nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2015‒06‒20
twenty papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Uncertainty: A diagrammatic treatment By Dow, Sheila
  2. Heavens above: what equilibrium means for economics. With an appendix on temporality, equilibrium, endogeneity and exogeneity, in the inductive sciences and in economics By Freeman, Alan
  3. Comparing Conceptions of Social Ontology: Emergent Social Entities and/or Institutional Facts? By Tony Lawson
  4. Gendered economic policy making: The case of public expenditures on family allowances By Ozdamar, Oznur
  5. Productivity and performance in the public sector. By Mathieu Lefebvre; Sergio Perelman; Pierre Pestieau
  6. Risk sharing versus risk transfer in Islamic Finance: A critical appraisal By Hasan, Zubair
  7. Towards an ethnographic understanding of the European Marriage Pattern: Global correlates and links with female status By Sarah Carmichael; Jan Luiten van Zanden
  8. Gauge field theory of market dynamics: Toward a solution of the "man vs. men" dilemma By Yang, Yingrui
  9. Radical uncertainty: Sources, manifestations and implications By Müller, Christian
  10. Algunas reflexiones acerca del enfoque popperiano sobre la racionalidad y sus implicaciones para las ciencias sociales By Iván H. Ayala; Alfonso Palacio Vera
  11. Family types and intimate-partner violence: A historical perspective By Ana Tur-Prats
  12. Application of the Concept of Entropy to Equilibrium in Macroeconomics By AOYAMA Hideaki; IYETOMI Hiroshi; SOUMA Wataru; YOSHIKAWA Hiroshi
  13. The economics of radical uncertainty By Ormerod, Paul
  14. Corps Intermédiaires, Civil Society, and the Art of Association By Jacob T. Levy
  15. Field experimental evidence on gender discrimination in hiring: Biased as Heckman and Siegelman predicted? By Baert, Stijn
  16. Efficiency versus Stereotypes: an Experiment in Domestic Production By Hélène Couprie; Elisabeth Cudeville; Catherine Sofer
  17. Austerity and Repressive Politics: Italian Economists in the Early Years of the Fascist Government By Clara Elisabetta Mattei
  18. The Occupational Feminization of Wages By John T. Addison; Orgul D. Ozturk; Si Wang
  19. The persistent high-tech myth in the EC policy circles - Implications for the EU10 countries By Attila Havas
  20. Decision-making under radical uncertainty: An interpretation of Keynes' Treatise By Marsay, David

  1. By: Dow, Sheila
    Abstract: In spite of superficial similarities, the way in which uncertainty is understood as a feature of the crisis by mainstream economics is very different from Keynesian fundamental uncertainty. The difference stems from the mainstream habit of thinking in terms of a full-information benchmark, where uncertainty arises from ignorance. By treating uncertain knowledge as the norm, Keynesian uncertainty theory allows analysis of differing degrees of uncertainty and the cognitive role of institutions and conventions. The paper offers a simple diagrammatic representation of these differences, and uses this framework to depict different understandings of the crisis, its aftermath and the appropriate policy response.
    Keywords: uncertainty,risk,ambiguity,Keynes
    JEL: B41 B5 E00 G01
    Date: 2015
  2. By: Freeman, Alan
    Abstract: This paper presents in formal terms the key notions of the temporalist approach in economics as I have presented it over the years, with an appendix providing a formal definition of such terms as endogenous, exogenous, temporalism, and equilibrium. I thus hope this paper can serve as something of a reference work for these concepts as well as the key terms ‘esoteric’ and ‘exoteric’ which are widely used in my writings. The paper incorporates, but supersedes, the prepublication version of a chapter of the same name originally published in Mosini, V. (ed) 2007. “Equilibrium in Economics: Scope and Limits”, with a previously unpublished appendix. It provides the background to the argument I have made in a number of other pieces, (for example Freeman 2004, most recently Freeman 2015) to the effect that economics plays a religious, not a scientific role, in the social sciences. I argue that the concept of equilibrium in economics plays a special and defining role in this respect which is not adequately recognised either by its defenders, nor by the critics of economics. I term this role esoteric, by which I mean that its primary function is not to explain what we experience or observe, but to justify it. This is a work in progress but summarises, hopefully with as few typographical and mathematical errors as possible, the general arguments that have been developed, or deployed, in my various writings on equilibrium, self-restoration, crisis, and the esoteric function of economics, to this date.
