nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2010‒10‒30
fourteen papers chosen by
Erik Thomson
University of Manitoba

  1. Property and subjective rights in Juan de Mariana By FERNANDEZ, ANGEL
  2. Neuroeconomics: Constructing Identity By Davis, John B
  3. Становление общего социального анализа By Polterovich, Victor
  4. "The Global Financial Crisis and a New Capitalism?" By Luiz Carlos Bresser-Pereira
  5. Fifteen Years of Econophysics Research By Bikas K. Chakrabarti; Anirban Chakraborti
  6. Economic Theory in Historical Perspective By Lefteris Tsoulfidis
  7. "Extrinsic Rewards and Intrinsic Motives: Standard and Behavioral Approaches To Agency and Labor Markets" By James B. Rebitzer; Lowell J. Taylor
  8. Keynes’ Business Cycle: Animal Spirits and Crisis By John Harvey
  9. To Believe or Not Believe… or Not Decide: A Decision-Theoretic Model of Agnosticism By Tigran Melkonyan; Mark Pingle
  10. The Minority of Three-Game: An Experimental and Theoretical Analysis By Thorsten Chmura; Werner Güth; Thomas Pitz; Anthony Ziegelmeyer
  11. A Commentary on Mel Rutherford's 'On the Use and Misuse of the "Two Children" Brainteaser' By Maya Bar-Hillel
  12. Strategic choice of preferences: the persona model By David H. Wolpert; Julian Jamison; David Newth; Michael Harre
  13. The Role of Impulses in Shaping Decisions By Judith Avrahami; Yaakov Kareev
  14. Benoit Mandelbrot 1924 -2010: A Greek among Romans By Estrada, Fernando

    Abstract: This working paper aims to point out the ideas defended by the Spaniard Juan de Mariana in the early XVII century in his book “De Rege et Regis Institutione” and in his monetary treatise “De Monetae Mutatione”. Juan de Mariana not only summarized the ideas of the Spanish scholastics in such books, but also added powerful arguments to the defense of private property against the different forms of State coercion, a key concept in the political economics of an open society. That is to say, he bravely defended the strict protection of citizen's private property and subjective rights against the reason of State and tyrants. As a result of it, his book “De Rege et Regis Institutione” was burned in public in the year 1610 by order of the French Parliament. Furthermore, due to his monetary treatise, he was investigated by the court of Inquisition, which ordered his preventive imprisonment for one year. His work "De Monetae Mutatione" was persecuted in Europe by the Spanish ambassadors, who were ordered to recover and destroy all copies of his monetary masterpiece. There is no doubt that he was well known throughout Europe in the early decades of the XVII century, which was precisely when he clearly explained the main economic concepts which have been reflected in the works of later authors. ENGLISH VERSION.
    Keywords: History of Economic Thought; School of Salamanca; Property Rights; Subjective Rights; Law and Economics.
    JEL: O43 K12 K11 B15 P16
    Date: 2010–10–15
  2. By: Davis, John B (Department of Economics Marquette University)
    Abstract: This paper asks whether neuroeconomics will make instrumental use of neuroscience to adjudicate existing disputes in economics or be more seriously informed by neuroscience in ways that might transform economics. The paper pursues the question by asking how neuroscience constructs an understanding of individuals as whole persons. The body of the paper is devoted to examining two approaches: Don Ross’s neurocellular approach to neuroeconomics and Joseph Dumit’s cultural anthropological science organization approach. The accounts are used to identify boundaries on single individual explanations. With that space Andy Clark’s external scaffolding view and Nathaniel Wilcox’s socially distributed cognition view are employed.
    Keywords: neuroeconomics, behavioral economics, neurocellular economics, collective brainset, external scaffolding, socially distributed cognition, Economics
    JEL: A12 B41
    Date: 2010–09
  3. By: Polterovich, Victor
    Abstract: In this paper, it is shown that the concept “economic imperialism” has no real content with epistemological point of view: there is no evidence of using specific economic methodology in areas of other social disciplines. Economics is in a permanent crisis caused by the impossibility to answer its most important questions if one remains in its own area. However, social disciplines have now not only common subject of research, but also common empirical base and a unified analytical apparatus. Preconditions are created to form General Social Analysis as a discipline about functioning and development of social institutions and about behavior of human collectives in their frameworks.
