
on History and Philosophy of Economics 
By:  K. Vela Velupillai 
Abstract:  Duncan Foleyís manyfaceted and outstanding contributions to macroeconomics, microeconomics, general equilibrium theory, the theory of taxation, history of economic thought, the magnificent dynamics of classical economics, classical value theory, Bayesian statistics, formal dynamics and, most recently, fascinating forays into an interpretation of economic evolution from a variety of complexity theoretic viewpoints have all left and continue to leave  significant marks in the development and structure of economic theory. He belongs to the grand tradition of visionaries who theorise with imaginative audacity on the dynamics, evolution and contradictions of capitalist economies  a tradition that, perhaps, begins with Marx and Mill, continues with Keynes and Schumpeter, reaching new heights with the iconoclastic brilliancies of a Tsuru and a Goodwin, a Chakravarty and a Nelson, and to which Duncan Foley adds a lustre of much value. In this contribution I return to mathematical themes broached in Foleyís brilliant and pioneering Yale doctoral dissertation (Foley, 1967) and attempt to view them as a Computable Economist would.The intention is to suggest that algorithmic indeterminacies are intrinsic to the foundations of economic theory in the mathematical mode 
Keywords:  Equilibrium existence theorems, Welfare theorems, Constructive proofs, Computability 
JEL:  C02 C63 D58 E17 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:trn:utwpas:1124&r=hpe 
By:  K.Vela Velupillai 
Abstract:  Takashi Negishi's remarkable youthful contribution to welfare economics, general equilibrium theory and, with the benefit of hindsight, also to one strand of computable general equilibrium theory, all within the span of six pages in one article, has become one of the modern classics of general equilibrium theory and mathematical economics. Negishi's celebrated theorem and what has been called Negishi's Method have formed one foundation for computable general equilibrium theory. In this paper I investigate the computable and constructive aspects of the theorem and the method 
Keywords:  Computable General Equilibrium, Fundamental Theorems of Welfare Economics, Negishi's Method 
JEL:  C63 C68 D58 D60 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:trn:utwpas:1129&r=hpe 
By:  Schilirò , Daniele 
Abstract:  Classical mathematical algorithms often fail to identify in time when the international financial crises occur although, as the classical theory of choice would suggest, the economic agents are rational and the markets are or should be efficient and behave also rationally. This contribution does not pretend to give a complete answer to these questions, but it will highlight some wellknown limits of the classical theory of rational choice and compare this theory of choice with the approach that seeks to combine economics and psychology and that has established itself as cognitive or behavioral economics. In particular, the present paper will focus on the juxtaposition of the concepts of perfect rationality and bounded rationality. It concludes with some references to the literature of behavioral finance which has given important contributions in explaining the behavior and the anomalies of financial markets. 
Keywords:  Bounded rationality; procedural rationality; rational choice; cognitive economics 
JEL:  D81 B52 C00 D83 
Date:  2011–10 
URL:  http://d.repec.org/n?u=RePEc:pra:mprapa:34292&r=hpe 
By:  K. Vela Velupillai 
Abstract:  The genesis and the path towards what has come to be called the DSGE model is traced, from its origins in the ArrowDebreu General Equilibrium model (ADGE), via Scarf's Computable General Equilibrium model (CGE) and its applied version as Applied Computable General Equilibrium model (ACGE), to its ostensible dynamization as a Recursive Competitive Equilibrium (RCE). It is shown that these transformations of the ADGE  including the fountainhead  are computably and constructively untenable. The policy implications of these (negative) results, via the Fundamental Theorems of Welfare Economics in particular, and against the backdrop of the mathematical theory of economic policy in general, are also discussed (again from computable and constructive points of view). Suggestions for going 'beyond DSGE' are, then, outlined on the basis of a framework that is underpinned  from the outset  by computability and constructivity considerations 
Keywords:  Computable General Equilibrium, Dynamic Stochastic General Equilibrium, Computability, Constructivity, Fundamental Theorems of Welfare Economics, Theory of Policy, Coupled Nonlinear Dynamic 
JEL:  C02 C62 C68 D58 E61 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:trn:utwpas:1125&r=hpe 
By:  Selda (Ying Fang) Kao; K. Vela Velupillai 
Abstract:  In this paper, the origins and development of behavioural economics, beginning with the pioneering works of Herbert Simon (1953) and Ward Edwards (1954), is traced, described and (critically) discussed, in some detail. Two kinds of behavioural economics – classical and modern – are attributed, respectively, to the two pioneers. The mathematical foundations of classical behavioural economics is identified, largely, to be in the theory of computation and computational complexity; the corresponding mathematical basis for modern behavioural economics is, on the other hand, claimed to be a notion of subjective probability (at least at its origins in the works of Ward Edwards). The economic theories of behavior, challenging various aspects of 'orthodox' theory, were decisively influenced by these two mathematical underpinnings of the two theories 
