nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2009‒01‒24
seventeen papers chosen by
Erik Thomson
University of Manitoba

  1. AUTONOMIE MORALE ET AUTORITE Ou la question de la volonté chez Rousseau By Christophe Salvat
  2. Keynes’s slip of the pen: aggregate supply curve vs employment function By Heller, Claudia
  3. A hidden duel: Gunnar Myrdal and Dag Hammarskjöld in Economics and International Politics 1935-1955 By Appelqvist, Örjan
  4. The effects of Procedures on Social Interaction: A Literature Review By Vanessa Mertins
  5. Clean Evidence on Face-to-Face: Why Experimental Economics is of Interest to Regional Economists By Björn Frank
  6. The New Arthurian Economics By Shipman, Arthur F.
  7. World-Leading Research and its Measurement By Oswald, Andrew J.
  8. Micro-Founded Institutions and Macro-Founded Individuals: The Dual Nature of Profit By Alberto Battistini
  9. Three Failed Attempts of Joint Rankings of Research in Economics and Business By Albers, Sönke
  10. Is Antitrust Too Complicated for Generalist Judges? The Impact of Economic Complexity and Judicial Training on Appeals By Michael R. Baye; Joshua D. Wright
  11. Estimating the Causal Effects of Income on Happiness By Nattavudh Powdthavee;
  12. Approaches to Estimating the Health State Dependence of the Utility Function By Finkelstein, Amy; Luttmer, Erzo F.P.; Notowidigdo, Matthew J.
  13. The Characteristics of the Evolution of the Economical Indicators By Stegaroiu, Carina-Elena
  14. Information Flow and Influence during Collective Search, Discussion, and Choice By Abele, Susanne; Vaughan-Parsons, Sandra I.; Stasser, Garold
  15. Theories of the evolution of cooperative behaviour: A critical survey plus some new results By Rowthorn, Robert E.; Guzmán, Ricardo Andrés; Rodríguez-Sickert, Carlos
  16. How democracy resolves conflict in difficult games By Brams, Steven J.; Kilgour, D. Marc
  17. Cutting a pie is not a piece of cake By Barbanel, Julius B.; Brams, Steven J.; Stromquist, Walter

  1. By: Christophe Salvat (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579, Robinson College - University of Cambridge, Centre for History and Economics - University of Cambridge)
    Abstract: La notion de souveraineté renvoie généralement dans la tradition rousseauiste à la souveraineté du corps politique et non à celle des individus comme c’est le cas dans les théories du droit naturel. Rousseau, pourtant, ne cède jamais à la tentation holiste. L’individu,et sa protection, reste au fondement de son système. L’objet de cet article est de questionner la notion de liberté entendue comme autonomie morale, en particulier dans sa relation à l’autorité
    Keywords: Rousseau, Autonomie Morale, Autorité, Liberté, Volonté Générale
    Date: 2009–01–15
  2. By: Heller, Claudia
    Abstract: This paper focuses on Keynes’s exposition of the Principle of Effective Demand and its generalised mathematical representation – the basis of a Z-D type model. It elaborates on Keynes’s algebraic formulation in the General Theory, relying on interpreters who contributed to the generalisation of his most restrictive hypotheses on competition and returns to scale as well as on those who developed the algebraic argumentation that Keynes left only indicated. Instead of correcting Keynes’s mathematics (which is right), the paper concludes that there has been a “slip of the pen” in his own description of these concepts on the footnote to page 55 of the General Theory. Keynes’s employment function, the inverse of his aggregate supply curve is not the same thing as his aggregate supply function. Therefore, in the controversial footnote, it is not the aggregate supply function but the employment function that is linear with a slope given by the reciprocal of the money-wage.
