institutional selection in international relations state anarchy as order by the end of the medieval era three new competing institutions attempted to capture gains from trade and reduce feudal particularism sovereign territorial states cityleagues and city states by the middle of the seventeenth century city leagues and city states had declined markedly territorial states survived as the dominant form because they were able to reduce free riding lower transaction costs and credibly commit their constituents the selection process took place along three dimensions first sovereign territorial states proved competitively superior in the economic realm second states increasingly recognized only other sovereign territorial states as legitimate actors in the international system third other actors defected to or copied the institutional makeup of sovereign territorial organization the emergence of discrete territorial units in which only sovereign authorities represented their citizens as the predominant type of organization in international affairs created a new solution to the problem of markets and hierarchies

equality employment and budgetary restraint the trilemma of the service economy this article presents an analysis of the postindustrial economy from a political economy perspective it identifies a set of specific distributional trade offs associated with the new role played by the services sector as the chief source of employment growth in advanced democracies over the last three decades it is argued that three core policy objectives budgetary restraint wage equality and expansion of employment constitute a political trilemma that allows only two of the goals to be successfully pursued at the same time using a combination of statistical and case oriented analysis the authors demonstrate the political and economic salience of the trilemma the distributional tensions inherent in each strategy to cope with it and the political institutional constraints under which these strategies are chosen

who benefits from local job growth migrants or the original residents bartik t j 1993 who benefits from local job growth migrants or the original residents reg studies 27 297 311 this paper surveys research on whether the new jobs resulting from growth in a local economy e g a metropolitan area go to inmigrants or the original local residents the empirical evidence suggests that around one quarter of the new jobs from local growth increases the labour force participation rates of local residents in the long run these long run effects may occur because local growth provides residents with valuable employment experience research also suggests that minorities benefit most from growth and that higher wage industries provide greater employment benefits for local residents bartik t j 1993 qui est ce qui beneficie de la croissance d emploi locale les migrants ou la population autochtone reg studies 27 297 311 cet article etudie la recherche effectuee dans le but d evaluer si les nouveaux emplois dus a la croissance d une economic locale par exemple une

the new institutional economics this outstanding book presents new original contributions from some of the world s leading economists including ronald coase douglass c north masahiko aoki oliver e williamson and harold demsetz it demonstrates the extent and depth of the new institutional economics research programme which is having a worldwide impact on the economics profession

contra coercion russian tax reform exogenous shocks and negotiated institutional change the view of institutions as coercion rather than as contracts dominates the comparative politics literature on both institutional creation and the politics of economic reform the emergence of a collectively optimal tax code in russia demonstrates the limitations of this emphasis on coercion this new tax code was not imposed by a strong central leader mandated by international institutions or the result of state capture by powerful economic interest groups rather it is the product of a mutually beneficial exchange between the russian government and the russian oil companies russia s ability to negotiate an effective tax regime also suggests the conditions under which and the microcausal mechanism whereby exogenous shocks promote institutional change and economic reform owing to their mutual vulnerability and interdependence the august 1998 financial crisis generated widely shared perceptions among these actors that the payoffs of cooperation had changed yet the economic reform institution that resulted required a series of incremental strategic moves that established common knowledge

a revelation scheme for allocating organizational resources abstract efficient resource allocation in a hierarchical organization frequently requires top management to obtain information from division managers but division managers may place personal interests above those of the organization and communicate distorted information designing simple and robust optimal game theoretic revelation schemes is difficult instead of making another attempt at this we analyze a project valuation scheme actually used by several us government agencies under certain environments the scheme encourages managers to truthfully reveal the relative benefits of alternative projects while some aspects of these environments do not have nice mathematical properties we argue that they may well represent better characterizations of the way managers actually view their situation

employment unemployment and demand shifts in local labor markets this paper analyzes the effects of demand shifts within and between local labor markets on unemployment and employment outcomes observed in those markets the demand shifts are calculated from sales growth data at the firm and industry levels the results show that in general employment and wage adjustments by firms are primarily driven by shifts in labor demand demand shifts between local areas account for large fractions of the observed variation in unemployment and employment rate levels and changes across areas within area shifts cause much smaller and insignificant amounts of unemployment and only if they are between industry copyright 1991 by mit press

capture and ideology in the economic theory of politics the economic theory of regulation long ago put public interest theories of politics to rest these theories have correctly been viewed as normative wishings rather than explanations of real world phenomena they have been replaced by models of political behavior that are consistent with the rest of microeconomics anthony downs 1957 james buchanan and gordon tullock 1965 george stigler 1971 sam peltzman 1976 recently however debate has arisen over whether some version of a public interest theory of regulation will have to be readmitted to our thinking about actions and results in the political arena what is at issue is the empirical importance of the altruistic publicly interested goals of rational actors in determining legislative and regulatory outcomes james kau and paul rubin 1979 kalt 1981 peltzman 1982 this study assesses the nature and significance of publicly interested objectives in a particular instance of economic policymaking u s senate voting on coal strip mining regulations the existence of such objectives is of course no contradiction of the economic view of human behavior kenneth arrow 1972 gary becker 1974 and may well be rooted in genetic biological history becker 1976 jack hirshleifer 1978 generally however individuals altruistic publicly interested goals have been given little attention this reflects the judgment that such goals are so empirically unimportant as to allow the use of occam s razor in positive models or well founded apprehensions that these goals are unusually difficult to identify measure and analyze notwithstanding the latter problem we find that approaches which confine themselves to a view of political actors as narrowly egocentric maximizers explain and predict legislative outcomes poorly the tracking and dissecting of the determinants of voting on coal strip mining policy suggest that the economic theory of politics has been prematurely closed to a broader conception of political behavior

first branch or root the congress the president and the federal reserve much of the literature on the power of elected officials and bureaucratic agencies argues from an empirical perspective that bureaus appears to exercise autonomy in this paper a theoretical model sets out the conditions under which the congress the president and one agency we use the u s federal reserve as an extended example can dictate policy outcomes the results of the paper include the congressional dominance theorem if more than 2 3 of house members and more than 2 3 of senate members agree on something they get it the theorem is obvious the proof is in the u s constitution but often forgotten in the substantive literature more realistic results are derived for situations where the preferences of members of congress are more diverse powers of the president to influence policy with and without appointments are also analyzed