Keywords:  Classical Behavioural Economics, Modern Behavioural Economics, Subjective Probability, Model of Computation, Computational Complexity. Subjective Expected Utility 
JEL:  C61 C63 D81 D83 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:trn:utwpas:1126&r=hpe 
By:  Thieme, Sebastian 
Abstract:  The worldwide economic crisis of 2007/2008 popularised the ethical questions within economics. Currently, few mainstream economists tackle these questions and the typical curriculum of economics often lacks input on philosophy, ethics and the history of economic thoughts. However, economists confronted with ethical questions believe themeslves capable of answering them. As a result, the popular discussion about ethics and economics becomes a discussion about regulations. In contrast to that, in the context of the “Economics and Ethics” discussion in Germany, the article shows an alternative approach, which concentrates on the question of why something is to be labelled as “moral”. On the base of Peter Ulrich's integrative economic ethics, the relevance of the right of subsistence on the ethical legitimacy of economic decisions, recommendations etc. is explained. The insights are discussed with respect to labour market theories and the German labour market reforms of 2005. Finally, the question of ethical legitimation is connected to the question of democracy and economics. 
Keywords:  Peter Ulrich; integrative economic ethics; discourse; ethical legitimation; Karl Polanyi; Subsistence; Viablity; Right of Subsistence 
JEL:  B52 P48 B59 Z13 B00 
Date:  2011–10–25 
URL:  http://d.repec.org/n?u=RePEc:pra:mprapa:34313&r=hpe 
By:  V. Ragupathy; K. Vela Velupillai 
Abstract:  We study the emergence of the nonlinear, endogenous, theory of the business cycle, in mathematical modes, within the framework of a macroeconomic theory, which was itself going through its own formal 'birth pangs' at the same time, in the same years. The first part of the story begins in 1928 and ends, with the publication of Yasui's classic on Kaldor, Hicks and Goodwin, in 1953, and Hudson's classic of 1957. But there were other classics in the 1930s, even within some theories of the business cycles of the time  particularly the Austrian and that which may now be called the 'timetobuild' tradition, which originates in Marx and Aftalion, independently, and reaches its nonlinear formalization origins in Tinbergenís work of 1931, followed by Kalecki's theories of the business cycle, substantially influenced also by Tinbergen's classic for mathematical method. There is also what may, for want of a better name, be called the 'cobweb' tradition, on the one hand, and the tradition of Swedish Sequence Analysis, on the other (especially in the 1937 classic work of Lundberg, summarising the Swedish discussion on business cycle theory). The former having its origins, partly, in Austrian inspired search for an integration of dynamic method with equilibrium economic theory (especially represented by a series of classics by RosensteinRodan, from about 1929); and partly in the well known phenomenon of lagged responses in the supplydemand interactions in agricultural and commodity markets, particularly elegantly formalised by Leontief in 1934. From the point of view of economic theory, they were all part of the emerging consensus on the need to incorporate money and áuctuations in nontrivial ways as intrinsic components of orthodox equilibrium economic theory which was characterised as static theory. The implication was that the search was for a synthesis of dynamic method with traditional static equilibrium economic theory. The origins of macroeconomic theory, generally attributed to the postdepression development of monetary theory, business cycle theory and the theory of policy, could be traced to this particular search for a synthesis and was brilliantly summarised by Kuznets in a series of pioneering contributions in 1929/30. The story we try to tell is of mathematical business cycle theory in its nonlinear modes, and how it emerged from one strand of macroeconomic theory, which, as just mentioned, was itself being forged, ab initio, dynamically 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:trn:utwpas:1127&r=hpe 
By:  Michel DE VROEY (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Pierre MALGRANGE (CEPREMAP, Paris) 
Abstract:  This paper is a contribution to the forthcoming Edward Elgar Handbook of the History of Economic Analysis volume edited by Gilbert Faccarello and Heinz Kurz. Its aim is to introduce the reader to the main episodes that have marked the course of modern macroeconomics: its emergence after the publication of Keynes’s General Theory, the heydays of Keynesian macroeconomics based on the ISLM model, disequilibrium and nonWalrasian equilibrium modelling, the invention of the natural rate of unemployment notion, the new classical attack against Keynesian macroeconomics, the first wave of new Keynesian models, real business cycle modelling and, finally, the second wage of new Keynesian models, i.e. DSGE models. A main thrust of the paper is the contrast we draw between Keynesian macroeconomics and stochastic dynamic general equilibrium macroeconomics. We hope that our paper will be useful for teachers of macroeconomics wishing to complement their technical material with a historical addendum. 
