nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒05‒29
eleven papers chosen by
Erik Thomson
University of Manitoba

  1. The Ultimatum Game and Expected Utility Maximization – In View of Attachment Theory By Shaul Almakias; Avi Weiss
  2. Language and argumentation in the controversy economic By Estrada, Fernando
  3. Pleasure and belief in Hume's decision process By Marc-Arthur Diaye; André Lapidus
  4. An Outline of the Existing Literature on Monetary Economics in India By Das, Rituparna
  5. The Rhetoric of Economics: Why Words Are Important By Morles, Gustavo
  6. The classical notion of competition revisited By Salvadori, Neri; Signorino, Rodolfo
  7. From action theory to the theory of the firm By Argandoña, Antonio
  8. Truly Non-Cooperative Games: A Unified Theory By Funk, Matt
  9. "But can't we get the same thing with a standard model?" Rationalizing bounded-rationality models. By Spiegler, R.
  10. A probabilistic position value By Amandine Ghintran; Enrique Gonzalez-Arangüena; Conrado Manuel
  11. Coordination after gains and losses: Is prospect theoryâs value function predictive for games? By Schade, Christian; Schroeder, Andreas; Krause, Kai Oliver

  1. By: Shaul Almakias (Finance Ministry, Israel); Avi Weiss (Bar-Ilan University)
    Abstract: In this paper we import a mainstream psycholgical theory, known as attachment theory, into economics and show the implications of this theory for economic behavior by individuals in the ultimatum bargaining game. Attachment theory examines the psychological tendency to seek proximity to another person, to feel secure when that person is present, and to feel anxious when that person is absent. An individual's attachment style can be classified along two-dimensional axes, one representing attachment "avoidance" and one representing attachment "anxiety". Avoidant people generally feel discomfort when being close to others, have trouble trusting people and distance themselves from intimate or revealing situations. Anxious people have a fear of abandonment and of not being loved. Utilizing attachment theory, we evaluate the connection between attachment types and economic decision making, and find that in an Ultimatum Game both proposers' and responders' behavior can be explained by their attachment styles, as explained by the theory. We believe this theory has implications for economic behavior in different settings, such as negotiations, in general, and more specifically, may help explain behavior, and perhaps even anomalies, in other experimental settings.
    Keywords: Attachment Theory, Experimental Economics, Behavioral Economics, Ultimatum Game, Psychology and Economics
    JEL: C91 C78
    Date: 2010–01
  2. By: Estrada, Fernando
    Abstract: This article offers an approach to the general structure of the controversy in economy. In our case we adopted a perspective to study a particular aspect of the rhetoric that comes from the context of a particular controversy: the controversy on the advantages of the free commerce between Daly and Bhagwati. It is sustained that the positions in economy present with relative frequency interest conflicts that are revealed in the dialectic one of the arguments. A proponent in open defense of the free commerce is not released of presumptions reflected in the field of the rhetoric. Reason why to include the language dimensions of the argumentation in economy has advantages for the field of the explanation and the epistemology in the social sciences.
    Keywords: language; argumentation; theory economics; epistemology; public choice; decision theory.
    JEL: Z1 A1 A20 Z10 C7 A2 C70 A10 D84 A12 D8 D80 C72
    Date: 2010
  3. By: Marc-Arthur Diaye (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, CEE - Centre d'Etudes de l'Emploi - Ministère de la recherche - Ministère chargé de l'Emploi); André Lapidus (PHARE - Pôle d'Histoire de l'Analyse et des Représentations Economiques - CNRS : FRE2541 - Université Panthéon-Sorbonne - Paris I - Université de Paris X - Nanterre)
    Abstract: The purpose of this paper is to introduce explicitly pleasure and belief in what aims at being a Humean theory of decision, like the one developed in Diaye and Lapidus (2005a). Although we support the idea that Hume was in some way a hedonist – evidently different from Bentham's or Jevons' way – we lay emphasis less on continuity than on the specific kind of hedonism encountered in Hume's writings (chiefly the Treatise, the second Enquiry, the Dissertation, or some of his Essays). Such hedonism clearly contrasts to its standard modern inheritance, expressed by the relation between preferences and utility. The reason for such a difference with the usual approach lies in the mental process that Hume puts to the fore in order to explain the way pleasure determines desires and volition. Whereas pleasure is primarily, in Hume's words, an impression of sensation, it takes place in the birth of passions as reflecting an idea of pleasure, whose “force and vivacity” is precisely a “belief”, transferred to the direct passions of desire or volition that come immediately before action. As a result, from a Humean point of view, “belief” deals with decision under risk or uncertainty, as well with intertemporal decision and indiscrimination problems. The latter are explored within a formal framework, and it is shown that the relation of pleasure is transformed by belief into a non-empty class of relations of desire, among which at least one is a preorder.
    Keywords: Hume; decision; pleasure; belief; passion; desire; preference; rationality; indiscrimination; will; choice
    Date: 2012–05
  4. By: Das, Rituparna
    Abstract: As per the researchers on monetary economics, a detailed account of the changing role of money from Walrasian and Non-Walrasian settings to the more recent theories on the dynamics of the relationships between money, inflation and growth with reference to their historical evolution are available in Friedman et al. ed. (1998) and such type of theoretical work did not happen in India. There is a tendency among the Indian researchers to apply the theories developed abroad to up to date empirical data in econometrics models and then, with the help of econometric techniques and compare the results. For example Dash and Goal (2001) applied the theory of Foster (1992) and Chona (1976) applied the theory of Ahrensdorf and Thasan (1960). This paper dealt with such applications, their lacunae and attempts to resolve the issues unaddressed till 2005.
    Keywords: monetary policy; money; interest rate; Keynes; monetarist; neo Keynesian; Quantity Theory; LM curve; Nachane; Brahmananda; Tobin; post Keynesian; endogenous; money supply; financial markets; bank; credit; loan
