Abstract
This chapter explores the difficulties of building a normative theory of development — a theory that determines the properties of the “best” conduct of development with some rigor under precise assumptions about the developer’s goals and the manner in which he acquires knowledge as development proceeds. Such a theory will, of course, have to deal with models that omit many important elements of development as it occurs in the real world. The models will become progressively more complicated and more realistic, but at the beginning we shall leave out a great deal.
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References
In the sense that has been introduced by L. J. Savage and his followers. See Leonard J. Savage: The Foundations of Statistics, New York: John Wiley and Sons, Inc., 1954.
Jacob Marschak and Roy Radner: The Economic Theory of Teams, forthcoming monograph of the Cowles Foundation for Research in Economics, Yale University; H. Raiffa and D. Luce: Cames and Decisions, New York: John Wiley and Sons, 1958, Ch. 13.
For example, a functional equation, to be satisfied by expected time and money cost under an optimal policy, can, as in all multi-stage problems, be written down. Richard Bellman: Dynamic Programming, Princeton: Princeton University Press, 1957.
Burton H. Klein: The Decision Making Problem in Development, in R. R. Nelson, ed., The Rate and Direction of Inventive Activity: Economic and Social Factors, Princeton: Princeton University Press, 1962, pp. 477–497.
First noted by R. Nelson in Uncertainty, Learning, and the Economics of Parallel R&D Efforts, Review of Economics and Statistics, Vol. XLIII (November 1961), pp. 351–364.
The proofs of Theorems 2 and 5 of this section, and the counter example under “Diminishing Returns and Stronger Properties” below, are largely due to J. A. Yahay. A compact discussion of the results of this section, in a somewhat more general setting, appears in a joint paper by Thomas Marschak and J. A. Yahav: The Sequential Selection of Approaches to a Task, Management Science, May 1966.
F. Chow and Herbert Robbins: A Martingale System Theorem and Applications, Proceedings of the Fourth Berkeley Symposium on Probability and Statistics, Berkeley: University of California Press, 1961.
See especially D. R. Fulkerson: A Network Flow Computation for Project Cost Curves, Management Science Vol. 7 (January 1961), pp. 167–178, and J. E. Kelley, Jr.: Critical-path Planning and Scheduling: Mathematical Basis, Operations Research Vol. 9 (May-June 1961), pp. 296–320. The first paper on network methods that explicitly formulated an optimization problem was apparently that of J. E. Kelley, who considered the problem discussed here.
Notably the first network technique, PERT (Program Evaluation Review Technique), originally described in D. G. Malcolm, J. Y. Roseboom, C. E. Clark, and W. Fazar: Application of a Technique for Research and Development Program Evaluation, Operations Research Vol. 7 (September-October 1959), pp. 646–669.
Herman Chernoff: The Sequential Design of Experiments, Annals of Mathematical Statistics Vol. 30 (September 1959), pp. 755–770.
Optimal rules here have been characterized by Herman Chernoff: The Sequential Design of Experiments, Annals of Mathematical Statistics Vol. 30 (September 1959), pp. 755–770 and by Dorian Feldman, Contributions to the “Two Armed Bandit” Problem, Annals of Mathematical Statistics Vol. 33 (September 1962), pp. 847–856.
Robert E. Bechhofer, Salah Elmaghraby, and Norman Morse: A Single Sample Multiple Decision Procedure for Selecting the Multinomial Event Which Has the Highest Probability, Annals of Mathematical Statistics Vol. 30 (March 1959), pp. 102–119.
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Aryeh Dvoretzky: On Stochastic Approximation, Proceedings of the Third Berkeley Symposium on Probability and Statistics Berkeley: University of California Press, 1956, Vol. I, pp. 39–56.
Notably by K. L. Chung, On a Stochastic Approximation Method, Annals of Mathematical Statistics Vol. 25 (June 1954), pp. 463–483.
B. O. Koopman: The Theory of Search, Operations Research Parts I and II, Vol. 4 (May June and September-October 1956), pp. 324–346 and 503–531, and Part III, Vol. 5 (September-October 1957), pp. 613–626.
David Blackwell: Discrete Dynamic Programming, Annals of Mathematical Statistics Vol. 33 (June 1962), pp. 719–726, and Discounted Dynamic Programming, Vol. 36 (February 1965), pp. 226–235.
See also Richard Bellman: Dynamic Programming Princeton: Princeton University Press, 1957, and Ronald A. Howard: Dynamic Programming and Markov Processes Cambridge, Massachusetts: The M.I.T. Press, 1960, p. 136.
The relevant efforts are the “theory of teams” (Jacob Marschak and Roy Radner: The Economic Theory of Teams forthcoming monograph of the Cowles Foundation for Research in Economics, Yale University) and the study of “adjustment processes” in economies and other organizations (Kenneth J. Arrow and Leonid Hurwicz: Decentralization and Computation in Resource Allocation, in W. Phoutts, ed., Essays in Economics and Econometrics Chapel Hill: University of North Carolina Press, 1960, pp. 34–104, and Thomas Marschak, “Centralization and Decentralization in Economic Organizations,” Econometrica Vol. 27 (July 1959), pp. 399–430.)
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Marschak, T. (1967). Toward a Normative Theory of Development. In: Strategy for R&D: Studies in the Microeconomics of Development. Ökonometrie und Unternehmensforschung / Econometrics and Operations Research, vol 8. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-46095-1_5
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