evidence of work related and incentive payments in gubernatorial pay the usual caveat applicable to such exploratory study also applies to this one i e the results should be viewed as mere association and does not imply causality however the results are interesting and consistent with a causal argument presented here we find some support to the monitoring arguments presented in the paper and the ways such monitoring information may be produced our evidence is also consistent with the argument that in the high competition states the executive power may be viewed as a necessary productive input while in low competition states such powers could be viewed as alternative ways of allocating political dividends which could be traded with monitory compensation

who talks with whom the role of repeated interactions in decentralized forest governance summary this article suggests that efforts to study decentralization outcomes would benefit from widening the unit of analysis from the local government administration to the local governance system many individual local governments especially in developing countries lack the human and physical resources to be effective governors by themselves it is thus useful to recognize the linkages between different governance actors the empirical analysis based on observations in bolivia s forestry sector finds that the degree of connectivity between the actors in a municipal governance system helps explain why some systems are more effective than others 2003 elsevier ltd all rights reserved

the changing structure of the us national innovation system implications for international conflict and cooperation in r d policy abstract the paper summarizes recent trends in the structure of the us national innovation system among these trends is a decline in r d spending by the federal government largely due to reductions in defense related r d spending another important shift in the profile of us r d spending is the reduction in the share of basic research funded by industry other policy related changes are the introduction of federal programs that have sought to strengthen civilian technology capabilities by subsidizing and promoting joint research and collaboration between us universities and industry and the federal laboratories and us industry the paper claims that sporadic efforts to limit the international dissemination of the results of publicly funded r d have in many cases been frustrated similar efforts to restrict foreign firms access to eu r d programs have had little effect it further concludes that the efforts to restrict foreign participation in us or eu publicly funded r d programs seem to be ill advised and infeasible considerable evidence suggests that the critical competitive weakness for both us and eu firms lie more in the translation of r d advances into commercial products rather than in the r d capabilities per se consequently the participation of non european firms in eu technology development projects and non us firms in publicly funded technology projects could convey powerful learning and demonstration benefits

simulating currency substitution bias the sign and size of estimates of the elasticity of currency substitution critically depend on the definition of the oppurtunity costs of holding money we investigate possible biases by means of monte carlo experiments as sufficient real data are not available

local labor markets and welfare spells do demand conditions matter this paper examines the impact of changes in labor market conditions on participation in the aid to families with dependent children afdc program in california transitions off welfare and transi

adaptive signal processing hierarchy and budgetary control in federal regulation control over agency budgets is a critical tool of political influence in regulatory decision making yet the causal mechanism of budgetary control is unclear do budgetary manipulations influence agencies by imposing resource constraints or by transmitting powerful signals to the agency i advance and test a stochastic process model of adaptive signal processing by a hierarchical agency to address this question the principal findings of the paper are two first presidents and congressional committees achieve budgetary control over agencies not by manipulating aggregate resource constraints but by transmitting powerful signals through budget shifts second bureaucratic hierarchy increases the agency s response time in processing budgetary signals limiting the efficacy of the budget as a device of political control i also show that the magnitude of agency response to budgetary signals increased for executive branch agencies after 1970 due to executive oversight reforms i conclude by discussing the limits of budgetary manipulations as a device of political control and the response of elected authorities to adaptive signal processing by agencies

bureaucratic discretion or congressional control regulatory policymaking by the federal trade commission this paper extends stigler and peltzman s approach to regulation by incorporating a legislature the model yields comparative statics results and hence testable implications the paper then tests between two opposing approaches about regulatory agency behavior the first assumes agencies operate independently of the legislature and hence exercise discretion the second assumes that congress controls agency decisions the recent behavior of the federal trade commission provides the empirical setting substantial evidence is found for the specific predictions of the model including the hypothesis of systematic congressional influence over ftc decisions

sectoral shifts and cyclical unemployment a substantial fraction of cyclical unemployment is better characterized as fluctuations of the frictional or natural rate than as deviations from some relatively stable natural rate shifts of employment demand between sectors of the economy necessitate continuous labor reallocation since it takes time for workers to find new jobs some unemployment is unavoidable this paper presents evidence that most of the unemployment fluctuations of the seventies unlike those in the sixties were induced by unusual structural shifts within the u s economy simple time series models of layoffs and unemployment are constructed that include a measure of structural shifts within the labor market these models are estimated and a derived natural rate series is constructed

can creative destruction be destroyed military ir d and destruction along the value added chain we elaborate a supply chain innovation matrix that can be applied to both commercial and military supply chains by shifting the analysis from a focal firm to industry structure we argue that the market structure of the entire supply chain functions as a major moderating variable in determining both the timing and adoption of innovations both for commercial and military markets we extend work on supply chain resource dependency by drawing a distinction between market structure induced resource dependency and supplier over reliance on a customer in a competitive market this has policy implications for the organization of military industrial research and development ir d joint service research and development jointness will certainly bring about innovation but it will be incremental reinforcing established military hierarchies policy makers may need to add this probable consequence when comparing jointness and inter service rivalry the cost savings inherent in jointness may unwittingly sustain a military force unready for fighting the next war

political preferences for the pork barrel a generalization this paper provides a rational explanation for the observation of oversized coalitions often approaching unanimous size in the realm of distributive policies distributive policies are those which concentrate benefits in specific geographic areas states congressional districts while spreading costs through general taxation the explanation offered here that legislators may rationally prefer universalism to hard ball coalition politics generalizes earlier work of weingast and fiorina in particular it extends their results to pork barrel politics i e projects that are economically inefficient and demonstrates how packages of economically inefficient projects can nevertheless be politically popular the main theoretical feature that induces preferences for universalism is uncertainty over the composition of winning coalitions and consequently the desire for the political insurance that universalism provides

the industrial organization of congress or why legislatures like firms are not organized as markets this paper provides a theory of legislative institutions that parallels the theory of the firm and the theory of contractual institutions like market institutions legislative institutions reflect two key components the goals or preferences of individuals here representatives seeking reelection and the relevant transactions costs we present three conclusions first we show how the legislative institutions enforce bargains among legislators second we explain why given the peculiar form of bargaining problems found in legislatures specific forms of nonmarket exchange prove superior to market exchange third our approach shows how the committee system limits the types of coalitions that may form on a particular issue

