nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2009‒03‒22
eight papers chosen by
Erik Thomson
University of Manitoba

  1. Misbehavioral urban economics By Berliant, Marcus
  2. "The Return of Big Government--Policy Advice for President Obama " By L. Randall Wray
  3. An experimental investigation of why individuals conform By Basit Zafar
  4. Social Norms and Naive Beliefs By Amrish Patel; Edward Cartwright
  5. Qu?est-ce que la pauvreté ? By Nanak Kakwani
  6. Les Nouvelles Estimations de la Pauvreté Mondiale ? Un Coup d?épée Dans l?eau By Sanjay G. Reddy
  7. Does aversion to the sucker's payoff matter in public goods games? By Douadia Bougherara; Sandrine Costa; Gilles Grolleau; Lisette Ibanez
  8. "When Should Manufacturers Want Fair Trade?": New Insights from Asymmetric Information By Jakub Kastl; David Martimort; Salvatore Piccolo

  1. By: Berliant, Marcus
    Abstract: Applications of the framework of behavioral economics to questions arising from urban economics are discussed. Directions for future research are outlined.
    Keywords: behavioral urban economics; ambiguity aversion; loss aversion; regional art
    JEL: C90 R23
    Date: 2009–03–17
  2. By: L. Randall Wray
    Abstract: In the current global financial crisis, economists and policymakers have reembraced Big Government as a means of preventing the reoccurrence of a debt-deflation depression. The danger, however, is that policy may not downsize finance and replace money manager capitalism. According to Senior Scholar L. Randall Wray, we need a permanently larger fiscal presence, with more public services. His advice to President Obama is to discard all of former Treasury Secretary Paulson's actions. Wray believes that we can afford any necessary spending and bailouts, and that these actions will not burden our grandchildren.
    Date: 2009–03
  3. By: Basit Zafar
    Abstract: Social interdependence is believed to play an important role in how people make individual choices. This paper presents a simple model constructed on the premise that people are motivated by their own payoff as well as by how their actions compare with those of other people in their reference group. I show that conformity of actions may arise either from learning about the norm (social learning), or from adhering to the norm because of image-related concerns (social influence). To disentangle the two empirically, I use the fact that image-related concerns can be present only if actions are publicly observable. The model predictions are tested in a "charitable contribution" experiment in which the actions and identities of the subjects are unmasked in a controlled and systematic way. Both social learning and social influence seem to play an important role in the subjects' choices. In addition, individuals gain utility simply by making the same choice as the reference group (social comparison) and change their contributions in the direction of the social norm even when their identities are hidden. Once the identities and contribution distributions of group members are revealed, individuals conform to the modal choice of the group. Moreover, I find that social ties (defined as subjects knowing one another from outside the experimental environment) affect the role of social influence. In particular, a low-contribution norm evolves that causes individuals to contribute less in the presence of people they know.
    Keywords: Human behavior ; Social choice
    Date: 2009
  4. By: Amrish Patel; Edward Cartwright
    Abstract: In this paper we analyse the effect that naive agents (those who take behaviour at "face value") have on the nature of social norms. After reviewing the use of signalling models to model conformity, we argue in favour of modelling naive inferences in tandem with standard Bayes rational inferences. Naive agents weaken the existence of social norms and reduce the range of actions that can become social norms.
    Keywords: Signalling; Conformity; Social Norms; Naive beliefs
    JEL: D82 D83 Z13
    Date: 2009–03
  5. By: Nanak Kakwani (International Poverty Centre)
    Keywords: Qu?est-ce que la pauvreté ?
    Date: 2009–03
  6. By: Sanjay G. Reddy (Dept. of Economics, Barnard College, Columbia University)
    Keywords: Les Nouvelles Estimations de la Pauvreté Mondiale ? Un Coup d?épée Dans l?eau
    Date: 2009–03
  7. By: Douadia Bougherara; Sandrine Costa; Gilles Grolleau; Lisette Ibanez
    Abstract: A usual explanation to low levels of contribution to public goods is the fear of getting the sucker’s payoff (cooperation by the participant and defection by the other players). In order to disentangle the effect of this fear from other motives, we design a public good game where people have an assurance against getting the sucker’s payoff. We show that contributions to the public good under this ‘protective’ design are significantly higher and interact with expectations on other individuals' contribution to the public good. Some policy implications and extensions are suggested.
    Keywords: Experiments, Public good, Sucker’s payoff, Assurance
    JEL: C72 C91 H41
    Date: 2009
  8. By: Jakub Kastl (Stanford University); David Martimort (Toulouse School of Economics); Salvatore Piccolo (University of Naples "Federico II", CSEF and Toulouse School of Economics,)
    Abstract: We revisit the Chicago School argument, advocating for the lawfulness of resale price restrictions, in a setting of competing manufacturer-retailer pairs with both adverse selection and moral hazard. A "laissez-faire" approach towards vertical price control might harm consumers when privately informed retailers impose non-market externalities on each other. We show that letting manufacturers free to control retail prices harms consumers as long as retailers impose positive non-market externalities on each other, and that the converse is true otherwise. In contrast to previous work, we show that, in these instances, consumers' and suppliers' preferences over contractual choices are not always aligned. These results underscore the scarce appeal of per se rules and predict circumstances where retail price restrictions should be forbidden.
    Keywords: Competing hierarchies, resale price maintenance, retail externalities
    JEL: D2 D23 D82 K21
    Date: 2009–03–12

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