitudes toward small probability events: the standard situation for insurable risks. Non-Expected Utility and Risk Management examines whether the existing results in insurance economics are robust to more general models of behavior under risk.

It is generally acknowledged that deterministic formulations of dy namical phenomena in the social sciences need to be treated differently from similar formulations in the natural sciences. Social science phe nomena typically defy precise measurements or data collection that are comparable in accuracy and detail to those in the natural sciences. Con sequently, a deterministic model is rarely expected to yield a precise description of the actual phenomenon being modelled. Nevertheless, as may be inferred from a study of the models discussed in this book, the qualitative analysis of deterministic models has an important role to play in understanding the fundamental mechanisms behind social sci ence phenomena. The reach of such analysis extends far beyond tech nical clarifications of classical theories that were generally expressed in imprecise literary prose. The inherent lack of precise knowledge in the social sciences is a fun damental trait that must be distinguished from "uncertainty. " For in stance, in mathematically modelling the stock market, uncertainty is a prime and indispensable component of a model. Indeed, in the stock market, the rules are specifically designed to make prediction impossible or at least very difficult. On the other hand, understanding concepts such as the "business cycle" involves economic and social mechanisms that are very different from the rules of the stock market. Here, far from seeking unpredictability, the intention of the modeller is a scientific one, i. e."

JEAN-FRANQOIS MERTENS This book presents a systematic exposition of the use of game theoretic methods in general equilibrium analysis. Clearly the first such use was by Arrow and Debreu, with the "birth" of general equi librium theory itself, in using Nash's existence theorem (or a generalization) to prove the existence of a competitive equilibrium. But this use appeared possibly to be merely tech nical, borrowing some tools for proving a theorem. This book stresses the later contributions, were game theoretic concepts were used as such, to explain various aspects of the general equilibrium model. But clearly, each of those later approaches also provides per sea game theoretic proof of the existence of competitive equilibrium. Part A deals with the first such approach: the equality between the set of competitive equilibria of a perfectly competitive (i.e., every trader has negligible market power) economy and the core of the corresponding cooperative game."

Quantified Societal Risk and Policy Making is the result of an international workshop on societal risk organized by the Dutch Ministry for Transport, Public Works and Water Management with additional financial support from the Directorate for Transportation (DG VII) of the European Union. Managing risks, whether there is a strong man-made or natural component, basically means assessing alternative options under uncertainty. The possibility of multiple fatalities is one of the factors that can vary between options. This volume is concerned with one particular type of risk - the risk of death of a number of people in one accident - and with one particular tool - probabilistic risk analysis - as they are developing in various domains of society nowadays. Generally, this risk is labelled societal risk. This book shows how such comparisons are shaped at present in various hazard domains, such as: flood protection location and physical planning of industry transportation of chemicals, and prevention of aircraft accidents. It examines how to represent aggregate risks from major hazards in ways that can be handled by policy-makers. The purpose of the book is to increase the awareness of societal risk, disseminate available knowledge of existing approaches, and exchange information on applications from various domains. Quantified Societal Risk and Policy Making should be of interest to all those professionally concerned with defining the optimal separation between hazardous activities and equally desirable developments nearby.

Industrial Price, Quantity, and Productivity Indices: The Micro-Economic Theory and an Application gives a comprehensive account of the micro-economic foundations of industrial price, quantity, and productivity indices. The various results available from the literature have been brought together into a consistent framework, based upon modern duality theory. This integration also made it possible to generalize several of these results. Thus, this book will be an important resource for theoretically as well as empirically-oriented researchers who seek to analyse economic problems with the help of index numbers. Although this book's emphasis is on micro-economic theory, it is also intended as a practical guide. A full chapter is therefore devoted to an empirical application. Three different approaches are pursued: a straightforward empirical approach, a non-parametric estimation approach, and a parametric estimation approach. As well as illustrating some of the more important concepts explored in this book, and showing to what extent different computational approaches lead to different outcomes for the same measures, this chapter also makes a powerful case for the use of enterprise micro-data in economic research.

Social Networks and Trust discusses two possible explanations for the emergence of trust via social networks. If network members can sanction untrustworthiness of actors, these actors may refrain from acting in an untrustworthy manner. Moreover, if actors are informed regularly about trustworthy behavior of others, trust will grow among these actors.
A unique combination of formal model building and empirical methodology is used to derive and test hypotheses about the effects of networks on trust. The models combine elements from game theory, which is mainly used in economics, and social network analysis, which is mainly used in sociology.
The hypotheses are tested (1) by analyzing contracts in information technology transactions from a survey on small and medium-sized enterprises and (2) by studying judgments of subjects in a vignette experiment related to hypothetical transactions with a used-car dealer.

