Probabilistic choice: A simple invariance.

When subjects must choose repeatedly between two or more alternatives, each of which dispenses reward on a probabilistic basis (two-armed bandit ), their behavior is guided by the two possible outcomes, reward and nonreward. The simplest stochastic choice rule is that the probability of choosing an alternative increases following a reward and decreases following a nonreward (reward following ). We show experimentally and theoretically that animal subjects behave as if the absolute magnitudes of the changes in choice probability caused by reward and nonreward do not depend on the response which produced the reward or nonreward (source independence ), and that the effects of reward and nonreward are in constant ratio under fixed conditions (effect-ratio invariance )--properties that fit the definition of satisficing . Our experimental results are either not predicted by, or are inconsistent with, other theories of free-operant choice such as Bush-Mosteller, molar maximization, momentary maximizing, and melioration (matching).

Editor's choice Regional trade agreements and export competitiveness: the uncertain path of Nicaragua’s apparel exports under CAFTA

The Central American Free Trade Agreement (CAFTA) has been a mixed blessing for economic development. While exports to the US economy have increased, dependency may hinder economic growth if countries do not diversify or upgrade before temporary provisions expire. This article evaluates the impact of the temporary Tariff Preference Levels (TPLs) granted to Nicaragua under CAFTA and the consequences of TPL expiration. Using trade statistics, country- and firm-level data from Nicaragua’s National Free Zones Commission (CNZF) and data from field research, we estimate Nicaragua’s apparel sector will contract as much as 30–40% after TPLs expire. Our analysis underscores how rules of origin and firm nationality affect where and how companies do business, and in so doing, often constrain sustainable export growth.