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on History and Philosophy of Economics |
| By: | Alan S. Blinder (Princeton University) |
| Abstract: | The Squam Lake Report is a volume by economists for economists. It offers the fruits of the labors of 15 top economists who met at Squam Lake, New Hampshire, to discuss financial reform. While somewhat disjointed, and avoiding many important issues, the book is nonetheless a tour du force. Its many recommendations derive from two basic principles: that reformers need to think systemically, and that third-party costs stemming from systemic risk need to be internalized. And its approach is just what you would expect from a group of academic economists. It asks (and answers) questions like: Where did incentives go wrong? What were the sources of market failure? How can we better protect society against negative externalities? |
| Keywords: | market failure, financial reform, finance reform, negative externalities, third party coats |
| JEL: | B40 D02 D62 E20 A31 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:1243&r=hpe |
| By: | Petrosyan, Leon A.; Zenkevich, Nikolay A. (Eds.) |
| Abstract: | The collection contains abstracts of papers accepted for the International Conference Game Theory and Management (June 28–30, 2010, St. Petersburg University, Russia). The presented abstracts belong to the field of game theory and its applications to management. The abstract volume may be recommended for researches and post-graduate students of management, economic and applied mathematics departments. |
| Keywords: | game theory, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:sps:cpaper:159&r=hpe |
| By: | Wu, Haoyang |
| Abstract: | Quantum mechanics has been applied to game theory for years. A recent work [H. Wu, Quantum mechanism helps agents combat ``bad'' social choice rules. \emph{International Journal of Quantum Information}, 2010 (accepted). Also see http://arxiv.org/pdf/1002.4294v3] has generalized quantum mechanics to the theory of mechanism design (a reverse problem of game theory). Although the quantum mechanism is theoretically feasible, agents cannot benefit from it immediately due to the restriction of current experimental technologies. In this paper, a classical algorithm is proposed to help agents combat ``bad'' social choice rules immediately. The algorithm works well when the number of agents is not very large (e.g., less than 20). Since this condition is acceptable for small-scale cases, it can be concluded that the Maskin's sufficiency theorem has been broken through for small-scale cases just right now. In the future, when the experimental technologies for quantum information are commercially available, the Wu's quantum mechanism will break through the Maskin's sufficiency theorem completely. |
| Keywords: | Quantum games; Prisoners' Dilemma; Mechanism design. |
| JEL: | D71 C72 |
| Date: | 2010–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22402&r=hpe |
| By: | Gabriele Camera; Marco Casari; Maria Bigoni |
| Abstract: | Social norms of cooperation are studied under several forms of communication. In an experiment, strangers could make public statements before playing a prisoner’s dilemma. The interaction was repeated indefinitely, which generated multiple equilibria. Communication could be used as a tool to either signal intentions to coordinate on Pareto-superior outcomes, to deceive others, or to credibly commit to actions. Some forms of communication did not promote the incidence of efficient Nash play, and sometimes reduced it. Surprisingly, cooperation suffered when subjects could publicly commit to actions. |
| Keywords: | coordination, cheap-talk, deception, indefinitely repeated game, social norms |
| JEL: | C90 C70 D80 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1236&r=hpe |
| By: | Sell, Friedrich L. |
| Abstract: | In diesem Beitrag werden die Grundzüge der Überinvestitionstheorien von Hyman Minsky auf der einen und die von v. Hayek/Garrison auf der anderen Seite zunächst in den 'Sprachen' der Originalbeiträge herausgearbeitet. Anschließend wird ihr möglicher Erklärungsbeitrag für die aktuelle Finanzmarkt- und Weltwirtschaftskrise geprüft. So lässt sich das gleichzeitige Auftreten von Überkapazitäten - in Verbindung mit einer von den Präferenzen der Konsumenten deutlich abweichenden Kapitalstruktur - und einer Verschuldungskrise von Unternehmen und Banken befriedigend erklären. Während man nämlich mit v. Hayek/Garrison die Verwendungsseite des Kapitalstocks im Verlauf des Zyklus und die Fehlallokation von Kapitalgütern schon zu Beginn des Aufschwungs beleuchten kann, verhilft Minsky zu einem detaillierten Blick auf die Herkunftsseite des Kapitalstocks: Der Aufschwung, der sowohl technologisch wie monetär fundiert sein kann, legt durch riskante Fremdfinanzierung die Saat für die vergiftete Ernte in der Krise. -- In this paper, we first develop, making use of the original tools used in the seminal papers of Hyman Minsky on the one hand and of Friedrich A. v. Hayek/Roger Garrison on the other hand, the foundations of their overinvestment theories. Thereafter, we will investigate their possible contributions to the explanation of the actual financial market and worldwide economic crisis. We will demonstrate that a complementary use of both approaches enables us to understand the simultaneous existence of idle capacities - in combination with an allocation of capital goods which falls apart from consumer preferences - and of a severe debt crisis affecting both firms/households and commercial banks. While it is possible - with the help of v. Hayek/Garrison - to detect the usage side of the capital stock, its change during the cycle and the misallocation of capital goods which tends to happen already at the beginning of an economic upswing, it is Minsky who helps us to get a precise view on the financing side of the capital stock during the cycle: The upswing, which may be motivated by either new technological developments or by monetary expansion and more so the following boom goes along with too risky financing patterns which are then key factors for the explanation of the downswing and the following bust. |