Keywords:  Keynes, Lucas, ISLM model, DSGE models 
JEL:  B E E E 
Date:  2011–06–30 
URL:  http://d.repec.org/n?u=RePEc:ctl:louvir:2011028&r=hpe 
By:  K. Vela Velupillai 
Abstract:  In this paper I attempt to make a case for promoting the courage of rebels within the citadels of orthodoxy in academic research environments. Wicksell in Macroeconomics, Brouwer in the Foundations of Mathematics, Turing in Computability Theory, Sraffa in the Theories of Value and Distribution are, in my own fields of research, paradigmatic examples of rebels, adventurers and nonconformists of the highest caliber in scientific research within University environments. In what sense, and how, can such rebels, adventurers and nonconformists be fostered in the current University research environment dominated by the cult of 'picking winners'? This is the motivational question lying behind the historical outlines of the work of Brouwer, Hilbert, Bishop, Veronese, Gödel, Turing and Sraffa that I describe in this paper. The debate between freedom in research and teaching, and the naked imposition of 'correct' thinking, on potential dissenters of the mind, is of serious concern in this age of austerity of material facilities. It is a debate that has occupied some of the finest minds working at the deepest levels of foundational issues in mathematics, metamathematics and economic theory. By making some of the issues explicit, I hope it is possible to encourage dissenters to remain courageous in the face of current dogmas 
Keywords:  Nonconformist research, economic theory, mathematical economics, 'Hilbert's Dogma', Hilbert's Program, computability theory 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:trn:utwpas:1123&r=hpe 
By:  S. I. Melnyk; I. G. Tuluzov 
Abstract:  A new constructivist approach to modeling in economics and theory of consciousness is proposed. The state of elementary object is defined as a set of its measurable consumer properties. A proprietor's refusal or consent for the offered transaction is considered as a result of elementary economic measurement. Elementary (indivisible) technology, in which the object's consumer values are variable, in this case can be formalized as a generalized economic measurement. The algebra of such measurements has been constructed. It has been shown that in the general case the quantummechanical formalism of the theory of selective measurements is required for description of such conditions. The economic analogs of the elementary slit experiments in physics have been created. The proposed approach can be also used for consciousness modeling. 
