nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2009‒10‒17
ten papers chosen by
Erik Thomson
University of Manitoba

  1. Darwinism in Economics and the Evolutionary Theory of Policy-Making By Christian Schubert
  2. Recent Developments in Evolutionary Biology and Their Relevance for Evolutionary Economics By Karin Knottenbauer
  3. How Sapient is Homo Economicus? The Evolutionary Origins of Trade, Ethics and Economic Rationality By Kaushik Basu
  4. The Place of Nature in Economic Development By Partha Dasgupta
  5. Evolutionary Stability of Prospect Theory Preferences By Marc Oliver Rieger
  6. Technology and Economic Theory By Stan Metcalfe
  7. Concept Paper on Child Labour in India By Child Rights and You CRY
  8. Alternatives vs. Outcomes: A Note on the Gibbard-Satterthwaite Theorem By Weber, Tjark
  9. Inequity and Risk Aversion in Sequential Public Good Games By Sabrina Teyssier
  10. Why are we in a recession? The Financial Crisis is the Symptom not the Disease! By Ravi Jagannathan; Mudit Kapoor; Ernst Schaumburg

  1. By: Christian Schubert
    Abstract: According to the advocates of a "Generalized Darwinism" (GD), the three core Darwinian principles of variation, selection and retention (or inheritance) can be used as a general framework for the development of theories explaining evolutionary processes in the socio­economic domain. Even though these are originally biological terms, GD argues that they can be re-defined in such a way as to abstract from biological particulars. We argue that this approach does not only risk to misguide positive theory development, but that it may also impede the construction of a coherent evolutionary approach to "policy implications". This is shown with respect to the positive, instrumental and normative theories such an approach is supposed to be based upon.
    Keywords: Evolution, Selection, Darwinism, Ontology, Continuity Hypothesis, Evolutionary Theory of Policy-Making Length 30 pages
    JEL: A1 B4 B52 D6
    Date: 2009–09
  2. By: Karin Knottenbauer
    Abstract: The paper gives attention to the question of whether the development of evolutionary theories in biology over the last twenty years has any implications for evolutionary economics. Though criticisms of Darwin and the modern synthesis have always existed, most of them have not been widely accepted or have been absorbed by the mainstream. Recent findings in evolutio¬nary biology have started to question again the main principles of the modern synthesis. These findings suggest amongst others that the phenomena of co-operation, communication, and self-organization have been under¬estimated, and that selection is not the predominant factor of evolution, but only one among many. Thus, in evolutionary economics, the question is whether the popular variation-retention-selection principle is still up to date. The implications for evolutionary economics with respect to analogies, generalized Darwinism, and the continuity hypothesis are also addressed.
    Keywords: Analogies, evo-devo, evolutionary economics, evolutionary biology, co-operation, genes, Lamarckism, modern synthesis, neo-Darwinism, selection, self-organization Length 18 pages
    Date: 2009–09
  3. By: Kaushik Basu
    Abstract: The paper argues that economism and, in particular, the individual drive to maximize utility and amass profit are not enough to ensure the efficient functioning of an economy; and that even for elementary economic activities, such as trade, exchange and contracting to occur smoothly, it is essential that human beings be endowed with appropriate social norms, such as a critical level of trustworthiness. This, in turn, implies that an economy’s development can depend significantly on whether the citizen is endowed with the relevant norms. Where these norms come from and how they gather stability remain open questions, though we can get some important insights from theories of evolutionary processes.
    Keywords: ecomism, economic rationality, profit, elementary economic, economy development, theories, economics, evolutionary processes trade, exchange, utility, human beings, rationality,
    Date: 2009
  4. By: Partha Dasgupta
    Abstract: Review of the most salient issues in ecological economics when the subject is applied to the field of economic development. The aim here has not been to be scholastic but to examine the lives of the world's poor so as to unearth the role of natural capital there. An account here of the processes that characterise human-nature interactions reads differently from the accounts in recent surveys of both development economics and environmental and resource economics are given. [SANDEE]
    Keywords: rural institutions, pollute, ecological economics, economic development, natural capital, human, nature, development econmics, environmental, resource, poor,
    Date: 2009
  5. By: Marc Oliver Rieger (Institute of Mathematical Economics, Bielefeld University)