increasing returns path dependence and the study of politics it is increasingly common for social scientists to describe political processes as path dependent the concept however is often employed without careful elaboration this article conceptualizes path dependence as a social process grounded in a dynamic of increasing returns reviewing recent literature in economics and suggesting extensions to the world of politics the article demonstrates that increasing returns processes are likely to be prevalent and that good analytical foundations exist for exploring their causes and consequences the investigation of increasing returns can provide a more rigorous framework for developing some of the key claims of recent scholarship in historical institutionalism specific patterns of timing and sequence matter a wide range of social outcomes may be possible large consequences may result from relatively small or contingent events particular courses of action once introduced can be almost impossible to reverse and consequently political development is punctuated by critical moments or junctures that shape the basic contours of social life

authority and democracy in corporate governance although mcmahon offers a potentially valuable extension of joseph raz s conceptualization of authority by distinguishing three different kinds of authority this paper argues first that his account of the conditions and considerations that would justify managerial authority is problematic because it relies on a conception of reasons for action that excludes precisely the kind of rationality that plays an important role in the explanation and justification of authority in economic organization this paper explains second why mcmahon s thesis of the justificatory similarity of authority in governments and nongovernmental organizations can also be seen to hold for corporate governance of publicly owned firms more specifically finally this paper raises some critical objections against mcmahon s presumption of democratic governance in governments and ngo s alike the thrust of these objections is that democratic corporate governance does not make sense in the publicly owned firms because 1 it will not produce results that are fair or welfare maximizing and 2 it will undermine the legitimacy of managerial authority in such firms

two views of the geographic distribution of unemployment this paper investigates the extent to which equilibrium and disequilibrium explanations can account for unemployment rate differentials between cities it shows that shocks that disturb the steady state relationship among the unemployment rates of metropolitan areas tend to be eliminated by mobility within a single year it also shows that high unemployment areas tend to be those with attractive climates and amenities high wages and high unemployment insurance it argues that the main effect of government programs that create jobs in high unemployment areas will be to lure additional job seekers to those areas

government failure social capital and the appropriateness of the new zealand model for public sector reform in developing countries abstract the policy problems posed by a lack of state capacity in developing societies now attract the attention of a growing number of scholars both the government failure paradigm with its top down emphasis and the social capital theory with its stress on bottom up approaches provide analytical frameworks that can be used to comprehend the symptoms of state incapacity reported by the much broader literature on policy implementation this paper seeks to determine the implications of the government failure and social capital models for policy implementation more specifically the paper considers the contractualist approach to public management reform in new zealand as the epitome of a top down solution to government failure it will also evaluate this model from a social capital perspective and suggest ways in which a balanced approach to public sector reform can take into account elements of both paradigms

the new economics of organization over the last ten years or so an important new approach to the study of organizations has emerged within economics it is perhaps best characterized by three elements a contractual perspective on organizational relationships a theoretical focus on hierarchical control and formal analysis via principal agent models this paper provides political scientists with an overview of the new economics of organization and explores its implications for the study of public bureaucracy so far positive political theory has not contributed much to our understanding of public bureaucracy in part this is due to the unsympathetic treatment that rational modeling and most other modes of quantitative analysis have long received from students of public administration the other side of the coin however is that positive theorists have not made much of an effort to develop theories of bureaucracy their concerns have centered around two basic mechanisms of social choice voting and markets and they have devoted little systematic attention to a third mechanism that is clearly important for understanding how societies and other aggregates make collective decisions this third and relatively unexplored mechanism is hierarchy movement toward a positive theory of hierarchies would fill a serious gap in the social choice literature while at the same time making a theoretical contribution that strikes to the essence of public bureaucracy indeed of all organizations in fact significant steps toward a positive theory of hierarchies have very recently been taken but by economists not political scientists in small numbers of course economists made contributions to the study of public bureaucracy some time ago with the pioneering works of downs 1967 tullock 1965 and niskanen 1971 but this new wave of theoretical work is different it is already a large complex body of literature that is the focus of innovation and excitement among a growing number of economists and it reflects an unusual degree of theoretical coherence and cumulative effort work in this tradition tends to receive orientation from a distinctive economic approach to the analysis of organizations an approach perhaps best characterized by three elements a contractual perspective on organizational relationships a focus on hierarchical control and formal analysis via principal agent models this approach has emerged from recent attempts to move beyond the neoclassical theory of the firm which assumes away all organizational considerations to a theory of economic organizations that can explain why firms corporations and other enterprises behave as they do propo

bureaucrats legislators and the size of government some recent theories have blamed the growth of government on budget maximizing bureaucrats who are assumedly capable of imposing their most preferred budget output combination on legislatures subject to cost and demand constraints however theoretical examination of the range of bargaining outcomes that might occur between bureau and legislature shows that budget maximizing behavior does not necessarily lead to super optimal levels of production nor do the suggested reforms of competition and privatization necessarily improve the situation in this bargaining model the central determinants of governmental growth are not budget maximizing bureaucrats but the legislature s decisions regarding mode of oversight and form of internal organization

gridlock and delegation in a changing world fixed statutes and regulations often have variable consequences over time if left unattended such drift can severely erode the performance of government as an institution of representation to better understand the mechanics of policy making in a changing world we develop a positive theory that captures political drift in a dynamic separation of powers system we show analytically that a distinctive combination of legislative supermajoritarianism and agency discretion institutional features that in isolation elicit widespread criticism can effectively ameliorate policies susceptibility to the vicissitudes of exogenous change the critical mechanism for governmental accommodation of drift is delegation which increases all decision makers well being by reducing fluctuations in outcomes although the complete smoothing of outcomes is attainable in a separation of powers system we show that this is typically not achieved in equilibrium the presence of drift provides an opportunity for self interested legislators to extract a distributional benefit from their fellow legislators at the expense of overall policymaking efficiency

south korean and taiwanese development and the new institutional economics the publication of books by both alice amsden and robert wade provide an opportune moment to reflect on the study of east asian development after an initial surge of interest beginning in the 1970s the field has reached a plateau and scholars recently have cast a wide net in searching for ways to extend the field in assessing the state of the art regarding the economic development of the east asian newly industrialized countries nics this review will treat three themes first i will argue that the focus on states versus markets is becoming stale and that much of the scholarly interest lies in the politics behind the economics second i argue that political scientists have underexplored the historical origins of korean and taiwanese capitalism and that such attention promises to strengthen both theories and explanations of development third i argue that the international system has been more important in promoting development in east asia than accounts in the first wave have recognized the purpose of this review is to assess the field reveal

