Behavior Of Individual Agents Research Articles

Parametric and Nonparametric Approaches to Price and Tax Reform

In many public policy problems, we need to estimate the way in which policy changes affect people's behavior. In the analysis of tax and subsidy reform—the topic of this article—we need to know how tax-induced price changes affect the amounts that people buy of the taxed goods. We present various economic and statistical approaches to obtaining the required estimates. We consider the standard structural methods in economics, where the behavior and welfare of individual agents are captured simultaneously by the specification of utility functions whose parameters are to be estimated. We argue that these methods are less useful than alternatives that directly consider the derivatives of the regression function of average behavior. We consider both parametric and nonparametric estimators of these derivatives in the context of price reform for foods in Pakistan, focussing on the advantages and disadvantages of “average derivative estimation” (ADE). ADE is attractive in principle, because it directly estimates the statistics required for policy analysis. In the practical case considered here, neither technique is a clear winner; each has strengths and weaknesses.

Assisted Suicide, the Supreme Court, and the Constitutive Function of the Law

It not difficult to compose a brief summary of the Supreme Court's assisted suicide decisions that would suitable for bar review study guides and law student outlines: With no dissenters, the Court overturned the decisions of the Second and Ninth Circuit Courts that conferred Fourteenth Amendment protection upon the choice of competent, terminally ill adults to end their own lives with medication prescribed by their physicians. (1) Holding that the Constitution does not protect a right to commit suicide that itself entails a right to assistance in committing the act, the majority opinions relegate assisted suicide and euthanasia to the laboratory of the states. (2) However, the decisions leave open the ill-defined possibility that the Court might revisit the issue, particularly if presented with a more narrowly focused claim than the one vindicated by the two circuit courts. Such a description would probably enable recent law school graduates correctly to answer a multiple choice bar exam question on whether there a constitutional right to die. But grasping their bottom line not the same as grappling with the power of the two decisions to shape our society's ongoing debate about the neuralgic ethical and legal questions entangled in end-of-life decisionmaking. As legal theorist and literary critic James Boyd White has taught us, courts do not simply issue abstract judgments that impersonally and mechanically guide the behavior of individual and institutional agents in our society. According to White, those who play a role in the legal enterprise are engaged in a type of rhetoric that actually helps shape the moral identity of the community in which they participate. The community-constituting character of law does not inhere solely in the results that issue in particular cases, but also in the very way the questions are framed for decision. A lawyer arguing a client's position, and a fartiori a judge rendering an opinion, is always saying not only 'Here how this case should decided,' but also 'Here--in this language--is the way this case and similar cases should talked about. The language I am speaking the proper language of justice in our culture.' (3) Assuming that White correct, if we are to understand the full import of the Supreme Court decisions on assisted suicide, we cannot fix our gaze solely on the conclusions they reach. We must also scrutinize the way the justices frame the issues at stake, the communal hopes and fears they invoke, the modes of argument they find persuasive and those that they discount, and the particular words and phrases through which they convey all of those things. By exercising the authority to interpret the constitutive document of our nation that has ultimately rested in their hands since the Court decided Marbury v. Madison in 1803, the justices inevitably wield a tremendous power of moral formation. In effect, they are moral teachers who help to shape the character of our nation. White reminds us that the habit of regarding law as the instrument by which 'we' effectuate 'our policies' and get what 'we want' wholly inadequate. It the true nature of law to constitute a 'we' and to establish a conversation by which that 'we' can determine what our 'wants' are and should be (p. 42). How, then, do the opinions in Glucksberg (4) and Quill (5) refocus the discussion regarding our communal obligations to the persons in our midst who are confronting the momentous and often terrifying task of relinquishing their earthly existence? In what follows, I would like to examine three issues on which these decisions are likely to exert significant pedagogical influence: (1) the tension between general rules or classifications and the particular needs of individuals; (2) the relationship among pain, dignity, and equality; and (3) the limits of philosophical theory and the importance of practical experience. Equality, Rules, and Exceptions The opinion of the Court in Glucksberg communicates its most significant moral lesson in the way that it frames the legal claim at stake. …

Complex dynamics in a simple macro disequilibrium model

This study analyzes disequilibrium dynamics in a simple macro economic model constructed with micro foundation in which the behavior of individual economic agents, concerning consumption, labor supply, employment, output supply and the formation of expectation, can be described by very simple and conventional monotonic functions. It is demonstrated that, despite that simplicity, complex nonlinear dynamics may appear through the interaction of those individual behavior in different markets.

Aggregate consumption behavior and the permanent income hypothesis

This paper shows that the random walk behavior of real aggregate consumption is unrelated to Hall's rational choice model. The result implies that random walk behavior of macroeconomic aggregates is something quite general which need have little relation to the optimizing behavior of individual agents.

Negotiating Through an Agent

Agents often bargain on behalf of their principals. In many common negotiating situations, especially where ex post ratification of the agent's agreement is required (e.g., union contracts, treaties), an agent faces inherent uncertainty about the terms that are minimally acceptable to the principal (the principal's “reservation price”). In fact, the agent's entire payoff function may be uncertain. We study bargaining behavior in these circumstances and show that the agent's minimum demands unambiguously increase with increases in uncertainty about the principal's reservation price, with increases in uncertainty about the payoff function, and with increases in the agent's degree of risk aversion. We then fashion these results about an individual agent's behavior into conclusions about the difficulty of reaching agreement in the overall negotiations. Using Axelrod's measure of the “conflict of interest” in a game, optimal insistence prices in a one-shot bargaining situation, and two equilibrium concepts in a common commitment game, we show that the inherent uncertainty of agency bargaining can frequently make disagreement more likely.

