nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2009‒12‒05
twelve papers chosen by
Erik Thomson
University of Manitoba

  1. On Human Behavior, Human Fulfillment, and the Nature of the Workplace By Jon D. Wisman
  2. Merchants and councilors: intellectual divergences in early 17th century British economic thought By Carlos Eduardo Suprinyak
  4. Interpreting a crisis: trade and money debates in England during the parliament of 1621 By Carlos Eduardo Suprinyak
  5. Increasing Inequality, Status Insecurity, Ideology, and the Financial Crisis of 2008 By Jon D. Wisman; James F. Smith
  6. Why are Economics Students More Selfish than the Rest? By Elaina Rose (with Yoram Bauman)
  7. Good Predictions and Bad Policies By Luis Roberto Martínez Armas
  8. Game Mining: How to Make Money from those about to Play a Game By James W. Bono; David H. Wolpert
  9. Statistical prediction of the outcome of a noncooperative game By James W. Bono; David H. Wolpert
  11. Unconventional monetary policies: an appraisal By Claudio Borio; Piti Disyatat
  12. L'indexation des créances selon Maurice Allais : leçons pour la crise actuelle By Sylviane GUILLAUMONT JEANNENEY

  1. By: Jon D. Wisman
    Abstract: Many notable heterodox economists have viewed workplace democracy as essential for the realization of the Enlightenment ideals of liberty, equality, and community. Yet the economics profession has never given their ideal more than a passing and dismissive glance. The reasons for this have been well-covered in the literature. But one reason that has been all but ignored is that the theory of human behavior that is credited to Adam Smith's Wealth of Nations and that has dominated economic thinking ever since is not supportive of workplace democracy. However, Smith developed a far richer theory of human behavior in his Theory of Moral Sentiments. His fuller theory depicted humans as fully social beings, in need of community. This article outlines the “social approbation” theory of human behavior that Smith developed in his Theory of Moral Sentiments and demonstrates how it is in accord with the findings of contemporary evolutionary psychology. It then examines the manner in which this theory suggests workplace democracy as the appropriate organizational form of control for society's sphere of production.
    Keywords: Adam Smith, Self-interest, Altruism, Approbation, Cooperation, Workplace democracy
    Date: 2009–09
  2. By: Carlos Eduardo Suprinyak (Cedeplar-UFMG)
    Abstract: During the early 1620’s, England went through a period of intense economic disorders which sparked the interest of many in economic reasoning. The decade witnessed the emergence of the most relevant pieces of economic literature of the early Stuart era, but the debate was not restricted to the abstract confrontation of economic writers. The fundamental issue at stake in the controversies between Malynes, Misselden, and Mun – the integration of money and international trade in a coherent explanation of economic phenomena – was also the subject of much care in the political arena at large. The 1621 parliamentary session, in particular, put in evidence not only the fundamental relevance of the matter for understanding England’s economic maladies, but also the great difficulties involved in its investigation. By bringing all these elements together, the paper seeks to articulate a more dense and meaningful portrait of the prevailing state of economic ideas in early 17th century England.
    Keywords: pre-classical economics; mercantilism; 17th century; Stuart England; Thomas Mun
    JEL: B11
    Date: 2009–11
  3. By: Andrés Álvarez
    Abstract: This paper analyses how Cournot‟s views on Monopoly have influenced the marginalists authors. It is argued that there are two different points of view in the cournotian evaluation of the consequence of Monopoly. The first one is a purely theoretical construction adopted in modern economic theory. Even if it is a theoretical one it has normative consequence. From these it is derived a negative appreciation on Monopoly. The second is a more pragmatic point of view. Whereas the former is purely theoretical the latter is derived from multiple examples and it cannot be based on the same theoretical framework as the well known theory of monopoly prices. From this pragmatic point of view, Cournot constructs some “positive” appreciations on the existence of monopolies. These two different appreciations on imperfect markets have influenced in different ways the works of the authors of the Marginal Revolution. Following this distinction we study the different points of view of Walras, Edgeworth and Marshall on Monopoly. We show that even if Walras‟s theory of Monopoly does not have the same theoretical foundations of Cournot‟s, his normative point of view on monopolies is closely related with the “purely theoretical” conclusions. Walras frequently quoted Cournot on these matters. Edgeworth and Marshall have a different point of view on Monopoly, mainly pragmatic and sometimes quite positive from the normative point of view. However Walras‟s as well as Edgeworth‟s and Marshall‟s theories on monopoly are not based on their theories of perfect competition. We conclude that the marginlists views on imperfect competition are not constructed as a “perturbation” or a “friction” of a perfectly competitive market.