Positive conceptions of healthy aging are rightly displacing negative ageist perceptions of older members of our society. Nevertheless, at some stage, most elderly citizens will require some form of assistance from other members of society. When the body or mind begins to fail, a legitimate need for intervention and care will arise. This second volume on Aging discusses this theme.

In this chapter the topic of this book is introduced. Section 1. 1 provides a brief and rather general motivation for the scientific project undertaken here. Interest groups are a very popular object of scientific inquiry, and they received already considerable research attention from scholars in political science, as well as from researchers in economics. Necessarily, then, this book adds to a literature which is already quite developed. A detailed positioning in this literature of the theoretical material presented in this monograph will be given in Chapter 2. This second chapter will also, by means of a review of the empirical literature, provide a more general overview of the issues deemed to be important when studying the influence of interest groups on public policy. The outline of the entire book is described in greater detail in Section 1. 2. As most issues involved are more easily presented in later chapters, this introductory chapter is kept brief. 1. 1 MOTIVATION Substantial political power is often attributed to interest groups. Examples abound in both the economics and political science literature, as well as in journalistic accounts and popular publications. On many occasions the authors express concerns about the negative impact of interest groups on the democratic quality of government. "The interests of a small group are served at the expense of the interests of the general public, the taxpayers ," is an often heard popular complaint.

Most economic evaluations of health care programmes at the moment are cost effectiveness and cost-utility analyses. The problem with these methods is that their theoretical foundations are unclear. This has led to confusion about how to define the costs and health effects and how to interpret the results of these studies. In the environmental and traffic safety fields it is instead common to carry out traditional cost-bene: fit analyses of health improving programmes. This striking difference in how health programmes are assessed in different fields was the original motivation for writing this book. The aim of the book is to tty and provide a coherent framework within cost-bene: fit analysis and welfare economics for the different methods of economic evaluation in the health care field. The book is written in an easily accessible manner and several examples of applications of the different methods are provided. It is my hope that it will be useful both for teaching purposes and as a guide for practitioners in the field. Glenn C. Blomquist, John D. Graham, Rich O'Conor and four anonymous referees provided helpful comments on previous versions of the manuscript. I would also like to express my gratitude to the following persons for helping me to prepare the manuscript: Carl-Magnus Berglund, Carin Blanksvard, Ann Brown, and Ziad Obeid."

G. Galeotti* and M. Marrelli** *Universita di Perugia **Universita di Napoli 1. The economic analysis of optimal taxation has permitted considerable steps to be taken towards the understanding of a number of problems: the appropriate degree of progression, the balance between different taxes, the equity-efficiency trade-off etc .. Though at times considered as abstract and of little use in policy design, the issues it addresses are real ones and very much on the agenda of many countries. As usual in scientific debate, criticisms have contributed to the correct understanding of the theoretical problems involved and made clear that, at the present state of the art, definitive conclusions may be premature. A first well-taken criticism addresses the assumption, underlying optimal taxation models, of a competitive economy with perfect information on the part of individual agents and full market clearing. Once we leave the Arrow-Debreu world, it is no longer necessarily the case that taxes and transfers introduce distortions on otherwise efficient allocations.

Economic and financial research on insurance markets has undergone dramatic growth since its infancy in the early 1960s. Our main objective in compiling this volume was to achieve a wider dissemination of key papers in this literature. Their significance is highlighted in the introduction, which surveys major areas in insurance economics. While it was not possible to provide comprehensive coverage of insurance economics in this book, these readings provide an essential foundation to those who desire to conduct research and teach in the field. In particular, we hope that this compilation and our introduction will be useful to graduate students and to researchers in economics, finance, and insurance. Our criteria for selecting articles included significance, representativeness, pedagogical value, and our desire to include theoretical and empirical work. While the focus of the applied papers is on property-liability insurance, they illustrate issues, concepts, and methods that are applicable in many areas of insurance. The S. S. Huebner Foundation for Insurance Education at the University of Pennsylvania's Wharton School made this book possible by financing publication costs. We are grateful for this assistance and to J. David Cummins, Executive Director of the Foundation, for his efforts and helpful advice on the contents. We also wish to thank all of the authors and editors who provided permission to reprint articles and our respective institutions for technical and financial support.

Industry Structure and Pricing: The New Rivalry in Infrastructure extends current economic models by incorporating effects of actual and potential rivalry in markets outside the markets of immediate interest. Focusing on the contestable model, the author shows how diverse patterns of actual and potential rivalry, called multilateral rivalry or MLR, affect the appropriateness of many regulatory policies. It is specifically shown that many conclusions of the contestability literature are overly generous to firms that might want to protect or extend their monopoly positions. While this book's refinement to existing economic theory gives strong results, it is still based on static production functions and demands - integrated to provide a dynamic view of multilateral rivalry.