    Keywords: economic crisis; crisis of economics; economic imperialism; methodological individualism; game theory; Sonnensсhein-Mantel-Debreu theorem
    JEL: A20 A12 B4 Z13 A14 A11
    Date: 2010
  4. By: Luiz Carlos Bresser-Pereira
    Abstract: The 2008 global financial crisis was the consequence of the process (1) of financialization, or the creation of massive fictitious financial wealth, that began in the 1980s; and (2) the hegemony of a reactionary ideology-namely, neoliberalism-based on self-regulated and efficient markets. Although laissez-faire capitalism is intrinsically unstable, the lessons of the 1929 stock market crash of 1929 and the Great Depression of the 1930s were transformed into theories and institutions or regulations that led to the "30 glorious years of capitalism" (1948–77) and that could have helped avoid a financial crisis as profound as the present one. But it did not, because a coalition of rentiers and "financists" achieved hegemony and, while deregulating the existing financial operations, refused to regulate the financial innovations that made these markets even riskier. Neoclassical economics played the role of a meta-ideology as it legitimized, mathematically and "scientifically," neoliberal ideology and deregulation. From this crisis a new democratic capitalist system will emerge, though its character is difficult to predict. It will not be financialized, but the glory years' tendencies toward a global and knowledge-based capitalism in which professionals have more say than rentier capitalists, as well as the tendency to improve democracy by making it more social and participative, will be resumed.
    Keywords: Financial Crisis; Neoliberalism; Deregulation; Financialization; Political Coalition
    JEL: E30 P1
    Date: 2010–05
  5. By: Bikas K. Chakrabarti; Anirban Chakraborti
    Abstract: Econophysics is a new research field, which makes an attempt to bring economics in the fold of natural sciences or specifically attempts for a "physics of economics". The term Econophysics was formally born in Kolkata in 1995. The entry on Econophysics in The New Palgrave Dictionary of Economics, 2nd Ed., Vol 2, Macmillan, NY (2008), pp 729-732, begins with "... the term 'econophysics' was neologized in 1995 at the second Statphys- Kolkata conference in Kolkata (formerly Calcutta), India ...". The Econophysics research therefore formally completes fifteen years of research by the end of this year! The importance and proliferation of the interdisciplinary research of Econophysics is highlighted in the special issue of Science & Culture, which presents a collection of twenty nine papers (giving country wise perspectives, reviews of the recent developments and original research communications), written by more than forty renowned experts in physics, mathematics or economics, from all over the world. We present here the list of contents and the editorial. The manuscript files are available at for preview. This special issue will be published online at, at the end of October 2010.
    Date: 2010–10
  6. By: Lefteris Tsoulfidis (Department of Economics, University of Macedonia)
    Abstract: On the methodological plain this paper outlines the conditions that contribute to the development of economic theories and it continues with an examination of the concrete circumstances that gave rise to modern neoclassical macroeconomic theories. The paper further claims that the current impasse in macroeconomics is indicative of the need for new directions in economic theory which becomes imperative in the long economic downturn that started in 2007 and concludes by suggesting the need for a synthesis between the classical analysis and the theory of effective demand.
    Keywords: economic history
    JEL: N10
    Date: 2010–10
  7. By: James B. Rebitzer; Lowell J. Taylor
    Abstract: Employers structure pay and employment relationships to mitigate agency problems. A large literature in economics documents how the resolution of these problems shapes personnel policies and labor markets. For the most part, the study of agency in employment relationships relies on highly stylized assumptions regarding human motivation, e.g., that employees seek to earn as much money as possible with minimal effort. In this essay, we explore the consequences of introducing behavioral complexity and realism into models of agency within organizations. Specifically, we assess the insights gained by allowing employees to be guided by such motivations as the desire to compare favorably to others, the aspiration to contribute to intrinsically worthwhile goals, and the inclination to reciprocate generosity or exact retribution for perceived wrongs. More provocatively, from the standpoint of standard economics, we also consider the possibility that people are driven, in ways that may be opaque even to themselves, by the desire to earn social esteem or to shape and reinforce identity.
    Keywords: Agency; Motivation; Employment Relationships; Behavioral Economics
    JEL: D2 J0 M5
    Date: 2010–08
  8. By: John Harvey (Department of Economics, Texas Christian University)
    Abstract: Today, we are in the midst of the worst economic crisis since the Great Depression. Recovery has not been swift, and policymakers and citizens throughout the globe have turned to economists for answers. While in the mainstream, the general opinion is that the collapse was unpredictable and caused by exogenous events (i.e., poor policy decisions), those in the Post-Keynesian school not only raised voices of concern well before the crisis struck, but they have argued consistently that the problems we face are systemic. They base this conclusion on theories developed by John Maynard Keynes. This paper attempts to determine the primary factors creating instability by building and then analyzing a system dynamics model of Keynes’ explanation of the business cycle. It shows that the financial sector is key and that while, of course, exogenous factors can play critical roles, they are unnecessary: cycles are generated endogenously.
