nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2011‒11‒07
sixteen papers chosen by
Erik Thomson
University of Manitoba

  1. The Economics of All Things: an Emotional Review of Tim Harford’s Books By Jorge Barrientos Marín
  2. The river sharing problem: A review of the technical literature for policy economists By Beard, Rodney
  3. Les économistes français et le pouvoir d'achat de la monnaie By Alain Béraud
  4. Individual notions of distributive justice and relative economic status By Abigail Barr; Justine Burns; Luis Miller; Ingrid Shaw
  5. U.S. monetary-policy evolution and U.S. intervention By Michael D Bordo; Owen F Humpage; Anna J Schwartz
  6. Illegale Märkte: Stand der sozialwissenschaftlichen Forschung By Wehinger, Frank
  8. Detection and Interpretation of Communities in Complex Networks: Methods and Practical Application By Vincent Labatut; Jean-Michel Balasque
  10. Too smart to be selfish? Measures of intelligence, social preferences, and consistency By Chen, Chia-Ching; Chiu, I-Ming; Smith, John; Yamada, Tetsuji
  11. Corporate lobbying: A review of the recent literature By Martin Gregor
  12. The focus axiom and poverty: On the co-existence of precise language and ambiguous meaning in economic measurement By Subramanian, Subbu
  13. An experiment on experimental instructions By M. Bigoni; D. Dragone
  14. Common assumption of rationality By Keisler, H. Jerome; Lee, Byung Soo
  15. Paysages et théorie (s) du marché By François Facchini
  16. Collusion, symmetry, and the Banzhaf value By Casajus, André

  1. By: Jorge Barrientos Marín (Universidad de Antioquia)
    Abstract: After reading and thinking seriously about the teachings in Tim Harford’s books, The Undercover Economist and the Logic of Life, they confirmed me that every behavior and act, not only in the market but also along life, have hidden interests and everybody is conscious about them. What do I mean by “conscious”? I mean that almost all our choices are rational. We can make mistakes once in a while, of course, but along our life we show a rational behavior
    Keywords: Tim Harford
    Date: 2011
  2. By: Beard, Rodney
    Abstract: Water is essential for life. However, the basic problem of water resource allocation has been that water tends to be over-allocated. Demand for water exceeds the available supply. Essentially, the water economy is bankrupt. Bankruptcy problems have been almost exhaustively studied in the literature on economic theory-primarily from the perspective of cooperative game theory. The main concern of this literature has been how to fairly divide up the assets of a bankrupt entity. In water resource economics cooperative game theory has often been employed as a means of analyzing water resource allocation. It was only recently that the problem of directional flow was incorporated into such analyses. This has come to be known as the “river sharing problem” in the theoretical literature. Accounting for the direction of flow in water resource allocation problems has profound implications for policies that wish to facilitate both fair and efficient water allocations. This is the case whether proposed policies are interventionist or market based in nature. There is now a considerable literature on the allocation and distribution of water resources characterized by unidirectional flow. In this paper I critically review and appraise this literature with a view to making it more accessible to applied and policy economists. A key feature of the paper is that the connection between the bankruptcy literature, which has recently also realized the importance of flow, and the river sharing literature is discussed. The current state of the art in game theoretic models of water resource allocation with directional flow is discussed and implications and consequences for water resource policy highlighted
    Keywords: River sharing problem; Bankruptcy; Cooperative game theory; Water resouyrce allocation; distributive justice
    JEL: D63 C71 B23 Q25
    Date: 2011–10–28
  3. By: Alain Béraud (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise)
    Abstract: Quand les économistes français lurent the Purchasing Power of the Money, ils s'intéressèrent d'abord à l'équation des échanges et à la reformulation que Fisher proposait de la théorie quantitative de la monnaie. Cette lecture les conduisit à s'interroger sur le sens qu'il convenait de donner à cette théorie et à étudier sa portée empirique. Certains d'entre eux, notamment Rueff et Divisia, allèrent plus loin et considérèrent l'œuvre de Fisher comme un point de départ pour leurs propres analyses qui portèrent notamment sur l'indice monétaire, sur l'intégration de la monnaie dans la théorie de l'équilibre général et sur l'analyse des phénomènes monétaires en économie ouverte.