    Keywords: equilibrium, temporalism, TSSI, self-restoration, cycles, crisis, endogenous, exogenous, esoteric, exoteric, religion, science
    JEL: A2 B41 E32 E37
    Date: 2015–06–14
  3. By: Tony Lawson
    Abstract: It is commonplace, if erroneous, to suppose that worldviews (or ontological conceptions) that underpin, or are presupposed by, substantive analyses and/or methodological stances are somehow beyond interrogation2. This is thought to be especially so regarding social ontological orientations (see discussion in Lawson 2014). To the contrary ontological conceptions, including those relating to the social realm, are easily shown to be subject to empirical assessment in both absolute terms (see e.g. Lawson 2003 chapter 2; Lawson 2014) and in comparison to the explanatory power of competing accounts (see e.g., Lawson 2014,2015a).
    Date: 2015–06–10
  4. By: Ozdamar, Oznur
    Abstract: Parliament is the place where politicians make laws to set the policy direction of countries. Non-involvement of different voices such as gender, race and ethnicity in policy decisions may create an inequality in policy-making. Regarding gender, previous literature suggests that women and men may have different policy preferences and women give more priority to policies related to their traditional roles as care givers to children in the family. Public spending on family allowances is one of the economic policies that plays an important role in helping families for the childcare. This paper contributes to the literature by analyzing the relationship between female political representation and public spending on family allowances as well as within a perspective of critical-mass framework. Overall findings support the fact that when the fraction of female politicians is above a certain critical-mass threshold, there is a significantly different allocation of public spending on family allowances.
    Keywords: women in economic policy-making,public expenditures on family allowances,critical mass,panel data analysis
    JEL: H53 H83 J16
    Date: 2015
  5. By: Mathieu Lefebvre; Sergio Perelman; Pierre Pestieau
    Abstract: In times of budgetary difficulties it is not surprising to see public sector performance questioned. What is surprising is that what is meant by performance, and how it is measured, does not seem to matter to either the critics or the advocates of the public sector. The purpose of this paper is to suggest a definition, and a way to measure the performance of the public sector or rather of its main components. Our approach is explicitly rooted in the principles of welfare and production economics. We will proceed in two stages. First of all we present what we call the "performance approach" to the public sector. This concept rests on the principal-agent relation that links a principal, i.e., the public authority, and an agent, i.e., the person in charge of the public sector unit, and on the definition of performance as the extent to which the agent fulfils the objectives assigned to him by the principal. The performance is then measured by using the notion of productive efficiency and the "best practice" frontier technique. We then move to the issue of measuring the performance of some canonical components of the public sector (railways transportation, waste collection, secondary education and health care). We survey some typical studies of efficiency and emphasize the important idea of disentangling conceptual and data problems. This raises the important question that given the available data, does it make sense to assess and measure the performance of such public sector activities? In the second stage we try to assess the performance of the overall public sector. We argue that for such a level of aggregation one should restrict the performance analysis to the outcomes and not relate it to the resources involved. As an illustration we then turn to an evaluation of the performance of the European welfare states using the DEA approach.
    Keywords: performance measure, best practice frontier, social protection.
    JEL: H50 C14 D24
    Date: 2015
  6. By: Hasan, Zubair
    Abstract: Some writers on Islamic finance have recently resuscitated the old ‘no risk, no gain’ precept from the earlier literature in the wake of the 2007-2008 financial crisis. They argue that the basic reason for the recurrence of such crises is the conventional interest-based financial system that subsists purely based on the transfer of risks. In contrast, Islam shuns interest and promotes the sharing of risks, not their transfer. The distinction is used to make a case for replacing the conventional system with the Islamic; for that alone is thought as the way to ensuring the establishment of a just, stableand crisis-free financial system. As evidence to support this thesis, it is cited that Islamic banks have faced the current crisis better than their conventional counterparts. The present paper is a critique of this line of thought. It argues that risk sharing is not basic to Islam. Islam approves profit-and-loss sharing;sharing of risk is a consequence of that, not its cause. There is no such thing as a risk-sharing contract per se in Islamic finance that, when entered into,gives rise to profit-and-loss sharing. The paper concludes that while there is a case for encouraging participatory finance in Islam, there is none for treating risk sharing as its inviolable principle. What really requires emphasis is the need for transparent moral conduct and commitment to Islamic ethical norms.
