nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2012‒01‒25
24 papers chosen by
Erik Thomson
University of Manitoba

  1. Rationality and choices in economics: behavioral and evolutionationary approaches By Graziano , Mario; Schilirò, Daniele
  2. Resources and Economic Dynamics, Technology and Rents By Alberto Quadrio Curzio
  3. Warrant Economics, Call-Put Policy Options and the Fallacies of Economic Theory By Hatgioannides, John; Karanassou, Marika
  4. Die Sittlichkeit der Wirtschaft: Von Effizienz- und Differenzierungstheorien zu einer Theorie wirtschaftlicher Felder By Beckert, Jens
  5. Cooperative Games with Incomplete Information: Some Open Problems By Francoise Forges; Roberto Serrano
  6. Cognitive load in the multi-player prisoner's dilemma game By Duffy, Sean; Smith, John
  7. On Partial Honesty Nash Implementation By Ahmed Doghmi, National Institute of Statistics and Applied Economics, Madinat Al Irfane, Rabat Institutes, 13000 Rabat, Morocco; Abderrahmane ZIAD, University of Caen Basse-Normandie, CREM (UMR CNRS)
  8. On the measurement of social progress and well being: some further thoughts By Jean Paul Fitoussi; Joseph Stiglitz
  9. How Unjust! An Experimental Investigation of Supervisors' Evaluation Errors and Agents' Incentives By Marchegiani, Lucia; Reggiani, Tommaso; Rizzolli, Matteo
  10. Social identity and competitiveness By Dargnies, Marie-Pierre
  11. The Emotional Consequences of Pro-social Behavior in Markets By Toke Fosgaard
  12. "Das wird man wohl noch sagen dürfen" - oder: Was hat Thilo Sarrazin eigentlich mit dem Sturm und Drang zu tun? By Lange, Carolin Dorothée
  13. Equal pay and dilemmas of justice By Cathrine Holst
  14. Human rights as demands for communicative action By Gauri, Varun; Brinks, Daniel M.
  15. Convergent learning algorithms for potential games with unknown noisy rewards By Archie C. Chapman; David S. Leslie; Alex Rogers; Nicholas R. Jennings
  16. Penser l'action par les excuses By Hervé Dumez
  17. Où vont stationner les taxis (et leurs concurrents) ? By Richard Darbéra
  18. Who Acts More Like a Game Theorist? Group and Individual Play in a Sequential Market Game and the Effect of the Time Horizon By Wieland Mueller; Fangfang Tan
  19. You Better Play 7: Mutual versus Common Knowledge of Advice in a Weak-link Experiment By Giovanna Devetag; Hykel Hosni; Giacomo Sillari
  20. Manipulationsanreize im Gale-Shapley-Algorithmus: Ein Literaturüberblick By Hübner, Frank
  21. Where It All Began: Lending of Last Resort and the Bank of England During the Overend, Gurney Panic of 1866. By Marc Flandreau; Stefano Ugolini
  22. On Fairness of Equilibria in Economies with Differential Information By Achille Basile; Maria Gabriella Graziano; Maria Laura Pesce
  23. The lifeboat problem By Konrad, Kai A.; Kovenock, Dan
  24. Game complete analysis of symmetric Cournot duopoly By Carfì, David; Perrone, Emanuele

  1. By: Graziano , Mario; Schilirò, Daniele
    Abstract: The paper critically discusses the issue of rationality and choices in economics in both the behavioural and evolutionary approaches. Our study aims, on the one hand, to highlight the scientific contributions of psychology in economics, since psychology, and with it the theoretical approach of the behavioral economics, has made more complex and problematic the analysis of economic choices, showing the limits of rationality. On the other hand, the work offers a reinterpretation of the theory of Alfred Marshall in a biologicalevolutionary perspective. The reinterpretation of Marshall's theory in a evolutionary perspective aims to show that, historically, economics has not been a discipline aligned in a homogenous way to a single and undifferentiated thought, locked into the idea of perfect rationality, but, on the opposite, is a discipline that has enriched itself and continually is enriching by contributions and significant contaminations with other research fields.
