Rochester IV

     Now for the next application of the Prisoner’s Dilemma.  We have made our decision.  There was certainly room for honest and principled difference of opinion about the probable ultimate cost, about the effectiveness against apartheid, about the impact on black South Africans - and no one of us has to change his or her mind about these matters.

     Let me quote again from the Gleick article - he is referring to a game theory model employed at a recent Harvard symposium at which psychologists and economists discussed ways to quantify decision making.

     “The real power of the Prisoner’s Dilemma model comes when the subjects play not once but many times, what is known as the iterated prisoners dilemma.  In a standard version, subjects play for points, paired under the supervision of a psychologist.

     “Over the long run, both subjects will do best to cooperate every time. Yet in any one round, not knowing what the opponent will do, each subject has an overpowering temptation to betray the other, or defect.”

     No principled prose without consequences.  And so, after weighing carefully over two meetings, the arguments for and against, the Board voted to divest.

     What will the cost of this be?  The aggregate cost will never be known because its major component is based on a comparison of how the securities we sold will perform over time, versus how the securities we bought to replace them will perform.  For portfolios in which changes are being made constantly, this is a comparison which can never be made with any certainty.  There are too many variables as to issues and timing.  I have seen no end of studies on this subject. They all lack one thing - the ability to see into the future - only the future will tell us which portfolios will achieve relative success and which will not.

     I said in the letter I wrote last fall to each congregation (explaining the action taken and the reasoning -- as well as some of my own agonies in arriving at and voting for that decision) that I believed, in addition to transaction costs, we might expect to realize some $150,000 to $300,000 less each year. This was only an estimate, an informed guess, we may do better.  We shall have to see.

     The actual cost of the divestiture process itself, in my opinion, approximated $600,000 about 1.5% of invested assets.  This is higher than we expected because we were out of the market for brief periods in October of 1985 while divesting and shifting to new managers, all while the market was moving sharply upward.

     Let me close by asking you to join in a few moments of consideration and aspiration.  We have the leadership of the Association together in this room.

     We hold close our shared commitment to this institution.  We value each person who when added together by congregations makes up our small numbers

     But let us not allow that spirit to rise which seeks advantage at the possible expense of another.

     We do need to engender a spirit of cooperation in matters touching not only our finances, but all of our institutional life  - not because game theory says in the long run, we all win that way.

     We need that spirit because it honors us as  religious persons and honors our stated and felt principles.

     So let our process be:

          Diversity:Consideration
          Discussion:Commitment
          Debate:Contention
          Decision:Cooperation