Date:  2011–10 
URL:  http://d.repec.org/n?u=RePEc:arx:papers:1110.5283&r=hpe 
By:  John Creedy 
Abstract:  Ursula Hicks (nee Webb) is well known for her contributions to public finance and development economics, and in her role as founding editor of Review of Economic Studies. After a brief introduction to Ursula Hicks’s complex family background, this paper reproduces, with editorial material, the autobiographical sketch of her early life in Dublin. This sketch, written late in her life, is of considerable interest,not only for the light it shows on her own background, but for the glimpse it gives of life in Dublin in the early years of the 20th century. In particular, there is much discussion of the wide circle of the Religious Society of Friends, more generally known as Quakers,which played such a large part in the life of her family. 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:mlb:wpaper:1126&r=hpe 
By:  K.Vela Velupillai 
Abstract:  A reinterpretation of the asymmetric roles assigned to the two agents in the genesis of Newcomb’s Paradox is suggested. The reinterpretation assigns a more active role for the 'rational' agent and a possible Turing Machine interpretation for the behaviour of the demon (alias 'being from another planet, with an advanced technology and science,..,etc.'). These modifications, while introducing new conundrums to an already diabolical interaction, do allow the 'rational' agent, as a computably behavioural agent, to make a clear decision, if any decision is possible at all. This latter caveat is necessary because in the Turing Machine formulation, the computably behavioural agent might have to face algorithmic undecidabilities 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:trn:utwpas:1128&r=hpe 
By:  Marco Centoni (LUMSA University); Gianluca Cubadda (Faculty of Economics, University of Rome "Tor Vergata") 
Abstract:  Modelling comovements amongst multiple economic variables takes up a relevant part of the literature in time series econometrics. Comovement can be defined as "move together", that is as movement that several series have in common. The pattern of the series could be of different nature, such as trend, cycles, seasonality, being the results of different driving forces. As a results, series that comove share some common features. Common trends, common cycles, common seasonality are terms that are often found in the literature, different in scope but all aimed at modeling common behavior of the series. However, modeling comovements is not only a statistical matter, since in many cases common features are predicted by economic theory, resulting from the optimizing behavior of economic agents. 
Date:  2011–10–26 
URL:  http://d.repec.org/n?u=RePEc:rtv:ceisrp:215&r=hpe 
By:  Leonard J. Mirman; Marc Santugini 
Abstract:  Building on Kihlstrom and Mirman (1974)’s formulation of risk aversion in the case of multidimensional utility functions, we study the effect of risk aversion on optimal behavior in a general consumer’s maximization problem under uncertainty. We completely characterize the relationship between changes in risk aversion and classical demand theory. We show that the effect of risk aversion on optimal behavior is determined not by the riskiness of the risky good, but rather the riskiness of the utility gamble associated with each decision. We also discuss the appropriateness of an (alternative) approach to study risk aversion suggested by Selden (1978), which has been widely popularized in the field of macroeconomics through the parametric model of Epstein and Zin (1989) (henceforth, the SeldenEZ approach). We show that the SeldenEZ approach cannot disentangle risk aversion from tastes, and, thus, cannot be used to isolate the effect of risk aversion. 
Keywords:  Classical Demand Theory, Consumer Choice, EpsteinZin preferences, Risk Aversion, Selden Preferences 
JEL:  D01 D81 D91 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:lvl:lacicr:1132&r=hpe 
By:  Julie Rosaz (Université de Lyon, Lyon, F69007, France ; CNRS, GATE Lyon St Etienne,F69130 Ecully, France); MarieClaire Villeval (Université de Lyon, Lyon, F69007, France ; CNRS, GATE Lyon St Etienne,F69130 Ecully, France) 
Abstract:  This paper presents the results of a laboratory experiment in which workers perform a realeffort task and supervisors report the workers’ performance to the experimenter. The report is non verifiable and determines the earnings of both the supervisor and the worker. We find that not all the supervisors, but at least one third of them bias their report. Both selfish black lies (increasing the supervisor’s earnings while decreasing the worker’s payoff) and Pareto white lies (increasing the earnings of both) according to Erat and Gneezy (2009)’s terminology are frequent. In contrast, spiteful black lies (decreasing the earnings of both) and altruistic white lies (increasing the earnings of workers but decreasing those of the supervisor) are almost nonexistent. The supervisors’ secondorder beliefs and their decision to lie are highly correlated, suggesting that guilt aversion plays a role. 
Keywords:  lies, deception, selfimage, guilt aversion, lieaversion, evaluation, experiments 
JEL:  C91 D82 M52 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:gat:wpaper:1124&r=hpe 
By:  Vitor Joao Pereira Domingues Martinho 
Abstract:  Much has been said lately about entrepreneurship, so it seems important to leave here some personal analysis on this topic. The issues outlined here result from a work in about a year in which because a personal and professional obligations it was doing some research on these issues. This is an interesting topic that has not yet expired and on which there is much to research, do it is an area where there are many challenges. 