money talks supplementary financiers and international monetary fund conditionality what explains the changes in international monetary fund imf conditionality i argue that imf conditionality agreements are influenced by supplementary financiers the imf regularly relies on external financing to supplement its loans to countries facing payments imbalances as a result these supplementary financiers are able to exercise leverage over the imf and the design of its conditionality programs i consider the influence of one type of supplementary financier private financial institutions on imf conditionality conclusions are supported by a data set of 249 conditionality arrangements coded according to their terms and two case studies

unravelling the mystery of regional unemployment in finland b ockerman p 2003 unravelling the mystery of regional unemployment in finland reg studies 37 331 340 the study explores the determination of regional unemployment in finland the evaluation of regional labour markets is based on unique linked panel data that is created by matching the conventional economic fundamentals with the measures based on gross flows of jobs and workers the striking empirical finding is that the reorganization of labour markets lowers the unemployment rate in the finnish regions in other words the reallocation of labour resources seems to be good for regional employment b ockerman p 2003 demystifier le chomage re gional en finlande reg studies 37 331 340 cette etude cherche a examiner la determination du chomage regional en finlande l evaluation des marches du travail est fonde e sur des donnees uniques rassemblees aupres des e chantillons permanents liees et obtenues en mettant en rapport les fondements economiques conventionnels avec les mesures basees sur l

the limits of tax and expenditure limits tel implementation as a principal agent problem previous scholarship has shown that tax and expenditure limits tels often fail to constrain government growth this paper views the implementation of tels as a principal agent problem agency theory predicts that delegation is affected by the preferences of agents and the costs of monitoring those agents using panel data for the us states from 1970 through 2008 i conduct an empirical test of the validity of the principal agent model for tels i find that state spending limitations are only effective at cutting the growth of state and local spending under the direction of agents who have a preference for limited government additionally state property tax limitations are only effective when monitoring does not require costly coordinated action these findings contradict an alternative theory of tel implementation that looks towards the policy s origin my research suggests that the arrangements of delegation determine when and under what conditions tels effectively reduce government growth

the institutional dynamics of policy administration bureaucratic influence over securities regulation theory a dynamic systems model of administrative politics that 1 relaxes restrictive causal assumptions among the president congress and an administrative agency 2 emphasizes aggregate institutional behavior and 3 analyzes both anticipated and unanticipated policy behavior is set forth as a more general means to investigate agency political relationships hypotheses the main set of hypotheses focus on the aggregate institutional relationships among the president congress and administrative agency these four possible hypotheses include bureaucratic influence bureaucratic autonomy mutual influence and political influence the purpose here is to assess the relative merits of competing explanations for bureaucratic behavior securities regulation is a perfect area of inquiry to investigate these competing perspectives since the findings of existing research on this topic are disparate methods vector autoregressive time series statistical methods are used to empirically test the dynamic systems model of administrative politics by examining three empirical models of sec enforcement behavior in relation to presidential and congressional budgetary preference signals for the 1949 92 annual period results the sec sends potent signals of their own via their changes in regulatory outputs that will affect the budgetary preferences of its political principles however the sec s administrative outputs are shown to be somewhat less sensitive to political budgetary preference signals than what one would expect presidential and congressional budgetary preference signals with respect to the sec are interdependent to a sizeable extent thus raising doubts about the separate independent effect democratic institutions have over the bureaucracy the implications of this study suggest that conventional theories of agency political relations serve as an oversimplified way to study administrative behavior future research on this topic

agency problem institutions and technology policy explaining taiwan s semiconductor industry development abstract taiwan has made significant progress in the semiconductor industry with government agencies and bureaucrats as the driving forces over the past 30 years taiwan s impressive achievement in the semiconductor industry clearly indicates that the government failures and agency problem usually associated with deep government involvement did not occur in taiwan why is that the case this paper proposes a principal agent framework for technology policy and applies the framework to discuss the institutional arrangements through which bureaucrats were controlled effectively in executing the semiconductor industry policies in taiwan by analyzing the institutional and organizational arrangements taiwanese leaders made to mitigate the agency problem this paper brings bureaucrats into the popular developmental state theory and emphasizes that the success of state intervention should not be taken for granted and it also brings politics into technology policy analysis and stresses the importance and complexity of agency problem in technology policy

tests of institutional versus non institutional models of local public expenditure determination are institutional or non institutional factors more important determinants of local public expenditure decisions employing data that allows us to directly identify the entire distribution of voter expenditure demands we estimate models of deviations of actual expenditures from the expenditure demand of defensible benchmarks namely the median voter s expenditure demand and the mean of voters expenditure demands three competing paradigms are employed to specify these models namely a non institutional model the reform government movement s explanation of how institutions affect local government decisions and a transactions cost model of this same phenomenon predictions from these three competing models differ in many respects comparisons of results from estimating models of expenditure deviations are found to be generally more consistent with the non institutional model than with either of the two institutional models these results suggest that a competitive local public service market helps limit the ability of governments to tax and spend in excess of the demands of the median or mean voter

syndication institutionalization and lottery play1 why do people play the lottery since lottery tickets are assets with negative expected return lottery play challenges the basic assumptions of economic theory this article approaches lottery play from a networks perspective and focuses on syndicate play a comparison of the development of lottery markets in germany austria spain and portugal from the 17th century onward shows that lottery play declined with rising incomes except in countries in which syndicate play diffused widely namely spain and to a lesser extent portugal although syndicating originated among the relatively poor as a response to an increase in lottery prices it persisted even when individual play became affordable this article contends that syndicating endured because of an institutionalization process by which lottery tickets have transformed from purely economic assets into symbolic carriers of interpersonal ties that convey membership and status position in relevant social networks

crossroads the myth of a monolithic economics fundamental assumptions and the use of economic models in policy and strategy research in 1990 in the first issue of organization science paul hirsch and his co authors ray friedman and mitchell koza published a caveat to researchers about possible pitfalls of using economic models in behaviorally oriented strategy and policy research hirsch et al 1990 crossroads provides a context for a reply to this paper and todd zenger and william hesterly have taken the opportunity to do so they seek to clarify where economics stands with respect to fundamental assumptions about humans organizations markets and investors they concur with many of hirsch friedman and koza s 1990 warnings concerning the adoption of unrealistic assumptions but disagree that the assumptions they impute to economics are universally held by economic models particularly those models most often used by strategy and policy researchers zenger and hesterly show that there are significant differences among economic theories in their fundamental assumptions finally they suggest how strategy and policy researcher

