{"title":"Notes on the Tableau Economique","authors":"J. Blatt","doi":"10.4324/9781315496290-20","DOIUrl":"https://doi.org/10.4324/9781315496290-20","url":null,"abstract":"","PeriodicalId":318945,"journal":{"name":"Dynamic Economic Systems","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133904859","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The utility of being hanged on the gallows","authors":"T. Brennan, J. Blatt","doi":"10.1080/01603477.1980.11489205","DOIUrl":"https://doi.org/10.1080/01603477.1980.11489205","url":null,"abstract":"1. I thank the editors for permitting me to reply to criticisms of my views (Blatt 1979-80 and 1980). Ulph (1981-82) shows, in his Figure 1, that a von Neumann individual may accept the gamble for small probability p of disaster and reject it for large p; yet this man has an unbounded utility of money. However, Ulph's man exhibits some highly peculiar preferences. Suppose the money gain M becomes very large. In his Figure 1 the point labeled V(Wo + M, 0) moves ever higher on the vertical axis, hence the critical probability p* (below which the gamble is accepted) moves ever closer to unity on the horizontal axis. Thus, by merely promising him enough money M upon success, Ulph's man can be induced to accept the gamble, no matter how poor his chances of escaping the gallows! While some criminals may be so utterly foolhardy, not all rational people act that way; this is all that is needed to refute the objection. 2. Let me make this argument more formal. Define a \"greedy but cautious criminal,\" abbreviated GCC henceforth, by the three properties: (1) His utility of money u(M) is unbounded (Blatt, 1980); (2) There exists a maximum probability Pma Pmax, no matter how big the money sum M; (3) He accepts the gamble for small enough, but nonzero, p. THEOREM: The preference scale of a GCC is inconsistent with expected utility theory. PROOF: Expected utility is E(U) = (1 p) u(M) + pu(G). Let","PeriodicalId":318945,"journal":{"name":"Dynamic Economic Systems","volume":"37 2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1979-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117279023","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Investment evaluation under uncertainty","authors":"J. Blatt","doi":"10.2307/3665352","DOIUrl":"https://doi.org/10.2307/3665352","url":null,"abstract":"* Evaluation of future cash flows under conditions of certainty is well known; it leads to the \"discounted present value\" method. This paper shows that maximization of expected utility is a very restrictive method of expressing one's attitude to risk. Most businessmen would judge it unreasonable once it is explained to them what this method really implies. By using a preference ordering, which is not equivalent to any utility function, and by focusing attention on the possibility of unpredictable \"disasters\" in the future, we develop a new method of investment evaluation. Qualitatively, the new approach turns out to be very similar to the one used by businessmen, and not at all similar to discounted present value. We give an example of two projects, A and B, where A is preferred to B by the discounted present value method at all values of the discount rate, but A is inferior to B by the new evaluation. The discussion in the body of this paper is literary. All the mathematics is contained in appendices and can be skipped by the non-mathematical reader. Introduction and Notation","PeriodicalId":318945,"journal":{"name":"Dynamic Economic Systems","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1979-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132371011","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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