    Keywords: Théorie quantitative de la monnaie, indice des prix, théorie de la parité des pouvoirs d'achat, utilité marginale de la monnaie, intégration de la monnaie dans l'équilibre général.
    Date: 2011–10–14
  4. By: Abigail Barr (Institute for Fiscal Studies and University of Oxford); Justine Burns; Luis Miller; Ingrid Shaw
    Abstract: <p>Issues of inequality, distribution and redistribution are commanding progressively more attention in the minds of not only world leaders, politicians, and academics but also of ordinary people. So, what constitutes distributive justice in the minds of ordinary people? The philosophical literature offers several alternative principles of distributive justice. But which of these, if any, do ordinary people adopt as the principle against which to judge their own and other people's and entities' outcomes and actions? </p><p> </p><p>This paper presents the findings from two experiments designed to test the hypothesis that individuals' notions of distributive justice are associated with their economic status relative to others within their own society. In the experiments, each participant played a specially designed distribution game. This game allowed us to establish whether and to what extent the participants perceived inequalities owing to differences in productivity rather than luck as just and, hence, not in need of redress. A type of participant that distinguished between inequalities owing to productivity and luck, redressing the latter and not or to a lesser extent the former, is said to be subject to an earned endowment effect. Drawing on previous work in both economics and psychology, we hypothesised that the richer members of any society would be more likely to be subject to an earned endowment effect, while the poorer members would be more inclined towards redistribution irrespective of whether the inequality was owing to productivity or luck. </p><p> </p><p>We conducted our first experiment in the UK. We selected unemployed residents of one city to represent low economic status individuals and student and employed residents of the same city to represent relatively high economic status individuals. We found a statistically significant earned endowment effect among the students and employed and no effect among the unemployed. The difference between the unemployed and the others was also statistically significant. </p><p>Our second experiment was designed to test the generalizability of the findings from our first. It was conducted in Cape Town, South Africa. Exploiting the fact that Cape Town is home to one of the continent's best universities, we built a participant sample that was highly comparable to the UK sample in many regards. However, the states of employment and unemployment are less distinct in South Africa as compared to the UK and a number of interventions are in place to ensure that the student body of the University of Cape Town includes young people from not only rich and middle income but also poorer households. So, in South Africa we chose to rely on responses to a survey question to distinguish between high and low economic status individuals. The findings from this second experiment also supported the hypothesis; among individuals who classified their households as rich or high or middle income there was a statistically significant earned endowment effect, among individuals who classified their households as poor or low income there was not and the different between the two participant types was significant. </p><p> </p><p>We conclude that individuals' notions of distributive justice are associated with their relative economic status within society and that this is a generalizable result.</p>
    Keywords: Distributive Justice; inequality; laboratory experiments.
    JEL: D63 C91 C93
    Date: 2011–10
  5. By: Michael D Bordo; Owen F Humpage; Anna J Schwartz
    Abstract: The United States all but abandoned its foreign-exchange-market intervention operations in late 1995, when they proved corrosive to the credibility of the Federal Reserve?s commitment to price stability. We view this decision as the culmination of the evolution of U.S. monetary policy over the past century from a gold standard to a fiat money regime. The abandonment of intervention was necessary to secure monetary policy credibility.
