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FOLLOWING A DETAILED INTRODUCTION BY THE TRANSLATOR, A PRESENTATION OF MAX WEBER'S TREATISE IS GIVEN. ECONOMIC THEORY, WITH EMPHASIS ON MARGINAL UTILITY ANALYSIS, IS NOT DEPENDENT ON PSYCHOLOGICAL THEOREMS, PRINCIPLES, OR CONCEPTS. RATHER, IT IS VIEWED AS AN ENTERPRISE DEDICATED TO WORKING OUT CONSEQUENCES OF THE ASSUMPTIONS OF ECONOMIC RATIONALITY IN ANALYTICAL TERMS, NOT IN PSYCHOLOGICAL ONES. THE CONCEPT 'OPTIMUM', CANNOT BE REGARDED AS SPECIFICALLY PSYCHOLOGICAL, PSYCHOPHYSICAL, PHYSIOLOGICAL, OR BIOLOGICAL. RATHER, IT IS PARTNER TO VARIOUS PROBLEMS WHICH DIFFER FROM ONE ANOTHER IN SIGNIFICANT WAYS. WHEN VIEWED IN THIS MANNER, IT IS CLEAR THAT THIS CONCEPT DOES NOT MARK OUT MARGINAL UTILITY THEORY. SOME HAVE USED IT AS A SPECIAL CASE TO ILLUSTRATE THE WEBER-FECHNER LAW. AS THE WEBER-FECHNER LAW PROVIDES THE THEORETICAL BASIS FOR MARGINAL UTILITY THEORY, IT CANNOT BE SEEN AS INCLUSIVE OF THE CONCEPT OF OPTIMUM. 'OPTIMUM' HAS CERTAIN ASPECTS IN COMMON WITH THE PHYSIOLOGICAL & PSYCHOLOGICAL APPROACH & MAY HAVE PEDAGOGICAL VALUE BUT CANNOT BE RESTRICTED TO THE WEBER-FECHNER LAW. B. WEISBROD.

THIS PAPER REPORTS UPON SOME CURRENT RESEARCH WHICH PROVIDES CLARIFICATION, BOTH TO SOME OF THE OLDER PARADOXES AND TO SOME OF THE NEWER ISSUES THAT ARISE OUT OF THE ECONOMICS OF UNCERTAINTY. IT IS SHOWN THAT A UTILITY FUNCTION CAN BE SPECIFIED WHICH CAN ACCOUNT FOR ALL THE NORMAL PATTERNS OF BEHAVIOUR ASSOCIATED WITH UNCERTAIN CHOICE, BUT WHICH IS ALSO MORE GENERAL, IN THAT IT IS CAPABLE OF ACCOMMODATING BEHAVIOUR THAT HAS PREVIOUSLY BEEN VIEWED AS IRRATIONAL, PERVERSE OR ABERRATIONAL. AT THE SAME TIME A FRAMEWORK IS PROVIDED WITHIN WHICH MORE RECENT APPROACHES TOWARDS THE ANALYSIS OF BEHAVIOUR UNDER UNCERTAINTY CAN BE BETTER UNDERSTOOD, DEVELOPED AND CLARIFIED, THROUGH HIGHLIGHTING THE IMPORTANCE THAT REQUIRES TO BE ATTACHED TO PSYCHOLOGICAL, AS WELL AS ECONOMIC, VARIABLES FOR THE CONSTRUCTION OF A GENERAL THEORY OF DECISION MAKING UNDER UNCERTAINTY.

Discussed are two major errors found in a utility theory analysis of criminal behavior by R. Stover & D. Brown ("Understanding Compliance and Noncompliance with Law: The Contributions of Utility Theory," Social Science Quarterly, 1975, 56, Dec, 363-375). As a result of misusing opportunity cost, the lawful wage rate was not included in their utility theory as a determining factor in criminal behavior. The study further errs in not considering attitudes toward risk of punishment. In Reply to Palmer and Bartlett, Robert V. Stover & Don W. Brown (U of Colorado, Boulder & U of California, Riverside) explain that their utility model extends beyond the conventions & vocabulary of traditional utility theory used by economists, & that this model can easily accommodate risk attitudes & other variables. The aim was to demonstrate the possibilities of utility theory in the study of legal compliance by presenting a general model. A. Rubins.

Deterrence & compellence couple demands for inaction & action, respectively, to a threat of sanctions. Conventional wisdom holds that deterrence requires less coercive effort than compellence, yet expected utility theory contradicts this claim. Only if exogenous factors affect these situations in a systematic & asymmetrical manner will the claim hold within expected utility theory. Prospect theory provides a systematic & endogenous account for this claim. Experimental findings suggest the degree of effort required to obtain compliance in comparable deterrence & compellence situations. Deterrence is "easier" than compellence, but this relationship is variable. Deterrence requires less effort than expected, & the relative effort it requires decreases substantially as the stakes demanded & costs threatened grow. Compellence requires more effort than expected, & the relative effort it requires decreases slightly as the stakes demanded & costs threatened grow. 6 Tables, 1 Figure, 39 References. Adapted from the source document.