    Keywords: Principle of effective demand; D/Z-mode´; Aggregate demand; Aggregate supply
    JEL: B31 B22 B2
    Date: 2009–01–18
  3. By: Appelqvist, Örjan (Dept. of Economic History, Stockholm University)
    Abstract: Characterizes conflict and cooperation in the intertwined careers of Gunnar Myrdal and Dag Hammarskjöld as economists, actors in Swedish policy 1940-1947 and international civil servants, Myrdal being Executive Secretary of the UN ECE 1947-1957 and Hammarskjöld being General Secretary of the UN 1951-1961. In economics the difference between dynamic and neoclassical approaches are noted. It contrasts Myrdal’s very early formulation of growth oriented financial policy with the very lasting refusal of counter-cyclical policies of the Swedish government under the influence of Hammarskjöld. In regard to official US postwar policies their differences are highlighted from the pre-cold war period as well as from the early fifties, Myrdal defending a ‘universalist’ position trying to defend the ECE against power policy intrusion whereas Hammarskjöld wanted to ‘proceed with caution’ in regard to what he considered to be ‘a friendly government’. <p>Their differences are traced to personal backgrounds while at the same time expressing principal dilemmas facing civil servants in international organisations in a political climate of strong tensions between national interests.
    Keywords: Swedish economic policy; history of economic ideas; intellectual history of United Nations; Gunnar Myrdal; Dag Hammarskjöld
    JEL: B25 B31
    Date: 2008–12–27
  4. By: Vanessa Mertins (Institute for Labour Law and Industrial Relations in the EC, University of Trier)
    Abstract: While economists have neglected procedures for a long time, other social scientists early established a substantial research program. By now, there exists a large gap between a sheer bulk of empirical, experimental, and theoretical studies by non-economists and the fact that there is hardly any economic research on procedures. We argue that due to clear evidence for procedures in uencing human decision-making, economists can not remain silent about procedural aspects of strategic interactions any longer. There is an important research agenda to be developed. This survey article is intended to discuss an important approach by which the standard economic model, which is based on consequentialist preferences, needs to be enriched: not only outcomes shape human behavior but also the way in which decisions are taken. Behavioral economics may serve as an important link. Its aim is to integrate insights of cognitive and social psychologists as well as experimental economists with neoclassical economic theory. We argue that experimental economics should increase its efforts to identify procedural effects and that these experiments should be more incorporated in the theoretical literature as part of an ongoing dialogue between theorists and experimentalists. Among procedural aspects, procedural fairness suggests itself to become an integrative part. To highlight the need for rethinking the standard economic approach we review social science literature on procedural effects, with a special focus on experimental economics and inspired theory-building.
    Date: 2008–12
  5. By: Björn Frank (University Kassel, Nora-Platiel-Str. 4, 34109 Kassel, Germany)
    Abstract: The notion of face-to-face contacts has recently become very popular in regional economics and in economic geography. This is the most obvious way to explain why firms still locate in proximity to others after the "death of distance", i.e., the shrinking costs for transportation, especially transportation of messages' pure information content. While this is intuitive, controlled laboratory experiments provide much more direct and reliable evidence on the importance of face-to-face contacts. They tackle the question what personal contacts are good for, and in which cases their effects are negligible. To the best of my knowledge, regional economists and geographers are not aware of this new and developing string of literature; it is the purpose of this paper to survey and to organize the relevant experimental research with a special focus on its importance for regional economics. However, the paper might also serve to alert more experimentalists to the importance of their work for current regional science, of which they seem not to be aware either.
    Keywords: Cooperation, death of distance, face-to-face, localized spillovers, trust
    JEL: C90 D83 R19
    Date: 2009
  6. By: Shipman, Arthur F.
    Abstract: The popular understanding of monetary policy is reviewed. A flaw is uncovered: Changes in the components of "money" have been ignored. Policy has therefore allowed the development of a monetary imbalance. This imbalance may be described as the excessive reliance on credit. The flaw has reduced the effectiveness of monetary policy. It is responsible for our failure to bring inflation to a halt. It is responsible for massive debt accumulation. It is responsible for our economic problems today. A solution is proposed.
    Keywords: monetary imbalance; monetary policy; new economic theory; credit-money; credit in circulation; debt accumulation; cause of hard times
    JEL: E0 E31 E51
    Date: 2009–01–16
  7. By: Oswald, Andrew J. (University of Warwick)
    Abstract: Journalists and others have asked me whether the favourable RAE 2008 results for UK economics are believable. This is a fair question. It also opens up a broader and more important one: how can we design a bibliometric method to assess the quality (rather than merely quantity) of a nation’s science? To try to address this, I examine objective data on the world’s most influential economics articles. I find that the United Kingdom performed reasonably well over the 2001-2008 period. Of 450 genuinely world-leading journal articles, the UK produced 10% of them -- and was the source of the most-cited article in each of the Journal of Econometrics, the International Economic Review, the Journal of Public Economics, and the Rand Journal of Economics, and of the second most-cited article in the Journal of Health Economics. Interestingly, more than a quarter of these world-leading UK articles came from outside the best-known half-dozen departments. Thus the modern emphasis on ‘top’ departments and the idea that funding should be concentrated in a few places may be mistaken. Pluralism may help to foster iconoclastic ideas.
