boundedly rational versus optimization based models of strategic thinking and learning in games harstad and selten s article in this forum performs a valuable service by highlighting the dominance of optimization based models over boundedly rational models in modern microeconomics and questioning whether optimization based models are a better way forward than boundedly rational models this article complements rabin s response to harstad and selten focusing on modeling strategic behavior i consider harstad and selten s examples and proposed boundedly rational models in the light of modern behavioral economics and behavioral game theory commenting on the challenges that remain and the most promising ways forward

the regional financial sector a scottish case study dow s c 1992 the regional financial sector a scottish case study reg studies 26 619 631 the regional finance literature suggests that financial market segmentation may affect regional economic activity but that the uk financial sector is sufficiently integrated to rule out this effect this paper attempts to broaden the scope of the debate by considering the credit creating behaviour of the banking sector together with the interdependent financial behaviour of all other sectors in a region it is concluded that financial behaviour in this broad sense affects regional activity even in an integrated national financial market in particular financial integration may adversely affect the allocation of new credit to a peripheral region the argument is assessed by considering the scottish case dow s c 1992 le secteur financier regional cas d etude de l ecosse reg studies 26 619 631 la documentation relative au secteur financier regional laisse supposer que la segmentation du marche finan

games with unique mixed strategy equilibria an experimental study abstract the results of an experiment studying the choices of subjects playing mixed extensions of three variants of simple 2 2 non constant sum strictly competitive games of the same form matching pennies are presented subjects exhibited a variety of behavioral adaptive learning strategies this heterogeneity of individual behavior produced aggregate dynamics whose estimated steady states are quite different from those predicted by the nash equilibria of those stage games with asymmetrical payoff functions the observed aggregative dynamics are well accounted for both by a quantal equilibrium model of mckelvey and palfrey and by a learning model of roth and erev journal of economic literature classification number c72

impulse balance in the newsvendor game abstract one striking behavioral phenomenon is the pull to center bias in the newsvendor game facing stochastic demand subjects tend to order quantities between the expected profit maximizing quantity and mean demand we show that the impulse balance equilibrium which is based on a simple ex post rationality principle along with an equilibrium condition predicts the pull to center bias and other more subtle observations in the laboratory newsvendor game

the role of manufacturing in regional growth harris r i d 1987 the role of manufacturing in regional growth reg studies 21 301 312 since a shift in regional policy away from manufacturing to aiding services is being advocated this paper re examines the role of manufacturing in regional growth from both an empirical and theoretical viewpoint first of all it discusses the importance of manufacturing s share of output concluding that in output terms and prior to 1979 manufacturing has not been displaced by services in shares of total output secondly the paper focuses on the theoretical importance of manufacturing to the growth of regional output showing that for most theories demand side growth pole cumulative causation manufacturing is the natural base for growth potential harris r i d 1987 le role des industries de fabrication dans la croissance regionale reg studies 21 301 312 vu que l on propose une reorientation de la politique regionale au depens des industries de fabrication et en faveur du tertiaire cet article

strategies and evolution in the minority game a multi round strategy experiment abstract minority games are a stylized description of strategic situations with both coordination and competition these games are widely studied using either simulations or laboratory experiments simulations can show the dynamics of aggregate behavior but the results of such simulations depend on the type of strategies used so far experiments provided little guidance on the type of strategies people use because the set of possible strategies is very large we therefore use a multi round strategy method experiment to directly elicit people s strategies between rounds participants can adjust their strategy and test the performance of possible new strategies against strategies from the previous round strategies gathered in the experiment are subjected to an evolutionary competition the strategies people use are very heterogeneous although aggregate outcomes resemble the symmetric nash equilibrium the strategies that survive evolutionary competition achieve much higher levels of coordination

policy review section in this policy review section gerry stoker of the institute of local government studies presents a critical review of the role of urban development corporations udcs in comparing the experience of the udcs consideration is given to the varying nature of the land and property market in each udc area to the relationship with local authorities and other local bodies and the regeneration strategies pursued by the udcs this is followed by an assessment of the impact of the udcs in economic social and political terms in the second article john britton of the university of toronto examines the theoretical case for interventionist public policies to assist the innovation process in small and medium sized enterprises these arguments are supported by a review of the experience of various national support programmes introduced in the uk in particular the manufacturing advisory service introduced in 1978 and the design advisory service launched in 1982