Canada and the countries of Latin America are in the midst of major changes and choices in the area of labor markets and related social policy. These decisions are likely to have profound consequences for the quality of life of workers throughout the hemisphere. Labor Market Policies in Canada and Latin America: Challenges of the New Millennium reviews the evidence of Canada and Latin America on three major labor policy instruments - unemployment insurance, minimum wages and training - and on the effects of the payroll taxes which are the main means of funding the unemployment insurance system and other components of social expenditure. This is the first study attempting an in-depth comparison of these labor policy instruments between Canada and Latin America. The useful juxtaposition of Canadian and Latin American experiences comes at a time when the trend in Canada is to back away from the perhaps overly generous or ineffectively administered elements of the labor legislation/social security net and when Latin American countries have undertaken significant reforms of their past systems but require further changes to move toward the sorts of legislation and support systems that characterize developed countries. The experiences of Canada and Latin America are mutually relevant since all are small economies forced to adjust to events at the world or hemispheric level and most are inclined to approach policy in an intermediate fashion which falls between the more market-oriented American and the more interventionist European models. Together with its comparative aspect, this volume attempts a more balanced and in-depth assessment in each of the policy areas than has hitherto been available. The gradually increasing base of available empirical data on the period after the reforms has been used in the studies, which provide thorough syntheses of the available research for Canada and Latin America.

This book is an analysis of the modern economy's two major resource allocation mechanisms. The price mechanism has been subject to extensive examination by neoclassical economists, but there has been relatively little attention paid to the impact of the organization of firms on allocation. Professor Ichiishi presents a distinctive theory of the firm which views firms as organizations characterized by diversity of interest among their members, but an acceptance of a coordinated choice of activities: a coalition formed when people play a cooperative game. Using a theory embodying both the neoclassical market mechanism, and the cooperative game, the author derives a number of original results thereby contributing to the theory of the firm, cooperative game theory, and general equilibrium analysis theory.

In the wake of the publication of Forrester's World Dynamics and Meadow's The Limits to Growth-books which in The Netherlands may have received ex cessive attention from the public at large-the Netherlands Organization for Applied Scientific Research (TNO) established a commission under the chair manship of the late Professor R. Timman. The commission received the task of trying to find a sound philosophical basis for world modelling and to stimulate the building of models that incorporated those aspects of society which are usu ally left out of mathematical models because of technical difficulties. The study that is discussed in this text was started under the auspices of the TNO commis sion. Timman died early in 1975. The commission then came under the chair manship of Professor P. de Wolff. TNO generously provided the means to acquire the computer time necessary to continue our study. We also wish to express our gratitude to the Statistical Office of the European Communities (SOEC) for their willingness to put the necessary data at our dis posal in a form suitable for computer processing. Mr. H. Krijnse Locker's expert knowledge in the field of input-output statistics has especially been of great sup port to us. We are much indebted to Professor A. P. J. Abrahamse for his interest in our work and for all the valuable comments and corrections we received from him. v vi PREFACE We are grateful to Mr. P. van Batenburg, Mr. F."

First published in 1984, this title discusses the emergence of both the orthodox and political economy based approaches to underdevelopment in geography , critically assessing their strengths and weaknesses, and showing the relationship between intellectual developments and changing material conditions. The work is primarily concerned with theories, though it does contain much empirical material drawn from throughout the Third World. The book examines the emergence of theories of development historically and considers the various contemporary theoretical 'schools', both Marxist and non-Marxist. It goes on to consider four aspects of development which are of particular interest to geographers, namely the world economy, regional imbalances, the human-nature theme and the analysis of urban space, and concludes by suggesting some directions for future research.

This book is about the institutions, incentives and constraints that guide the behaviour of people and organizations involved in the implementation of foreign aid programmes. While traditional performance studies tend to focus almost exclusively on the policies and institutions in recipient countries, this book looks at incentives in the entire chain of organizations involved in the delivery of foreign aid, from donor governments and agencies to consultants, experts and other intermediaries. Four aspects of foreign aid delivery are examined in detail: incentives inside donor agencies, the interaction of subcontractors with recipient organizations, incentives inside recipient country institutions, and biases in aid performance monitoring systems.

The European Commission and its member states, along with many others, are wrestling with the problem of how to implement the scheduled liberalization of the postal sector while maintaining the universal service obligation. This book addresses some of these concerns. It is comprised of original essays chosen from among several dozen presented at the 13th Conference on Postal and Delivery Economics, which was held in Antwerp, Belgium, in June, 2005.