    Keywords: rationality; choices; behavioral economics; evolutionary theories; biology;
    JEL: D03 D81 B52 D90 B13 D01
    Date: 2012–01
  2. By: Alberto Quadrio Curzio
    Abstract: The essay investigates non producible (natural) resources and rent from three points of views: stylized facts, quantitative economics and economic theory. Taking the first point of view, the author discusses how economic growth can be represented in terms of never-ending tension between scarcity and technical progress. At least since the onset of modern economic growth, whenever scarcity produced a slowdown of growth, technical progress followed and scarcity was thereby removed. Scarcity, in a long-run perspective, has always been of the «relative» type, while absolute scarcity never set in. This essay consider this problem from many points of view. First of all it considers the point of view of quantitative economics like those of Simon Kuznets and Wassily Leontief who emphasized the relative character of scarcity and the importance of keeping the relationship between scarcity and innovation into account (this is especially true of Kuznets). Secondly the essay considers the contribution of economic theory. In this connection, the author points out that both the macroeconomic and multi-sectoral models developed since the 1930s overlooked the investigation of scarce natural resources and rent, as well as their relationship with technical progress. Only Piero Sraffa examined non producible resources and rent but he has done it in a single-period model. The author of this essay investigated the same issues in a more general analytical set-up starting with a contribution published in 1967 followed by many others. Later on, Quadrio Curzio and Pellizzari, especially in the 1996 volume, analyzed the general relationships among production, prices, income distribution, technical progress and growth when scarce resources play a significant role. Those contributions also investigated the nature of technological rents, which are an important feature of modern economic growth in the presence of technical progress. At the same time Quadrio Curzio, in collaboration with Marco Fortis and Roberto Zoboli, analysed historical, quantitative and qualitative aspects of economic dynamics, and the way in which natural resources and raw materials exert an influence on economic growth and more generally economic dynamics. Those aspects are not fully considered in the present essay, but they represent its fundamental background. Finally in 2008 Quadrio Curzio, Pellizzari and Zoboli outlined in a valuable encyclopaedic dictionary a compact synthesis of the above approach to the economic analysis of raw materials and primary commodities. The essay takes a point of view which is not typical of the «post- Keynesian» approach, yet it belongs to a post-classical perspective that is closely connected to the Italian-Cambridge tradition of political economy as a social discipline. Tradition on which Alberto Quadrio Curzio, especially researching with Roberto Scazzieri, focused his attention in many essays from a methodological point of view.
    Keywords: natural resources; technological innovation; relative scarcity; investments; rent;
    JEL: O10 O11 O33
    Date: 2011
  3. By: Hatgioannides, John (City University London); Karanassou, Marika (University of London)
    Abstract: In this paper we aim to trace the roots of the ongoing economic mayhem and to unmask the chorus of the tragedy which plays on the world stage. The main thesis of our work is that, despite the triumphant rhetoric praising the merits of perfect competition, the global fields of the dysfunctional market system have mushroomed in what we call Warrant Economics for the Free-Market Aristocracy. Warrant Economics unfolds in two symbiotic tenets that constitute the subtle architecture of the neoliberal edifice: (i) the systemic creation and preservation of inequality via Call-Put policy options, and (ii) the systemic exploitation of inequality via novel and toxic forms of securitisation. In effect, the power structure of insiders’ capitalism that we describe, trough the costless appropriation of an intricate cobweb of Call-Put structures, has distorted competition and accelerated economic concentration. We view the income distribution effect, which favours the top 1%, and the business concentration effect, which gravitates competition towards oligopolistic/monopolistic industries, as the two sides of the Warrant Economics coin. We argue that the Warrant Economics state of capitalism has been legitimised by a degenerating research programme blossomed under the fallacy that economics is the “physics of society”. In this faculty of thought, we perceive the Great Recession as a symptom of Warrant Economics, rather than as a tsunami-like event.