measuring the knowledge base of regional innovation systems in germany in terms of a triple helix dynamics the interaction among the three sub dynamics of economic exchange technological innovation and institutional control can be captured with a generalized triple helix model we propose to use the information contained in the configuration among the three sub dynamics as an indicator of the synergy in a configuration this measure indicates the reduction of the uncertainty which prevails at the level of an innovation system on the basis of data at the district level in germany the conclusions of a previous study about the netherlands are tested medium tech manufacturing is the main driver of the knowledge based configuration in a regional economy while knowledge intensive services tend to uncouple the economy from the regional configuration at the level of regions nuts 2 germany s knowledge based economy is no longer structured in terms of the previous east west divide of the country while this divide has prevailed at the level of the states nuts 1 that constitute the federal republic however the effects of high and medium tech are not specific for the western or eastern parts of the country the configuration of medium tech manufacturing can be considered a better indicator of the knowledge based economy than that of high tech manufacturing

industrial policy through the restriction of capital flows a test of several claims made about industrial policy we examine the extent and effect of an interest rate based industrial policy in japan france great britain and west germany while using the united states as a control case we argue that some governments have undertaken industrial policies that achieve a belowcompetitive market interest rate thereby allowing the redirection of financial flows to firms in the form of cheaper capital zysman shonfield and others believe these restrictions on interest rates cause additional firm investment change the time horizon of managers and transfer wealth from domestic savers to domestic firms we first examine the role of industrial policy by assessing the relationship between domestic interest rates and eurocurrency rates we argue that the degree of difference between these rates is an indication of the extent of one type of industrial policy we then evaluate the relative influences of domestic and external interest rates on stock prices as a way of measuring the consequences of these industrial policies if the policy were completely effective i e insulating the relevant interest rate from market forces only the domestic interest rate would influence stock prices we assess the conditions under which states demonstrate sufficient strength to undertake policies to insulate domestic markets we find that only france under the socialists succeeded in positively affecting economic activity through this type of industrial policy and that britain prior to thatcher s election demonstrated ineffective policies some evidence also indicates that japan s industrial policies were less effective than previously believed no evidence of such policies was found for west germany under either the socialists or the csu cdu alliance we tested for partisan political changes in government policies and except in great britain found none

a theory of white elephants asymmetric information in government support for technology abstract information advantages of firms over government are an important cause of policy failures in government financed technology using a game theory model such failures can be reconstructed as a situation analogous to the prisoner s dilemma in which rational individual action results in an outcome that is suboptimal for both industry and government by logic of economic theory any pareto deficient information asymmetry between industry and government qualifies as market failure the resulting policy failure therefore represents a case of government failure joined with market failure cost sharing between government and industry can solve the problem and a way to calculate the optimal level of cost sharing is shown however in many cases cost sharing is unfeasible or undesirable empirical evidence is adduced from the west german fast breeder reactor programme

the short run relationship between sectoral shifts and u s labor market fluctuations monthly data for the aggregate u s economy are used to assess competing hypotheses concerning the relationship between sectoral employment shifts and fluctuations in the unemployment rate it is shown that sectoral shifts are caused by major work stoppages aggregate fluctuations unrelated to permanent sectoral shifts a reallocation timing effect and allocative shocks at the sectoral level larger employment shifts are associated with higher unemployment during slow growth periods and lower unemployment during above average growth periods models are presented which demonstrate that both aggregate and allocative shocks are causes of cyclical increases in unemployment

introduction epistemic communities and international policy coordination the growing technical uncertainties and complexities of problems of global concern have made international policy coordination not only increasingly necessary but also increasingly difficult if decision makers are unfamiliar with the technical aspects of a specific problem how do they define state interests and develop viable solutions what factors shape their behavior under conditions of uncertainty what are the origins of international institutions and how can we best study the processes through which international policy coordination and order emerge while a variety of analytic approaches have been used to address the problems of international cooperation the approaches have yielded only fragmentary insights at its core the study of policy coordination among states involves arguments about determinism versus free will and about the ways in which the international system is maintained and transformed among the overlapping topics of debate are whether national behavior is determined or broadly conditioned by system level factors unit level factors or some complex interplay between the two whether state policymakers can identify national interests and behave independently of pressures from the social groups they nominally represent and whether states respond consistently to opportunities to create defend or expand their own wealth and power to enhance collective material benefits or to promote nonmaterial values a related question of

money and its substitutes abstract measurement of the elasticity of substitution between financial assets is an important element in evaluating the role that those assets play in the economy this paper generalizes the model developed by chetty by relaxing the separability conditions while restoring homotheticity to the utility function the general model is found to produce empirical estimates that are statistically superior to the original while substantially reducing the estimated elasticities of substitution consequently the various types of savings accounts no longer appear to be very close substitutes for money balances

do cio it budgets explain bigger or smaller governments theory and evidence from u s state governments given the recent concern on big governments and rising budget deficits in the united states and european nations there has been a fundamental economic debate on the proper boundary and role of governments in a society inspired by this debate we study the relationship between information technology it and government size drawing on a broad range of the literature from multiple disciplines such as information systems industrial organization and political sciences we present several theoretical mechanisms that explain the impact of it on government expenditures using a variety of data on it spending and state government expenditures we find that greater it investments made by a state chief information officer cio are associated with lower state government spending it is estimated that on average a 1 increase in state cio budgets is associated with a reduction of as much as 3 49 in state overall expenditures this study contributes to the literature by identifying a key technological factor that affects government spending and showing that it investments can be a means to restrain government growth

ethics incentives and conflicts of interest a practical solution couched in positive agency theory it is shown that the straight commission compensation system sccs creates a conflict of interest between the agent s and the client s self interests based on this it is hypothesized that the sccs will encourage agents to intend to act unethically towards their clients two hundred and forty five insurance agents in the u s were surveyed with 59 responding the results suggest that the sccs does not significantly affect agents ethical intentions positively or negatively this lack of empirical evidence may be due to the unique nature of the sample indeed the company which enabled this sample appears to have found a practical solution to temper the potential negative effects of the sccs in its commitment to selective hiring and marketing products which benefit both the client and the agent

the power of parallel thinking a small computer model demonstrates that an appropriate organization of boundedly rational individuals can find optimal policies in an environment that is overwhelmingly complex for unorganized decision makers the model is also used to identify conditions under which optimal or even good policies are not found the demonstrated adaptive power of the model is interpreted in light of recent developments in the theory of computational complexity that place new stress on powerful methods of search and of new models from computer science which markedly advance search effectiveness by harnessing parallel structures of information processing

