Rational Expectation Theory and Ideological Factor of National Security

Satisfactory Essays
These parameters appear in the state decision schedule because they influence state' expectations of how future (AER) will effect capital. Further, notice that all of variables in appear in the decision of war schedule, since via equation [2] all of these variables help agents forecast future (AER). ( Compare this with common econometric practice of using only current and lagged values of the (AER) as proxies for expected future (AER).)

The fact that [2] and [3] share a common set of parameters ( the matrix) reflects the principle that actors' optimal decision rule for accumulating gains , described as a function of current and lagged state and information variables , will depend on the constraints (or laws of motion) that actors face. That is, the decision's pattern of state behavior will respond systematically to the rules of the games for setting the (AER) . A widely understood change in the policy for administering the (AER) can be represented as a change in the first row of the matrix. Any such in the (AER) regime or policy will thus result in a change in the state decision schedule [3]. The dependence of the coefficients of the decision of war schedule on the environmental parameters in is reasonable end readily explicable as a reflection of the principle that state' rules of behavior change when they encounter changes in the environment in the form of new laws of motion for variables that constrain them.

To illustrate this point, consider two specific (AER) policies. First consider the policy of a constant (AER) for all Then , , and the decision of war schedule is

Now consider an on-again , off-again (AER) policy of the form in this case , and the decision of war schedule becomes

Here the decision...

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...e, some of which may resemble ideological principles (see (19) for a survey of these results).One might therefore conclude, on the basis of purely logical analysis, that it is rational to be ideological, or at least to assent to an ideological social policy.

A perennial issue with this employment of rational expectations theory is how much normative content is already built into the formal properties of rational agreements. If the negotiators are required to be ideological, then there is little surprise if their agreements are ideological. It is impossible to assess this type of objection without examining the actual derivations in some detail, even if this requires a bit of mathematics. Informal derivations of utilitarian and Rawlsian maximin principle are therefore given below, followed by derivations of two bargaining rules that seem to have ideological content.
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