| Keywords: | Minsky,Weltwirtschaftskrise,Österreichische Schule,Minsky,Austrian School of Economics,World Economic Crisis |
| JEL: | E31 E32 E31 E43 B22 B53 D53 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ubwwpe:20101&r=hpe |
| By: | Gabriele Camera; Marco Casari |
| Abstract: | A new behavioral foundation is uncovered for why money promotes impersonal exchange. In an experiment, subjects could cooperate by intertemporally exchanging goods with anonymous opponents met at random. Indefinite repetition supported multiple equilibria, from full defection to the efficient outcome. Introducing the possibility to hold and exchange intrinsically worthless tickets affected outcomes and cooperation patterns. Tickets resembled fiat money, which emerged as a tool for equilibrium selection in the economy. Monetary exchange facilitated coordination on cooperation and redistributed surplus from defectors to cooperators. Treatments where subjects could develop a reputation revealed a limited record-keeping role for monetary exchange. |
| Keywords: | money, cooperation, information, trust, folk theorem, repeated games |
| JEL: | C90 C70 D80 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1239&r=hpe |
| By: | Petrosyan, Leon A. (Ed.); Zenkevich, Nikolay A. (Ed.) |
| Abstract: | The collection contains papers accepted for the Third International Conference Game Theory and Management (June 24–26, 2009, St. Petersburg University, St. Petersburg, Russia). The presented papers belong to the field of game theory and its applications to management. The volume may be recommended for researches and post-graduate students of management, economic and applied mathematics departments. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:sps:cpaper:155&r=hpe |
| By: | Luís Francisco Aguiar (Universidade do Minho - NIPE); Maria Joana Soares (Universidade do Minho) |
| Abstract: | Wavelet analysis is becoming more popular in the Economics discipline. Until recently, most works have made use of tools associated with the Discrete Wavelet Transform. However, after 2005, there has been a growing body of work in Economics and Finance that makes use of the Continuous Wavelet Transform tools. In this article, we give a self-contained summary on the most relevant theoretical results associated with the Continuous Wavelet Transform, the Cross-Wavelet Transform, the Wavelet Coherency and the Wavelet Phase-Difference. We describe how the transforms are usually implemented in practice and provide some examples. We also introduce the Economists to a new class of analytic wavelets, the Generalized Morse Wavelets, which have some desirable properties and provide an alternative to the Morlet Wavelet. Finally, we provide a user friendly toolbox which will allow any researcher to replicate our results and to use it in his/her own research. |
| Keywords: | Economic cycles; ContinuousWavelet Transform, Cross-Wavelet Transform, Wavelet Coherency, Wavelet Phase-Difference; The Great Moderation. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:23/2010&r=hpe |
| By: | Jean Michel Glachant; Michelle Hallack |
| Abstract: | Gas transportation networks exhibit a quite substantial variety of technical and economical properties ranges roughly from an entrenched natural monopoly to near to an open competition platform. This empirical fact is widely known and accepted. However the corresponding frame of network analysis is lacking or quite fuzzy. As an infrastructure, can a gas network evolve or not from a natural monopoly (an essential facility) to an open infrastructure (a “highway” facility)? How can it be done with the same transportation infrastructure components within the same physical gas laws? Our paper provides a unified analytical frame for all types of gas transportation networks. It shows that gas transport networks are made of several components which can be combined in different ways. This very “lego property” of gas networks permits different designs with different economic properties while a certain infrastructural base and set of gas laws is common to all transportation networks. Therefore the notion of “gas transportation network” as a general and abstract concept does not have robust economic properties. The variety and modularity of gas networks come from the diversity of components, the variety of components combinations and the historical inclusion of components in the network. First, a gas network can combine different types of network components (primary or secondary ones). Second, the same components can be combined in different ways (notably regarding actual connections and flow paths). Third, as a capital-intensive infrastructure combining various specific assets, gas transportation networks show strong “path dependency” properties as they evolve slowly over time by moving from an already existing base. The heterogeneity of gas networks as sets of components comes firstly from the heterogeneity of the network components themselves, secondly from the different possibilities to combine these components and thirdly from the ‘path dependence’ character of gas network constructions. These three characteristics of gas networks explain the diversity of economic proprieties of the existent gas networks going from natural monopoly to competitive markets. |
| Keywords: | gas transport networks, regulatory economics, network regulation |
| JEL: | L5 L29 D42 D61 D6 |
| Date: | 2010–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2010/42&r=hpe |
| By: | Timothy N. Cason; Daniel Friedman; Ed Hopkins |
