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The significance of the agenda should come

as no surprise.

The three

individual and three issue example comes from the seminal theoretical research

over a generation ago by Nobel Laureate Kenneth Arrow on democratic voting

systems. Political practitioners intuitively sense the importance of the way

issues are considered and often try to time amendments or other motions to

affect group decisions.

What is new is the ability of social scientists to

induce through rewards a structure of preferences in an experimental group

similar to an actual group, to predict from theory the influence of different

agendas on the decisions by the

two groups, and then

to confirm these

predictions experimentally. Social scientists are beginning to identify and

confirm experimentally the general principles underlying the influence of

agendas on small group decisions.

The paper by Michael Levine and Charles

Plott "Agenda Influence and Its Implications" which I have also provided for

the record discusses this research in more detail.

The importance and difficulty of analyzing small groups is reflected in

the large number of theories from economics, political science, psychology, m

mathematics, sociology, and other disciplines on bargaining in small groups.

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is that many of the most widely used theories fail to predict the outcome of

small group experiments.

But there is a definite pattern in experimental

results partially explained by some of the existing theories.

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Much work remains to be done. More complicated experiments need to be conducted to determine if the bargaining theories that fail to perform well in simple experiments work better in more complex settings. Theorists are trying to explain the stable outcomes of these experiments in terms of a general,

powerful bargaining theory that includes as special cases those theories that

work.

The emphasis in my talk has been on the value of basic experimental

research

on

the general principles of agenda influence and on bargaining

theories.

But the increasing ability of laboratory experiments to provide

timely, relatively inexpensive tests of new policies is also important. In a

study on alternative methods of allocating airport slots, which I have provided

for the record, David Grether, Mark Isaac and Charles Plott use theory and

experiments to show that allocating airport slots through committees composed

of the airlines using the airport probably leads to inefficient decisions.

Another set of experiments conducted by Charles Plott for the Department of

Transportation demonstrated that proposed regulations to help small barge

operators and grain farmers by forcing barge operators on the Mississippi to post barge prices would actually have reduced the number of small barge

operators and driven up transportation costs if implemented earlier.

Experimental research on small group decisions is significant for both

basic and applied work and like most fundamental efforts, the findings are

generalizable to many issues in the social sciences.

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Mr. Brown. Thank you very much, Dr. Newlon.

The overriding question in economics today, in the areas of macroeconomics and I do not expect that we will get into that particularly, but the question I would have is that the theoretical implications from experiments with the small groups possibly can be extrapolated. In other words, is there a large framework as well as a smaller framework within which this research could have significance?

Dr. NEWLON. Yes. There is a body of experimental literature on not just small group decisionmaking but on market contexts, simulating markets. This research was used in our program review the last time because of the fascinating results that were emerging from that research.

There are macroeconomic experiments that are used as teaching devices but there, of necessity, you have to work with historical experiments in interpreting what happened in the past and use that to test the different competing explanations of the macroeconomy.

Let me emphasize, though, this is not purely economics or even principally economics.

Mr. Brown. Well, I understand that. As a matter of fact, I welcome it. I think one of the errors that we perhaps have made and I see signs that we are doing our best to overcome it, is to departmentalize too much. The best that I am able to gather, in my own readings, in this field—even Adam Smith had a somewhat broader concept of economics than we give him credit for today.

I am interested in the interdisciplinary aspect of this and to better understand it. Again, I am using the term that Redfield used, that understanding is the goal, not just an opportunity to demonstrate expertise in applying certain methodologies.

Thank you very much, Dr. Newlon. We will reserve the rest of our time for our last witness this morning, Dr. Herbert Simon, who is, as I indicated previously, a Nobel Prize laureate in economics, but, as I understand it, who is here from the Department of Psychology. Would you explain this anomaly, Dr. Simon? You may proceed with your statement.

STATEMENT OF DR. HERBERT SIMON, DEPARTMENT OF PSY.

CHOLOGY, CARNEGIE-MELLON UNIVERSITY, PITTSBURGH, PA.

Dr. Simon. Thank you, Mr. Brown.

Mr. Chairman and committee members, I am very grateful to have this opportunity to appear and talk about what I love best. I won't talk too long, but maybe I need a ruling from the chairman as to when you would like this morning's session to end?

Mr. Brown. I am going to stay here as long as you have anything to say. We will probably go until 12:30 without any difficulty.

Dr. SIMON. Fine.

I think the theme of this morning's discussion and of the conversation between the committee and the witnesses have been very consistent. We know what the social sciences are about. The social sciences are concerned with following the advice of the Greek philosopher: “Know thyself.” As Congressman Ritter put it this morning, we are interested, in the social sciences, in understanding our own human behavior because, after all, the difficult problems that our society faces today,

like those it has faced in the past, are most of all human problems. They are problems of how we get organized to do the things that need to be done, with due regard for the conflicting interests that surround many social problems. Solutions to our problems require the resolution of those conflicts.

Many of these problems are thought of as technical and scientificfor example, the problems of energy and environment today. We know that we need to conserve energy. We know that we need to find alternate energy sources. These are partly technical problems; but central to them all is how we organize to do it, and that is a social science problem.

Much of social and behavioral science is concerned with understanding the great mechanisms that society uses to bring about mutual coordination of our efforts. There is the mechanism of the market which we just heard discussed a few minutes ago, which allows us to coordinate all of our specialized economic activities, each one of us going about his business and coordinating through this remarkable mechanism.

There are mechanisms of formal organization, that we use in business, government, and education. We see in developing countries the difficulties they experience in implementing development plans because they lack the kinds of organizational structure and organizational skills that a society of our sort has. There are the processes of bargaining, negotiating, and voting.

These social mechanisms are the fundamental tools we use, and on which we base the productivity of our society. Productivity isn't just a matter of machines and factories. It is also a matter of skill in organizing for decisionmaking in our society, so that we can use the machines and factories effectively.

I think the task for application of the social and behavioral sciences, as we enlarge fundamental knowledge, is to help us build effective social mechanisms and use them well. Now, Congressman Ritter and Congressman Brown raised some questions about what the Federal Government's role is and ought to be in that kind of effort.

There is one very simple view that I don't think is entirely satisfying; but it is an important part of the answer; namely, the role we want the Federal Government to play depends a lot on what rate of scientific progress we want; not only in the social and behavioral sciences, but across the board in all the sciences.

In the period when Margaret Meade was doing her first anthropological research and the period before that, we would have to recognize that American science was living largely on European research and European science. The universities were transmitting knowledge in the modest way that their funds and foundation funds permitted. They were advancing knowledge, but we were very heavy borrowers from European science.

What the post-war period in American science has done in the behavioral and social sciences as well as in the physical and biological sciences, has been to turn that around. It has made us leaders in the world with respect to scientific progress.

Now, I think most scientists, and certainly most behavioral and social scientists, would be much more comfortable if the role of the Federal Government in the total support were more modest. We would

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