    Date: 2009–08–23
  4. By: Carlos Eduardo Suprinyak (Cedeplar-UFMG)
    Abstract: The parliament of 1621 witnessed extensive debating of economic issues by those engaged in finding solutions for the exacting crisis which then affected England. These proceedings offer the background against which some of the most relevant economic literature of the period was produced. As debates progressed, two contrasting perspectives gradually emerged. One of them argued that monetary imbalances were responsible for bullion outflows and sluggish economic activity, while the other believed that monetary flows were ultimately caused by an unfavorable balance of trade. These were exactly the same issues at stake in the controversy between Malynes and Misselden in the early 1620’s, to which Mun would provide a solution with his strict adherence to the balance of trade. Thus, through an analysis of economic debates in the 1621 parliament, this paper seeks to offer an essential element for understanding early XVII century British economic reasoning.
    Keywords: pre-classical economics; mercantilism; XVII century; Stuart England; Thomas Mun
    JEL: B11
    Date: 2009–11
  5. By: Jon D. Wisman; James F. Smith
    Abstract: Over the three decades leading up to the crisis of 2008, inequality dramatically increased in the United States and Great Britain. What stands out, but is seldom noted, is that this occurred within democracies where the relative losers -- the overwhelming majority -- could in principle have used the political system to block or reverse rising inequality. Why did they not do so? A glance at history reveals that peoples have only very infrequently contested inequality because they were led to believe that their inferior status in terms of income, wealth, and privilege was just, that it was not really so bad, or that it was necessary for their future wellbeing. Ideological systems legitimated a status quo of inequality, or in more modern times even increasing inequality. This article surveys the manner in which inequality has been historically legitimated, first predominantly by religion, then predominately by economic thought. Attention is then focused on the manner in which contemporary economic science and its popular interpretations in the media have served to legitimate inequality in the U.S. since the mid-1970s. The paper concludes with a reflection on the unique conditions that enable the legitimation of inequality to be delegitimated.
    Keywords: Ideology, class power, utility of poverty, trickle down, vertical social mobility
    Date: 2009–11
  6. By: Elaina Rose (with Yoram Bauman)
    Abstract: A substantial body of research suggests that economists are less generous than other professionals and that economics students are less generous than other students. We address this question using administrative data on donations to social programs by students at the University of Washington. Our data set allows us to track student donations and economics training over time in order to distinguish selection effects from indoctrination effects. We find that economics majors are less likely to donate than other students and that there is an indoctrination effect for non-majors but not for majors. Women majors and non-majors are less likely to contribute than comparable men.
    Date: 2009–11
  7. By: Luis Roberto Martínez Armas
    Abstract: Relatively little has been said on economic policy by participants in the debate on the realisticness of assumptions in economic models. What has been said is that a ‘Friedmanian’ methodology which accepts unrealistic assumptions and is only concerned with correct predictions is appropriate from the perspective of a practical economist who is in charge of designing policy. This paper tries to show that this is not true. Even if a model provides very accurate predictions of an event, its ability to provide valid explanations is determined by the realisticness of its underlying assumptions. Different assumptions yield different explanations and unrealistic assumptions tend to provide no explanation at all. There is a strong relation between the way a phenomenon is explained and understood and the actions that are consequently recommended. Therefore, a model based on unrealistic assumptions is not a reliable source of advice on policy.