political aspects of mne theory political behavior by mnes has usually been ignored downplayed or passively treated in dominant economic models of the multinational enterprise in order to remedy this lacuna dunning s eclectic paradigm is expanded to integrate political dimensions in the analysis of ownership internalization and location advantages

hysteresis in unemployment evidence from 48 u s states i introduction one central idea in macroeconomics is the equilibrium unemployment rate hypothesis 1 in many macroeconomic models which allow for some degree of price stickiness fluctuations in demand and supply may lead to deviations of the actual unemployment rate from its equilibrium value these deviations in turn trigger changes in the inflation rate there is nothing in the equilibrium unemployment rate literature which even vaguely suggests such a rate is constant indeed many studies have analyzed the factors which cause the equilibrium unemployment rate to change over time or across areas for example summers 1986 presents evidence of an increased normal u s unemployment rate since the mid 1960s and argues that this increase has in large part resulted from high and growing noncompetitive wage differentials barro 1988 addresses the issue of persistence of unemployment in various countries over a number of time periods and relates measures of persistence to variables that matter theoretically for the economy s speed of adjustment blanchard and summers 1986 1987 propose the so called hysteresis hypothesis of unemployment hysteresis is the term used to describe the long lasting influence of history on the natural rate a recession potentially has permanent effects if it changes attitudes and or characteristics of the unemployed and particularly the long term unemployed furthermore the latter may exert less pressure on the wage setting because they will become outsiders in the labor market the insiders union members or currently employed workers have much incentive to keep wages from falling 2 the hysteresis hypothesis of unemployment has important policy implications it suggests that high unemployment if left by itself may persist and continue to be a serious problem in the economy even in the long run this possibility leaves more room for active government policies to fight recessions and manage the economy the fact that the actual unemployment rate may not fluctuate around some natural rate suggests the possibility of nonstationarity in the unemployment series this relationship can be illustrated with a simple model from wyplosz 1987 or brunello 1990 consider the following phillips curve 1 mathematical expression omitted where p sub t is the current inflation rate e sub t i p sub t is the expected inflation rate of time t given information at time t 1 u sub t is the current unemployment rate mathematical expression omitted is the natural unemployment rate beta is the slope of the phillips curve and xi sub t is an error term the possibility of hysteresis arises when the natural rate is a function of past unemployment rates this can be expressed as follows 2 mathematical expression omitted where c and alpha are constants and zeta sub t is an error term substituting 2 into 1 yields 3 u sub t c alpha u sub t 1 epsilon sub t where epsilon sub t 1 beta e sub t 1 p sub t p sub t xi sub t zeta sub t hysteresis requires the parameter alpha in 3 to be equal to one 3 it implies that once disturbed the unemployment rate tends to wander around without returning to a mean value in this case the unemployment rate and also the natural rate contain a unit root in contrast when alpha is between zero and one the natural rate evolves towards its steady state level c 1 alpha and the weak version of the natural rate hypothesis holds as long as alpha is larger than zero there is persistence in unemployment rate in the sense that past unemployment affects the natural rate we however seek to test for the existence of hysteresis the extreme version of persistence finally when the parameter alpha equals zero the natural rate stays at a constant level c

innovation and inter firm linkages new implications for policy abstract this article discusses the implications for competition innovation and learning of different forms of inter firm linkage ways to govern them different generic systems of innovation and government policy it employs a transformed theory of transactions that can deal with innovation and learning and brings in trust next to opportunism nooteboom b 1996a trust opportunism and governance a process and control model organization studies 17 6 985 1010 nooteboom b 1996b towards a learning based model of transactions in groenewegen j ed tce and beyond kluwer deventer pp 327 349 nooteboom b 1999a inter firm alliances analysis and design routledge london while trust has its limits and should not be blind it can lower transaction costs for learning and innovation it takes the resource competence perspective supported by a theory of knowledge developed in earlier publications according to this theory people perceive interpret and evaluate the world according to cognitive categories that have developed in interaction with the physical and social environment as a result people will perceive understand and evaluate differently to the extent that they have developed in different environments without interaction nooteboom b 1992 towards a dynamic theory of transactions journal of evolutionary economics 2 281 299 nooteboom 1999a this theory yields the notion of external economy of cognitive scope people and firms need outside sources of cognition and competence to complement their own that is the fundamental reason why inter firm linkages are important especially for innovation in order to produce high added value and novelty by utilizing the opportunities of complementary competencies firms need to make relation specific investments which creates risks of hold up and spill over building on earlier work the article identifies different instruments for the control of those risks nooteboom 1996a nooteboom 1996b nooteboom et al 1997 effects of trust and governance on relational risk academy of management journal 40 2 308 338 nooteboom 1999a it identifies two generic kinds of innovation systems in terms of the mix of instruments for relational governance and discusses their merits and flaws with respect to quality of products diffusion incremental and radical innovation one is close to practices in continental europe and japan another is close to anglo american practice there is a certain tendency for the first to gravitate to the second the article warns about the dangers involved and explores a possible third way

transaction cost economics and cross national patterns of industrial conflict a comparative institutional analysis at the core of a capitalist system is an implied coalition between labor and capital built upon a system of exchange and compromise without capital the material condition upon which labor s interests are realized would be impossible likewise without labor s consent to exchange wages for future investment capital could not procure the profits and savings necessary for its reproduction and transformation organizing stable and cost efficient class coalitions has long been recognized as not merely an economic priority but a political challenge yet some democracies have met this challenge more successfully than others for the student of comparative political economy an enduring question remains why the present study is an attempt to provide an answer that complements and integrates the more common macroand microanalytic studies of industrial conflict it is argued here that a useful approach is to explicate some of the major microeconomic dynamics that condition exchanges between labor and capital and to demonstrate how institutional devices designed to accommodate political representation and conflict resolution facilitate or impede the process of class compromise by employing the logic of transaction cost economics the analysis highlights the comparative institutional elements fundamental to economizing on the costs of exchange shaping consensus within a political economy s industrial relations system the resulting transaction cost efficiency model of industrial conflict specifies the ex ante cost factors price margin of transaction and the institutional control of bounded rationality and the ex post cost factors legislative polarized pluralism executive hegemony and the frequency of general elections central to the process of building and sustaining class coalitions the model is tested on data drawn from 19 democracies covering the years 1965 83 use of simulation models reveals the relative trade offs associated with different patterns of ex ante and ex post cost structures