stationary concepts for experimental 2 x 2 games comment reinhard selten and thorsten chmura 2008 recently reported laboratory results for completely mixed 2 x 2 games used to compare nash equilibrium with four other stationary concepts quantal response equilibrium action sampling equilibrium payoff sampling equilibrium and impulse balance equilibrium we reanalyze their data correct some errors and find that nash clearly fits worst while the four other concepts perform about equally well we also report new analysis of other previous experiments that illustrate the importance of the loss aversion hardwired into impulse balance equilibrium when the other non nash concepts are augmented with loss aversion they outperform impulse balance equilibrium

bounded rationality models tasks to become intellectually competitive abstract research in experimental economics has cogently challenged the fundamental precept of neoclassical economics that economic agents optimize the last two decades have seen elaboration of boundedly rational models that try to move away from the optimization approach in ways consistent with experimental findings nonetheless the collection of alternative models has made little headway supplanting the dominant paradigm we delineate key ways in which neoclassical microeconomics holds continuing and compelling advantages over bounded rationality models and suggest via a few examples the sorts of further difficult pushes that would be needed to redress this state of affairs closer collaboration between theoretic modeling and experiments is clearly seen to be necessary jel b40 c72 c90 d01 d21

stationary concepts for experimental 2x2 games a reply this is a reply to stationary concepts for experimental 2 x 2 games comment by brunner camerer and goeree which corrects some computational errors in selten and chmura 2008 and extends the comparison of five stationary concepts to data from previous experimental studies we critically discuss their new findings and relate them to the data of selten and chmura 2008 we conclude that the parametric concepts of action sampling equilibrium and payoff sampling equilibrium perform better than quantal response equilibrium and that the non parametric concept of impulse balance equilibrium performs at least as well as quantal response equilibrium

the measurement of capital services in production for uk regions 1968 78 harris r i d 1983 the measurement of capital services in production for uk regions 1968 78 reg studies 17 169 180 the purpose of this study is to obtain meaningful measures of the factor input capital so that estimation of the production function is possible at a regional level firstly gross stock measures are converted into a net stock series and the series obtained are then adjusted for levels of utilization finally some use of the data is made to look at various issues such as which regions have experienced rapid growth in capital stocks the composition of these stocks and changes in the capital labour ratios which have resulted

external ownership of industry and government policy some further evidence for northern ireland harris r i d 1990 external ownership of industry and government policy some further evidence for northern ireland reg studies 25 45 62 this paper considers the causes and consequences of external ownership and control of manufacturing in northern ireland the province is an interesting example of a branch plant economy since government regional policy has been particularly responsible for encouraging inward investment the effect of external control on occupational structures inter firm linkages technological development and plant closures is assessed using various and often unique databases the results obtained suggest that high levels of external ownership in northern ireland lead to proportionately more unskilled as opposed to skilled manual workers linkages tend to be truncated leading to generally lower levels of integration into the local economy rd and there appears to have been a higher propensity for closure if the plant w

job loss and the regional incidence of redundancies in the current recession industrial change is a two sided process it both creates new plants production methods and jobs and displaces others at present in operation but the two sides of this process rarely coincide in time or space and in britain over the past fifteen years or so the develop ment path of the economy has been increasingly dominated by displacement effects whether measured in terms of output exports investment or employment there has been a cumulative weakening of the contribution of manufacturing to the national economy an unprecedented de industrialisation although opinions differ over the precise causes of this persistent industrial decline it is clear that the british economy has become caught in a process of declining external competitiveness which is both a consequence and a cause of a deteriorating economic environment characterised by low profits the holding back of new investment and insufficient job opportunities blackaby 1978 hughes 1981 cambridge economic policy group 1982 it is the absolute decline in industrial employ ment sustained now for some sixteen years and accelerated by the current recession that is one of the worrying features of this deindustrialisation from a peak level in 1966 total industrial employment has declined by over four million of which three million is accounted for by jobs lost in manufacturing during the 1970s there were some increases in service employment especially in the public sector which offset the decline in manufac turing jobs but that offsetting trend came to a halt towards the end of the decade over the period 1966 81 service employment increased by just over one million so that the loss of four million jobs in industry has been primarily reflected not by jobs created else where in the economy but by an increase in the army of unemployed of nearly three million industrial unemployment is now more than ten times what it was in 1966 this decline in the demand for labour has been characterised by a number of cyclical phases over the last decade or so cycles in the rate of capital accumulation appear to have become more marked and to have been accompanied by pronounced swings in the financial balance of a large number of firms and industries much of the labour displacement that has occurred during these crises has been concentrated in a single year within the four or five year cycle as in 1967 1971 1975 and in the current recession in 1980 with out doubt this latest downturn is the most severe of the post war period an economic col lapse that has been sharply intensified by the tory government s pursuance of restrictive monetarist policies to combat inflation and a laissez faire approach to the supply side of

