nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2007‒08‒27
eleven papers chosen by
Erik Thomson
University of Chicago

  1. What Fisher Knew About His Relation, We Sometimes Forget By Taner Yigit; Neil Arnwine
  2. John Maynard Keynes and Ludwig von Mises on Probability By van den Hauwe, Ludwig
  3. Behavioral industrial organization, firm strategy, and consumer economics By Azar, Ofer H.
  4. The Economics of Time as a Resource. By Christopher C. Klein
  5. Moral Distance and Moral Motivations in Dictator Games By Fernando Aguiar; Pablo Branas-Garza; Luis M. Miller
  6. Total Factor Productivity and Income Distribution: A Critical Review By Yongbok Jeon
  7. Statistics and Politics in a "Knowledge Society". By Enrico Giovannini
  8. Individual Rationality and Market Efficiency By Steven Gjerstad; Jason M. Shachat
  9. Where Economics Has Been Headed? Multiple Identities And Diversity In Economic Literature Evidence From Top Journals Over The Period 2000-2006 A First Note By Campiglio, Luigi; Caruso, Raul
  10. Probabilities in Economic Modeling By Itzhak Gilboa; Andrew Postlewaite; David Schmeidler
  11. Governance, Economic Growth and Development since the 1960s By Mushtaq H. Khan

  1. By: Taner Yigit; Neil Arnwine
    Date: 2007
  2. By: van den Hauwe, Ludwig
    Abstract: The economic paradigms of Ludwig von Mises on the one hand and of John Maynard Keynes on the other have been correctly recognized as antithetical at the theoretical level, and as antagonistic with respect to their practical and public policy implications. Characteristically they have also been vindicated by opposing sides of the political spectrum. Nevertheless the respective views of these authors with respect to the meaning and interpretation of probability exhibit a closer conceptual affinity than has been acknowledged in the literature. In particular it is argued that in some relevant respects Ludwig von Mises´ interpretation of the concept of probability exhibits a closer affinity with the interpretation of probability developed by his opponent John Maynard Keynes than with the views on probability espoused by his brother Richard von Mises. Nevertheless there also exist significant differences between the views of Ludwig von Mises and those of John Maynard Keynes with respect to probability. One of these is highlighted more particularly: where John Maynard Keynes advocated a monist view of probability, Ludwig von Mises embraced a dualist view of probability, according to which the concept of probability has two different meanings each of which is valid in a particular area or context. It is concluded that both John Maynard Keynes and Ludwig von Mises presented highly nuanced views with respect to the meaning and interpretation of probability.
    Keywords: General Methodology; Austrian Methodology; Keynesian Methodology; Quantitative and Qualitative Probability Concepts: Meaning and Interpretation; Frequency Interpretation; Logical Interpretation; John Maynard Keynes; Ludwig von Mises; Richard von Mises;
    JEL: B50 B53 B40 B49 C00 B00
    Date: 2007–03–12
  3. By: Azar, Ofer H.
    Abstract: The field of behavioral economics is one of the fastest-growing fields in economics in recent years. Not long ago this was a small field, but over the last decade or so, the field gained more recognition, and today it seems clear that psychological motivations and biases affect economic behavior in many important ways. Insights from psychology were incorporated in several areas of economics. This paper offers a short review of the application of behavioral economics to industrial organization, which can be denoted “behavioral industrial organization,” and on the relationship between behavioral industrial organization, firm strategy, and consumer economics.
    Keywords: industrial organization; behavioral economics; strategy; firm strategy; business strategy; economic psychology; behavioral industrial organization; consumer behavior; consumer economics
    JEL: D40 L10 M20 A12 M30 D10
    Date: 2006
  4. By: Christopher C. Klein
    Abstract: The characteristics of time as a resource are examined in order to seek evidence of these characteristics in fundamental concepts of Economics. A series of thought experiments on time travel demonstrate that a constant irreversible rate of time usage underlies the concepts of opportunity cost, time preference, and interest. This leads to the startling suggestion that the root question in Economics concerns the choice of how to spend time. Thus, the principles of Economics are tied closely to the human perception of time and more closely to the human condition than is generally admitted in undergraduate classes on the subject.
