Introduction: SEA Symposium in Honor of Roger Sherman

Abstract

This special issue is dedicated to the memory and scholarly accomplishments of Roger who died in 2010 at the age of 80 after a series of complications from a boating accident. The articles were selected from those presented by a group of Roger's former students and coauthors at a session entitled Studies in Regulation and Antitrust Inspired by Roger Sherman, which we organized for the 2010 Annual Meeting of the Southern Economic Association. We begin with a perspective on the legacy provided by Roger's long career, and then we provide a brief introduction for the articles included in this symposium.Roger Sherman majored in mathematics at Grove City College, where he was briefly expelled for organizing a boat party that violated college alcohol guidelines. After graduating, he resumed his seafaring interests by serving as a radar officer for a U.S. Navy amphibious command ship, where the onboard presence of an Admiral presumably helped ensure high standards of professional conduct. He left the Navy in 1956 to obtain an MBA in Finance from the University of Colorado. One of his Colorado accounting professors encouraged him to go to Harvard for a worthwhile MBA, which he finished in 1959.As a doctoral student at Carnegie-Mellon (then Carnegie Tech) in the 1960s, Roger began running laboratory experiments that were motivated by issues in industrial organization. Under the intellectual leadership of Herb Simon, the focus at Carnegie was interdisciplinary and behavioral, spanning economics, psychology, computer science, and politics, with a clear interest in models of bounded rationality and observed business behavior. The second year MBA management game involved a computer simulation of the demand side of a multimarket competition played out by the MBA students, which provided an early connection between teaching and experimentlike simulations. This focus on actual behavior spilled over into research, and Roger was one of the first students to use experimental economics techniques (with financially motivated subjects) in his doctoral dissertation. His first scholarly article, Individual Attitude Toward and Choice Between Prisoner's Dilemma Games, was published in the Journal of Psychology in 1967 (Sherman 1967).Roger's early scholarly work is collected and republished in the various chapters of his 1972 book, Oligopoly . The parts of this book that are most relevant for the articles included in this symposium are Chapters 6 and 7 on risk attitudes, capacity choice, and collusion. The measure of risk aversion used was the survey-based Wallach and Kogan (1961) Social Preference Scale. The score is based on presenting subjects with a risky alternative to the status quo and eliciting a of success that makes the subject prefer to take the risk. Holt and Laury (2014) describe this probability equivalence procedure and compare it with other menu-based procedures that have been used subsequently. Roger once raised the possibility of using the Social Preference Scale to measure risk aversion in a qualitative sense. Holt and Sherman ended up using an auction-based alternative with financial incentives in their symposium contribution, Risk Aversion and the Winner's Curse. This auction-based procedure produced a parameter estimate of relative risk aversion that could be used to make predictions. Non-numerical measures of risk taking do have one clear advantage in that the resulting measures tend to show more consistency over time. For example, a person who is willing to admit driving without a seatbelt in one year is likely to answer the question in the same way a year later.Roger Sherman was a risk taker in both his personal and professional life. He owned a collection of imported motorcycles and sports cars, and on several occasions he had to report to driving behavior modification school after being stopped for speeding. He resigned from a comfortable position at IBM to study for a Ph. …