    Keywords: income distribution, monopoly, securitisation, Call-Put policy options, Warrant Economics, Great Recession, sovereign debt
    JEL: E66 G01 G10
    Date: 2011–12
  4. By: Beckert, Jens
    Abstract: Auch die Wirtschaft moderner Gesellschaften folgt nicht einfach einer ökonomischen Eigengesetzlichkeit, sondern konstituiert sich aus ihrer Einbettung in ein Gefüge sittlicher Werte, Interessen und sozialer Macht. Von welcher theoretischen Grundlage lässt sich die Sittlichkeit der Wirtschaft beschreiben? In dem Artikel zeige ich in kritischer Auseinandersetzung mit der auf der Neoklassik aufbauenden orthodoxen Wirtschaftstheorie, dass es gerade deren normativer Charakter ist, der verhindert, Normen einen angemessenen Platz einzuräumen. Es ist jedoch verfehlt zu denken, dass die Soziologie per se hierzu eine angemessene Alternative anbieten würde. Weder die funktionalistische Differenzierungstheorie noch Teile der Wirtschaftssoziologie werden der Herausforderung gerecht. Vielversprechender erscheint, wirtschaftliche Strukturen mit dem Instrumentarium der Theorie sozialer Felder zu analysieren. -- The economy of modern societies does not simply operate according to its own inherent laws, but is embedded in a moral order, interests, and in social power. Upon what theoretical basis can we describe the morality of the economy? Critically reflecting on orthodox neoclassical economics, I argue that it is the normative character of neoclassical theory which stands in the way of improving our understanding of the normative foundations of the economy. It would be wrong, however, to think that sociology necessarily offers a more adequate alternative. Neither functionalist theories of social differentiation nor certain strands of the new economic sociology are up to the challenge. Using the toolkit provided by the theory of social fields seems to be the more promising way to investigate economic structures.
    Date: 2011
  5. By: Francoise Forges; Roberto Serrano
    Abstract: This is a brief survey describing some of the recent progress and open problems in the area of cooperative games with incomplete information. We discuss exchange economies, cooperative Bayesian games with orthogonal coalitions, and issues of cooperation in non-cooperative Bayesian games.
    Keywords: #
    Date: 2011
  6. By: Duffy, Sean; Smith, John
    Abstract: We find that differences in the ability to devote cognitive resources to a strategic interaction imply differences in strategic behavior. In our experiment, we manipulate the availability of cognitive resources by applying a differential cognitive load. In cognitive load experiments, subjects are directed to perform a task which occupies cognitive resources, in addition to making a choice in another domain. The greater the cognitive resources required for the task implies that fewer such resources will be available for deliberation on the choice. Although much is known about how subjects make decisions under a cognitive load, little is known about how this affects behavior in strategic games. We run an experiment in which subjects play a repeated multi-player prisoner's dilemma game under two cognitive load treatments. In one treatment, subjects are placed under a high cognitive load (given a 7 digit number to recall) and subjects in the other are placed under a low cognitive load (given a 2 digit number). We find that the behavior of the subjects in the low load condition converges to the Subgame Perfect Nash Equilibrium prediction at a faster rate than those in the high load treatment. However, we do not find the corresponding relationship involving outcomes in the game. Specifically, there is no evidence of a significantly different convergence of game outcomes across treatments. As an explanation of these two results, we find evidence that low load subjects are better able to condition their behavior on the outcomes of previous periods.
    Keywords: cognitive resources; experimental economics; experimental game theory; public goods game
    JEL: C72 C91
    Date: 2012–01–11
  7. By: Ahmed Doghmi, National Institute of Statistics and Applied Economics, Madinat Al Irfane, Rabat Institutes, 13000 Rabat, Morocco; Abderrahmane ZIAD, University of Caen Basse-Normandie, CREM (UMR CNRS)
    Abstract: An agent is said to be partially honest if he or she weakly prefers an outcome at a strategy profile with his truthful strategy than an outcome at a strategy profile with his false strategy, then this player must prefer strictly the \true" strategy profille to the \false" strategy profile. In this paper we consider an exchange economy with single peaked preferences. With many agents (n ≥3), if there exists at least one partially honest agent, we prove that any solution of the problem of fair division satisfying unanimity is Nash implementable.
