nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2009‒10‒10
thirteen papers chosen by
Erik Thomson
University of Manitoba

  1. From the Great Depression to Bretton Woods: Jacob Viner and International Monetary Stabilization (1930-1945) By Sebastiano Nerozzi
  2. In Defense of Dwelling in Great Minds: A Few Quotations from Michael Polanyi’s The Study of Man By Klein, Daniel B.
  3. On reciprocal Behavior in Prisoner Dilemma game By Ahmed Doghmi; Miloudi Kobiyh
  4. On the Independence of Observations between Experiments By Astrid Matthey; Tobias Regner
  5. The Political Economy of Conscription By Poutvaara, Panu; Wagener, Andreas
  6. Yes, we should discount the far-distant future at its lowest possible rate: a resolution of the Weitzman-Gollier puzzle By Freeman, Mark C.
  7. Making the World a better Place: Experimental evidence from the generosity Game By Werner Güth; M. Vittoria Levati; Matteo Ploner
  8. Whitefish: An Economic Primer By Arthur J. Hosios; Lawrence B. Smith
  9. The perceived framework of a classical statistic: Is the non-invariance of a Wald statistic much ado about null thing? By Dastoor, Naorayex
  10. "Money Manager Capitalism and the Global Financial Crisis" By L. Randall Wray
  11. Does the Journal Impact Factor help make a Good Indicator of Academic Performance? By Mishra, SK
  12. Sharing the pie: the Lutheran is neither opportunistic nor generous By Migheli, Matteo
  13. Inequity and Risk Aversion in Sequential Public Good Games By Sabrina Teyssier

  1. By: Sebastiano Nerozzi (Università Cattolica Di Milano)
    Abstract: This paper examines Jacob Viner’s contribution to the debate and the policy decision making concerning international monetary policy from the Great Depression to the Bretton Woods agreements. An outstanding member of the so called “early Chicago School of Political Economy”, Viner was actively engaged in the debate over the causes and cures of the depression, emphasizing the important role international economic problems played in producing its onset and in reinforcing its duration. During the 1930’s Viner was an outspoken supporter of international monetary cooperation, set up to secure exchange rates stability, which he regarded as a paramount factor in restoring business confidence and fostering recovery. As a close assistant to Secretary of the Treasury Henry Morgenthau, Jr. Viner was able to exert a positive influence on the administration’s foreign economic policy, from the Gold Stabilization Act of 1934 to the Tripartite agreement of 1936. Though not directly involved in the Bretton Woods Conference, he played a role in preparing the ground for the establishment of multilateral agencies such as the IMF and the IBRD. By means of his unpublished papers and other archival sources, as well as his writings, we will examine Viner’s analysis of the Great Depression, his contribution to the debate over American foreign economic policy and his work as economic adviser from 1930 to 1945.
    Keywords: Great Depression, Gold Stabilization Act, Tripartite Agreement, Bretton Woods, Jacob Viner.
    JEL: B31 E63 F59 N12
    Date: 2009
  2. By: Klein, Daniel B. (The Ratio Institute)
    Abstract: It seems like a small and perhaps shrinking minority of economists know reverence of individual figures. Most economists seem to be without heroes, and sometimes disparage reverence as cultish idolatry. Here I collect from Michael Polanyi’s The Study of Man (1959) a few passages that eloquently suggest that “we need reverence to perceive greatness, even as we need a telescope to observe spiral nebulae.” The selection is made in the defense of seeking out and communing with great minds.
    Keywords: greatness; reverence; heroes; calling
    JEL: A20 B00 B30
    Date: 2009–09–24
  3. By: Ahmed Doghmi (Strategic Interaction Group, Max Planck Institute of Economics, Jena, Germany); Miloudi Kobiyh (Center for Research in Economics and Management, University of Caen, France)
    Abstract: In this paper, we introduce the concept of payoffi distortion in the standard prisoner's dilemma game when strategies are driven by psychological behaviors. This concept enables to take account each player's assessment of the other player's behavior and the asymmetry of information. We determine the conditions which allow that mutual cooperation constitutes the equilibrium. we particularly focus on the reciprocity in case of complete and incomplete information about the payoffi distortion. We show that mutual cooperation is a Nash equilibrium with complete information and is a Bayesian equilibrium when each player believes that his opponent behaves with "large" reciprocity in incomplete information environment.
    Keywords: Reciprocity, Behavior, Cooperation, prisoner's dilemma game.
    JEL: C7 A13
    Date: 2009–09–25
  4. By: Astrid Matthey (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Tobias Regner (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)
    Abstract: In experimental economics there exists a lively debate about the independence of observations. Although opinions on the issue differ widely, all concerns regard the independence of subjects' behavior within one session or experiment. This paper attempts to shed some light on the independence of observations between experiments, if they are generated by the same subjects. We analyze experiments with an allocation decision and find that participation in previous experiments tends to increase the amount subjects allocate to themselves. Hence, independence between experiments cannot be presumed if subjects participate repeatedly. The finding has implications for the interpretation of previous allocation decision results and deserves attention when running future experiments.
