500 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28 
certainly had no precise idea about when he should judge his coef- 
ficient high or when low. The only thing he knew was that the 
coefficient was bound to lie between —1 and +1; whether .7 was 
high or whether .99 was high, that certainly was not a matter that 
could be decided at that time. In the same way I hope I am able 
to give an appropriate answer after ten years or so. 
Regarding expected utility to be replaced by the max-min ap- 
proach, I have my doubts. I think the max-min approach is always 
a little difficult by the time your random variables have an infinite 
range. And also regarding expected utility, this has a rather firm 
foundation given by von NEUMAN and MORGENSTERN; they showed 
that under a number of rather innocent assumptions a rational man 
behaves as if he maximizes expected utility. It is of course quite 
another affair whether these preferences can be represented in the 
way I do, but I think that given the large number of difficulties 
which we are bound to have in formulating a preference function 
anyhow, this is a matter of relatively minor concern. 
Finally, regarding Professor FISHER, I must say that no com- 
putations have been made on the part of the loss function which 
is due to the instruments and the part which is due to the non- 
controlled variables. But the basic data are available, so the com- 
putations can be made. 
FRISCH 
Professor THEIL excused himself for the non-realism of the choice 
of instruments. He excused himself by pointing to the simplicity 
of the model. I should say that this is an excellent example of how 
a simple model can reveal very pertinent facts and conclusions. 
In this particularly simple model, which I complimented Professor 
THEIL on, I should say that the capital output ratio is a much 
better example of a real instrument, but THEIL took that simply as 
a constant that was given. That was mv first remark. 
‘71 Theil - pag. 36