    Keywords: Nash implementation; Partial honesty; Single-peaked preferences
    JEL: C72 D71
    Date: 2012–01
  8. By: Jean Paul Fitoussi (Observatoire Français des Conjonctures Économiques); Joseph Stiglitz (Columbia University)
    Abstract: Two years after the delivery of the report on The Measurement of Economic Performances and Social Progress (Stiglitz-Sen-Fitoussi),this paper provides some further reflections on the subject. Since 2008, when the work of the Commission began, the world has experienced several dramatic events which all call into question our measurement systems and the policies which were grounded on them: the financial crisis of 2007-2008, the grave events in Japan, the Sovereign debt crisis, and the revolutions in the Arabic world. In particular, the Japanese earthquake and its aftermath underlines three central shortcomings of our metrics: the measurement of the economic product,the measurement of well being, and the measurement of sustainability. For economists, these concerns are especially important, because we often rely on statistical (econometric analyses) to make inferences about what are good policies. Those inferences are only as reliable as the metrics that they are based on. Our statistical systems should tell us whether or not what we are doing is sustainable, economically, environmentally, politically, or socially and whether proposed policies will in fact enhance well-being . There would be little sense in pursuing policies aimed at increasing some widely used metric like GDP ifsuch policies lead to a decrease in well being.
    Keywords: 1- Economic indicators 2- Gross Domestic Products 3-Social indicators 4- Well being 5- Sustainability
    JEL: E01 E30 G10 I32 Q50 Q54
    Date: 2011–10
  9. By: Marchegiani, Lucia (University of Rome 3); Reggiani, Tommaso (University of Bologna); Rizzolli, Matteo (Free University of Bozen/Bolzano)
    Abstract: In our simple model the supervisor: i) cannot observe the agent's effort; ii) aims at inducing the agent to exert high effort; but iii) can only offer rewards based on performance. Since performance is only stochastically related to effort, evaluation errors may occur. In particular, deserving agents that have exerted high effort may not be rewarded (Type I errors) and undeserving agents that have exerted low effort may be rewarded (Type II errors). We show that, although the model predicts both errors to be equally detrimental to performance, this prediction fails with a lab experiment. In fact, failing to reward deserving agents is significantly more detrimental than rewarding undeserving agents. We discuss our result in the light of some economic and managerial theories of behavior. Our result may have interesting implications for strategic human resource management and personnel economics and may also contribute to the debate about incentives and organizational performance.
    Keywords: agency theory, organizational justice, compensation, type I and type II errors, real effort
    JEL: C91 M50 J50
    Date: 2011–12
  10. By: Dargnies, Marie-Pierre
    Abstract: Recent experimental results indicate that women do not like competitive environments as much as men do. Another literature is interested in the effect of social identity on economic behaviors. This paper investigates in the lab the impact of social identity on men and women's willingness to compete both individually and as part of a team. To this aim, participants from the Identity sessions had to go through group identity building activities in the lab while participants from the Benchmark sessions did not. The main result is that men are only willing to enter a team competition with a teammate of unknown ability if they share a common group identity with him or her. This change of behavior seems to be caused by high-performing men who are less reluctant to be matched with a possibly less able participant when he or she belongs to his group. On the other hand, group identity does not seem to induce women to take actions more in the interest of the group they belong to. --
    Keywords: Social Identity,Gender Effects,Tournament,Teams
    Date: 2011
  11. By: Toke Fosgaard (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: Pro-social behavior made when buying private goods is becoming increasingly popular. Several findings from behavioral and experimental economics however emphasizes that people are less pro-social in such situations, compared to pro-social decisions in non-market contexts. This paper suggests that emotional responses are important explanations of this finding. It is first argued that the emotional response to a pro-social decision combined with private good purchase is different from the response to a similar decision in a non-market situation. Through evidence from a laboratory experiment, it is then found, that deciding on a social choice in a market exchange involves a less positive emotional reaction to others, compared to non-market situations. Moreover, subjects in market contexts are found to be less responsive to other subjects’ contribution behavior, relative to the non-market contexts.