    Keywords: Foreign exchange market ; Monetary policy - United States ; Federal Open Market Committee
    Date: 2011
  6. By: Wehinger, Frank
    Abstract: This research report gives an overview of the academic literature on illegal markets. Compared to legal markets, the sociology of markets has largely neglected illegal markets and the report therefore encourages their investigation. Results are presented from studies in criminology, sociology, political science, anthropology, economics, and other disciplines and a typology of illegal markets is developed. The literature review is used as a basis to summarize, from an economic sociological perspective, the characteristics of illegal markets with regard to market structure, organization, and processes. The report suggests areas of future research whose results would add to the general understanding of markets. -- Anders als legale Märkte sind illegale Märkte in der marktsoziologischen Forschung bislang kaum beachtet worden. Hier knüpft das Working Paper an: Es gibt einen Überblick über die wissenschaftliche Literatur zu illegalen Märkten mit dem Ziel, ihre Erforschung voranzutreiben. Auf der Basis einer eigenen Klassifikation werden die Ergebnisse kriminologischer, soziologischer, politikwissenschaftlicher, anthropologischer, wirtschaftswissenschaftlicher und weiterer Studien zu einzelnen illegalen Märkten vorgestellt. Davon ausgehend werden ihre strukturellen, organisatorischen und prozessualen Merkmale aus einer wirtschaftssoziologischen Perspektive zusammengefasst. Der Bericht schlägt Themenbereiche für eine zukünftige Erforschung illegaler Märkte vor, deren Ergebnisse auch zum allgemeinen Verständnis von Märkten beitragen sollen.
    Date: 2011
    Date: 2011
  8. By: Vincent Labatut (Bit Lab - Galatasaray University); Jean-Michel Balasque (Galatasaray University - Business & Marketing Department - Galatasaray University)
    Abstract: Community detection is an important part of network analysis and has become a very popular field of research. This activity resulted in a profusion of community detection algorithms, all different in some not always clearly defined sense. This makes it very difficult to select an appropriate tool when facing the concrete task of having to identify and interpret groups of nodes, relatively to a system of interest. In this article, we tackle this problem in a very practical way, from the user's point of view. We first review community detection algorithms and characterize them in terms of the nature of the communities they detect. We then focus on the methodological tools one can use to analyze the obtained community structure, both in terms of topological features and nodal attributes. To be as concrete as possible, we use a real-world social network to illustrate the application of the presented tools, and give examples of interpretation of their results from a Business Science perspective.
    Keywords: Complex Networks, Community detection, Business Science, Community interpretation
    Date: 2011
    Date: 2011
  10. By: Chen, Chia-Ching; Chiu, I-Ming; Smith, John; Yamada, Tetsuji
    Abstract: Although there is an increasing interest in examining the relationship between cognitive ability and economic behavior, less is known about the relationship between cognitive ability and social preferences. We investigate the relationship between strongly incentivized measures of intelligence and measures of social preferences. We have data on a series of small-stakes dictator-type decisions, known as Social Value Orientation (SVO), in addition to choices in a larger-stakes dictator game. We also have access to the grade point averages (GPA) and Scholastic Aptitude Test (SAT) outcomes of our subjects. We find that subjects who perform better on the math portion of the SAT are more generous in both the dictator game and the SVO measure. By contrast we find that subjects with a higher GPA are more selfish in the dictator game and more generous according to the SVO. We also find that the consistency of the subjects is related to GPA but we do not find evidence that it is related to either portion of the SAT.
    Keywords: dictator game; Social Value Orientation; altruism; cognitive ability
    JEL: D64 C91
    Date: 2011–11–01
  11. By: Martin Gregor (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: This survey covers recent literature on lobbying, with particular focus on corporate lobbying. Three main research traditions --- contestsfor policy rent, persuasion games, and multiple means models --- are analyzed in detail. Various strategic aspects of lobbying arepresented in the context of a single unified model that encompasses both strategic communication and monetary contributions. Next, thereview investigates into three particular issues in the lobbying literature: (i) Incentive to lobby and the equilibrium amount of lobbying,both in the presence and absence of competitors, (ii) strategic substitution and complementarity of lobbying and contributions,and (iii) the role of intermediation in lobbying. Recent evidence from corporate lobbying is presented.
