nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒10‒09
eleven papers chosen by
Erik Thomson
University of Manitoba

  1. 10-06 "Does Profit-Seeking Rule Out Love? Evidence (or Not) from Economics and Law" By Julie A. Nelson
  2. Let’s make science metrics more scientific By Julia Lane
  3. The Weirdest People in the World? By Joseph Henrich; Steve J. Heine; Ara Norenzayan
  4. The Credibility Revolution in Empirical Economics: How Better Research Design is Taking the Con out of Econometrics By Joshua D. Angrist; Jörn-Steffen Pischke
  5. Rational indecisive choice By Gerasimou, Georgios
  6. "Gendered Aspects of Globalization" By Sunanda Sen
  7. How sensitive are equilibrium pricing models to real-world distortions? By Harbir Lamba
  8. Market Myths in Contemporary Economics By Punabantu, Siize
  9. Group Reciprocity By David Hugh-Jones; Martin A. Leroch
  10. "Innocent Frauds Meet Goodhart's Law in Monetary Policy" By Dirk Bezemer; Geoffrey Gardiner
  11. What Makes Persistent Identifiers Persistent? By Nikos Askitas

  1. By: Julie A. Nelson
    Abstract: Many believe that firms are driven to maximize profits, and therefore are not allowed to take actions that would benefit their workers, communities, or the environment if these actions would reduce profits even slightly. This essay shows that this belief is supported neither by sound economic evidence and arguments, nor by United States statutory and case law. The roots of this belief are, instead, to be found in a centuries-old desire of economists to make our discipline look like Newtonian physics. Among scholars of law, both misinformation and the use of University of Chicago-style economics have contributed to the belief's popularity. Among scholars and the public alike, the dualistic "love or money" view is appealing because of its simplicity and congruence with cultural gender norms. Reexamining the evidence, rather than adhering to common ideologies, this essay offers an unconventional analysis of corporate behavior and commodification.
  2. By: Julia Lane
    Date: 2010
  3. By: Joseph Henrich; Steve J. Heine; Ara Norenzayan
    Abstract: Behavioral scientists routinely publish broad claims about human psychology and behavior in the world’s top journals based on samples drawn entirely from Western, Educated, Industrialized, Rich and Democratic (WEIRD) societies. Researchers—often implicitly—assume that either there is little variation across human populations, or that these “standard subjects” are as representative of the species as any other population. Are these assumptions justified? Here, our review of the comparative database from across the behavioral sciences suggests both that there is substantial variability in experimental results across populations and that WEIRD subjects are particularly unusual compared with the rest of the species—frequent outliers. The domains reviewed include visual perception, fairness, cooperation, spatial reasoning, categorization and inferential induction, moral reasoning, reasoning styles, selfconcepts and related motivations, and the heritability of IQ. The findings suggest that members of WEIRD societies, including young children, are among the least representative populations one could find for generalizing about humans. Many of these findings involve domains that are associated with fundamental aspects of psychology, motivation, and behavior—hence, there are no obvious a priori grounds for claiming that a particular behavioral phenomenon is universal based on sampling from a single subpopulation. Overall, these empirical patterns suggests that we need to be less cavalier in addressing questions of human nature on the basis of data drawn from this particularly thin, and rather unusual, slice of humanity. We close by proposing ways to structurally re-organize the behavioral sciences to best tackle these challenges.
    Keywords: external validity, population variability, experiments, cross-cultural research, culture, human universals, generalizability, evolutionary psychology, cultural psychology, behavioral economics
    Date: 2010
  4. By: Joshua D. Angrist; Jörn-Steffen Pischke
    Date: 2010
  5. By: Gerasimou, Georgios
    Abstract: This paper proposes and characterises two preference-based choice rules that allow the decision maker to choose nothing if the criteria associated with them are satisfied by no feasible alternative. Strict preferences are primitive in the first rule and weak preferences in the second. Each of them includes the corresponding utility-maximisation theory of rational choice as a special case. The first one explains changes in the magnitude of context effects observed in experiments that allow for indecision. The second offers one explanation of experimental findings suggesting that choice is more likely to be made from small rather than from large sets. The general conclusion in both cases is that an individual conforms to meaningful and testable principles of choice consistency whenever assumed to be occasionally indecisive.
    Keywords: Rationality; indecision; incomplete preferences; choice rules
    JEL: D11 D01
    Date: 2010–09–27
  6. By: Sunanda Sen
    Abstract: We need to go beyond the accepted notions relating to the role of women in the economy and society, especially in terms of what is recognized in mainstream theory and policy as "work" done by women. Thus, the traditional gender roles, with the man as the breadwinner and the woman in the role of housekeeper, do not explain the contribution of women in general. We also need to go beyond standard models to interpret the intrahousehold gender inequities. We do not gain much insight from dwelling on the cooperative-conflict type of bargaining concepts either, which are offered in the literature to unfold the process of women's subordination within households. The issues relate to the intrahousehold power structure, which has an inbuilt bias against female members under patriarchy. In terms of a policy agenda, especially in the context of social and economic disparities that affect women in particular, we need to recognize not only the collective social norms but also the unequal power relations that influence the sexual division of labor, both within the family and in the workplace. A notion of "gendered moral rationality," complemented by the Rawlsian concept of "justice as fairness" (implying compensation for the underprivileged), can be used to devise policy that addresses the status of women both in the workplace and at home. We need a concerted move toward sensitization of gender issues and scrutiny entailing a gender audit at every level of activity. This may work at least partially until society is ready to remodel itself by treating men and women equally.