    Abstract: We demonstrate that in simple 2 X 2 games (cumulative) prospect theory preferences can be evolutionarily stable, i.e. a population of players with prospect theory preferences can not be invaded by more rational players. This holds also if probability weighting is applied to the probabilities of mixed strategies. We also show that in a typical game with infinitely many strategies, the "war of attrition", probability weighting is evolutionarily stable. Finally, we generalize to other notions of stability. Our results may help to explain why probability weighting is generally observed in humans, although it is not optimal in usual decision problems.
    Keywords: prospect theory, existence of Nash equilibria, evolutionary stability
    JEL: C70 C73 D81
    Date: 2009–10
  6. By: Stan Metcalfe
    Abstract: Technology and technological change play a central role in economics, whether in the theory of resource allocation or in the theory of growth and development. Yet the nature of technology is largely ignored in economic theory, it being considered sufficient to treat technology as a constraint on productive opportunities. This short essay delves a little deeper into the nature of technology and the material, energy and information transformation processes that it represents. A deeper understanding of technology leads to a deeper understanding of the main currents of technological advance and to the reasons why the development of technology and its application are so uneven over time and place.
    Keywords: Length 27 pages
    Date: 2009–08
  7. By: Child Rights and You CRY
    Abstract: This concept papers aims at demystifying some of these social, economic and political myths, and stimulate discussion, debate and deliberation on various aspects of child labour. This paper, further, has two functions, one, it provides a background to the national child labour research; and two, as a prelude to the policy paper on child labour, this will be a working paper for facilitating a framework on the contending aspects of the issue, and the implementation of good practices.
    Keywords: social, economic, political myths, childhood, adult, India, NSSO, adulthood status, India, child labout, research, deliberation, debate, national
    Date: 2009
  8. By: Weber, Tjark
    Abstract: The Gibbard-Satterthwaite theorem is a well-known theorem from the field of social choice theory. It states that every voting scheme with at least 3 possible outcomes is dictatorial or manipulable. Later work on the Gibbard-Satterthwaite theorem frequently does not distinguish between alternatives and outcomes, thereby leading to a less general statement that requires the voting scheme to be onto. We show how the Gibbard-Satterthwaite theorem can be derived from the seemingly less general formulation.
    Keywords: Gibbard-Satterthwaite theorem; infeasible alternatives
    JEL: D71
    Date: 2009–10–12
  9. By: Sabrina Teyssier (Thurgau Institute of Economics - Universität Konstanz, GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    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 first 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 significantly and negatively correlated with the contribution decision of first 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 first 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 contribu- tion
    Date: 2009
  10. By: Ravi Jagannathan; Mudit Kapoor; Ernst Schaumburg
    Abstract: Globalization has brought a sharp increase in the developed world’s labor supply. Labor in developing countries – countries with vast pools of underemployed people – can now more easily augment labor in the developed world, without having to relocate, in ways not thought possible only a few decades ago. We argue that the large increase in the developed world’s labor supply, triggered by geo-political events and technological innovations, is the major underlying cause of the global macro economic imbalances that led to the great recession. The inability of existing institutions in the US and the rest of the world to cope with this shock set the stage for the great recession: The inability of emerging economies to absorb savings through domestic investment and consumption due to inadequate national financial markets and difficulties in enforcing financial contracts; the currency controls motivated by immediate national objectives; and the inability of the US economy to adjust to the perverse incentives caused by huge money inflows leading to a breakdown of checks and balances at various financial institutions. The financial crisis in the US was but the first acute symptom that had to be treated. A sustainable recovery will only occur when the natural flow of capital from developed to developing nations is restored.
    JEL: E0 E00 E2 E3 G0 G00 G2
    Date: 2009–10

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