| Abstract: | We report experiments designed to test between Nash equilibria that are stable and unstable under learning. The “TASP” (Time Average of the Shapley Polygon) gives a precise prediction about what happens when there is divergence from equilibrium under a wide class of learning processes. We study two versions of Rock-Paper-Scissors with the addition of a fourth strategy, Dumb. The unique Nash equilibrium places a weight of 1/2 on Dumb in both games, but in one game the NE is stable, while in the other game the NE is unstable and the TASP places zero weight on Dumb. Consistent with TASP, we find that the frequency of Dumb is lower and play is further from Nash in the high payoff unstable treatment than in the other treatments. However, the frequency of Dumb is substantially greater than zero in all treatments. |
| Keywords: | games, experiments, TASP, learning, unstable, mixed equilibrium, fictitious play |
| JEL: | C72 C73 C92 D83 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1233&r=hpe |
| By: | David P. Myatt; Chris Wallace |
| Abstract: | In the context of a “beauty contest” coordination game (in which payoffs depend on the quadratic distance of actions from an unobserved state variable and from the average action) players choose how much costly attention to pay to various informative signals. Each signal has an underlying accuracy (how precisely it identifies the state) and a clarity (how easy it is to understand). The unique linear equilibrium has interesting properties: the signals which receive attention are the clearest available, even if they have poor underlying accuracy; the number of signals observed falls as the complementarity of players’ actions rises; and, if actions are more complementary, the information endogenously acquired in equilibrium is more public in nature. The consequences of “rational” inattention constraints on information transmission and processing are also studied. |
| Keywords: | Beauty contest games, Coordination games, Endogenous information acquisition, Rational inattention |
| JEL: | C72 D83 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:501&r=hpe |
| By: | Riccardo Calcagno (VU University Amsterdam); Stefano Lovo (HEC, France) |
| Abstract: | We introduce a form of pre-play communication that we call "preopening". During the preopening, players announce their tentative actions to be played in the underlying game. Announcements are made using a posting system which is subject to stochastic failures. Posted actions are publicly observable and players payoffs only depend on the opening outcome, i.e. the action profile that is posted at the end of the preopening phase. We show that when the posting failures hit players idiosyncratically all equilibria of the preopening game lead to the same opening outcome that corresponds to the most "sensible" pure Nash equilibrium of the underlying game. By contrast preopening does not operate an equilibrium selection when posting failure hits players simultaneously. |
| Keywords: | Preopening; equilibrium selection; bargaining; cheap talk |
| JEL: | C72 C73 C78 G1 |
| Date: | 2010–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20100023&r=hpe |
| By: | Chang, C-L.; McAleer, M.J.; Oxley, L. |
| Abstract: | The paper is concerned with analysing what makes a great journal great in economics, based on quantifiable measures. Alternative Research Assessment Measures (RAM) are discussed, with an emphasis on the Thomson Reuters ISI Web of Science database (hereafter ISI). The various ISI RAM that are calculated annually or updated daily are defined and analysed, including the classic 2-year impact factor (2YIF), 5-year impact factor (5YIF), Immediacy (or zero-year impact factor (0YIF)), Eigenfactor score, Article Influence, C3PO (Citation Performance Per Paper Online), h-index, Zinfluence, PI-BETA (Papers Ignored - By Even The Authors), and two new RAM measure, the Self-citation Threshold Approval Rating (STAR) score and the Impact Factor Inflation (IFI) score. The ISI RAM data are analysed for the most highly cited journals in the ISI categories of Economics, Management, Business, and Business - Finance. The journals are chosen on the basis of 2YIF (including self citations by both author and journal). The application to these four ISI categories could be used as a template for other ISI categories in both the Social Sciences and the Sciences, and as a benchmark for newer journals in a range of ISI disciplines. In addition to evaluating high quality research in the most highly cited Economics journals, the paper also compares the most highly cited journals in Management, Business, and Business - Finance, alternative RAM, highlights the similarities and differences in alternative RAM criteria, finds that several ISI RAM capture similar performance characteristics for the most highly cited Economics, Management, Business and Business - Finance journals, determines that the Immediacy and PI-BETA scores are not highly correlated with the other ISI RAM, and hence conveys additional information regarding ISI RAM criteria. Harmonic mean rankings of the 12 RAM criteria for the most highly cited journals in the four categories are also presented. It was shown that emphasizing THE impact factor, specifically the 2-year impact factor, of a journal to the exclusion of other useful and illuminating RAM criteria, can lead to a distorted evaluation of journal performance and influence on the profession. |
| Keywords: | research assessment;measures;impact factors;immediacy;eigenfactor;article influence;h-index;C3PO;zinfluence;PI-BETA;STAR;IFI |
| Date: | 2010–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureir:1765020158&r=hpe |
| By: | Baardwijk, M. van; Franses, Ph.H.B.F. |
| Abstract: | Urban legend has it that the hemline is correlated with the economy. In times of decline, the hemline moves towards the floor (decreases), and when the economy is booming, skirts get shorter and the hemline increases. We collected monthly data on the hemline, for 1921-2009, and evaluate these against the NBER chronology of the economic cycle. The main finding is that the urban legend holds true but with a time lag of about three years. Hence, the current economic crisis predicts ankle length shirts around 2011 and 2012. |
| Date: | 2010–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureir:1765020147&r=hpe |