    Keywords: experimental methods, independence of observations, social preferences, conditional cooperation
    JEL: C90 D84
    Date: 2009–09–25
  5. By: Poutvaara, Panu (University of Helsinki); Wagener, Andreas (University of Hannover)
    Abstract: Though in decline recently, military conscription is still a widely used mode of staffing armies. Since not many valid economic, social or military arguments in favor of the draft can be put forward, the question emerges why societies choose to rely on it. In this survey we explain the political allure of military conscription by its specific intra- and intergenerational incidence as a tax. From a public choice perspective, there is always a vast majority of people in favor of the introduction and maintenance of military draft, as compared to a professional army. Empirical evidence for this conclusion appears to be mixed, however. Political preferences with respect to conscription involve concerns about its unfairness and questionable record on social accounts. Special interests may also matter.
    Keywords: fairness, dynamic costs, military draft, public choice, taxation
    JEL: H56 D72
    Date: 2009–09
  6. By: Freeman, Mark C.
    Abstract: In this paper the author proves that the Expected Net Future Value (ENFV) criterion can lead a risk neutral social planner to reject projects that increase expected utility. By contrast, the Expected Net Present Value (ENPV) rule correctly identifies the economic value of the project. While the ENFV increases with uncertainty over future interest rates, the expected utility decreases because of the planner's desire to smooth consumption across time. This paper therefore shows that Weitzman (1998) is right and that, within his economy, the far-distant future should be discounted at its lowest possible rate.
    Keywords: Discount rates,term structure,capital budgeting,interest rate uncertainty,environmental planning
    JEL: D61 E43 G12 G31 Q51
    Date: 2009
  7. By: Werner Güth (Max Planck Institute of Economics); M. Vittoria Levati (Max Planck Institute of Economics); Matteo Ploner (Max Planck Institute of Economics)
    Abstract: We study ultimatum and dictator experiments where the first mover chooses the amount of money to be distributed between the players within a given interval, knowing that her own share is ?xed. Thus, the first mover is faced with scarcity, but not with the typical trade-off between her own and the other's payoff. Removing the trade-off inspires significant generosity, which is not affected by the second mover's veto power. On the whole our results con?rm heterogeneity in behavior, but point to efficiency concerns as the predominant motive.
    Keywords: Ultimatum, Dictator, Social Preferences
    JEL: C70 C91 D63
    Date: 2009–09–25
  8. By: Arthur J. Hosios; Lawrence B. Smith
    Abstract: The 2007 Ontario Court of Appeal decision in Whitefish Lake Band of Indians v. Canada (Attorney General) sets out, for the first time, a set of guidelines for establishing compensation for cases in which the Crown allegedly breached its fiduciary duties to a First Nation band. The influence and financial implications of this decision are far reaching, extending well beyond the Ontario courts. Indeed, going forward, it is difficult to imagine a case in Canada of breach of duty by the Crown in which the Crown or Plaintiff’s arguments regarding compensation will fail to take account of the Whitefish decision. Nonetheless, a consensus concerning this decision has not yet emerged; all parties agree that Whitefish is important and yet, for the same set of circumstances, the financial implications of Whitefish are said to differ, not just between the Crown and Plaintiff’s positions but sometimes also among the “experts”. This would seem to suggest that the implications and implementation of the Whitefish guidelines are legitimately open to different interpretations. This article demonstrates that this view is wrong. It establishes that the only internally consistent and empirically grounded framework for implementing Whitefish is the standard economic model of consumption-saving decision making. Other interpretations implicitly make assumptions about individual behaviour that are at odds with known data, rational economic behaviour and common sense. The article also clarifies which historical data need to be applied to limit the range of feasible compensation, consistent with the application of the standard economic model, for any given case.
    Keywords: Whitefish First Nation, land claims, aboriginal
    JEL: D K
    Date: 2009–09–25
  9. By: Dastoor, Naorayex (University of Alberta, Department of Economics)
    Abstract: The distinction between a nominal framework for the three classical statistics and a perceived framework for each classical statistic provides more ways to interpret these statistics, and intuitively explains as well as more easily shows some well-known results. In particular, each classical statistic can be viewed in terms of a length in each of four spaces and, since the classical procedures per se are equivalent in a perceived framework, two statistics are identical if their perceived frameworks are identical. This helps to integrate the normally separately treated issues of a reformulation of a null hypothesis and of locally equivalent alternatives. For example, a Wald statistic is not invariant if a reformulation changes its perceived framework, and an appropriate score statistic is invariant as its perceived framework is unaffected by considering a locally equivalent alternative. [During the thirty-four months this paper was under consideration at The Econometrics Journal, the Editor-in-charge (Professor Stephane Gregoir) did not reply to three (of the author's four) requests about the status of the submission, and provided neither a referee's report nor a first decision. Also, when asked to intervene by the author, the new Managing Editor (Professor Richard J Smith) offered the author the possibility of submitting the paper (as a new submission) to the new editorial regime, at which point, the author withdrew the paper.]
