SEMAINE D'ÉTUDE SUR LE ROLE DE L’ANALYSE ECONOMETRIQUE ETC. 404 
but just the general idea of this kind of decision making with re- 
gard to problems of development planning. Regarding another re- 
mark made by Professor FRISCH as to the distinction between moving 
planning instead of a strategy, I think really that the difference 
is not as big as he thinks it is. Particularly this possibility of using 
‘he certainty equivalence procedure makes that effectively we are 
working with a moving horizon, we could call it moving planning. 
This can be particularly easily justified when one works with an 
nfinite horizon. 
I should also add that this approach of maximizing the expecta- 
on of a quadratic preference function over time subject to linear 
constraints is the only case for which it is possible to handle three 
difficulties simultaneously: uncertainty, maximization over time, 
and many variables. The method of « dynamic programming » 
breaks down when the number of variables is not extremely small. 
However, inequality constraints cannot be handled by my approach 
‘Professor FriscH suggested the use of lower bounds). On the 
other hand, the approach has several interesting advantages, for 
which I would like to refer to my Optimal Decision Rules for Go. 
vernment and Industry. 
Furthermore, Professor FriscH talked about a priori desired 
values of the quadratic preference functions. I agree with him that 
t would be worthwhile to have a preliminary study as to how we 
should really define these desires in any scientific manner. I think 
t is rather difficult to do and for the moment I would like to sug- 
gest that this is being solved by a process of experimentation. 
Professor Isarp asked two questions. He wondered — it was 
page 23 — what I had expected for this relative performance of the 
strategy approach and I expressed more or less my dissatisfaction 
that 0.9 came out of it. I have no precise ideas about what is 
zoing to come out of this in general. This is a matter that will be 
‘ound in future research. To take an example, right now we know 
rather well when a correlation coefficient is high or when it is low. 
But if you go back a sufficient number of decades, when this coef- 
cient was formulated for the first time, the man who invented ” 
= - 
2 F 
Theil - pag. 
35