Richard M. Cyert

Organizational Factors in the Theory of Oligopoly

Introduction, 44. — I. Motivational assumptions, 46. — II. The planning process, 49. — III. Organizational slack, 53. — IV. Empirical relevance, 55. — V. Theoretical relevance, 58. — VI. Summary, 62.

Computer Models in Dynamic Economics

Introduction, 112. — Theory construction (model building), 113. — General characteristics of computer models, 115. — Comparison of computer models with operations research simulations and econometric models, 117. — Methodological problems of computer models, 119. — Review of the literature, 121. — Future of computer models, 126.

The Role of Expectations in Business Decision Making

From an extended sequence of observations of decision making in three firms, four examples of how management uses expectations in making internal investment decisions are analyzed. The analysis suggests that although expectational data are an important element, they do not enter into the decisions in quite the way anticipated by standard theories of business behavior. In particular, four characteristics of these decisions are discussed: the extent to which resource allocation reflects comparisons of marginal advantages of alternatives; the extent to which search activity is viewed as one of the competitors for internal resources and the nature of search activity in a business organization; the type of computations about alternatives that are made and used in a decision; and the interaction between expectations and personal and subunit preferences.1 R. M. Cyert, W. R. Dill, and J. G. March are faculty members in the Graduate School of Industrial Administration, Carnegie Institute of Technology.

A Behavioral Theory of the Firm

Provides a theory of decision making within business organizations. Contrary to the economic theory of the firm, which sees firms as profit-maximizing entities, the authors advocate a theory based on empirical observation of actual firm decision-making. Various features of firm decision-making are identified. First, firms are coalitions of participants whose individual goals may and often do conflict. How this conflict is resolved is determined by the firms bargaining process. This process is constrained by past behavior and decisions. Second, the authors reject the notion that firms are one-dimensional profit-maximizers in favor of a view of firms as entities with many different objectives that will accept suboptimal outcomes if they are above a minimum level. Congruent with this, a firms search activity occurs in response to a perceived problem and is limited in scope. The effect is that firm policies will change only incrementally. Also impeding radical policy change is the fact that firms react to uncertainty using standardized decision rules. Using this theory, two computer models of business decision-making are presented and compared with actual results. These models are shown to have especially good predictive power. (CAR)

Theory of the Firm: Resource Allocation in a Market Economy.

Presenting a comprehensive account of the elementary theory of exchange, this new text focuses on exchange systems, rather than on the theory of the individual consumer. Dr. Newmans text represents a return to the classical tradition of Jevons, Edgeworth and Walras, although it includes a simplified account of the most recent contributions of the mathematical economists. This book can be viewed as an introduction to the wider study of general systems of allocation, including production. The text is nearly self-contained both economically and mathematically. However, two or three years of training in economic theory and a solid background of high school mathematics will facilitate student comprehension. January 1965, 201 pp., 59 diagrams,

Estimation of the Allowance for Doubtful Accounts by Markov Chains

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