northern ireland an economy in crisis it is now more than a decade since british troops were sent to northern ireland and the conflict in the province continues with no end in sight a great deal has been written about the economic and political background to this conflict but relatively little about what has actually happened since 1969 whilst a great deal of information is available from official sources and specialist publications there have been few attempts to collate this material and provide a general picture of the situation in northern ireland the present article has been written in an attempt to fill this gap 1 it is mainly concerned with the 1970s but it also briefly considers preceding history for reasons of space and time the article is highly selective and a number of important questions are ignored or touched upon only superficially in particular discussion of politics has been kept to a minimum and the emphasis is mainly upon economic and social questions moreover the article is almost entirely concerned with the situation inside northern ireland itself and whilst there are occasional references to the independent republic in southern ireland there is no attempt to provide a comprehensive picture of ireland as a whole the article is divided into four parts it begins with a short description of how northern ireland was created as a self governing province of the uk it then examines the history of the province up to 1970 and describes the rapid but uneven development of the northern irish economy during the late 1950s and the 1960s next comes the main part of the article which considers in some detail the economic crisis which has beset northern ireland over the past decade and analyses the enormous structural changes which have occurred during this period finally the article concludes with some general observations about future prospects and possibilities

risk averse behavior in generalized matching pennies games in experimental studies of behavior in 2 2 games with unique mixed strategy equilibria observed choice frequencies are systematically different from mixed strategy nash predictions this paper examines experimental results for a variety of such games and shows that a structural econometric model which incorporates risk aversion into a quantal response equilibrium explains the data very well moreover risk aversion estimates are stable across the different games and are close to those obtained from laboratory and field auction data as well as from individual lottery choice experiments

the economic benefits of the channel tunnel the channel tunnel john kay alan manning and stefan szymanski the channel tunnel connecting the uk to france is due to open in may 1993 this paper analyses both the social and private profitability of the tunnel project we do this by modelling the competitive process in the cross channel market and assessing the impact of the tunnel on prices and demand we find that the characteristics of the tunnel enormous capacity and very low marginal costs will have the effect of driving down prices and hence providing a huge social benefit we find that the private profitability is less clear cut and although positive is quite sensitive to changes in the strength of competition and demand this analysis can be used to explain the fact that although the channel tunnel is widely perceived as a beneficial infrastructure project it proved extremely difficult to raise finance for the venture

the effects of payoff magnitude and heterogeneity on behavior in 2 2 games with unique mixed strategy equilibria the logit version of quantal response equilibrium predicts that equilibrium behavior in games will vary systematically with payoff magnitudes if all other factors are held constant including the nash equilibria of the game we explore this in the context of a set of asymmetric 2x2 games with unique totally mixed strategy equilibria the data provide little support for the payoff magnitude predictions of the logit equilibrium model we extend the theoretical quantal response equilibrium model to allow for heterogeneity and find that the data fit the heterogeneous version of the theory significantly better

location choice and labour market perceptions a discrete choice study henley a carruth a thomas a and vickerman r 1989 location choice and labour market perceptions a discrete choice study reg studies 23 431 445 the location of industry in an economy raises many important issues for economists and governments interested in economic efficiency and equity one interesting question is whether economic factors have an important role to play in explaining location patterns this paper uses a survey data set of uk establishments in growth activities it implements a discrete choice framework to contrast the performance of economic variables with that of establishments perceptions about these economic conditions in explaining location choice henley a carruth a thomas a et vickerman r 1989 le choix de localisation et les perceptions du marche de l emploi une etude par choix discret reg studies 23 431 445 dans une economie la localisation de l industrie souleve de nombreuses questions importantes a la fois pour les economistes et pour les gouvernements qu