    Keywords: Emotions; market exchange; pro-social behavior
    JEL: C92 H41 M14
    Date: 2011–12
  12. By: Lange, Carolin Dorothée
    Abstract: Thilo Sarrazins Deutschland schafft sich ab ist eines der meistverkauften Bücher der deutschen Nachkriegszeit. Es ist viel darüber diskutiert worden, ob der Text rassistisch, sozialdarwinistisch oder diffamierend ist und was die hohen Verkaufszahlen über die deutsche Gesellschaft aussagen. Wenig hingegen hat man sich mit der tatsächlichen Rezeption des Buches beschäftigt, und genau dies ist das Ziel dieses Artikels. Quellengrundlage sind die (Laien-)Rezensionen drei maßgeblicher Online-Bücherportale (, und Als Ergebnis kann festgehalten werden, dass die von den Rezensenten benutzten Narrative und Deutungsmuster alles andere als neu sind: Sie gleichen den Schlagworten der ästhetischen Bewegung des Sturm und Drang (was unter anderem eine vehemente Kritik an sozialen Eliten beinhaltet) und reaktivieren sie. Gleichzeitig wird deutlich, dass Themen wie Integration oder Demografie überraschenderweise nur eine untergeordnete Rolle bei der Wahrnehmung des Buches spielen. -- Thilo Sarrazin's Deutschland schafft sich ab ('Germany Does Away With Itself') is one of the best-selling books of the German postwar era. Much has been discussed of whether the book is racist, social Darwinist, or defamatory, and what the high sales figures say about German society. By contrast, there has been little work done on how the book has actually been received. This article aims to do precisely that, by using (lay) reviews from three influential online booksellers (, and as source material. The reviews establish that the narratives and interpretive patterns used by the reviewers are anything but new: they closely resemble the watchwords of the Sturm und Drang aesthetic movement (which included vehement criticism of social elites) and reactivate these. At the same time, a study of such patterns makes it clear that topics such as integration and democracy have played a surprisingly subordinate role in how the book has been perceived.
    Date: 2011
  13. By: Cathrine Holst
    Abstract: Equal pay for work of equal value is a fundamental principle in EU law and so in the EEA Agreement. The paper takes as its point of departure the debate in Norway on the interpretation of EEA equal pay legislation, and relates this debate to the broader equal pay controversy in Norway. Among arguments on both sides in these debates have been arguments about what is right and just: Whereas proponents for strong equal pay commitments typically stress that social justice requires work of equal value to be paid as equally as possible, if necessary by means of state intervention and law enforcement (the law enforcement position), proponents for weaker equal pay commitments stress typically either (1) the relative justice of markets; pay ought primarily to be distributed through markets and according to market value and not according to some market-external equality standard (the free market position), or (2) that wages should be set as far as possible by strong democratic unions that negotiate with employers and employers’ organizations (the collective bargaining position). The paper focuses on the law enforcement /collective bargaining confrontations and interprets these confrontations as reflecting dilemmas of justice (Nancy Fraser); in part a redistribution/recognition dilemma; in part a justice-from-above/justice-from-below dilemma. Finally, the paper investigates to what extent these dilemmas are genuine. Are there ways to narrow down the gap between the law enforcement camp and the collective bargaining camp?
    Keywords: democracy; gender policy
    Date: 2011–12–15
  14. By: Gauri, Varun; Brinks, Daniel M.
    Abstract: A key issue with human rights is how to allocate duties correlative to rights claims. But the philosophical literature, drawing largely on naturalistic or interactional accounts of human rights, develops answers to this question that do not illuminate actual human rights problems. Charles Beitz, in recent work, attempts to develop a conception of human rights more firmly rooted in, and helpful for, current practice. While a move in the right direction, his account does not incorporate the domestic practice of human rights, and as a result remains insufficiently instructive for many human rights challenges. This paper addresses the problem of allocating correlative duties by taking the practices of domestic courts in several countries as a normative benchmark. Upon reviewing how courts in Colombia, India, South Africa, Indonesia, and elsewhere have allocated duties associated with socio-economic rights, the paper finds that courts urge parties to move from an adversarial to an investigative mode, impose requirements that parties argue in good faith, and structure a public forum of communication. The conclusion argues that judicial practice involves requiring respondents to engage in communicative, instead of strategic, action, and explores the implications of this understanding of human rights.
