BIO -  JULIAN L. SIMON

             Julian L. Simon teaches business administration at the

        University of Maryland.  He has studied the economic consequences

        of population changes, and topics in statistics, managerial

        economics, and advertising.  He is the inventor of the resampling

        (bootstrap) method for statistical inference, and the volunteer

        auction scheme for airline oversales.



        page 1 article4 interabs May 28, 1995

        For Rationality and Society

        INTERPERSONAL ALLOCATION CONTINUOUS WITH INTERTEMPORAL ALLOCATION:

                    BINDING COMMITMENTS, PLEDGES, AND BEQUESTS


                                 Julian L. Simon*


             Gifts and bequests trouble economic theory.  A solution is

        to deal similarly with distributions for consumption among (a)

        the current person, (b) future self-persons that are legally and

        physically the same individual who is allocating, and (c) other

        individuals at present and in the future.  Instead of a one-

        dimensional maximizing entity, or even the two-dimensional

        individual who allocates intertemporally, this model envisages a

        three-dimensional surface, with an interpersonal 'distance'

        dimension replacing the concept of altruism.

             A key assumption, as in Strotzian intertemporal allocations,

        is that the discount between the current conscious "person" and

        future "self-persons" within the same individual is greater than

        the discount between other equal-length forward periods within

        the same individual.  Applying a conventional present-value

        framework to evaluate utility, as seen at various decision-making

        moments, then makes sense of the phenomena under discussion.


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