    Keywords: time, choice, opportunity cost
    JEL: A11 A22 D01
    Date: 2007–08
  5. By: Fernando Aguiar (IESA-CSIC); Pablo Branas-Garza (Departamento de Teoria Economica, Universidad de Granada); Luis M. Miller (IESA-CSIC; Strategic Interaction Group, Max Planck Institute of Economics)
    Abstract: We perform an experimenta linvestigation using a dictator game in which individuals must make a moral decision - to give or not to give an amount of money to poor people in the Third World. A questionnaire in which the subjects are asked about the reasons for their decision shows that, at least in this case, moral motivations carry a heavy weight in the decision: the majority of dictators give the money for reasons of a consequentialist nature. Based on the results presented here and of other analogous experiments, we conclude that dicator behavior can be understood in terms of moral distance rather than social distance and that it systematically deviates from the egoism assumption in economic models and game theory.
    Keywords: Keywords: Dictator game, moral distance, moral motivations, experimental economics.
    JEL: A13 C72 C91
    Date: 2007–08–20
  6. By: Yongbok Jeon
    Abstract: The aim of the present paper is to critically reappraise the validity and the relevance of the notion of total factor productivity (TFP) as a measure of technological progress. Placing the focus on the role that the neoclassical distribution theory plays in measuring technological progress, we take up the recent revival of the tautology argument (Felipe & McCombie 2003) and the simple results of the capital controversies. First, I argue that the measure of TFP exclusively relies on the marginal productivity theory of distribution through which factors’ income shares are linked to their technological progress. Second, it will be shown that the marginal productivity theory of distribution is based on extremely limited theoretical and empirical grounds. Third, therefore, it is concluded that the measure of TFP as a measurement of the contribution made by technical progress to the economic growth has very little to do with the reality.
    Keywords: Total Factor Productivity, Marginal Productivity Theory of Distribution, Income Accounting Identity, Capital Controversies
    JEL: B41 O11 O47
    Date: 2007–04
  7. By: Enrico Giovannini
    Abstract: Several studies have analysed the characteristics of the knowledge society, as well as its impact on the production of "official" statistics. In this paper we will not enter into this debate, but we will try to analyse the role of statistics in building a knowledge society and improving the democratic control of policy makers. This issue is especially important because the development of information and communication technologies (ICT) dramatically reduced the cost of producing statistics: therefore, nowadays a huge number of organisations is able to produce statistical figures and indices, frequently picked up by media, just for advocacy purposes and this contributes to create a sense of "confusion" often reported by citizens about the real state of the economy and of the society. This "noise" does not help at all citizens to make the best possible choices, including the electoral ones, and this is not a good thing for the functioning of economic markets and the democracy. The paper initially analyses the relationships between information, expectations and economic theory, as well as the nexus between information and political sciences. In the second part, various approaches to the measurement of societal progress and the role of "key indicators" are presented and analysed. Moreover, theoretical models and empirical evidence about what citizens know on societal progress are discussed. Finally, the OECD project on the measurement of societal progress is presented. <BR>Plusieurs études ont analysé les caractéristiques d’une société de la connaissance, ainsi que son impact sur la production de statistiques « officielles ». Nous n’entrerons pas dans ce débat dans ce document, mais nous essayerons d’analyser le rôle des statistiques dans la construction d’une société de la connaissance et l’amélioration du contrôle démocratique des décideurs politiques. Cette question est particulièrement importante parce que le développement des technologies de l’information et de la communication (TIC) a nettement réduit le coût de la production des statistiques : par conséquent, un grand nombre d’organisations sont maintenant capables de produire des chiffres et des indices, fréquemment repris par les médias, dans le but de sensibiliser ce qui contribue à créer un sentiment de « confusion » souvent rapporté par les citoyens à propos de l’état réel de l’économie et de la société. Ce « bruit » n’aide pas les citoyens à faire les meilleurs choix possibles, y compris les choix électoraux, et ce n’est pas une bonne chose pour le fonctionnement des marchés économiques et de la démocratie. Cet article examine initialement les rapports entre l?information, les attentes et la théorie économique, ainsi que la connexion entre l'information et les sciences politiques. Dans la deuxième partie, diverses approches de la mesure du progrès sociétal et du rôle des « indicateurs clés » sont présentées et analysées. De plus, les modèles théoriques et l'évidence empirique au sujet de ce que les citoyens connaissent du progrès sociétal sont discutés. En conclusion, le projet de l'OCDE sur la mesure du progrès sociétal est présenté.