    Keywords: Human Rights,International Terrorism&Counterterrorism,Parliamentary Government,Gender and Law,Health Law
    Date: 2012–01–01
  15. By: Archie C. Chapman (The University of Sydney Business School); David S. Leslie (The University of Bristol); Alex Rogers (The University of Southampton); Nicholas R. Jennings (The University of Southampton)
    Abstract: In this paper, we address the problem of convergence to Nash equilibria in games with rewards that are initially unknown and which must be estimated over time from noisy observations. These games arise in many real-world applications, whenever rewards for actions cannot be prespecified and must be learned on-line. Standard results in game theory, however, do not consider such settings. Specifically, using results from stochastic approximation and differential inclusions, we prove the convergence of variants of fictitious play and adaptive play to Nash equilibria in potential games and weakly acyclic games, respectively. These variants all use a multi-agent version of Q-learning to estimate the reward functions and a novel form of the e-greedy decision rule to select an action. Furthermore, we derive e-greedy decision rules that exploit the sparse interaction structure encoded in two compact graphical representations of games, known as graphical and hypergraphical normal form, to improve the convergence rate of the learning algorithms. The structure captured in these representations naturally occurs in many distributed optimisation and control applications. Finally, we demonstrate the efficacy of the algorithms in a simulated ad hoc wireless sensor network management problem.
    Keywords: Game theory, distributed optimisation, learning in games.
    Date: 2011–08
  16. By: Hervé Dumez (CRG - Centre de recherche en gestion - CNRS : UMR7655 - Polytechnique - X)
    Abstract: L'action constitue l'objet d'analyse fondamental des chercheurs en sciences sociales (gestionnaires, sociologues, politistes, psychologues, économistes même peut-être). Il s'agit par ailleurs d'une des réalités les plus banales et les plus universelles, les plus évidentes. Mais peut-on la penser, et si oui, comment ? Sur ce thème, John Langshaw Austin a écrit un texte aussi étrange que profond.
    Keywords: performativité du langage; John Langshaw Austin; excuses organisationnelles; analyse du langage ordinaire; aporie
    Date: 2011
  17. By: Richard Darbéra (LATTS - Laboratoire Techniques, Territoires et Sociétés - Université Paris Est Marne-la-Vallée - Ecole des Ponts ParisTech - CNRS : UMR8134 - Université Paris Est)
    Abstract: Le stationnement dans l'attente de clients est un enjeu central dans la concurrence qui oppose les taxis aux autres voitures de location avec chauffeur. Qu'il s'agisse du stationnement sur la voie publique, qui est en France un monopole des taxis, ou dans les gares et les aéroports, ou encore dans les espaces privés, la possibilité de stationner confère un avantage économique qui est souvent l'objet de conflits.
    Keywords: Taxi, concurrence, stationnement
    Date: 2011–05
  18. By: Wieland Mueller; Fangfang Tan
    Abstract: Previous experimental results on one-shot sequential two-player games show that group decisions are closer to the subgame-perfect Nash equilbirum than individual decisions. We extend the analysis of inter-group versus inter-individual decision making to a Stackelberg market game, by running both one-shot and repeated markets. Whereas in the one-shot markets we find no significant differences in the behavior of groups and individuals, we find that the behavior of groups is further away from the subgame-perfect equilibrium of the stage game than that of individuals. To a large extent, this result is independent of the method of eliciting choices (sequential or strategy method) and the method used to account for observed first- and second-mover behavior. We provide evidence on followers' response functions and electronic chats to offer an explanation for the differential effect that the time horizon of interaction has on the extent of individual and group players (non)conformity with subgame perfectness.
