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

SEMAINE D'ÉTUDE SUR LE ROLE DE L’ANALYSE ECONOMETRIOUE ETC. 50} Second, it seems that Professor THEIL connected the idea of moving planning with the idea of an infinite horizon. There is abso- lutely no connection between the two. When I speak about moving planning, I simply mean that I am not committed to any predeter- nined rule of strategy but simply I am evaluating the whole si- tuation in a new and entirely free way, and that, of course, I may do even if my planning period is a short one — three, four, five years or something. So it has nothing to do with the idea of an infinite horizon. Professor THEIL also made a remark on the MORGENSTERN theory of expected values of utility. I do not think you can justify this approach by saying that it is an expression of rational behaviour or something else pertaining to the substance matter of the problem. The whole thing here is only a formal one, and resides in the fact that you introduce an assumption which makes utility additive. And if you do that, if you put that up as an axiom, the you can derive a lot of consequences regarding sub-optimality. Prof. THEIL’s use »f the word suboptimal is really an example of what you may call persuasive definition, because optimality in this particular case is in the end precisely an expression for the idea of expected utility. THEIL This idea of moving planning and moving horizons can also be applied in the case of a « truncated » horizon of, say, three years. Then the decision maker is supposed to look three years ahead at he beginning of every year, and he should evaluate all things all over again. Hence there is not as much difference with Professor FRISCH’s ideas as he thinks there is. Regarding sub-optimality, 1 define as the optimal decision the decision which maximizes the pre- lerence function, not the expectation of the preference function, subject to the constraints as they actually are. There is therefore no reason to speak about a « persuasive terminology » Theil - pag. 37

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