could Statistomat hope to deliver a normal profit? It wasn't reasonable. There must be badly cut corners, if not in the product then in the sales program or the servicing of customers; or else the investors weren't hoping for a normal return. In that case there was something funny in their motives—a long-range scheme to undermine G.C., or something. That might show up in this salesman's pitch.

So I switched to, "How do I know what stocks this thing'll tell me to buy?"

"Not tell you to buy," he corrected charmingly, "buy you. The machine can be connected by direct wire to the Exchange's computer."

"Yeah-yeah, but how do I know what stocks I'll be getting? I want General Computers preferred!"

He smiled. "Quite possibly you'll find yourself the owner of a considerable block of G.C. preferred—provided of course your time-dependent utility function dictates a policy which—"

"You mean," I said, with the very suspicious expression my brother always objected to, "you'd let your machine bid for G.C. stock for me?"

"Naturally. The Statistomat has often recommended purchase of G.C. stock. Let me explain to you an aspect of modern firm management which may be so specialized as to have escaped your attention.

"Each firm draws up what is called a preference function. It is somewhat analogous to the investor's time-dependent utility function. It gives exact expression to the objectives of the firm. For any conceivable economic position the firm might be in, it determines, let us say, the weight the board places on a dividend this year as against a larger dividend a year from now, or ten. And so on. It is the criterion for all the optimization computations which pattern the firm's activities.

"Under a 1978 law, every corporation offering stock on the Exchange must publish its preference function. All these preference functions are known to your Statistomat; in effect, it is as if they were all in Statistomat's memory, continuously updated, automatically. Naturally, for a particular kind of investor only certain kinds of stock are suitable.

"But Statistomat does more—and this is the point I think you'll find intensely interesting. After all, more than the firm's policy is important. Two firms may have identical financial policies but very different dividend rates, either due to different degrees of success or to different kinds of partial success. Statistomat also has available to it a sound 

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