    Keywords: Stackelberg market, groups versus individuals, discontinuity effect, experiment
    JEL: C72 C92 L13
    Date: 2011–10
  19. By: Giovanna Devetag; Hykel Hosni; Giacomo Sillari
    Abstract: This paper presents the results of an experiment on mutual versus common knowl- edge of advice in a two-player weak-link game with random matching. Our experimen- tal subjects play in pairs for thirteen rounds. After a brief learning phase common to all treatments, we vary the knowledge levels associated with external advice given in the form of a suggestion to pick the strategy supporting the payo-dominant equilib- rium. In the mutual knowledge of level 1 treatment, the suggestion appears on every subject's monitor at the beginning of every round, with no common knowledge that everybody sees the same suggestion. In the mutual knowledge of level 2 treatment, the same suggestion appears on each subject's monitor, accompanied by the request to "send" the suggestion to the partner in the round, followed by a notication that the message has been read. Finally, in the common knowledge treatment, the suggestion is read aloud by the experimenter at the end of the learning phase. Our results are somewhat surprising and can be summarized as follows: in all our treatments both the choice of the efficiency-inducing action and the percentage of e cient equilibrium play are higher with respect to the control treatment, revealing that even a condition as weak as mutual knowledge of level 1 is sufficient to signicantly increase the salience of the e cient equilibrium with respect to the absence of advice. Furthermore, and contrary to our hypothesis, mutual knowledge of level 2 (as the one occurring in our "message" treatment) induces successful coordination more frequently than common knowledge.
    Keywords: Coordination games; experimental philosophy; epistemic attitudes, weak-link game; conventions
    JEL: D01 D83
    Date: 2012–01–17
  20. By: Hübner, Frank
    Abstract: Die von Gale und Shapley in ihrem 1962 veröffentlichten Artikel College Admissions and the Stability of Marriage vorgestellte deferred acceptance procedure hat in der Literatur zu einer umfassenden Diskussion über Zuordnungsverfahren auf zweiseitigen Märkten geführt, die sich mit der Fragestellung beschäftigen, wie die Agenten zweier disjunkter Mengen anhand gegenseitiger Präferenzlisten einander zugeordnet werden können. Dem von Gale und Shapley vorgestellten Algorithmus kam dabei in den letzten Jahren nicht nur in der Theorie eine große Bedeutung zu, sondern auch in der Praxis wird dem Versagen zahlreicher Märkte mit solchen Mechanismen entgegengetreten. Diese Arbeit geht ausführlich auf die von Gale und Shapley entwickelte deferred acceptance procedure und die sich hieraus ergebenden Manipulationsanreize auf zweiseitigen Märkten anhand des Hochzeits- und college admissions-Problems ein. Die im jeweiligen Modell resultierenden Manipulationsanreize werden in vier Arten von Manipulationen gegliedert - die Manipulation anhand von Präferenzen, anhand vorzeitiger bilateraler Vereinbarungen, anhand von endowments und anhand der Quote - und jeweils miteinander verglichen. Dabei wird deutlich, dass weder die deferred acceptance procedure noch irgendein anderes Zuordnungsverfahren, das stabile Zuordnungen ergibt, vollständig immun gegen Manipulationen ist. Anhand zahlreicher Theoreme und Überlegungen kann jedoch gezeigt werden, dass die Anreize oft nur für eine Seite des Marktes existieren und bei größer werdenden Märkten in der Praxis sogar abnehmen. -- The deferred acceptance procedure introduced by Gale and Shapley in their article College Admissions and the Stability of Marriage (1962) led to a huge and still growing discussion in the literature on two-sided matching markets. The algorithm didn't only become important in theory but is also often used in practice by policymakers to confront market failure. This paper explains the deferred acceptance procedure in detail and presents a survey on the resulting manipulability on twosided matching markets, e.g., within the marriage and college admissions problem. The incentives to manipulate are categorized in four groups of manipulations - manipulation via preferences, via pre-arranged matches, via endowments and via capacities - and are then compared for both problems. It is shown that there exists no stable matching procedure that is strategy-proof for all agents. But in practice many incentives to manipulate only apply to one side of the market and decrease with the size of the market.