    Keywords: Science ; evaluation ; peer-review ; citations ; research assessment exercise.
    Date: 2009
  8. By: Alberto Battistini
    Abstract: Starting from the observation that surplus-value is almost always due to the collective undertaking of non additively separable human capital investments, this paper introduces a theory of the institutional structure of production where groups are taken as units of analysis in a multi-level competition framework inspired by Marx’s critique of the ‘abstract man’. The main result is that monopoly profit is not the only meaningful notion of profit besides the value of individual contribution and, as a consequence, freeentry and competition do not necessarily wipe it out
    Keywords: value, power, conflict, competition, social classes
    JEL: A12 D20 D33 D74 L22 J21 J64
    Date: 2008–12
  9. By: Albers, Sönke
    Abstract: The attempts by Schulze, Warning, and Wiermann (2008) and Ritzberger (2008) to develop a joint ranking list of journals for economics and business research are critically evaluated. The results show a lack of sufficient knowledge of the quality of business journals. Based on these obscure journal rankings, Fabel, Hein, and Hofmeister (2008) derive a ranking of universities and departments. While Diamantopoulos and Wagner (2008) already show a lack of face-validity of these results, this article explains that the reason for this lies not only in the obscure weighting of the journals but, even more importantly, in a remarkable incompleteness of the data base.
    Keywords: Journal ranking; university ranking
    JEL: M00 A12 I23
    Date: 2008–12–23
  10. By: Michael R. Baye (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Joshua D. Wright (George Mason University School of Law)
    Abstract: Modern antitrust litigation sometimes involves complex expert economic and econometric analysis. While this boom in the demand for economic analysis and expert testimony has clearly improved the welfare of economists—and schools offering basic economic training to judges—little is known about the empirical effects of economic complexity or judges' economic training on decision-making in antitrust litigation. We use a unique data set on antitrust litigation in district courts during 1996—2006 to examine whether economic complexity impacts decisions in antitrust cases, and thereby provide a novel test of the frequently asserted hypothesis that antitrust analysis has become too complex for generalist judges. We also examine the impact of one institutional response to economic complexity - basic economic training by judges. We find that decisions involving the evaluation of complex economic evidence are significantly more likely to be appealed, and decisions of judges trained in basic economics are significantly less likely to be appealed than are decisions by their untrained counterparts. Our results are robust to a variety of controls, including the type of case, circuit, and the political party of the judge. Our tentative conclusion, based on a revealed preference argument that views a party’s appeal decision as an indication that the district court got the economics wrong, is that there is support for the hypothesis that some antitrust cases are too complicated for generalist judges.
    Keywords: antitrust, Daubert, complexity, economic training, expert witness
    JEL: A2 K21 K41 L4
    Date: 2008–11
  11. By: Nattavudh Powdthavee;
    Abstract: There is a long tradition of psychologists finding small income effects on life satisfaction (or happiness). Yet the issue of income endogeneity in life satisfaction equations has rarely been addressed. This paper aims to do just that. Instrumenting for income and allowing for unobserved heterogeneity result in an estimated income effect that is almost twice as large as the estimate in the basic specification. The results call for a reexamination on previous findings that suggest money buys little happiness, and a reevaluation on how the calculation of compensatory packages to various shocks in the individual's life events should be designed.
    Date: 2009–01
  12. By: Finkelstein, Amy (MIT); Luttmer, Erzo F.P. (Harvard University); Notowidigdo, Matthew J. (MIT)
    Abstract: If the marginal utility of consumption depends on health status, this will affect the economic analysis of a number of central problems in public finance, including the optimal structure of health insurance and optimal life cycle savings. In this paper, we describe the promises and challenges of various approaches to estimating the effect of health on the marginal utility of consumption. Our basic conclusion is that while none of these approaches is a panacea, many offer the potential to shed important insights on the nature of health state dependence.
