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Currently, the FCC assigns radio licences after making a determination of the public interest. Conflicting licence applications are resolved through comparative hearings. This mechanism is cumbersome and unreliable. This article analyses three alternatives: Increasing the available spectrum; an auction; or, lottery of radio licences. The analysis deals specifically with the Multipoint Distribution Service (MDS). The analysis suggests that increasing the spectrum allocation will create more assignments than will be demanded by MDS. Rough calculations suggest that auctions offer a more efficient selection mechanism. Lotteries with resale of the license are better than hearings, but not as good as auctions.

When two or more information sources (“experts”) provide a decision maker with information on two or more random variables, the decision maker using Bayes's rule has an opportunity to (a) update a prior about the random variables and (b) calibrate the experts. (Calibration is the process of adjusting the decision maker's likelihood about the experts' assessments.) This article presents a model for this two-way process and specializes to the case in which the experts' assessment errors have a multivariate normal density. In general, we find that variables which the decision maker and the experts regard as independent a priori will be dependent a posteriori because of dependence in the assessment errors. Formulas for posterior densities are given for the normal model. In this model the posterior density of the random variables depends on only a weighted average of the expert's means, with weights that depend on the experts' assessments of previously known quantities. I also present a special case o...

Forecasts of the future price and quantity of a service or commodity often ignore the dynamic interaction between demand and supply, perhaps because the economic meaning of these concepts is often rather fuzzily defined. This paper attempts to remove some of the fuzziness, and shows that the equilibrium point where supply and demand are equal has a clear interpretation. Further it argues that forecasts of the movement of the equilibrium point over time are meaningful and useful. Using the notion of equilibrium a model is constructed which forecasts simultaneously the rates of change of price and output. This model shows how a forecast is biased when the interaction between demand and supply is not included and what special assumptions are implicitly made by a forecaster who ignores it. Finally, the paper shows how uncertainty about the parameters of the model affects the estimates of the rates of change, providing uncertain estimates of price and quantity.

In proximal decision analysis the value of a decision depends on a vector of state variables s and a vector of decision variables d in a quadratic fashion. Suppose some data, represented by a vector x, can be obtained. This paper describes a technique for using the data and develops an expression for the value of the information conveyed by the data. Because the value model is quadratic the data processing procedure uses a linear minimum-variance estimate of the conditional mean of s which depends only on the prior moments of the state vector and the noise associated with the measurement.

The Communications Act of 1934, which regulates the United States telecommunications industry, is becoming less able to deal with the changes brought by modern technology. Therefore, proposals are being made to restructure the industry. Breaking up AT&T into smaller firms would have only minor effects, since its ratio of R and D to sales has been near the median for large telephone companies. Restructuring AT&T into subsidiaries dealing at arms' length might cause a reordering of priorities toward more directly marketable and useful products, but too extensive a break-up could endanger Bell Labs' commitment to basic research. Regulation leads a firm to ignore true social value of possible products, expand into low profit markets, and favor capital-intensive over labor-intensive innovation. If regulatory lag occurs, a firm will produce cost-reducing innovation in order to increase its profit.

Economists, like other forecasters, share knowledge, data and theories in common. Consequently, their forecast errors are likely to be highly dependent. This paper reports on an empirical study of 16 macroeconomic forecasters. Composite forecasts are computed using a sequential weighting scheme that takes dependence into account; these are compared to a simple average and median forecasts. A within-sample composite is also calculated. Both these methods perform significantly better than the average or median of the forecasts. This improvement in accuracy is apparently because the dependence between the forecasters' errors is so high that the optimal composite forecasts sometimes lie outside the range of the individual forecasts.

The report discusses technical and economic feasibility of widespread computer-netting technology to aid DOD procurement effectiveness, and describes procurement automation system development, the software and hardware required, and provides a hardware configuration. Next steps are logically detailed in a procurement automation system. Cost-benefit analysis and a survey of procurement automation systems presently in use is provided. It is indicated that savings in excess of $1 billion per year might be achievable in the future.

Some specific topics addressed in the present Quarterly Technical Report include: (1) Consideration of system modules necessary for a large set of procurement related functions; (2) Description of an early list of evolutionary functions felt to be most applicable; (3) Determination of the file sizes for the records considered; (4) Determination of the state of the art of inputting and storing the large text database implied in automating procurement; (5) Consideration of secrecy protection means that are more effectively built into the initial system configuration design rather than as an afterthought; (6) Survey of present procurement information automation efforts, and consideration of evolutionary growth from this presently highly advanced basis; (7) Analysis of the cost of sending one-way text messages via a number of alternatives ranging from postal mail to various forms of electronic transmittal; (8) Work in progress in evaluating present day legal interpretation of governmental secrecy provisions and private proprietary information protection legislation of import to procurement automation.