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on History and Philosophy of Economics |
| By: | Robert J. Shiller (Cowles Foundation, Yale University) |
| Abstract: | It is the 100th anniversary of Irving Fisher’s 1911 book The Purchasing Power of Money. But, more important than that, it is a good time, during the current financial turmoil, to reconsider some of his theories again, in light of current events. And I think that some of his theories about variations in the purchasing power of money are very important today, have been underappreciated, and are worthy of considering anew. |
| Keywords: | Purchasing power of money, Indexation, Indexed bonds, Depression, Recession, Mortgages, Financial crisis |
| JEL: | B22 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1817&r=hpe |
| By: | Harmon, Colm P. (University College Dublin) |
| Abstract: | The estimation of the economic return to education has perhaps been one of the predominant areas of analysis in applied economics for over 50 years. In this short note we consider some of the recent directions taken by the literature, and also some of the blockages faced by both science and policymakers in pushing forward some key issues. This serves by way of introduction to a set of papers for a special issue of the Economics of Education Review. |
| Keywords: | returns to education, education policy |
| JEL: | J08 J30 J38 C21 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp29&r=hpe |
| By: | Ron Martin; Peter Sunley |
| Abstract: | Over the past two decades, the notion of ÔemergenceÕ has attracted increasing attention and controversy across the social sciences, as par of a growing interest in the applicability of complexity theory to socio-economic-political systems. Within this context, as economic geographers, our concern in this paper is with the usefulness of the idea of emergence for studying the economic landscape and its evolution. We examine three ÔordersÕ of emergence, and focus attention especially on the third type, Ôdevelopmental or evolutionaryÕ emergence. Despite its limitations, the notion of third order emergence is a potentially valuable organizing concept in economic geography. It provides a framework for exploring how it is that the spatial forms of the economy - clusters, regions, firm networks and so on Ð are recursively related to economic action. |
| Keywords: | Emergence, Supervenience, Downward causation, Evolution, Economic landscape |
| JEL: | B15 R11 R12 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1116&r=hpe |
| By: | Bolle, Friedel; Breitmoser, Yves; Otto, Philipp E. |
| Abstract: | This paper proposes two generalization of the core and evaluates them on experimental data of assignment games (workers and firms negotiate wages and matching). The generalizations proposed allow for social utility components (e.g. altruism) and random utility components (e.g. logistic perturbations). These generalizations are well-established in analyses of non-cooperative games, and they prove to be both descriptive and predictive in the assignment games analyzed here. The "logit core" allows us to define a "stochastically more stable" relation on the outcome set, which has intuitive implications, and it fits better than alternative approaches such as random behavior cores and regression modeling. |
| Keywords: | cooperative games; core; random utility; social preferences; laboratory experiment |
| JEL: | C71 C90 D64 |
| Date: | 2011–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32918&r=hpe |
| By: | Martimort, David; Stole, Lars |
| Abstract: | An aggregate game is a normal-form game with the property that each player’s payoff is a function only of his own strategy and an aggregate function of the strategy profile of all players. Aggregate games possess a set of purely algebraic properties that can often provide simple characterizations of equilibrium aggregates without first requiring that one solves for the equilibrium strategy profile. The defining nature of payoffs in an aggregate game allows one to project the n-player strategic analysis of a normal form game onto a lower-dimension aggregate-strategy space, thereby converting an n-player game to a simpler object – a self-generating single-person maximization program. We apply these techniques to a number of economic settings including competition in supply functions and multi-principal common agency games with nonlinear transfer functions. |
| Keywords: | Aggregate games; common agency; asymmetric informa- tion; menu auctions |
| JEL: | D8 C72 |
| Date: | 2011–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32871&r=hpe |
| By: | Stefan T. Trautmann; Ulrich Schmidt |
| Abstract: | There is a large literature showing that willingness-to-accept (WTA) is usually much higher than willingness-to-pay (WTP) in empirical studies although they should be roughly equal according to traditional economic theory. A second stream of literature shows that people are typically ambiguity averse, i.e. they prefer lotteries with known probabilities over lotteries with unknown ones. Our study combines both streams of literature and analyzes whether there is an interaction between the WTP-WTA disparity and ambiguity aversion |
| Keywords: | WTP-WTA disparity, ambiguity aversion, comparative ignorance |