Groups, responsibility, and risk taking in business organizations

Discussions of risk taking in the modern business organization frequently focus upon the behavior of individual moral agents. Here I attempt to identify some of the complexities of risk taking when it is a group phenomenon and to do so in such a way as to shed some light upon the ethics of group risk taking in business organizations.

Some emerging principles underlying the physical properties, biological actions, and utility of vitrification solutions

Vitrification solutions are aqueous cryoprotectant solutions which do not freeze when cooled at moderate rates to very low temperatures. Vitrification solutions have been used with great success for the cryopreservation of some biological systems but have been less successful or unsuccessful with other systems, and more fundamental knowledge about vitrification solutions is required. The purpose of the present survey is to show that a general understanding of the physical behavior and biological effects of vitrification solutions, as well as an understanding of the conditions under which vitrification solutions are required, is gradually emerging. Detailed nonequilibrium phase diagram information in combination with specific information on the tolerance of biological systems to ice and to cryoprotectant at subzero temperatures provides a quantitative theoretical basis for choosing between vitrification and freezing. The vitrification behavior of mixtures of cryoprotective agents during cooling is predictable from the behavior of the individual agents, and the behavior of individual agents is gradually becoming predictable from the details of their molecular structures. Progress is continuing concerning the elucidation of mechanisms and cellular sites of toxicity and mechanisms for the reduction of toxicity. Finally, important new information is rapidly emerging concerning the crystallization of previously vitrified cryoprotectant solutions during warming. It appears that vitrification tendency, toxicity, and devitrification all depend on subtle variations in the organization of water around dissolved substances.

The effects of fiscal policy in a two-period model

The paper analyzes fiscal policy in a model which differs from the conventional analyses in the following ways: 1) It is based on the intertemporal maximizing behavior of individual agents. 2) The government is assumed to actively balance its budget the long run. 3) Government expenditure is on useful goods and services. The welfare effects of fiscal policy are also examined. The principal conclusions are that fiscal policy is effective in the short run but the effects on both output and welfare may be perverse; and, that with full employment in the long run, fiscal policy still has allocative effects and so influences welfare.

Federal budget cuts: Bureaucrats trim the meat, not the fat

13 in 1978 set off heated charges that vital services were being cut back instead of looked-for reductions in the size of the state bureaucracy. A bureaucratic response of this type to budget cuts is entirely foreseeable given the conception of bureaucrats as utility-maximizing individuals. Focus on the behavior of individual agents in the governmental process commenced formally in 1962 with Buchanan and Tullock's The Calculus of Consent. Since then, the ability of legislators and bureaucrats to engage in self-interested (as opposed to public-interest) behavior, has been investigated by numerous scholars. The general concensus which has emerged from these studies, among public choice economists at any rate, is that producers of public goods, acting in their own interest, are not led by Adam Smith's 'invisible hand' to act in the more general public interest. This paper provides additional support for the public choice view of public servant behavior. A comparison of proposed budget cuts by federal agency with proposed reductions in agency personnel reveals that, in the face of

Ethical Perspectives on Political Excuses

Self-styled policy scientists pride themselves on their sensitivity to the ethical implications of social policies. However, the very nature of their enterprise focuses attention on certain aspects of political evaluation at the expense of others. For assessing social action-plans, the obvious bits of moral philosphy to borrow are those for appraising the behaviour of individual moral agents. Such instruments are well suited to praising or blaming policy-makers, individually and perhaps even collectively. But there is more to political evaluation than policy evaluation construed in this narrow way. Some moral goods, in politics as elsewhere, come as simple windfalls for which no one deserves credit; and there are some evils for which no one can be faulted. Thus, the virtue of the state, its balance of good over evil, is partially independent of anyone’s actions. Ethical equipment for levelling recriminations is totally inadequate for assessing these other dimensions of moral goodness. These shortcomings are nowhere more apparent than with the familiar moral maxim, ‘ought implies can’, and its political analogue, ‘politics is the art of the possible’.

Stability of Monopoly

THE STABILITY PROPERTIES of a competitive economy are well known-at least under the artificial tatonnement assumption which avoids the problem of who changes prices. This note demonstrates that similar, if not stronger, properties carry over to a monopolistic economywhere price formation is completely explained by the independent optimizing behavior of individual agents. The discussion may be interpreted as that of monopoly as the opposite polar case to that of competition or, equivalently, as that of the stability of the concept of equilibrium presented in an earlier paper [1]. Price adjustment is by individuals, following [3 and 4], through their perceived demand curves, following [2 and 5]. There are n commodities (the last being a numeraire) identified by ownership: agent i is endowed with one unit of commodity i and no other commodity. Each agent (i) chooses a price pi ) 0 for his commodity and a consumption x' e R% , so that a state of the economy is an array (p1. p, x . x), or (p, X). Given some existing state (p, X) each agent (i) first chooses pi to maximize his expected income pixi, where xi is his expected sales, given by his perceived linear demand curve (with negative slope one, say) xi(pi) = x-i + Pi - pi; here Xi = I 5i is the existing aggregate demand. Taking account of the constraint xi < 1 this gives