    Keywords: : Financial crisis, Risksharing, Risktransfer, Islamic banking, KL Declaration.
    JEL: G01 G02 G2
    Date: 2015–01
  7. By: Sarah Carmichael; Jan Luiten van Zanden
    Abstract: This contribution compares the EMP, and the associated Western European family system (inheritance practices, intergenerational co-residence and exogamy), with what is known about family systems and marriage patterns in the rest of the world, with a special focus on the consequences of these family systems for human capital formation (in view of recent interpretations that interpret the EMP as a step in the 'quantity-quality' switch in demographic behaviour). This is done in the following ways: first the EMP is defined as a family system characterized by monogamy, exogamy, consensus (no arranged marriages), neo-locality, and a relatively strong position of women in marriage. Next we compare these criteria with ethnographic data from other Eurasian societies (mainly based on George Murdock's ethnographic world atlas), and with global classifications of family systems presented by academics (anthropologists, political scientists and demographic and family historians) such as Emmanuel Todd. We present maps of the institutions determining marriage behavior, and show which features of the EMP can be found elsewhere. In the margin of the Eurasian landmass, marriage systems can be found with certain similarities to the EMP. In the ‘core’ of the continent, in China, Northern India, the Middle East, and Russia, institutions are diametrically opposed to those of the EMP. Finally, we briefly sketch the ‘similar’ marriage systems in Japan, Sumatra, Kerala, Sri Lanka and Myanmar, and try to find out if these relatively female-friendly systems produced high levels of human capital (as the EMP is supposed to have done).
    Keywords: Marriage patterns, Ethnography, Female empowerment, Eurasia, Family, Inheritance, Kinship, Development
    Date: 2015–06
  8. By: Yang, Yingrui
    Abstract: The current economics and psychology are developed within the Newtonian tradition in physics from both conceptual and instrumental perspectives. This paper aims to integrate economics and cognitive science by applying gauge field theory of modern theoretical physics. Many controversies between normative theories and behavioral theories are characterized by the “man vs. men” dilemma. Gauge potential and gauge field strength is constructed at both the man-level and the men-level in order to satisfy the principle of gauge invariance. To maintain the Lagrangian density function invariant, the gauge transformations of the first kind and the second kind are performed at the man-level and the men-level, respectively. The market dynamics is modeled by the logic of electrodynamics. The interactions of the market and individual participants are formulated by the logic of electromagnetic coupling. In establishing the market dynamic equations, individual utility function serves as gauge function and efficiency provides gauge freedom.
    Keywords: bounded rationality; economic rational man; electrodynamics; gauge theory; market dynamics; cognitive field
    JEL: A1 A12 C0 C02 D0 D01 D03
    Date: 2015–04–20
  9. By: Müller, Christian
    Abstract: This paper argues that radical uncertainty is the outcome of standard market activity. The theoretical findings are corroborated with empirical analyses. The model example is applied to asset pricing and radical uncertainty is found a solution to various asset pricing "puzzles". In conclusion, radical uncertainty should form the basis of economic analysis.
    Keywords: rational expectations,uncertainty,subjectivity
    JEL: F31 F47 C53
    Date: 2015
  10. By: Iván H. Ayala; Alfonso Palacio Vera (Departamento de Economía Aplicada III (Política Económica). Universidad Complutense de Madrid.)
    Abstract: Existen dos nociones distintas sobre la racionalidad humana en la obra filosófica de Popper: la derivada de la teoría popperiana del conocimiento y el aprendizaje (TPCA) y la noción implícita en su propuesta metodológica para las Ciencias Sociales conocida como "Análisis Situacional" (AS). Este ensayo realiza un análisis crítico detallado de la relación entre estas dos nociones y de sus implicaciones para las ciencias sociales. En concreto, el ensayo aborda: (i) las diferencias entre TPCA y las versiones "objetivista" y "subjetivista" de AS, (ii) la distinción propuesta por Schumpeter entre la "racionalidad del observador y la "racionalidad del observado" y (iii) los argumentos de Hayek sobre la naturaleza de los "hechos" en las Ciencias Sociales.