    Date: 2007–05–29
  8. By: Steven Gjerstad; Jason M. Shachat
    Abstract: The demonstration by Smith [1962] that prices and allocations quickly converge to the competitive equilibrium in the continuous double auction (CDA) was one of the first – and remains one of the most important results in experimental economics. His initial experiment, subsequent market experiments, and models of price adjustment and exchange have added considerably to our knowledge of how markets reach equilibrium, and how they respond to disruptions. Perhaps the best known model of exchange in CDA market experiments is the random behavior in the “zero-intelligence” (ZI) model by Gode and Sunder [1993]. They conclude that even without trader rationality the CDA generates efficient allocations and “convergence of transaction prices to the proximity of the theoretical equilibrium price,” provided only that agents meet their budget constraints. We demonstrate that – by any reasonable measure – prices don’t converge in their simulations. Their budget constraint requires that a buyer’s currency never exceeds her value for the commodity, which is an unnatural restriction. Their conclusion that market efficiency results from the structure of the CDA independent of traders’ profit seeking behavior rests on their claim that the constraints that they impose are a part of the market institution, but this is not so. We show that they in effect impose individual rationality, which is an aspect of agents’ behavior. Researchers on learning in markets have been misled by their interpretation of the ZI simulations, with deleterious effects on the debate on market adjustment processes.
    Keywords: Bounded rationality; double auction; exchange economy; experimental economics; market experiment; “zero intelligence” model
    JEL: C70 C92 D44 D51
    Date: 2007–08
  9. By: Campiglio, Luigi; Caruso, Raul
    Abstract: This short paper presents some preliminary results of an ongoing research work focusing on richness and diversity of economic literature. The key idea is that each article published in an economic journal retains multiple identities. These multiple identities are captured through the use of Jel codes. A sample of ten top generalist journals has been selected. The relative abundance of all Jel categories has been computed for the period 2000-2006. Moreover, a degree of diversity has been proposed for both the sampled journals and the entire Econlit database.
    Keywords: JEL; Econlit; Economic Journals; multiple identities; identity; relative abundance; diversity; evenness; richness.
    JEL: A10
    Date: 2007–08
  10. By: Itzhak Gilboa; Andrew Postlewaite; David Schmeidler
    Date: 2007–08–10
  11. By: Mushtaq H. Khan
    Abstract: Liberal economists have developed a framework of good governance as market-enhancing governance, focusing on governance capabilities that reduce transaction costs and enable markets to work more efficiently. In contrast, heterodox economists have stressed the role of growth-enhancing governance, which focuses on governance capacities to overcome entrenched market failures in allocating assets, acquiring productivity-enhancing technologies and maintaining political stability in contexts of rapid social transformation. The two are not necessarily mutually exclusive, but current policy exclusively focuses on the former, and ignores the strong empirical and historical evidence supporting the latter to the detriment of the growth prospects of poor countries.
    Keywords: governance, market failures, transaction costs
    JEL: O20 O30 O40 P14 P16
    Date: 2007–08

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