John G. Cross

A Stochastic Learning Model of Economic Behavior

Stochastic learning theory, 242. — Probability matching: an example, 244. — The model, 247. — Alternative states of the market: a monopoly model, 252. — A simple market model, 254. — Further properties of the single-firm model, 256. — The dynamics of adjustment, 258. — The firm in disequilibrium, 261. — A final note: rules of thumb, 264.

Negotiation as a Learning Process

This paper presents a discussion of the role of adapting expectations in the bargaining process. Negotiators are charactenzed as persons who choose bargaining strategies in their attempt to optimize their payoffs from the situation. These strategies are contingent on each partys perception of the strategy of his opponent, and if these perceptions contain errors, expectations will change and this will lead in turn to a modification of each partys strategy choice. The payoff demands and manipulative moves which charactenze the bargaining process are seen as combinations of actions which are specified in the original bargaining plans of the parties and of changes in the plans themselves. The influence of the learnmg process on the settlement point is described as well as some empirical implications of the theory in general.

Efficiency-Inducing Taxation for a Monopolistically Supplied Depletable Resource

Author(s): Bergstrom, Ted; Cross, John; Porter, Dick | Abstract: We show that for a depletable resource, if the competitive time path of prices is known, and if the profit function is concave, then there is an easily described time path of taxes and/or subsidies that would induce a monopolist to follow an efficient time path of extraction.

Some theoretic characteristics of economic and political coalitions

This paper represents an attempt to make use of a few postulates which are frequently found in cconomic theory, and to achieve thereby some insights into an important problem in the theory of political interactions-the formation of coalitions. It is suggested that the same competitive process which constrains market behavior has, in reality, an equally important role in the determination of alliances, and that the search for a “best” alliance is no different in principle from the search for a lowest price. The resulting analysis will be found to apply to a wide variety of alliance situations provided that two fundamental premises are satisfied: (1) alliance mcmbcrs are motivated by a desire to maximize the value (to themselves) of their membership,l and ( 2 ) membership in one grouping precludes membership in another, that is, choice among alternatives must be a dominant problem.?

Incentive Pricing and Utility Regulation

X-Efficiency, 236. — Incentive pricing, 243. — Incentive pricing applied to regulated utilities, 244. — Calibration, 247. — The regulatory lag, 251. — Conclusion,

Preliminary production functions describing change in mental health status

Change in mental health status is analyzed as a function of hours of professional treatment, patient attributes, treatment characteristics, and environmental factors for each of seven clusters of conditions typically seen by psychiatrists, psychologists, or social workers. One of two regression strategies was effective in characterizing the relationship between status change and the input variables for each condition cluster. In each model, initial severity was significantly associated with change in mental health status, and it captured most of the unexplained variance. Provider time was predictive of improvement for only some conditions and providers. On average, mental health services appear to make patients better, but improvement is not terribly impressive. Moreover, the marginal benefits of treatment fall off as the number of contact hours increases.

A stochastic learning model of migration

Abstract It is observed in this paper that although the Harris-Todaro theory is intended to provide insight into rural-urban migration, their formal model describes a theory of equilibrium population densities, and although this can be used for comparative static analyses, it is not immediately applicable to the disequilibrium dynamic process whereby these densities change over time. A very simple stochastic (Markov) choice model found in the psychological adaptive learning literature is applied to the migration problem, and it is found that a dynamic equation similar to that used by Todaro can be obtained explicitly from this model. The possibility that migration rates might accelerate even in the presence of constant urban-rural wage differentials is derived.