    Abstract: There are two different notions of human rationality in Popper´s work: the notion that stems from his evolutionary theory of knowledge and learning (PTKL), and the notion embodied in his methodological proposal for the social sciences known as `Situational Analysis´ (SA). This essay provides an in-depth critical analysis of the relation between these two approaches and its implications for the social sciences. In particular, we focus on (i) the difference between PTKL and both the `objectivist´ and `subjectivist´ version of SA, (ii) Schumpeter´s distinction between the `rationality of the observer´ and the `rationality in the observed´, and (iii) Hayek´s arguments about the nature of the `facts´ of the social sciences.
    Keywords: Evolucionista, Conocimiento, Popper, Racionalidad, Análisis situacional.; Evolutionary, Knowledge, Popper, Rationality, Situational analysis.
    JEL: A12 B41 B52 D81
    Date: 2015–03
  11. By: Ana Tur-Prats
    Abstract: This paper examines the historical origins of violence against women, in contrast to earlier literature, which focused only on short-term determinants. It analyses the relationship between traditional family patterns (stem versus nuclear) and intimate-partner violence (IPV). Stem families are those in which one child stays in the parental household with spouse and children, so that at least two generations live together. I model the behavior of a traditional peasant family and show how coresidence with a mother-in-law increases a wife’s contribution to farmwork. This increased contribution is shown to potentially decrease the level of violence, since the wife’s reduced productivity acts as a deterrent. In my empirical analysis I use Spanish data, as Spain offers IPV measures of the highest quality as well as a persistent geographical distribution of family types. Results show that areas where stem families were socially predominant in the past currently have a lower IPV rate. I control for a large number of contemporary, historical, and geographical variables. To address causality, I use the stages and differences in the Christian conquest of the Iberian Peninsula (722-1492) as an instrument for the different family types. My instrumental variable results are consistent with my original findings.
    Keywords: Gender inequality, cultural norms, persistence, inheritance, coresidence, Christian conquest.
    JEL: D03 J12 N43 Z13
    Date: 2015–06
  12. By: AOYAMA Hideaki; IYETOMI Hiroshi; SOUMA Wataru; YOSHIKAWA Hiroshi
    Abstract: Entropic consideration plays the essential role in understanding equilibrium in the macroeconomy comprising heterogeneous agents. Curiously, it has been long ignored in economics. In fact, the idea of entropy is completely opposite to that of mainstream macroeconomics which is founded on representative agent models. Macroeconomics is meant to analyze the macroeconomy which consists of 10 million households and one million firms. Despite a large number of micro agents, the standard model focuses on the behavior of the representative micro agent. We show that entropy serves as a key concept in economics as well as in physics by taking the distribution of labor productivity in Japan as an illustrative example. Negative temperature, which is abnormal in nature, turns out to be normal to explain the distribution of workers on the low-to-medium productivity side. Also, the empirical result on the high productivity side indicates limited capacities of leading firms for workers. We construct a statistical physics model that is valid in the whole range of productivity.
    Date: 2015–06
  13. By: Ormerod, Paul
    Abstract: In situations of what we now describe as radical uncertainty, the core model of agent behaviour, of rational autonomous agents with stable preferences, is not useful. Instead, a different principle, in which the decisions of an agent are based directly on the decisions and strategies of other agents, becomes the relevant core model. Preferences are not stable, but evolve. It is not a special case in such circumstances, but the general one. The author provides empirical evidence to suggest that as a description of behaviour in the modern world, economic rationality is applicable in a declining number of situations. He discusses models drawn from the modern literature on cultural evolution in which imitation of others is the basic strategy, and suggests a heuristic way of classifying situations in which the different models are relevant. The key point is that in situations where radical uncertainty is present, we require theoretical 'null' models of agent behaviour which are different from those of economic rationality. Under uncertainty, fundamentally different behavioural rules are 'rational'. The author gives an example of a very simple pure sentiment model of the business cycle, in which agents use very simple heuristic decision rules. It is nevertheless capable of approximating a number of deep features of output growth over the cycle.
