JAM YESTERDAY, JAM THE DAY BEFORE YESTERDAY AND JAM THE DAY AFTER TOMORROW* A. R. HALL A us tralian Na tional University Peter Hammond appears not to be completely at home in the world of Lewis Carroll. In searching behind the looking-glass one suspects that he has encountered, and gone hunting, a Snark. That his goal should elude him is then explicable: “For the Snark was a Boojum you see”. No one should be surprised that nonsensical results emerge from the analysis of a problem involving the passage of time in which no provision is made in the analytical tools for the consequences of time. Was there no yesterday of which today is the tomorrow? It is difficult to believe that a rational choice can be made about the future in the absence of knowledge about the past. Hence a minimum requirement in setting up the problem should be that experience gained in the exchange of jam yesterday exists and naturally informs decisions made today about the exchange of jam today for jam tomorrow. To meet this condition it is not necessary, as Hammond’s Alice suggests, to fall back on the Deus ex machina of “a government or something like that . . . ”. It is necessary to endow the participants in the process of exchange with memory and expectations about the future that extend beyond the immediately following period. Under these conditions sellers who are in the habit of reneging today on forward contracts arranged yesterday would soon find it difficult to obtain today the stock-in-trade necessary for them to continue in business tomorrow. If the possession of these human attributes raises too many problems for the theorist then the necessary minimum realism might conceivably be attained by recognizing the existence, internal to the model, of a law merchant where- by the participants in the exchange process have themselves developed enforceable rules of contract. If neither of these means for enabling rational decisions about the future to be made is acceptable within the framework of an Edgeworth box diagram then it is an inappropriate tool for the analysis of problems involving. time and, used for such problems, properly belongs only in the world behind the looking-glass. *Provoked by Peter J. Hammond, “The Core and Equilibrium Through the LookingClass”,Ausrralian 362 Economic Papers, vol. 16,1917.

JAM YESTERDAY, JAM THE DAY BEFORE YESTERDAY AND JAM THE DAY AFTER TOMORROW*

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JAM YESTERDAY,

JAM THE DAY BEFORE YESTERDAY

AND JAM THE DAY AFTER TOMORROW*

A. R. HALL

A us tralian Na tional University

Peter Hammond appears not to be completely at home in the world of Lewis Carroll. In searching behind the looking-glass one suspects that he has encountered, and gone hunting, a Snark. That his goal should elude him is then explicable: “For the Snark was a Boojum you see”.

No one should be surprised that nonsensical results emerge from the analysis of a problem involving the passage of time in which no provision is made in the analytical tools for the consequences of time. Was there no yesterday of which today is the tomorrow? It is difficult to believe that a rational choice can be made about the future in the absence of knowledge about the past. Hence a minimum requirement in setting up the problem should be that experience gained in the exchange of jam yesterday exists and naturally informs decisions made today about the exchange of jam today for jam tomorrow.

To meet this condition it is not necessary, as Hammond’s Alice suggests, to fall back on the Deus ex machina of “a government or something like that . . . ”. It is necessary to endow the participants in the process of exchange with memory and expectations about the future that extend beyond the immediately following period. Under these conditions sellers who are in the habit of reneging today on forward contracts arranged yesterday would soon find it difficult to obtain today the stock-in-trade necessary for them to continue in business tomorrow. If the possession of these human attributes raises too many problems for the theorist then the necessary minimum realism might conceivably be attained by recognizing the existence, internal to the model, of a law merchant where- by the participants in the exchange process have themselves developed enforceable rules of contract.

If neither of these means for enabling rational decisions about the future to be made is acceptable within the framework of an Edgeworth box diagram then it is an inappropriate tool for the analysis of problems involving. time and, used for such problems, properly belongs only in the world behind the looking-glass.

*Provoked by Peter J. Hammond, “The Core and Equilibrium Through the LookingClass”,Ausrralian

362

Economic Papers, vol. 16,1917.