    Keywords: Gender; Justice; Feminization of Labor; Utilitarianism and Rationality; Households; Fair Exchange of Skills; Invisible Contribution; Social Reproduction
    JEL: J12 J16 J17 J22 J31 J71
    Date: 2010–09
  7. By: Harbir Lamba
    Abstract: In both finance and economics, quantitative models are usually studied as isolated mathematical objects --- most often defined by very strong simplifying assumptions concerning rationality, efficiency and the existence of disequilibrium adjustment mechanisms. This raises the important question of how sensitive such models might be to real-world effects that violate the assumptions. We show how the consequences of rational behavior caused by perverse incentives, as well as various irrational tendencies identified by behavioral economists, can be systematically and consistently introduced into an agent-based model for a financial asset. This generates a class of models which, in the special case where such effects are absent, reduces to geometric Brownian motion --- the usual equilibrium pricing model. Thus we are able to numerically perturb a widely-used equilibrium pricing model market and investigate its stability. The magnitude of such perturbations in real markets can be estimated and the simulations imply that this is far outside the stability region of the equilibrium solution, which is no longer observed. Indeed the price fluctuations generated by endogenous dynamics, are in good general agreement with the excess kurtosis and heteroskedasticity of actual asset prices. The methodology is presented within the context of a financial market. However, there are close links to concepts and theories from both micro- and macro-economics including rational expectations, Soros' theory of reflexivity, and Minsky's theory of financial instability.
    Date: 2010–09
  8. By: Punabantu, Siize
    Abstract: This paper elaborates on the economic operating system (EOS) the role it can play in growth. It focuses on markets, price determination and forces of demand and supply in order to illustrate how an EOS model offers greater economic growth, stability and safety. This paper delves into market theory to determine whether what is commonly understood about market forces and free markets in contemporary economics is as reliable as might be expected; do free markets encourage or retard economic growth? It is often, for amusement, brought up how modern medicine despite its advances cannot cure the common cold. Contemporary economics has a similar pet peeve; it does not know how to cure common inflation and deflation. The same way medicine leaves the body’s immune system to deal with colds until a cure is found contemporary economics leaves inflation and deflation to market forces to sort out with the occasional booster shot of intervention when this process seems to fail. To this day the stand off between Keynesian and Monetarist models demonstrates the irascible nature of this economic bug; is seems in contemporary economics there is only one way to control it and that’s do nothing about it. This nothing in contemporary economics is what is referred to as free markets. Allowing free markets to set prices and act as a mechanism for managing inflation works, what doesn’t work is that free markets systems based on a Monetarist model lack reliable growth and not being able to do anything comprehensive when market forces begin to act up. In a downturn, suddenly the liberty of free markets can become a threat to economic stability. Free markets may work best in an economic operating system (EOS) model better able to exploit the efficiency of markets whilst accelerating economic growth.
    Keywords: Scarcity; banking; credit creation; banks; open market operations; resource creation; implosion; wobble effect; economic thought; poverty; wealth; equation of exchange; cost curve; market efficiency; supply; demand; money; price; mark-up; cost plus pricing; rationality; operating level economics; economic growth; expenditure fallacy; paradox.
    JEL: D11 E12 E31 D40 E63 C78 H60 E50 D61 E40 D01 F31
    Date: 2010–10–01
  9. By: David Hugh-Jones (Max Planck Institute of Economics, Jena); Martin A. Leroch (University of Hamburg)
    Abstract: People exhibit group reciprocity when they retaliate, not against the person who harmed them, but against somebody else in that person's group. Group reciprocity may be a key motivation behind intergroup conflict. We investigated group reciprocity in a laboratory experiment. After a group identity manipulation, subjects played a Prisoner's Dilemma with others from different groups. Subjects then allocated money between themselves and others, learning the group of the others. Subjects who knew that their partner in the Prisoner's Dilemma had defected became relatively less generous to people from the partner's group, compared to a third group. We use our experiment to develop hypotheses about group reciprocity and its correlates.
    Keywords: reciprocity, groups, conflict
    JEL: D74 C92
    Date: 2010–09–27
  10. By: Dirk Bezemer; Geoffrey Gardiner
    Abstract: This paper discusses recent UK monetary policies as instances of John Kenneth Galbraith's "innocent fraud," including the idea that money is a thing rather than a relationship, the fallacy of composition (i.e., that what is possible for one bank is possible for all banks), and the belief that the money supply can be controlled by reserves management. The origins of the idea of quantitative easing (QE), and its defense when it was applied in Britain, are analyzed through this lens. An empirical analysis of the effect of reserves on lending is conducted; we do not find evidence that QE "worked," either by a direct effect on money spending, or through an equity market effect. These findings are placed in a historical context in a comparison with earlier money control experiments in the UK.
    Keywords: Quantitative Easing; UK Innocent Frauds; Accounting
    JEL: E52 E58
    Date: 2010–09
  11. By: Nikos Askitas
    Abstract: This essay sketches technical and non-technical issues around persistent identifiers (henceforth PIs) in a manner which makes no attempt to be complete. Our goal is to rescue the core notions from the obscurity which detail and completeness burdens them with. A reader willing to entertain the idea of their necessity should be able to cut to the chase and follow a more complex and involved debate after reading this. Our hope is that in isolating the core issues we will enable a more founded discussion of the social and political issues involved in PIs.
    Keywords: Persistent Identifier, handle, DOI, data, trust, URN, RePEc
    Date: 2010

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