nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒04‒24
seven papers chosen by
Erik Thomson
University of Manitoba

  1. Civic Capital as the Missing Link By Luigi Guiso; Paola Sapienza; Luigi Zingales
  2. Macroeconomics and Violence By Jurgen Brauer; J Paul Dunne
  3. The Real Puzzle of Blackmail: An Informational Approach By Thomas J. Miceli
  4. Voluntary Contributions by Consent or Dissent By Tan, Jonathan H.W.; Breitmoser, Yves; Bolle, Friedel
  5. Tax Morality and Progressive Wage Tax By Andr s Simonovts
  6. The effects of punishment in dynamic public-good games By Guererk, Oezguer; Rockenbach, Bettina; Wolff, Irenaeus
  7. The Designated Hitter Rule in Baseball as a Natural Experiment By Akihiko Kawaura; Sumner La Croix

  1. By: Luigi Guiso; Paola Sapienza; Luigi Zingales
    Abstract: This chapter reviews the recent debate about the role of social capital in economics. We argue that all the difficulties this concept has encountered in economics are due to a vague and excessively broad definition. For this reason, we restrict social capital to the set of values and beliefs that help cooperation—which for clarity we label civic capital. We argue that this definition differentiates social capital from human capital and satisfies the properties of the standard notion of capital. We then argue that civic capital can explain why differences in economic performance persist over centuries and discuss how the effect of civic capital can be distinguished empirically from other variables that affect economic performance and its persistence, including institutions and geography.
    Date: 2010
  2. By: Jurgen Brauer (Augusta State University); J Paul Dunne (Department of Economics, University of the West of England)
    Abstract: This chapter considers macroeconomic aspects of violence. It moves beyond the usual focus on war to argue the economic importance of all forms and aspects of armed and unarmed violence. Violence refers to acts of self-harm, interpersonal violence, and collective violence. Self-harm includes suicide; interpersonal violence includes organized criminal violence as well as domestic and workplace violence. Collective violence generally denotes political entities that are in, or at risk of, internal or external violent conflict as well as those that are in an insecure postwar predicament or wracked by pervasive armed criminal violence. In the past these different aspects of violence have been studied by different academic disciplines, with political scientists and defense economists tending to study the causes, consequences, and, lately, potential remedies of large-scale collective violence; and criminologists, public health experts, and crime economists tending to study interpersonal violence and self harm. Recognizing the economic importance of all aspects of violence means that macroeconomic policy cannot be considered in isolation from microeconomic developments or from regional, sectoral, distributional, and other economic policies, nor from the social contexts in which violence takes place. The increasing complexity and interrelatedness of the various aspects of the economics of violence means that any discussion of the macroeconomic issues has to consider the cost of conflict and violence more broadly conceived. The chapter reviews violence, measures and measurements of the cost of violence, the economic causes and consequences of violence, some macroeconomic aspects of recovery from violence and postwar reconstruction, and some of the necessary framework conditions for recovery from violence.
    Keywords: Keywords: Violence, macroeconomics, postconflict recovery, conflict-affected states
    JEL: H56 O51 E6
    Date: 2010–02
  3. By: Thomas J. Miceli (University of Connecticut)
    Abstract: The "puzzle" of blackmail is that threats to reveal private information that would be harmful to someone in exchange for money are illegal, but revelation is not. The resolution is that concealment of information about product quality impedes the efficient operation of markets, whereas revelation promotes it. The real puzzle is why possessors aren't naturally inclined to sell to uninformed parties, who value the information more than would-be blackmail victims. The answer has to do with the public good qualities of information, which create an appropriability problem in transactions with uninformed parties. The paper also discusses incentives to acquire compromising information.
    Keywords: Asymmetric information, blackmail, adverse selection
    JEL: D82 K42
    Date: 2010–04
  4. By: Tan, Jonathan H.W.; Breitmoser, Yves; Bolle, Friedel
    Abstract: We study games where voluntary contributions can be adjusted until a steady state is found. In consent games contributions start at zero and can be increased by consent, and in dissent games contributions start high and can be decreased by dissent. Equilibrium analysis predicts free riding in consent games but, in contrast, as much as socially efficient outcomes in dissent games. In our experiment, inexperienced subjects contribute high in consent games and low in dissent games, but behavior converges toward equilibrium predictions over time and eventually experienced subjects contribute as predicted: low in consent games and high in dissent games. Observed deviations from equilibrium in consent games are best explained by level-k reasoning, and those in dissent games are best explained by hierarchical reasoning formalized as nested logit equilibrium.
    Keywords: public good; contribution game; bounded rationality; mechanism
    JEL: C71 C44 H41
    Date: 2010–04–09
  5. By: Andr s Simonovts (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: We analyze the impact of tax morality on progressive income (wage) taxation. We assume that transfers (cash-back) and public expenditures are financed from linear wage taxes. We derive the reported wages from individual utility maximization, when individuals obtain partial satisfaction from reporting wages (depending on their tax morality), and cannot be excluded from the use of public services. The government maximizes a utilitarian social welfare function, also taking into account the utility of public services. The major conjecture is illustrated by numerical examples: the optimal degree of redistribution and the size of the public services are increasing functions of the individuals' tax morality.
    Keywords: tax moral, reporting earnings, progressive income tax, welfare economics
    JEL: H55 D91
    Date: 2010–03
  6. By: Guererk, Oezguer; Rockenbach, Bettina; Wolff, Irenaeus
    Abstract: Considerable experimental evidence shows that although costly peer-punishment enhances cooperation in repeated public-good games, heavy punishment in early rounds leads to average period payoffs below the non-cooperative equilibrium benchmark. In an environment where past payoffs determine present contribution capabilities, this could be devastating. Groups could fall prey to a poverty trap or, to avoid this, abstain from punishment altogether. We show that neither is the case generally. By continuously contributing larger fractions of their wealth, groups with punishment possibilities exhibit increasing wealth increments, while increments fall when punishment possibilities are absent. Nonetheless, single groups do succumb to the above-mentioned hazards.
    Keywords: Public good; Dynamic game; Punishment; Endowment endogeneity; Poverty-trap; Experiment
    JEL: H41 C91 C73
    Date: 2010–03–15
  7. By: Akihiko Kawaura (Department of Policy Studies, Doshisha University); Sumner La Croix (Department of Economics, University of Hawaii at Manoa)
    Abstract: All but two professional baseball leagues have adopted the “designated hitter” (DH) rule, which allows a team’s manager to designate a player to bat at the plate and run the bases in place of another player, usually the team’s pitcher. Unlike the team’s other players, the designated hitter does not take the field to play defense. This paper provides a survey of a large literature investigating the DH rule’s effect on the incentives of pitchers to hit batters and on changes in the number of hit batsmen. We also consider whether the DH rule provides a good example of a natural experiment, as some professional baseball leagues were “treated” with the DH rule and others were not treated.
    Keywords: baseball, designated hitter, moral hazard, natural experiment, Japan
    JEL: L83 D82
    Date: 2010–04–07

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