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