    Keywords: uncertainty,imitation,evolution,agent-based model,sentiment,business cycle
    JEL: D81 E32
    Date: 2015
  14. By: Jacob T. Levy
    Abstract: This paper races the shifts in treatments of intermediate groups among some liberal and democratic political theorists in the 18th and 19th centuries. The decades of the late 18th and early 19th centuries are traditionally understood to encompass the emergence of fully liberal political and social theory, and an early version of liberal political practice, in France, the UK, and the US; they have lately been identified by North, Wallis, and Weingast as the decades when those three societies substantially made the transition to “open access” political, economic, and legal orders. This transition consists in part in the democratization of organizational tools that had previously been open only to members of the elite, such as the shift from specially chartered monopolistic corporations to general incorporation laws, and that from parliamentary oligopolistic party competition to modern parties competing in wide-suffrage elections. Although the early liberal theorists did not fully perceive the changes happening around them, their analyses and reactions can help us see things about the shift to open-access orders that might not be fully visible in retrospect. To varying degrees they looked forward to the possibility of a pluralism without privilege, but they also had doubts about its possibility. They offered some reasons to prefer pluralism with privilege to the absence of both. They worried that centralization, democratic or otherwise, might be the preeminent fact of modern state consolidation, and that purely voluntary, equal, associational pluralism might not be powerful enough to check it. The kinds of pluralism grounded in ancient regime privilege and status, in entrenched jurisdictional pluralism within the constitutional order, or in pre-political cultural and customary ties might be needed to motivate the oppositional political action that could protect pluralism and freedom.
    JEL: B12 L30 N10
    Date: 2015–06
  15. By: Baert, Stijn
    Abstract: Correspondence studies are nowadays viewed as the most compelling avenue to test for hiring discrimination. However, these studies suffer from one fundamental methodological problem, as formulated by Heckman and Siegelman (The Urban Institute audit studies: Their methods and findings. In M. Fix, and R. Struyk (Eds.), Clear and convincing evidence: Measurement of discrimination in America, 1993), namely the bias in their results in case of group differences in the variance of unobserved determinants of hiring outcomes. In this study, the authors empirically investigate this bias in the context of gender discrimination. They do not find significant evidence for the predicted bias.
    Keywords: correspondence experiments,gender discrimination,unobserved heterogeneity
    JEL: J16 J71 M51 J41 C93
    Date: 2015
  16. By: Hélène Couprie (THEMA - Théorie Economique, Modélisation et Applications - Université de Cergy Pontoise); Elisabeth Cudeville (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Catherine Sofer (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: Most household models assume that decisions taken inside the family are Pareto optimal. However, empirical studies cast doubts upon the efficiency assumption. The sharing of time among men and women between market work and household work is highly differentiated by gender. In this paper we examine whether couples deviate from efficiency in household production decisions, using an experimental design in which subjects are real couples. The aim of the experiment is to mimic the sharing of highly-gendered household tasks. We compare the sharing of gendered tasks to that of more neutral tasks. By measuring individual productivity in each task, we can see if couples tend to deviate from efficiency, and by how much in each case. As we show that they deviate more when sharing gendered tasks, we also explore why, looking at different possible explanations, and we find evidence of the impact of stereotypes on inefficiencies.
    Abstract: La plupart des modèles de ménages supposent que les décisions prises à l'intérieur de la famille sont Pareto-optimales. Cependant, les études empiriques mettent en doute l'hypothèse d'efficience. Le partage du temps passé par les hommes et les femmes entre le marché du travail et les tâches domestiques est très différencié selon le sexe. Dans cet article, nous examinons si les couples s'écartent de l'efficience pour les décisions de production, en utilisant un protocole expérimental dont les sujets sont de vrais couples. Le but de l'expérience consiste à mimer le partage de tâches domestiques très genrées. Nous comparons le partage des tâches genrées à celui des tâches plus neutres. En mesurant la productivité individuelle dans chaque tâche, nous pouvons voir si les couples ont tendance à s'écarter de l'efficience et de combien dans chaque cas. Comme nous montrons qu'ils devient plus lorsqu'ils effectuent des tâches genrées, nous nous efforçons d'en trouver des explications, en examinant différentes causes possibles et nous mettons en évidence un impact des stéréotypes sur l'inefficience.