    Keywords: lobbying, political contributions, menu auction, contest, persuasion
    JEL: D72 D82 D83
    Date: 2011–11
  12. By: Subramanian, Subbu
    Abstract: Despite the formal rigour that attends social and economic measurement, the substantive meaning of particular measures could be compromised in the absence of a clear and coherent conceptualization of the phenomenon being measured. A case in point is afforded by the status of a focus axiom in the measurement of poverty. Focus requires that a measure of poverty ought to be sensitive only to changes in the income-distribution of the poor population of any society. In practice, most poverty indices advanced in the literature satisfy an income-focus but not a population-focus axiom. This, it is argued in the present paper, makes for an incoherent underlying conception of poverty. The paper provides examples of poverty measures which either satisfy both income and population focus or violate both, or which effectively do not recognize a clear dichotomization of a population into its poor and non-poor components, and suggests that such measures possess a virtue of consistency, and coherent meaning, lacking in most extant measures of poverty available in the literature. --
    Keywords: poverty measure,constituency principle,income focus,population focus,comprehensive focus
    JEL: B40 D31 D63 I32 O15
    Date: 2011
  13. By: M. Bigoni; D. Dragone
    Abstract: In this paper we treat instructions as an experimental variable. Using a public good game, we study how the instructions' format affects the participants' understanding of the experiment, their speed of play and their experimental behavior. We show that longer instructions do not significantly improve the subjects' understanding of the experiment; on-screen instructions shorten average decision times with respect to on-paper instructions, and requiring forced inputs reduces waiting times, in particular for the slowest subjects. Consistent with cognitive load theory, we find that short, on-screen instructions which require forced inputs improve on subjects' comprehension and familiarity with the experimental task, and they contribute to reduce both decision and waiting times without affecting the overall pattern of contributions.
    JEL: C72 C90 H41
    Date: 2011–10
  14. By: Keisler, H. Jerome; Lee, Byung Soo
    Abstract: In this paper, we provide an epistemic characterization of iterated admissibility (IA), i.e., iterated elimination of weakly dominated strategies. We show that rationality and common assumption of rationality (RCAR) in complete lexicographic type structures implies IA, and that there exist such structures in which RCAR can be satisfied. Our result is unexpected in light of a negative result in Brandenburger, Friedenberg, and Keisler (2008) (BFK) that shows the impossibility of RCAR in complete continuous structures. We also show that every complete structure with RCAR has the same types and beliefs as some complete continuous structure. This enables us to reconcile and interpret the difference between our results and BFK’s. Finally, we extend BFK’s framework to obtain a single structure that contains a complete structure with an RCAR state for every game. This gives a game-independent epistemic condition for IA.
    Keywords: Epistemic game theory; rationality; admissibility; iterated weak dominance; assumption; completeness; Borel Isomorphism Theorem; o-minimality
    JEL: D80 C72
    Date: 2011–09–08
  15. By: François Facchini (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: L'étude de la relation paysage - marché n'est pas aisée car elle met en perspective deux réalités difficiles à appréhender : le marché et le paysage. L'introduction du présent ouvrage a exposé une revue des approches et des définitions du paysage. Pour ce chapitre la définition retenue du paysage est assez proche de celle proposée par la convention européenne des paysages : un paysage est une portion de territoire vue par un observateur (Neuray 1982, p.23, Facchini, 1993). L'économie de marché désigne une réalité concrète et des pratiques sociales. Elle se définit pour Marx et les classiques comme capitaliste ou salariale (Frydman, 1992). Elle se définit pour l'école néoclassique de l'équilibre comme le lieu de la détermination des rapports d'échange. Elle est pour les économistes de l'école autrichienne " le système social de division du travail, avec propriété privée des moyens de production. Chacun agit pour son propre compte ; mais les