    Keywords: state dependence, health, insurance, marginal utility
    JEL: D12 I1
    Date: 2009–01
  13. By: Stegaroiu, Carina-Elena
    Abstract: After the criterion of time to examine the evolution of the indicator values that can be given at the time (eg number of human population in year t) or the time (eg GDP in year t). The indicators characterizing economic development are absolute growth, growth rate, the rate increase.
    Keywords: indicators economic; absolute growth; growth rate; rate increase
    JEL: C02 A12 B41 C60
    Date: 2008–10–10
  14. By: Abele, Susanne (Miami University, Department of Psychology); Vaughan-Parsons, Sandra I. (Howard Community College, Columbia); Stasser, Garold (Miami University, Department of Psychology)
    Abstract: If decision-relevant information is distributed among team members, the group is inclined to focus on shared information and to neglect unshared information, resulting often in suboptimal decisions. This classical finding is robust in experimental settings, in which the distribution of information is created artificially by an experimenter. The current paper looks at information sharing effects when access to information is not restricted, and decision makers are very familiar with the decision task. We analyzed archival search and discussion data obtained from business executives completing a personnel selection exercise. Information popularity in the population from which groups were composed predicted number of group members accessing items during information searches and whether the group discussed the items. The number of group members who accessed an item predicted whether information was repeated during discussion, and repetition predicted which items were included on an executive summary. Moreover, cognitively central group members were more influential than cognitively peripheral members. One implication is that collective decision making amplifies what is commonly known at the expense of disseminating what is not.
    Keywords: Information Sharing, Cognitive Centrality, Group Decision Making, Collective Choice, Archival Data
    JEL: D23 D83 M51 L84
    Date: 2008–12–30
  15. By: Rowthorn, Robert E.; Guzmán, Ricardo Andrés; Rodríguez-Sickert, Carlos
    Abstract: Gratuitous cooperation (in favour of non-relatives and without repeated interaction) eludes traditional evolutionary explanations. In this paper we survey the various theories of cooperative behaviour, and we describe our own effort to integrate these theories into a self-contained framework. Our main conclusions are as follows. First: altruistic punishment, conformism and gratuitous cooperation co-evolve, and group selection is a necessary ingredient for the co-evolution to take place. Second: people do not cooperate by mistake, as most theories imply; on the contrary, people knowingly sacrifice themselves for others. Third: in cooperative dilemmas conformism is an expression of preference, not a learning rule. Fourth, group-mutations (e.g., the rare emergence of a charismatic leader that brings order to the group) are necessary to sustain cooperation in the long run.
    Keywords: Cooperation; altruism; altruistic punishment; conformism; group-selection
    JEL: H41 Z13
    Date: 2009–01–04
  16. By: Brams, Steven J.; Kilgour, D. Marc
    Abstract: Democracy resolves conflicts in difficult games like Prisoners’ Dilemma and Chicken by stabilizing their cooperative outcomes. It does so by transforming these games into games in which voters are presented with a choice between a cooperative outcome and a Pareto-inferior noncooperative outcome. In the transformed game, it is always rational for voters to vote for the cooperative outcome, because cooperation is a weakly dominant strategy independent of the decision rule and the number of voters who choose it. Such games are illustrated by 2-person and n-person public-goods games, in which it is optimal to be a free rider, and a biblical story from the book of Exodus.
    Keywords: Democracy; voting; social choice; public goods; game theory; Prisoners' Dilemma; Bible
    JEL: D7 D6 C72
    Date: 2008–10
  17. By: Barbanel, Julius B.; Brams, Steven J.; Stromquist, Walter
    Abstract: Is there a division among n players of a cake using n-1 parallel vertical cuts, or of a pie using n radial cuts, that is envy-free (each player thinks he or she receives a largest piece and so does not envy another player) and undominated (there is no other allocation as good for all players and better for at least one)? David Gale first asked this question for pies. We provide complete answers for both cakes and pies. The answers depend on the number of players (two versus three or more players) and whether the players' preferences satisfy certain continuity assumptions. We also give some simple algorithms for cutting a pie when there are two or more players, but these algorithms do not guarantee all the properties one might desire in a division, which makes pie-cutting harder than cake-cutting. We suggest possible applications and conclude with two open questions.
    Keywords: Fair division; cake-cutting; pie-cutting; divisible good; envy-freeness; allocative efficiency
    JEL: D7 D6 C7
    Date: 2008–12

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