Date:  2011–10 
URL:  http://d.repec.org/n?u=RePEc:arx:papers:1110.5516&r=hpe 
By:  Gabriel GalvezBehar (IRHiS  Institut de Recherches Historiques du Septentrion  CNRS : UMR8529  Université Charles de Gaulle  Lille III) 
Abstract:  For thirty years scientific institutions have been engaged in a process of propertisation through the strengthening of intellectual property in science. In fact, the relationship between science, intellectual property rights and the economic spheres have ever been neither stable nor continuous. Therefore a historical inquiry is necessary to understand the meaning and the practice of scientific property from the middle of 19th century to WW II. In this paper, the relationship between scientific authorship and property appears as a mean to promote the scientific work and its professionalization. Moreover, through the study of the French case, the place of science in the patent system is taken into account in order to understand, at last, the international controversy about scientific property during the interwar period. 
Keywords:  Propertisation ; Science ; Intellectual Property ; History ; Scientific Authorship 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:hal:journl:halshs00633786&r=hpe 
By:  Rudolf Berghammer (Institut für Informatik  Universitat Kiel); Agnieszka Rusinowska (CES  Centre d'économie de la Sorbonne  CNRS : UMR8174  Université PanthéonSorbonne  Paris I); Harrie De Swart (Faculteit WijsbegeerteLogica en taalanalyse  Universiteit van Tilburg) 
Abstract:  Simple games are a powerful tool to analyze decisionmaking and coalition formation in social and political life. In this paper we present relational models of simple games and develop relational algorithms for solving some gametheoretic basic problems. The algorithms immediately can be transformed into the language of the Computer Algebra system RelView and, therefore, the system can be used to solve the problems and to visualize the results of the computations. 
Keywords:  relational algebra ; RelView ; simple games 
Date:  2011 
URL:  http://d.repec.org/n?u=RePEc:hal:cesptp:hal00633857&r=hpe 
By:  Dirk Bergemann; Stephen Morris 
Date:  2011–10–20 
URL:  http://d.repec.org/n?u=RePEc:cla:levarc:786969000000000265&r=hpe 
By:  Damien Besancenot (CEPN  Centre d'Economie de l'Université Paris Nord  Université ParisNord  Paris XIII  CNRS : UMR7234); JeanMichel Courtault (CEPN  Centre d'Economie de l'Université Paris Nord  Université ParisNord  Paris XIII  CNRS : UMR7234); Khaled El Dika (LAGA  Laboratoire d'Analyse, Géométrie et Applications  CNRS : UMR7539  Université ParisNord  Paris XIII) 
Abstract:  This paper applies the Mean Fi eld Game approach pioneered by Lasry and Lions (2007) to the analysis of the researchers' academic productivity. It provides a theoretical motivation for the stability of the universaly observed Lotka's law. It shows that a remuneration scheme taking into account the researchers rank with respect to the academic resume can induce a larger number of researchers to overtake a minimal production standard. It thus appears as superior to piecework remuneration. 
Keywords:  Mean Field Game, Academic production, incentives, Lotka's law. 
Date:  2011–10–13 
URL:  http://d.repec.org/n?u=RePEc:hal:cepnwp:halshs00632171&r=hpe 
By:  Peter Skott (University of Massachusetts Amherst) 
Abstract:  Macroeconomics is in crisis and this creates openings for alternative perspectives. The dominant heterodox traditions, however, have shortcomings that need to be addressed, both to improve our understanding of the real world and to take advantage of the opportunities offered by the irrelevance of most mainstream macro. This paper discusses three examples of areas that need attention: (i) investment functions (where popular specifications lack behavioral and empirical support), (ii) income distribution (where key developments have received little attention) and(iii) the relation between income inequality and financial markets (where extensions of existing models may help explain financial instability) JEL Categories: E12, E21, E22 
Keywords:  investment, earnings inequality, financial instability 
Date:  2011–10 
URL:  http://d.repec.org/n?u=RePEc:ums:papers:201123&r=hpe 