    Date: 2009–11–05
  8. By: James W. Bono; David H. Wolpert
    Abstract: It is known that a player in a noncooperative game can benefit by publicly re- stricting their possible moves before start of play. We show that, more generally, a player may benefit by publicly committing to pay an external party an amount that is contingent on the game's outcome. We explore what happens when external parties (who we call game miners) discover this fact and seek to profit from it by entering an outcome-contingent contract with the players. We analyze various bargaining games between miners and players for determining such an outcome- contingent contract. We establish restrictions on the strategic settings in which a game miner can profit, and bounds on the game miner's profit given various structured bargaining games. These bargaining games include playing the players against one another, as well as allowing the players to pay the miner(s) for exclu- sivity and first-mover advantage. We also establish that when all players can enter contracts with miners, to guarantee the existence of equilibria it is necessary to assume that players can randomize over the contracts they make.
    Date: 2009–08
  9. By: James W. Bono; David H. Wolpert
    Abstract: Conventionally, game theory predicts that the mixed strategy profile of players in a noncooperative game will satisfy some equilibrium concept. Relative probabil- ities of the strategy profiles satisfying the concept are unspecified, and all strategies not satisfying it are implicitly assigned probability zero. As an alternative, we re- cast the prediction problem of game theory as statistically estimating the strategy profile, from "data" that consists of the game specification. This replaces the focus of game theory, on specifying a set of "equilibrium" mixed strategies, with a new focus, on specifying a probability density over all mixed strategies. We explore a Bayesian version of such a Predictive Game Theory (PGT). We show that for some games the peaks of the posterior over strategy profiles approximate quantal response equilibria. We also show how PGT provides a best single prediction for any noncooperative game, i.e., a universal refinement. We also show how regula- tors can use PGT to make optimal decisions in situations where conventional game theory cannot provide advice.
    Keywords: Quantal Response Equilibrium, Bayesian Statistics, Entropic prior, Maximum entropy
    JEL: C02 C11 C70 C72
    Date: 2009–10
  10. By: Pedro Hugo Clavijo Cortes
    Abstract: El presente trabajo versa sobre la actual crisis que vive el capitalismo mundial, las explicaciones que ha dado la burguesía de la misma y el contraste con la teoría marxista de la crisis, los planes de salvamento que al contrario de los que algunos pueden pensar es mas una continuación del actual régimen de acumulación que un Keynesianismo. Así mismo la imposibilidad del Keynesianismo de ser una salida a la crisis y el brete de la teoría económica burguesa.
    Date: 2009–08–10
  11. By: Claudio Borio; Piti Disyatat
    Abstract: The recent global financial crisis has led central banks to rely heavily on "unconventional" monetary policies. This alternative approach to policy has generated much discussion and a heated and at times confusing debate. The debate has been complicated by the use of different definitions and conflicting views of the mechanisms at work. This paper sets out a framework for classifying and thinking about such policies, highlighting how they can be viewed within the overall context of monetary policy implementation. The framework clarifies the differences among the various forms of unconventional monetary policy, provides a systematic characterisation of the wide range of central bank responses to the crisis, helps to underscore the channels of transmission, and identifies some of the main policy challenges. In the process, the paper also addresses a number of contentious analytical issues, notably the role of bank reserves and their inflationary consequences.
    Keywords: unconventional monetary policy, balance sheet policy, credit policy, quantitative easing, credit easing, monetary policy implementation, transmission mechanism, interest rates
    Date: 2009–11
  12. By: Sylviane GUILLAUMONT JEANNENEY (Centre d'Etudes et de Recherches sur le Développement International)
    Abstract: If the debate relative to claim indexation is old, it seems that the financial and economic present crisis should have given a new topicality to this question. However the huge literature focused on the causes and responses to the crisis does not even mention the question of indexation. The first part of this article recalls the main features of Maurice Allais's argumentation in favour of indexation while the second analyses in what extent indexation claims may have prevent from the subprime crisis and could contribute to the solution to the economic and financial crisis.
    Date: 2009

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