    Keywords: Matching,university admission,manipulation,strategic behavior
    JEL: C78 D78 I29
    Date: 2011
  21. By: Marc Flandreau (Graduate Institute of International Studies and Development, Geneva); Stefano Ugolini (Scuola Normale Superiore, Pisa)
    Abstract: The National Monetary Commission was deeply concerned with importing best practice. One important focus was the connection between the money market and international trade. It was said that Britain’s lead in the market for “acceptances” originating in international trade was the basis of its sterling predominance. In this article, we use a so-far unexplored source to document the portfolio of bills that was brought up to the Bank of England for discount and study the behavior of the Bank of England during the crisis of 1866 (the so-called Overend-Gurney panic) when the Bank began adopting lending of last resort policies (Bignon, Flandreau and Ugolini 2011). We compare 1865 (a “normal” year) to 1866. Important findings include: (a) the statistical predominance of foreign bills in the material brought to the Bank of England; (b) the correlation between the geography of bills and British trade patterns; (c) a marked contrast between normal times lending and crisis lending in that main financial intermediaries and the “shadow banking system” only showed up at the Bank’s window during crises; (d) the importance of money market investors (bills brokers) as chief conduit of liquidity provision in crisis; (e) the importance of Bank of England’s supervisory policies in ensuring lending-of-last resort operations without enhancing moral hazard. An implication of our findings is that Bank of England’s ability to control moral hazard for financial intermediaries involved in acceptances was another reason for the rise of sterling as an international currency.
    Date: 2011–02
  22. By: Achille Basile (Università di Napoli Federico II and CSEF); Maria Gabriella Graziano (Università di Napoli Federico II and CSEF); Maria Laura Pesce (Università di Napoli Federico II)
    Abstract: The paper proposes a notion of fairness which overcomes the conflict arising between efficiency and the absence of envy in economies with uncertainty and asymmetrically informed agents. We do it in general economies which include, as particular cases, the main differential information economies studied in the literature. The analysis is further extended by allowing the presence of large traders, which may cause the lack of perfect competition.
    Keywords: Mixed markets, fairness, envy, efficiency, asymmetric information
    JEL: C71 D51 D82
    Date: 2012–01–11
  23. By: Konrad, Kai A.; Kovenock, Dan
    Abstract: We study an all-pay contest with multiple identical prizes (lifeboat seats). Prizes are partitioned into subsets of prizes (lifeboats). Players play a two-stage game. First, each player chooses an element of the partition (a lifeboat). Then each player competes for a prize in the subset chosen (a seat). We characterize and compare the subgame perfect equilibria in which all players employ pure strategies or all players play identical mixed strategies in the first stage. We find that the partitioning of prizes allows for coordination failure among players when they play nondegenerate mixed strategies and this can shelter rents and reduce rent dissipation compared to some of the less efficient pure strategy equilibria. --
    Keywords: All-pay contest,multiple prizes,rent dissipation,lifeboat
    JEL: D72 D74
    Date: 2011
  24. By: Carfì, David; Perrone, Emanuele
    Abstract: In this paper we apply the Complete Analysis of Differentiable Games (introduced by D. Carfì in [3], [6], [8], [9], and already employed by himself and others in [4], [5], [7]) to the classic Cournot Duopoly (1838), classic oligopolistic market in which there are two enterprises producing the same commodity and selling it in the same market. In this classic model, in a competitive background, the two enterprises employ, as possible strategies, the quantities of the commodity produced. The main solutions proposed in literature for this kind of duopoly are the Nash equilibrium and the Collusive Optimum, without any subsequent critical exam about these two kinds of solutions. The absence of any critical quantitative analysis is due to the relevant lack of knowledge regarding the set of all possible outcomes of this strategic interaction. On the contrary, by considering the Cournot Duopoly as a differentiable game (a game with differentiable payoff functions) and studying it by the new topological methodologies introduced by D. Carfì, we obtain an exhaustive and complete vision of the entire payoff space of the Cournot game (this also in asymmetric cases with the help of computers) and this total view allows us to analyze critically the classic solutions and to find other ways of action to select Pareto strategies. In order to illustrate the application of this topological methodology to the considered infinite game, several compromise decisions are considered, and we show how the complete study gives a real extremely extended comprehension of the classic model.
    Keywords: duopoly; normal-form games; microeconomic Policy; complete study of differentiable games; bargaining solutions
    JEL: B21 C71 C81 C7 O12 C72
    Date: 2012

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