| JEL: | C91 D81 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1727&r=hpe |
| By: | Nordblom, Katarina (Uppsala Center for Fiscal Studies); Zamac, Jovan (Uppsala Center for Fiscal Studies) |
| Abstract: | This paper offers an explanation to why the general observation that elderly hold stronger moral attitudes than young ones may be an age rather than a cohort effect. We apply mechanisms from social psychology to explain how personal norms may evolve over the life cycle. We assume that people update their norms influenced by their own past behavior (e.g., cognitive dissonance) and/or by the attitudes of their peers (normative conformity). We apply the theory on actual norm distributions for young and old concerning tax evasion. Allowing for heterogeneous updating of norms where only those who identify with their network are actually conforming with it, while the others are only influenced by their own past behavior, we can explain the difference between young and old people’s moral values as an age effect through endogenous norm formation. |
| Keywords: | Social norms; Endogenous norms; Tax evasion; Cognitive dissonance; Self-signaling; Normative conformity |
| JEL: | H26 |
| Date: | 2011–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uufswp:2011_010&r=hpe |
| By: | Yucel, Eray |
| Abstract: | This note is intended to share some observations regarding a non-exhaustive collection of the early warning literature from 1971 to 2011. Evolution of the interest in early warning models, methodological spectrum of studies and coverage of economic variables are briefly discussed in addition to providing a bibliography. |
| Keywords: | Early warning systems; bibliometric analysis |
| JEL: | C00 Z00 |
| Date: | 2011–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32893&r=hpe |
| By: | Giovanna Devetag; Francesca Pancotto; Thomas Brenner |
| Abstract: | In minority games, players in a group must decide at each round which of two available options to choose, knowing that only subjects who picked the minority op- tion obtain a positive reward. Previous experiments on the minority and similar congestion games have shown that players interacting repeatedly are remarkably able to coordinate eciently, despite not conforming to Nash equilibrium behavior. We conduct an experiment on a minority-of-three game in which each player is a team composed by three subjects. Each team can freely discuss its strategies in the game and decisions must be made via a majority rule. Team discussions are recorded and their content analyzed to detect evidence of strategy co-evolution among teams playing together. Our main results of team discussion analysis show no evidence sup- porting the mixed strategy Nash equilibrium solution, and support a low-rationality, backward-looking approach to model behavior in the game, more consistent with reinforcement learning models than with belief-based models. Showing level-2 ratio- nality (i.e., reasoning about others' beliefs) is positively and signicantly correlated with higher than average earnings in the game, showing that a mildly sophisticated approach pays off. In addition, teams that are more successful tend to become more egocentric over time, paying more attention to their own past successes than to the behavior of other teams. Finally, we nd evidence of mutual adaptation over time, as teams that are more strategic (i.e., they pay more attention to other teams' moves) induce competing teams to be more egocentric instead. Our results contribute to the understanding of coordination dynamics resting on heterogeneity and co-evolution of decision rules rather than on conformity to equilibrium behavior. In addition, they provide support at the decision process level to the validity of modeling behavior using low-rationality reinforcement learning models. |
| Keywords: | coordination, minority game, market eciency, information, self-organization, reinforcement learning s |
| JEL: | C72 C91 C92 |
| Date: | 2011–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2011/18&r=hpe |
| By: | Michael D. Bordo; Angela Redish; Hugh Rockoff |
| Abstract: | The financial crisis of 2008 engulfed the banking system of the United States and many large European countries. Canada was a notable exception. In this paper we argue that the structure of financial systems is path dependent. The relative stability of the Canadian banks in the recent crisis compared to the United States in our view reflected the original institutional foundations laid in place in the early 19th century in the two countries. The Canadian concentrated banking system that had evolved by the end of the twentieth century had absorbed the key sources of systemic risk—the mortgage market and investment banking—and was tightly regulated by one overarching regulator. In contrast the relatively weak, fragmented, and crisis prone U.S. banking system that had evolved since the early nineteenth century, led to the rise of securities markets, investment banks and money market mutual funds (the shadow banking system) combined with multiple competing regulatory authorities. The consequence was that the systemic risk that led to the crisis of 2008 was not contained. |
| JEL: | N20 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17312&r=hpe |