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on History and Philosophy of Economics |
| By: | Elke Muchlinski (Free University of Berlin, Department of Economics) |
| Abstract: | The purpose of this paper is to explain why Keynes revolutionized economic theory. He developed an epistemological approach to economic theory by integrating the categories of knowledge, ignorance, rational degree and precariousness. He abandoned constructivism because he rejected empty concepts as dry dones. He also left empiricism and realism behind since he needed to discuss his categories as a priori principles. He viewed bivalent logic as inadequate for his purpose to find solutions on economic problems. To defend his view of uncertainty inherent in all economic decisions he relied on the concepts of degree of credibi¬ity, degree of confidence and conventional judgement. His economic theory can be interpreted as an integrative approach to applied economics. |
| Keywords: | Epistemology, mental mapping, decision making under uncertainty |
| JEL: | A12 B22 D81 D83 |
| URL: | http://d.repec.org/n?u=RePEc:bef:lsbest:025&r=hpe |
| By: | Firat, Aykut; Madnick, Stuart; Manola, Frank |
| Abstract: | This paper describes the coupling of contexts and ontologies for semantic integration in the ECOIN semantic interoperability framework. Ontological terms in ECOIN correspond to multiple related meanings in different contexts. Each ontology includes a context model that describes how a generic ontological term can be modified according to contextual choices to acquire specialized meanings. Although the basic ECOIN concepts have been presented in the past, this paper is the first to show how ECOIN addresses the case of "single-ontology with multiple contexts" with an example of semantic integration using our new prototype implementation. |
| Keywords: | single-ontology with multiple contexts, |
| Date: | 2005–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:mit:sloanp:17070&r=hpe |
| By: | Lucas, William A.; Cooper, Sarah Y. |
| Abstract: | Enhancing levels of innovation and entrepreneurship to grow a more competitive economy is the focus of much government effort. Attention is paid to changing a culture seen as antagonistic to entrepreneurship through initiatives designed to promote an entrepreneurial spirit. Universities, aware of the importance of developing entrepreneurial potential, are focusing on equipping students with the skills and abilities to contribute to innovation within organisations they join upon graduation, while also providing opportunities for the development of student aspirations. Cambridge-MIT Institute (CMI) has developed a one week event designed to influence deep personal values and the underlying motivations of potential entrepreneurs. This paper reports on the Connections course content as it was offered at the University of Strathclyde in 2003, content premised on the belief that students are motivated to start new enterprises through enhancement of self-confidence in their entrepreneurial skills. Measures of entrepreneurial self-efficacy and other outcomes are offered, followed by a report of the results found at the end of the event and then six months later. The programme is found to have created enduring improvements in entrepreneurial self-efficacy, and a related strengthening of pre-entrepreneurial awareness and exploration of ideas for starting companies. Other assessment results are presented suggesting the need to include explicit course content on entrepreneurial career paths. The implications of the Connections findings for entrepreneurship teaching in general are discussed. |
| Keywords: | entrepreneurship, innovation, entrepreneurial self-efficacy, |
| Date: | 2005–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:mit:sloanp:18178&r=hpe |
| By: | Evans, David; Schmalensee, Richard |
| Abstract: | This essay surveys the economic literature on interchange fees and the debate over whether interchange should be regulated and, if so, how. We consider, first, the operation of unitary payment systems, like American Express, in the context of the recent economic literature on two-sided markets, in which businesses cater to two interdependent groups of customers. The main focus is on the determination of price structure. We then discuss the basic economics of multi-party payment systems and the role of interchange in the operation of such systems under some standard, though unrealistic, simplifying assumptions. The key point of this discussion is that the interchange fee is not an ordinary price; its most direct effect is on price structure, not price level. We then examine the implications for privately determined interchange fees of some of the relevant market imperfections that have been discussed in the economic literature. While some studies suggest that privately determined interchange fees are inefficiently high, others point to fees being inefficiently low. Moreover, there is a consensus among economists that, as a matter of theory, it is not possible to arrive, except by happenstance, at the socially optimal interchange fee through any regulatory system that considers only costs. This distinguishes the market imperfections at issue here for multi-party systems from the more familiar area of public utility regulation, where setting price equal to marginal cost is theoretically ideal. Next, we consider the issues facing policy makers. Since there is so much uncertainty about the relation between privately and socially optimal interchange fees, the outcome of a policy debate can depend critically on who bears the burden of proof under whatever set of institutions and laws the deliberation takes place. There is no apparent basis in today's economics - at a theoretical or empirical level - for concluding that it is generally possible to improve social welfare by a noticeable reduction in privately set interchange fees. Thus, if antitrust or other regulators had to show that such intervention would improve welfare, they could not do so. This, again, is quite unlike public utility regulation or many areas of antitrust including, in particular, ordinary cartels. By the same token, there is no basis in economics for concluding that the privately set interchange fee is just right. Thus, if card associations had to bear the burden of proof - for example, to obtain a comfort or clearance letter from authorities for engaging in presumptively illegal coordinated behavior - it would be difficult for them to demonstrate that they set socially optimal fees. We take a pragmatic approach by suggesting two fact-based inquiries that we believe policymakers should undertake before intervening to affect interchange. First, policymakers should establish that there is a significant market failure that needs to be addressed. Second, policymakers should establish that it is possible to correct a serious market imperfection, assuming one exists, by whatever intervention they are considering (such as cost-based regulation of interchange fee levels) and thereby to increase social welfare significantly after taking into account other distortions that the intervention may create. We illustrate both of these points by examining the recent Australian experience. |