    Date: 2015–03
  17. By: Clara Elisabetta Mattei
    Abstract: The historical forerunners of contemporary austerity are still largely unexplored. This essay considers the "liberal phase" of Fascist Italy (1922-1925) as a case study to explain austerity as a full-blown rationality, that is intrinsically, and simultaneously, theory and practice, encompassing the moral, the economic and the political. My explanation moves beyond the interpretation of austerity as the post-1980, neoliberal recipe of price deflation and budget cuts. The Italian case draws attention to a neglected connection: that between austerity and repression. Austerity was the guiding principle of the Fascist economic agenda during the 1920s. It served to extinguish the effects of the democratization process of the post-WWI years. The paper examines the work of four distinguished economists, Maffeo Pantaleoni, Luigi Einaudi, Alberto De Stefani and Umberto Ricci, who - in different roles as professors, journalists, advisors, and policy-makers ó can be considered the source, the guardians and the enforcers of Fascist austerity.
    Keywords: Austerity, Repressive Politics, Economists as Consultants, Fascism
    Date: 2015–06–13
  18. By: John T. Addison (University of South Carolina, University of Coimbra, and GEMF); Orgul D. Ozturk (University of South Carolina); Si Wang (Hunan University)
    Abstract: This paper updates the major study by Macpherson and Hirsch (1995) of the effect of the gender composition of occupations on female (and male) earnings. Using large representative national samples of employees from the Current Population Survey, cross-sectional estimates of the impact of proportion female in an occupation (or feminization) on wages are first provided, paying close attention to the role of occupational characteristics. Specification differences in the effects of feminization across alternative subsamples are examined, as well as the contribution of the feminization argument to the explanation of the gender wage gap. An updated longitudinal analysis using the CPS data is also provided. This examination of two-year panels of individuals is supplemented using information from the 1979 National Longitudinal Survey of Youth which has the advantage of offering a longer panel. Analysis of the former suggests the reduction in gender composition effects observed for females in cross section with the addition of controls for occupational characteristics becomes complete after accounting for unobserved individual heterogeneity. This is not the case for the latter dataset, most likely reflecting heritage effects of discrimination in what is an aging cohort.
    Keywords: occupational segregation, gender wage gap.
    JEL: J31 J71
    Date: 2015–05
  19. By: Attila Havas (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: Given the economic, societal and environmental relevance of innovation, this paper contrasts various models of innovation, compares how innovation is understood in mainstream economics and evolutionary economics of innovation and juxtaposes the concomitant policy rationales. By discussing two monitoring tools used by the European Commission to assess its member states’ innovation performance, it argues that the science-push model of innovation is still highly influential in the EC STI policy circles, in spite of the significance of non-R&D types of knowledge in innovation processes. Then it explores various types of opportunity costs stemming from the persistent high-tech myth, considers possible historical and sociological reasons for its perseverance and discusses policy implications of the systemic view of innovation, with an emphasis on the case of the EU10 countries. Policy conclusions include: i) several policies affect innovation processes and performance, perhaps even more strongly than STI policies, and hence policy goals and tools need to be orchestrated across several policy domains; ii) STI policies should promote learning and knowledge-intensive activities in all sectors, including low- and medium-technology industries and services; iii) analysts and policy-makers need to avoid the trap of paying too much attention to simplifying ranking exercises; iv) new indicators that better reflect the evolutionary processes of learning and innovation would be needed to support analysis and policy-making; v) the choice of an economics paradigm to guide policy evaluation is likely to be decisive.
    Keywords: Innovation processes; Sources, forms and types of knowledge; Models of innovation; High-tech myth; Low- and medium-technology sectors; Economics paradigms; STI policy rationales; Measurement of innovation; Composite indicators; Scoreboards, league tables; European Commission; Central and Eastern European countries
    JEL: O31 O38 B52 Y10
    Date: 2015–04
  20. By: Marsay, David
    Abstract: Keynes' mathematical Treatise addresses what some call 'radical uncertainty', which he thought endemic in world affairs and whose appreciation underpinned much of his later work. In contrast, the mainstream view in economics, as elsewhere, has been that even if radical uncertainty exists, either there is in principle nothing that can ever be done about it, or that even if one could in theory do something about it then the institutions required would be unreliable, and one would be better off without them. Thus the mainstream has worked as if it were realistic to ignore even the possibility of radical uncertainty. But one needs some conceptualisation of radical uncertainty, such as Keynes', before one can make such judgments. This paper presents an interpretation, to inform debate. The viewpoint taken here is mathematical, but this is not to deny the value of other views.
    Keywords: mathematical models,equilibrium conditions,stability conditions,evolutionary games,policy,regulation,crisis management
    JEL: C62 G18 H12
    Date: 2015

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