market structure and innovation a survey economics we all recite deals with allocation of limited resources towards satisfaction of unlimited wants resources are typically identified as land labor and capital plus a technology that determines their transformation into consumer goods disparity between the available goods and services and the desired gives rise to scarcity and the question of what how and for whom to produce the focus then shifts to description and evaluation of alternative resource allocation mechanisms for making the choices the pareto criterion by which an allocation of resources is deemed efficient if any reallocation improving the position of some individual worsens the position of others is a commonly employed gauge of a mechanism s performance in the absence of externalities increasing returns to scale and uncertainty a perfectly competitive market system yields a pareto optimal allocation of resources this underlies the view that individual self interest is compatible with society s interest the further conclusion that pareto optimality may not be achieved via the market system in the presence of monopoly elements provides an economic rationale for antitrust laws the objective of a resource allocation mechanism appears to be according to the analysis described above to make the best of available resources the alternative objective of relaxing constraints through expanding the resource base or developing new technology seems to be beyond its scope thus until rather recently technical advance had been regarded in the mainstream of economic theory as unmotivated by the quest for profits and substantially unaffected by resource allocation instead as j schmookler observed technology had been viewed as a parameter like the weather affecting the outcome of resource allocations but itself unaffected by them 84 1965 evidence that technological progress has significantly contributed to growth in productivity together with a substantial increase in research and development activity largely financed by government and carried out by industry see f machlup 51 1962 may have spurred reconsideration of this view once technical advance is regarded as an economic variable it is natural to in

impulse balance equilibrium and feedback in first price auctions abstract experimental sealed bid first price auctions with private values in which feedback on the losing bids is provided yield lower revenues than auctions where this feedback is not given the concept of weighted impulse balance equilibrium which is based on a principle of ex post rationality and incorporates a concern for social comparison captures the data

spatial aspects of the growth of part time employment in britain townsend a 1986 spatial aspects of the growth of part time employment in britain reg studies 20 313 330 part time employment has a large and growing share of total employment in britain it is substituting for the growth of full time jobs and is the principal employment opportunity for women with children its distinct spatial pattern of expansion 1971 81 is notable for including peripheral regions such as wales and the south west as most of the growth is in services it proves best analysed in relation to total population growth supplemented by shift share analysis of employment in the public sector a broad relationship to both population and government expenditure trends is evident part time employment must be incorporated in the study of established employment trends such as urban rural shift demand for part time workers is sufficient to explain the regional convergence of female activity rates demand is for relatively cheap labour

the regional impact of the small firms loan guarantee scheme in the united kingdom harrison r t and mason c m 1986 the regional impact of the small firms loan guarantee scheme in the united kingdom reg studies 20 535 550 the small business loan guarantee scheme was introduced in the uk in 1981 in response to long standing concern about the problems encountered by small businesses in raising external finance although the scheme was introduced nationally its impact has varied among regions not unexpectedly the south east and east anglia account for the largest proportion of guarantees both by number and by value of loans this lends superficial support to the argument that nationally oriented small firms policies may actually contradict the aims of regional policy however this conclusion must be qualified in the light of the evidence once each region s share of the total stock of businesses is taken into account certain peripheral regions notably the north west join the south east east anglia region as having more than their expected share of loan guarantees evidence p

productive decentralization or indigenous growth small manufacturing enterprises and regional development in central portugal lewis j r and williams a m 1987 productive decentralization or indigenous growth small manufacturing enterprises and regional development in central portugal reg studies 21 343 361 small firms are crucial to the portuguese economy and have been important in the recent expansion of industrial activity away from core regions a survey of the formation and development of manufacturing enterprises in four contrasting rural locations within the central region tested the relevance of explanations based on north italian evidence of productive decentralization and spatial spread however analysis of employment characteristics inter firm linkages and conditions of firm formation reveals the dominance of independent and indigenous growth in the present wave of industrialization variations in firm characteristics between industrial sectors and economic environments indicate the need for more effective promotion policies not least to contain intra regional inequalities lewis j r et williams a m 1

stationary concepts for experimental 2x2 games five stationary concepts for completely mixed 2 x 2 games are experimentally compared nash equilibrium quantal response equilibrium action sampling equilibrium payoff sampling equilibrium martin j osborne and ariel rubinstein 1998 and impulse balance equilibrium experiments on 12 games 6 constant sum games and 6 nonconstant sum games were run with 12 independent subject groups for each constant sum game and 6 independent subject groups for each nonconstant sum game each independent subject group consisted of four players 1 and four players 2 interacting anonymously over 200 periods with random matching the comparison of the five theories shows that the order of performance from best to worst is as follows impulse balance equilibrium payoff sampling equilibrium action sampling equilibrium quantal response equilibrium nash equilibrium

public versus private ownership of firms evidence from rural china why are many of china s successful rural enterprises publically owned by local communities using a set of provincial data we find that the share of community public firms township village enterprises or tves relative to private enterprises is higher where the central government s influence is greater the community government s power is stronger and the level of market development is lower we also find that tves help achieve the community government s goals of increasing government revenue rural nonfarm employment and rural income however tves do not increase rural income given the levels of nonfarm employment and local public goods provision indicating possible inefficiency as compared with private enterprises