This paper criticises the 'rational' model of valuation propounded by McIntosh and Sykes in their two papers in the Journal of Valuation. It concludes that, in the case of freehold investments with a standard pattern of income flow, the years' purchase method of valuation (adopting a single capitalisation rate) is likely to be more appropriate, and in the case of short leasehold investments a full discounted cash flow approach is preferable. Only in the case of long reversions or non‐standard short reversions may the 'rational model' prove optimal, but in these cases it seems merely a sensible application of conventional DCF techniques rather than a new valuation method.
The mathematics of property valuations commonly used in practice exist in several formulations which have been adopted over the years. All are similar in that they represent simple discounted cash flow models equating the estimated future earnings capacity of a property to a net present (capital) value. The process, whilst appearing somewhat daunting, is in fact accomplished in a manner such that, under normal circumstances, the estimated future cash flow beyond the next rent review is not explicitly expressed. Instead of generating a future income flow (assuming some rate of rental growth) and discounting at a money rate of interest (suitably adjusted for risk), the estimated rental income at the next review is capitalised at a relatively low investment yield rate which merely implies a future rental growth rate.
Arguing that the rational egoist model of human behavior has failed to generate successful predictions of important economic & political behaviors, including collective action, alternative models are presented that combine rational, utility-maximizing features with concerns about collective welfare. The performance of these models in explaining contributing behavior was tested in an experimentally induced public goods game conducted in 1985 (N = 84), & compared to the performance of a rational egoist & collective welfare model. Results indicate that a model in which Ss are presumed to trade off benefits to self with benefits to others provides a better explanation of actual contributing behavior than either the rational egoist or collective welfare models, but still explains only a small amount of the individual variance in contributing behavior. 2 Tables, 1 Figure, 26 References. HA
This article discusses the necessary conditions for two countries at war to come to a settlement and explores how domestic and military costs, time preferences and attitudes toward risk affect the timing and the outcome of the peace. It views the termination of war as a process of rational calculations by the participants; unless both sides believe that they can be made better off by a settlement, the war will continue. An important result of this approach is that a reduction of hostilities may reduce the probability of a settlement taking place and thus prolong the war. It is also shown that increasing the probability of winning may not increase the probability of a settlement and that a country which only values the present need not be at a disadvantage in the negotiation.
A post-mortem on the large-scale effort to use soc sci in the reform of the metropolitan gov of St. Louis, Mo, re the campaign for the District Plan of the Metropolitan St Louis Survey in 1959. Based on a model assuming the rationality of the voters, the Survey, taken in 1957, consisted of interviews with metropolitan area residents (N= 2,000), taken as the potential voice of the voters. Based on these responses, the recommendations of admin'ive analysts, & an extensive examination of the formal gov'al structure, the survey directors chose a middle path, a `federal system' leaving all municipalities in existence but creating a multipurpose metropolitan district gov, thus giving a solution which deprived no existing gov or official of much power or perquisite. The campaign for the plan was carried through the MM, with relatively little opposition expressed. The plan was overwhelmingly defeated 2 to 1 in the city & 3 to 1 in the county, the most overwhelming defeat ever suffered by the proponents of change in the St Louis area. Immediately after the election a sample survey showed that 66% of the suburbanites who had just defeated the plan thought that some kind of metropolitan reorg was needed in the future. This was about the same % as in the 1957 Survey. The voters did not understand the Plan, but nevertheless voted it down. An attempt is made to relate the results to a Sociol'al Model which provides 3 classes of roles: Community Actor, the Neighbor, & the Isolate. The hyp was: key actors in local pol'al activity will be preponderantly Community Actors - they will be best informed & most active. This was partially confirmed: 'pol'ly active' broke down into Community Actors 53%, Neighbors 17%, and Isolates 30%. There was also indication that for most suburbanites, conversations among relatives, friends, & kin were very important in transmitting influences, whereas little information was carried from other data. It is concluded that avoidance of the direct democracy of the referendum is the most likely method through which reforms in metropolitan gov can be achieved. Modified AA.