    JEL: E0
    Date: 2010
  5. By: Morles, Gustavo
    Abstract: By looking at historical evidence McCloskey concludes that the great transformation of the Industrial Revolution was made possible by the change in attitudes, reflected ultimately in the change in rhetoric, towards Bourgeois values. This paper explores the importance of the change in rhetoric by looking at the impact of the more recent change in attitudes against Bourgeois values. This paper argues that what Weigel identifies as the current European crisis of civilizational morale is ultimately a product of turning away from the rhetoric that made the Industrial Revolution possible. Weigel warns that today’s European crisis could be tomorrow’s American crisis. This paper argues that the election of Barack Obama has accelerated America’s turn towards the “European Model” and its anti-Bourgeois rhetoric.
    Keywords: Obama; rhetoric; industrial revolution; European crisis; Bourgeois values
    JEL: O10 P16
    Date: 2010–02
  6. By: Salvadori, Neri; Signorino, Rodolfo
    Abstract: The paper seeks to fill a lacuna within Classical economics concerning the process of market price determination in a short-period equilibrium. To this aim, first we distinguish the Classical notion of free competition from the Walrasian notion of perfect competition and we argue that the latter is beset by some theoretical difficulties alien to the former. Second, we reconstruct in some detail Smith and Marx’s views concerning market price determination and we show that Marx’s extensive use of metaphors and numerical examples foreshadows the modern taxonomy of buyers’ market, sellers’ market and mixed strategy equilibrium in the capacity space of a standard Bertrand duopoly model. Finally, we highlight similarities and differences between the Classical notion of competition and contemporary game-theoretic oligopoly models
    Keywords: Classical and neoclassical notions of competition, Adam Smith, Karl Marx, mixed strategies.
    JEL: B12 L11
    Date: 2010–05–17
  7. By: Argandoña, Antonio (IESE Business School)
    Abstract: Since Coase's (1937) pioneering article, the theory of the firm, especially in its neoclassical form, has developed tremendously. The criticisms leveled against it confirm its interest and usefulness - which is not to say that it cannot be improved upon or corrected in many respects. This chapter is intended to contribute to a broadening of the theory of the firm, starting from a theory of human action that encompasses a wide range of motivations. It also suggests specific ways in which the conception of the firm can be improved.
    Keywords: Action; Action theory; Firm; Motivations; Organization; Theory of the firm;
    Date: 2010–04–09
  8. By: Funk, Matt
    Abstract: This dissertation introduces "Truly Non-Cooperative Games" – axioms and complimentary negotiation models developed to analyse the human "Struggle for Life" – and presents "The Principle of Relative Insularity", a unified theory of value which unites economics, astrophysics, and biology. In brief, we discover that, reductio ad absurdum, value is a derivative function of relative insularity.
    Keywords: non-cooperative games; theory of value; economic development strategy; systemic risks; global threat mitigation; national security; the problem of induction; relative insularity; international cooperation; human survival
    JEL: Y40 Q34 C72
    Date: 2010–04–05
  9. By: Spiegler, R.
    Abstract: This paper discusses a common criticism of economic models that depart from the standard rational-choice paradigm - namely, that the phenomena addressed by such models can be “rationalized” by some standard model. I criticize this criterion for evaluating bounded-rationality models. Using a market model with boundedly rational consumers due to Spiegler (2006a) as a test case, I show that even when it initially appears that a bounded-rationality model can be rationalized by a standard model, the rationalizing models tend to come with unwarranted “extra baggage”. I conclude that we should impose a greater burden of proof on rationalizations that are offered in refutation of such models.
    Date: 2010–03
  10. By: Amandine Ghintran (Óbuda University); Enrique Gonzalez-Arangüena; Conrado Manuel
    Abstract: In this article, we generalize the position value, defined by Meessen (1988) for the class of deterministic communication situations, to the class of generalized probabilistic communication situations (G´omez et al. (2008)). We provide two characterizations of this new allocation rule. Following in Slikker’s (2005a) footsteps, we characterize the probabilistic position value using probabilistic versions of component eciency and balanced link contributions. Then we generalize the notion of link potential, defined by Slikker (2005b) for the class of deterministic communication situations, to the class of generalized probabilistic communication situations, and use it to characterize our allocation rule. Finally, we show that these two characterizations are logically equivalent.
    Keywords: Game Theory, TU Games, Graph-restricted Games, Position Value.; Game Theory, TU Games, Graph-restricted Games, Position Value.
    Date: 2010
  11. By: Schade, Christian; Schroeder, Andreas; Krause, Kai Oliver
    Abstract: We analyze the effects of prior gain and loss experiences on individualsâ behavior in two coordination games: battle of the sexes and simultaneous market entry. We propose subjectively transformed games that integrate elements of prospect theory, aggregation of prior and subsequent payoffs, and social projection. Mathematical predictions of behavior are derived based on equilibrium selection concepts. Malesâ behavior in our experimental studies is largely consistent with our predictions. However, the behavior of many female respondents appears to be rather consistent with interpreting the initial random lottery outcomes used to manipulate prior experiences as a signal for the playersâ abilities to compete. This could be related to femalesâ known uneasiness of competing against counterparts that might be male and thus, a generally higher salience of rivalry in our incentivized experiments. Females also chose to play far more mixed strategies than males indicating some uncertainty about what type of behavior is appropriate.
    Keywords: Prospect Game Theory, Prior Outcomes, Coordination, Equilibrium Selection, Economic Experiment, Agribusiness, Agricultural and Food Policy, Financial Economics, Institutional and Behavioral Economics, Research Methods/ Statistical Methods, Risk and Uncertainty,
    Date: 2010–02

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