scraps of paper agreements and the durability of peace in the aftermath of war what determines whether peace lasts or fighting resumes and what can be done to foster durable peace drawing on theories of cooperation i argue that belligerents can overcome the obstacles to peace by implementing measures that alter incentives reduce uncertainty about intentions and manage accidents a counterargument suggests that agreements are epiphenomenal merely reflecting the underlying probability of war resumption i test hypotheses about the durability of peace using hazard analysis controlling for factors including the decisiveness of victory the cost of war relative capabilities and others that affect the baseline prospects for peace i find that stronger agreements enhance the durability of peace in particular measures such as the creation of demilitarized zones explicit third party guarantees peacekeeping and joint commissions for dispute resolution affect the duration of peace agreements are not merely scraps of paper rather their content matters in the construction of peace that lasts

the impact of iso 9000 diffusion on trade and fdi a new institutional analysis the effects of iso 9000 diffusion on trade and foreign direct investment fdi have gone understudied we employ panel data reported by oecd nations over the 1995 2002 period to estimate the impact of iso adoptions on country pair economic relations we find iso diffusion to have no effect in developed nations but to positively pull fdi i e enhancing inward fdi and positively push trade i e enhancing exports in developing nations

conditionalities and the performance of european structural funds a principal agent analysis of control mechanisms in eu cohesion policy bachtler j and ferry m conditionalities and the performance of european structural funds a principal agent analysis of control mechanisms in european union cohesion policy regional studies in the context of debates on the performance of european union cohesion policy this paper considers how the european union has used control mechanisms to influence the use of structural funds by member states using the principal agent model this paper examines empirically three case studies of conditionalities applied to the absorption of funding decommitment rule outcomes of interventions performance reserve and targeting of expenditure earmarking in european union programmes over the 2000 2013 period the findings reveal different levels of effectiveness of the three conditionalities attributable to the differential scope for trade offs during the regulatory negotiations external pressure and principal self interest the paper discusses an effectiveness threshold for introducing controls the tensions

a dual approach to measuring the nearness of near monies increasing returns to scale rts is frequently po stulated as affecting productivity in surface coal mining however it is not cl ear whether increased capital intensity or increased output is the relevant phen omenon a ray homothetic production function that incorporates the capital labor mix and fixed site geology into the scale elasticity is presented and estimated with a micro mine level dataset the results indicate that higher capital int ensity contributes to higher rts for some types of capital equipment but not al l on the average increasing rts was found with few mines approaching optimal scale copyright 1987 by mit press

divided government and u s trade policy theory and evidence if different parties control the u s congress and white house the united states may maintain higher import protection than otherwise this proposition follows from a distributive politics model in which congress can choose to delegate trade policymaking to the president when the congressional majority party faces a president of the other party the former has an incentive to delegate to but to constrain the president by requiring congressional approval of trade proposals by up or down vote this constraint forces the president to provide higher protection in order to assemble a congressional majority evidence confirms that 1 the institutional constraints placed on the president s trade policymaking authority are strengthened in times of divided government and loosened under unified government and 2 u s trade policy was significantly more protectionist under divided than under unified government during the period 1949 90

entry barriers and medical board funding autonomy in this paper we develop and test the hypothesis that institutional funding arrangments affect the extent to which public agencies are influenced by special interests we test this hypothesis using data on state medical boards in 1989 medical boards in twenty one states received budget appropriations from their legislatures the remaining boards operated independent of legislative control financing their activities from fees and other revenues we find that budgetary autonomy does influence agency decisions the ability of physicians to restrict entry is enhanced where licensing boards are self financed

an affinity to commons model of public support for environmental energy policy abstract as atmospheric co 2 continues to rise above 450 ppm policymakers struggle with uncertainty concerning predictors of citizen support for environmental energy policies eeps and preferences for their design topics which have received limited attention in empirical literature we present an original model of policy support based on citizens affinity to commons pathways by which individuals enjoy natural public goods that in turn shape preferences between alternative policy mechanisms we evaluate this model using a survey of southern california electricity customers with results indicating the model s utility in predicting public support of eep stronger community ties are associated with preferences for pull type subsidies whereas stronger connections to natural commons are linked to support for both pull and push type sanctions findings have implications for coalition building as advocates may engender support for green energy policy by framing sanctions as protecting natural commons and framing subsidies either in this same way and or as producing benefits for communities

local labor market fluctuations and health is there a connection and for whom we examine the relationship between local labor market conditions and several measures of health and health behaviors for a sample of working aged men living in the 58 largest metropolitan areas in the united states we find evidence of procyclical relationships for weight related health and mental health for men with low ex ante employment probabilities separate estimates suggest worsening labor market conditions lead to weight gains and reduced mental health among african american men and lower mental health among less educated males among our findings those related to mental health are most pronounced

protecting the environment when costs and benefits are privately known in this survey i analyze different approaches for protecting the environment when stakeholders are privately informed about the costs and benefits of pollution reduction the presence of asymmetric information calls for some important departures from the textbook prescriptions of marketable permits and emission taxes for controlling pollution for instance it may no longer be optimal to equate the social marginal benefits to the marginal cost of cleanup in determining appropriate abatement levels i conclude this review with some suggestions for future research in this area

science policies as principal agent games institutionalization and path dependency in the relation between government and science national science policies seem to converge in policing the double edged problem of how to get policy and industry interested in the conduct of science and how to get science interested in the problems of policy and industry however similarity in the labels of institutes and instruments for science policy conceals traditional differences in the institutionalization of the relation between the state and science this article conceptualizes the relation between government and science as an ongoing principal agent game with different possibilities for stabilization each of these differ to the extent the principal or the agents can pursue their strategy institutionalization of the endless frontier ideology of consensus making and of competition between agents is elaborated path dependency emerges as costs for institutional changes are often higher than the accommodation of new instruments and policies to existing structures the argument is mainly and deliberately analytical but empirically illustrated by the development of foresight in the uk germany and the netherlands

can politicians police themselves natural experimental evidence from brazil s audit courts to enhance government accountability reformers have advocated strengthening institutions of horizontal accountability particularly auditing institutions that can punish lawbreaking elected offi