| Date: | 2005–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:mit:sloanp:18181&r=hpe |
| By: | Massimo Egidi (CEEL University of Trento) |
| Abstract: | The paper provides an brief overview of the “state of the art” in the theory of rational decision making since the 1950’s, and focuses specially on the evolutionary justification of rationality. It is claimed that this justification, and more generally the economic methodology inherited from the Chicago school, becomes untenable once taking into account Kauffman’s Nk model, showing that if evolution it is based on trial-and-error search process, it leads generally to sub- optimal stable solutions: the ‘as if’ justification of perfect rationality proves therefore to be a fallacious metaphor. The normative interpretation of decision-making theory is therefore questioned, and the two challenging views against this approach , Simon’s bounded rationality and Allais’ criticism to expected utility theory are discussed. On this ground it is shown that the cognitive characteristics of choice processes are becoming more and more important for explanation of economic behavior and of deviations from rationality. In particular, according to Kahneman’s Nobel Lecture, it is suggested that the distinction between two types of cognitive processes – the effortful process of deliberate reasoning on the one hand, and the automatic process of unconscious intuition on the other – can provide a different map with which to explain a broad class of deviations from pure ‘olympian’ rationality. This view requires re-establishing and revising connections between psychology and economics: an on-going challenge against the normative approach to economic methodology. |
| Keywords: | Bounded Rationality, Behavioral Economics, Evolution, As If |
| JEL: | C9 |
| Date: | 2005–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpex:0507002&r=hpe |
| By: | Federico Marongiu (Universidad de Buenos Aires) |
| Abstract: | El trabajo pretende analizar ciertas dificultades que surgen del análisis de la economía clásica al considerar la ética y los valores morales como un concepto absolutamente desligado del comportamiento del agente económico (ya sea consumidor o productor), fundamentalmente en el proceso de toma de decisiones. Este tipo de análisis es excesivamente simplificado, y tal como se demuestra en este trabajo, es necesario un replanteo de la ciencia económica, incluyendo valores sociales, culturales, religiosos, políticos, éticos (visto como una mayor interacción entre la ciencia económica y otras ciencias o disciplinas) para tener una visión completa y realista de las acciones de los individuos, de las variables económicas y de las interrelaciones existentes entre éstas. Para el análisis hemos partido de los fundamentos clásicos de la microeconomía y de ciertas objeciones que pueden hacerse a éstos. |
| Keywords: | Ethic - Economic Thought - Classical Economics - Classical Microeconomics |
| JEL: | B |
| Date: | 2005–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpmh:0507001&r=hpe |
| By: | Andreas Diekmann (ETH Zurich) |
| Abstract: | Digits in statistical data produced by natural or social processes are often distributed in a manner described by “Benford’s law”. Recently, a test against this distribution was used to identify fraudulent accounting data. This test is based on the supposition that real data follow the Benford distribution while fabricated data do not. Is it possible to apply Benford tests to detect fabricated or falsified scientific data as well as fraudulent financial data? We approached this question in two ways. First, we examined the use of the Benford distribution as a standard by checking digit frequencies in published statistical estimates. Second, we conducted experiments in which subjects were asked to fabricate statistical estimates (regression coefficients). These experimental data were scrutinized for possible deviations from the Benford distribution. There were two main findings. First, the digits of the published regression coefficients were approximately Benford distributed. Second, the experimental results yielded new insights into the strengths and weaknesses of Benford tests. At least in the case of regression coefficients, there were indications that checks for digit-preference anomalies should focus less on the first and more on the second and higher-digits. |
| Keywords: | Benford, Benford's law, falsification of data, fabrication of data |
| JEL: | C |
| Date: | 2005–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpot:0507001&r=hpe |
| By: | Raul Caruso (Università Cattolica del Sacro Cuore di Milano) |
| Abstract: | Among economists there is a growing interest on the multi-shaped aspect of conflict activities. Conflict, as a rational activity, plays a role in economic interactions as well as exchange. The acknowledged reference among economists is the pioneering work by Jack Hirshleifer. This paper is intended to survey the main contributions of a recent growing literature. It is organised as follows: a first section is devoted to analysis in depth the formal pillar of Hirshleifer (1988)’s seminal contribution. In the second section different contributions will be surveyed. In a third section attention will be paid on the impact of conflict on traditional exchange activity. A final section gives a summary and conclusions. |
| Keywords: | Conflict, exchange, butter and guns |
| JEL: | D50 D74 |
| Date: | 2005–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwppe:0507002&r=hpe |