Study week on the econometric approach to development planning

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Monograph

Identifikator:: 1824422792

URN:: urn:nbn:de:zbw-retromon-217476

Document type:: Monograph

Title:: Study week on the econometric approach to development planning

Place of publication:: Amsterdam [u.a.]

Publisher:: North-Holland Publ. Co. [u.a.]

Year of publication:: 1965

Scope:: XLVII, 1259 S.; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Decision rules and simulation techniques in development programming / Henri Theil, Nederlandsche Economische Hoogeschool - Econometrisch Institut Rotterdam - Nederland

Collection:: Economics Books

474 PONTIFICIAE ACADEMIAE S3CIENTIARVM SCRIPTA VARIA - 28 under conditions of uncertainty. (The v’s are the only un- certain factors which enter into the problem as it is posed here, which is of course highly restrictive, but it is easy enough to extend the list of such factors). We shall attack this problem by assuming that the uncertainty is of the proba- bilistic type and that the decision maker is interested in maximizing expected utility. That is, he is supposed to maximize the expectation of the preference function (3.4) subject to the constraint (3.4), the latter being interpreted stochastically (with random v’s). It is worthwhile to consider the implications of this pro- cedure in somewhat more detail. Take the first year, at the beginning of which the decision x, has to be made. The rates of increase of the population, Vi, Vo, ..., Vr, are then unknown and are supposed to be subject to a T-dimensional joint distri- bution. One year later the decision x, has to be made and the decision maker will then know more, particularly about v, but perhaps also about later v’s, because the development of the population during the first year may have shed some light on the probable development during later years. Clearly, the decision maker should be able to use this information gained during the first year when he formulates his decision x, at the beginning of the second year. In the same way, at the beginning of the third year he knows still more (particularly about v,) and he can use this additional information for his decision x;. And so on. It follows that it is the decision maker's task to formulate, for each year ¢=1, ..., T, the decision x,.as a function of the information that will be available at that time. Such a series of decisions x, ..., Xp written as functions of relevant in- formation is a strategy or decision rule. More specifically, the decision maker’s task is to find the maximizing strategy, i.e., the strategy which maximizes the expectation of the pre- ference function subject to the contraints. In general it is 71 Theil - pag. To

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