actions de chacun visent à satisfaire les besoins d'autrui tout autant que la satisfaction des siens " (Mises, 1985, p.272). D'un point de vue éthique l'économie de marché renvoie à un ordre économique où le droit de propriété n'est pas remis en cause et la main d'œuvre libre (non forcée) (Stark 2007, p.93). Elle est parfois assimilée à la loi de la jungle ou à la paupérisation des classes laborieuses et fait l'objet de nombreux discours spéculatifs. Sa définition varie ainsi en fonction du point de vue que l'on adopte, autrement dit, du référent que l'économiste choisit pour l'étudier. Chaque définition du marché conduit à une analyse particulière du paysage comme territoire et comme regard sur le territoire. Les théories critiques du capitalisme comme le marxisme, le socialisme utopique, le conservatisme de droite et l'ensemble des mouvements sociaux démocrates vont développer le thème de la destruction des paysages par les excès du libéralisme. Ces approches sont portées par le discours de l'ensemble des chercheurs anti-capitalistes et par l'idéologie protectionniste ou conservatrice d'un certain nombre d'écrivains et d'artistes. Elle développe une théorie socio-économique des préférences en matière de paysage et pense le paysage actuel comme le résultat du capitalisme ou des lois du marché. Comme territoire, le paysage est le reflet du capitalisme ou des lois de l'offre et de la demande. Comme regard sur le territoire, il est la conséquence des habitus et/ou des capitaux sociaux et personnels des individus. Les théories favorables à la propriété privée et à l'économie de libre marché vont développer des théories alternatives aux théories anti-capitalistes. Le paysage reflète toujours l'ordre économique, mais désormais l'ordre de la propriété privée est perçu comme à l'origine du développement économique et de la généralisation de la demande de paysage. La propriété privée crée les conditions pour que les individus accèdent au paysage en favorisant la hausse des revenus. Elle invente aussi des paysages d'un type particulier. Le paysage comme territoire devient le reflet de la généralisation de la propriété privée. Dans cette perspective, les représentations du paysage ne sont pas seulement déterminées par les conditions économiques et sociales. Elles trouvent aussi leur origine dans les expériences et les valeurs individuelles. Ces valeurs peuvent être adoptées par imitation, mais aussi être le résultat d'innovations esthétiques ou spirituelles. L'homme n'est plus passif. Il est créateur de concepts, de valeurs morales et de paysages. A l'origine d'une représentation sociale il y une représentation individuelle partagée. On retrouve alors les lois de l'innovation et de l'imitation d'un sociologue comme Gabriel Tarde. Les goûts ne sont plus déterminés par les conditions sociales mais par les rencontres, les expériences, le hasard, le désir de nouveauté, l'insatisfaction des individus vis-à-vis de leur monde des possibles. Le paysage trouve plus son origine dans l'imaginaire que dans les conditions socio-économiques des acteurs. Ce chapitre s'organise donc autour de deux sections. La première expose une théorie critique du marché et du paysage qu'il produit et donne à percevoir. Elle montre comment la vision critique du marché conduit à désirer et à valoriser les espaces non appropriés, gratuits. La deuxième section présente a contrario la dynamique d'intégration du paysage dans le calcul économique des acteurs et montre comment les individus valorisent les espaces clos, accessibles à ceux qui ont engagé des ressources pour les consommer. Au paysage pour tous s'oppose ainsi le paysage pour les seuls clients.
    Keywords: paysage, marché, propriété
    Date: 2011
  16. By: Casajus, André
    Abstract: We resolve redundancies in the characterizations of the Banzhaf value suggested by Haller (1994, Int J Game Theory 23, 261-281) and Malawski (2002, Int J Game Theory 31:47-67). In particular, we show that the collusion properties employed by them are equivalent. Combined with the dummy player axiom, any of the collusion properties has strong symmetry implications whenever the cardinality of the player set exceeds two. Finally, we establish that the Banzhaf value is non-redundantly characterized by the dummy player axiom and any of the collusion properties, provided that the player set is as above. --
    Keywords: Banzhaf value,symmetry,collusion,proxy,association,distrust
    JEL: C71
    Date: 2011

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