    Keywords: classical statistic; likelihood ratio statistic; nominal framework; perceived framework; score statistic; Wald statistic
    JEL: C12
    Date: 2009–08–01
  10. By: L. Randall Wray
    Abstract: This paper applies Hyman Minsky's approach to provide an analysis of the causes of the global financial crisis. Rather than finding the origins in recent developments, this paper links the crisis to the long-term transformation of the economy from a robust financial structure in the 1950s to the fragile one that existed at the beginning of this crisis in 2007. As Minsky said, "Stability is destabilizing": the relative stability of the economy in the early postwar period encouraged this transformation of the economy. Today's crisis is rooted in what he called "money manager capitalism," the current stage of capitalism dominated by highly leveraged funds seeking maximum returns in an environment that systematically under-prices risk. With little regulation or supervision of financial institutions, money managers have concocted increasingly esoteric instruments that quickly spread around the world. Those playing along are rewarded with high returns because highly leveraged funding drives up prices for the underlying assets. Since each subsequent bust wipes out only a portion of the managed money, a new boom inevitably rises. Perhaps this will prove to be the end of this stage of capitalism--the money manager phase. Of course, it is too early even to speculate on the form capitalism will take. I will only briefly outline some policy implications.
    Date: 2009–09
  11. By: Mishra, SK
    Abstract: After the notification of the University Grants Commission (Minimum Qualifications for Appointment of Teachers and other Academic Staff in Universities and Colleges and Measures for the Maintenance of Standards in Higher Education) Regulations, 2009 on September 23rd 2009, publication of research papers/articles in reputed journals has become an important factor in assessment of the academic performance of teachers in colleges and universities in India. One of the measures of reputation and academic standard (rank or importance) of a journal is the so-called ‘Impact Factor.’ This study makes a detailed analysis of Journal Impact Factors across the disciplines. It finds that if journal impact factor is used to assess the academic performance of individuals (for the purpose of selection, promotion, etc) and it is not borne in mind that due to vast differences in the nature of distribution of impact factors across the disciplines they are not justifiably comparable, a below average scholar in the one discipline (wherein the journal impact factor is negatively skewed) will rank higher and will be honored (and benefitted) more than another scholar in some other discipline (wherein the journal impact factor is positively skewed). It may be noted that in the university departments there are specializations with low impact factor journals and other specializations with very high impact factor journals. But the teachers/researchers of different specializations in the departments compete with each other for promotion. Whether the researchers with an unfortunate specialization (wherein the journal impact factor is positively skewed) receive justice on such criteria remains an open question.
    Keywords: Journal impact factor; University Grants Commission; regulation; India; UGC; Higher education; academic performance indicator; API; skewness
    JEL: A23 I23 I28 M51
    Date: 2009–10–07
  12. By: Migheli, Matteo
    Abstract: This paper studies how individual religiosity affects people's behaviour. In particular here I study the behaviour of the second players in a standard trust game. They have the possibility of sharing some resources between themselves and their game mates. It results that more religious people tend to choose an even allocation of these resources, whilst the less religious participants are either opportunistic or generous.
    Keywords: religiosity, distribution of resources, inequity aversion
    JEL: C93 D30 Z12
    Date: 2009–09
  13. By: Sabrina Teyssier (Thurgau Institute of Economics, Kreuzlingen, Switzerland; University of Konstanz, Department of Economics, Germany)
    Abstract: This paper analyzes which type of intrinsic preferences drive an agent’s behavior in a sequential public good game depending on whether the agent is ï¬rst or second mover. Theoretical predictions are based on heterogeneity of individuals in terms of social and risk preferences. We modelize preferences according to the inequity aversion model of Fehr and Schmidt (1999) and to the assumption of constant relative risk aversion. Risk aversion is signiï¬cantly and negatively correlated with the contribution decision of ï¬rst movers. Second movers with sufficiently high advantageous inequity aversion free-ride less and reciprocate more than others. Both results are predicted by our model. Nevertheless, no effect of disadvantageous inequity aversion of ï¬rst movers is found in the data while theory predicted it. Our results underline the importance of taking into account the order of agents’ play to correctly understand which type of preferences influences cooperation in voluntary contribution mechanisms. They suggest that individuals’ behavior can be consistent between different experimental games.
    Keywords: inequity aversion, risk aversion, public good game, conditional contribution
    JEL: C72 C91 D63 D81 H41
    Date: 2009

This nep-hpe issue is ©2009 by Erik Thomson. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.