the dubious role of institutions in international business a road forward our commentary returns to the conundrum of how institutions matter in international business ib by revisiting the 2018 jibs decade award article by jackson and deeg 2008 on comparing capitalisms we first synthesize their main insights around institutional diversity and track its significant impact within ib and other management fields we then suggest three main takeaways that could move jackson and deeg s agenda further in terms of developing a more nuanced approach to institutions in ib we close with suggestions for future research and urge ib scholars to be more cautious when drawing on different strands of institutions theory

u s politics and greater regulation of inward foreign direct investment an analyst of u s foreign economic policy observes that each wave of antiforeign sentiment associated with the surge of foreign direct investment fdi coming into the united states washes ashore a flotsam of restrictive and exclusionary laws that recedes slightly or becomes buried and forgotten in the sand only to advance again with a new wave during the late 1980s the controversy generated by the sharp rise of japanese acquisitions in the united states washed ashore the latest flotsam of regulatory measures and further advanced the tangle of rules and regulations targeting inward foreign direct investment ifdi of the various types of fdi the present study is concerned mainly with the policy change toward foreign investment in an already established domestic business this type of investment often involves merger or acquisition and is distinct from a greenfield investment where the foreign investor establishes from scratch a new business in the host economy

differences in state unemployment rates the role of labor and product market structural shifts state unemployment rates diverged dramatically in the 1980s differing unemployment rates across states are an important public policy concern because of equity concerns and the pure human consequences of higher unemployment moreover at the national level a greater dispersion in state and regional unemployment rates can increase the natural rate of unemployment and shift the phillips curve out because of an inefficient allocation of the labor force 3 38 one possible cause for the divergence in unemployment rates is national industrial restructuring u s industrial restructuring was suggested by lilien 26 as a cause for the rise in the national unemployment rate moreover national restructuring can have differential impacts across states because states can have dramatically different mixes of industries from each other one of the difficulties of national restructuring from a regional perspective is that it is difficult to avoid on the other hand if regional differences in unemployment are due to state idiosyncratic causes state and local public policy can potentially play a more active role for example the economic problems that plagued the northeast and california during the early 1990s have been typically attributed to national downsizing in the defense industries conversely economic problems in these states may have been driven by factors that are located within the state such as the collapse of their real estate markets

labour underutilisation in metropolitan labour markets in australia individual characteristics personal circumstances and local labour markets there has been a growing awareness that the issue of labour market disadvantage is substantially greater than merely considering unemployment and the ability to find a job there is an increasing l

the political economy of state medicaid policy we develop and test a market based model to explain variations in states welfare medicine policy decisions the empirical results support the model of state policy outputs indicating that states spending efforts for welfare medicine are most sensitive to the supply of services within their borders we learn in addition that spending effort declines with demand for services indicating that the states spending the highest proportions of total personal income for the program are those who need it most and can afford it least measures of political system development affect spending effort positively and significantly suggesting that ideology diversity of interests and administrative professionalism increase states welfare efforts

competitive policy development we present a model of policy development in which competing factions have different ideologies yet agree on certain common objectives policy developers can appeal to a decision maker by making productive investments to improve the quality of their proposals these investments are specific to a given proposal which means that policy developers can potentially obtain informal agenda power competition undermines this agenda power forcing policy developers to craft policies that are better for the decision maker this beneficial effect is strongest if policy developers have divergent ideological preferences because their intense desire to affect policy motivates them to develop higher quality proposals jel d72 d73 d78 e61 during the early years of the new deal president franklin delano roosevelt faced an enormous challenge he believed that dramatic policy innovation was urgently needed on a wide range of issues including agriculture trade banking employment and social insurance however although roosevelt was well versed in policy crafting workable proposals for such a far reaching agenda was well beyond his capacity or that of his immediate advisors instead the president had to rely on a broader array of politicians and bureaucrats to develop new policies although these individuals shared some common goals e g ending the great depression they also had deep seated ideological disagreements among themselves and with the president about what policies the federal government should pursue classic and contemporary theories of bureaucratic politics would suggest that this situation was ripe for exploitation and inefficiency weber 1991 famously argued that the typical ruler of a modern state is reduced to being a mere dilettante when dealing with institutionalized bureaucratic actors more recently scholars

delegation as commitment the case of income tax audits in this article we study the value of delegating authority over income tax audit policy arising from the incompleteness of contracts consider a utilitarian government whose ability to commit is limited to aggregate dimensions of its audit policy as publicly verifiable information about detailed allocations of audit budgets is not available we show that the welfare level associated with the full commitment solution can be attained by delegating authority over audit policy to a manager the latter is offered a simple incentive scheme based only on the aggregate variables which are publicly observable in contrast if the government retains authority direct commitment to these same variables does not allow the full commitment welfare level to be achieved thus despite sharing a common informational basis delegation may perform better than centralized arrangements in the presence of incomplete contracts

renegotiation design with multiple regulators abstract one striking feature of the internal organization of governments is the existence of multiple regulators this paper explains this organizational choice as coming from the government s limited ability to commit the separation of powers between two regulators is modeled as a stackelberg common agency game with respect to the case of a single regulator the allocative efficiency and the regulated firm s informational rent are both reduced in the unique equilibrium of this game however when regulators have a limited ability to commit this static cost of regulators separation becomes a dynamic benefit separation makes renegotiation harder and improves commitment journal of economic literature classification numbers d82 l51

theory and relevance of currency substitution with case studies for canada and the netherlands antilles textabstractabstract this paper develops the theory of currency substitution from a choice theoretic point of view the main result offers a simple relationship between the relative amount of currencies held and their opportunity costs i e interest and capital gains our hypothesis is tested by case studies for canada and the netherlands antilles in contradistinction with other studies we conclude that the elasticity of currency substitution is very small and negative it is shown how the omission of the interest term in other studies biases the elasticity of currency substitution considerably

democracy the market and the logic of social choice this article compares the types of knowledge democracy and the market require to rationally allocate resources i argue that high levels of public ignorance and voters inability to compare the effects of different parties policies make it difficult for parties and elections to rationally allocate resources markets mitigate these problems because the simultaneous existence of multiple firms products facilitates comparisons that mimic the conditions of scientific experimentation the economy of knowledge involved in such comparisons indicates there are epistemic advantages to using firms and markets instead of political parties and elections to allocate scarce resources however in contrast to arguments that markets merely provide better information than political decisions i argue markets epistemic advantages are derived from the way they facilitate comparisons that minimize decision makers need for knowledge or understanding