    Keywords: Keynes, business cycle, system dynamics
    JEL: E12 E17 E32
    Date: 2010–03
  9. By: Tigran Melkonyan (Department of Resource Economics, University of Nevada, Reno); Mark Pingle (Department of Economics, University of Nevada, Reno)
    Abstract: Using basic decision-theory, we construct a theory of agnosticism, where agnosticism is defined as choosing not to choose a religion. The theory indicates agnosticism can be supported as a rational choice if (a) adopting agnosticism provides in-life benefits relative to any religion, (b) the perceived payoff for agnosticism after death is not too much less than any religion, (c) no religion has a high perceived likelihood of truth, (d) probability of death is neither too high nor too low, or (e) it is less costly to switch from agnosticism to a given religion than from one religion to another, while at the same time there is a reasonable likelihood an informative signal may be received in life as to the truth of various religions.
    Keywords: Agnosticism; Decision theory; Religion; Procrastination; Signal; Uncertainty
    JEL: C44 D81
    Date: 2010–10
  10. By: Thorsten Chmura (Department of Economics, University of Munich); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Thomas Pitz (Nottingham University Business School China); Anthony Ziegelmeyer (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: We report experimental and theoretical results on the minority of three-game where three players have to choose one of two alternatives independently and the most rewarding alternative is the one chosen by a single player. This coordination game has many asymmetric equilibria in pure strategies that are non strict and payoff-asymmetric, and a unique symmetric mixed strategy equilibrium in which each player's behavior is based on the toss of a fair coin. We show that such a straightforward behavior is predicted by Harsanyi and Selten's (1988) equilibrium selection theory as well as alternative solution concepts like impulse balance equilibrium and sampling equilibrium. Our results indicate that participants rely on various decision rules, and that only a quarter of them decide according to the toss of a fair coin. Reinforcement learning is the most successful decision rule as it describes best the behavior of about a third of our participants.
    Keywords: Coordination, Minority game, Mixed strategy, Learning models, Experiments
    JEL: C72 C91 D83
    Date: 2010–10–19
  11. By: Maya Bar-Hillel
    Abstract: Rutherford (2010) criticizes the way some people have analyzed the 2-children problem, claiming (correctly) that slight nuances in the problem's formulation can change the correct answer. However, his own data demonstrate that even when there is a unique correct answer, participants give intuitive answers that differ from it systematically -- replicating the data reported by those he criticizes. Thus, his critique reduces to an admonition to use care in formulating and analyzing this brainteaser -- which is always a good idea -- but contributes little what is known, analytically or empirically, about the 2-children problem.
    Date: 2010–05
  12. By: David H. Wolpert; Julian Jamison; David Newth; Michael Harre
    Abstract: We introduce a modification to the two-timescale games studied in the evolution of preferences (EOP) literature. In this modification, the strategic process occurring on the long timescale is learning by an individual across his or her lifetime, not natural selection operating on genomes over multiple generations. This change to the longer timescale removes many of the formal difficulties of EOP models and allows us to show how two-timescale games can provide endogenous explanations for why humans sometimes adopt interdependent preferences and sometimes exhibit logit quantal response functions. In particular, we show that our modification to EOP explains experimental data in the Traveler’s Dilemma. We also use our modification to show how cooperation can arise in nonrepeated versions of the Prisoner’s Dilemma (PD). We then show that our modification to EOP predicts a “crowding out” phenomenon in the PD, in which introducing incentives to cooperate causes players to stop cooperating instead. We also use our modification to predict a tradeoff between the robustness and the benefit of cooperation in the PD.
    Keywords: Game theory
    Date: 2010
  13. By: Judith Avrahami; Yaakov Kareev
    Abstract: This article explores the extent to which decision behavior is shaped by short-lived reactions to the outcome of the most recent decision. We inspected repeated decision-making behavior in two versions of each of two decision-making tasks, an individual task and a strategic one. By regressing behavior onto the outcomes of recent decisions, we found that the upcoming decision was well predicted by the most recent outcome alone, with the tendency to repeat a previous action being affected both by its actual outcome and by the outcomes of actions not taken. Because the goodness of predictions based on the most recent outcome did not diminish as participants gained experience with the task, we conclude that repeated decisions are continuously affected by impulsive reactions.
    Date: 2010–05
  14. By: Estrada, Fernando
    Abstract: In this brief note describes the trajectory of the fractal models / multifractal F / M by Benoit Mandelbrot. The promise was discovered by the geometry of Mandelbrot covers a broad area of research fields, from meteorology and mathematical physics to the individual and collective behavior in society, besides his contributions to the analysis of the financial crisis in his wonderful essay on The (mis) Behavior of Markets. A fractal view of Risk, Ruin and Reward (2004).
    Keywords: Benoit Mandelbrot; Fractals; Financial
    JEL: B0 A1 C70 B32 C7 B00 A10 D7 D70 B3 C72
    Date: 2010–10

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