nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2012‒02‒20
twelve papers chosen by
Erik Thomson
University of Manitoba

  2. Why economics should be a modest and reasonable science By Bresser Pereira, Luiz Carlos
  3. Mainstream si keynesism: -două doctrine, două metode,aceleaşi idei- By Constantinescu , Radu
  4. The boundaries of the state By Wohlgemuth, Michael
  5. Laws and Norms By Benabou, Roland; Tirole, Jean
  6. A Dynamical Approach to Conflict Analysis By Sebastian Ille
  7. Agent-based Versus Macroscopic Modeling of Competition and Business Processes in Economics and Finance By Aleksejus Kononovicius; Vygintas Gontis; Valentas Daniunas
  8. La place de la notion de chômage involontaire dans la théorie keynésienne de l'emploi By Alain Béraud
  9. Ben Bernanke and the Zero Bound By Laurence M. Ball
  10. Beyond the selfishness paradigm and "Organizational Citizenship": Work-related prosocial orientation and organizational democracy By Moldaschl, Manfred; Weber, Wolfgang
  11. A game theoretical analysis of economic sanction By Shidiqi, khalifany ash; Pradiptyo, rimawan
  12. Strategic defense and attack for series and parallel reliability systems: reply to rejoinder By Hausken, Kjell

    Abstract: State involvement in the economy and society in general was and is still a fundamental problem, being approached by the all schools of economic thought. Its role was perceived differently from one historical stage to another and from one country to another, always constituting itself in a matter of political dispute, both in theory and in practice. In these circumstances, the issue of rule of law , defined by the Jacques Chevallier, as the "type of political regime in which state power is framed and limited by law", initially appreciated that represents a lawyers privilege, by starting from the privilege of the idea that all: rulers and ruled, the state, shall be subject to law, that "nobody is above the law", is approached from the twentieth century by philosophers, politicians or, recently, economists opposing to the totalitarian state and welfare state.
    Keywords: statul de drept; ordine spontană; liberalism; domnia legii
    JEL: K00 K30 K10
    Date: 2012–02–13
  2. By: Bresser Pereira, Luiz Carlos
    Abstract: Unlike the methodological sciences such as mathematics and decision theory, which use the hypothetical-deductive method and may be fully expressed in complex mathematical models because their only truth criterion is logical consistency, the substantive sciences have as their truth criterion the correspondence to reality, adopt an empirical-deductive method, and are supposed to generalize from and often unreliable regularities and tendencies. Given this assumption, it is very difficult for economists to predict economic behavior, particularly major financial crises.
    Date: 2012–02–07
  3. By: Constantinescu , Radu
    Abstract: Taking into consideration that, in order to talk about science we need both different opinions and construtive criticism, the starting point of the issue would be: “How do we succeed to manage in a constructive way different theories that debate the same theme- the economic crisis?”. As a concequence, the purpose of the essay is to critically analize the keynesism and the mainstream perspectives, currently used to solve the problems generated by the crisis and the economic cycle, as well as to discover both the convergence and the discrepancies between these two main economic doctrines. In the current work, it will be noted that, in order to achieve the above mentioned purpose, we will resume to schematics and abstracting the mechanisms, also to explaining the phenomenons and the informations, as well as to processing and interpreting these informations from a personal perspective, closer to the Austrian School than to the manipulating orthodoxism.
    Keywords: Economic cycles, crisis, mainstream, keynesianism
    JEL: F4 G14 N1 G18 G01
    Date: 2011
  4. By: Wohlgemuth, Michael
    Abstract: The paper is organized as follows: in part 2, I give a short account of Humboldt's boundaries of the state that relates to many present-day challenges to classical liberalism: his blunt rejection of any solicitude of the state for the positive welfare of the citizen which also covers education, religion and any kind of moral paternalism. In part 3, I refer to the new economic literature on the optimal size and number of nations in order to discuss whether small states are more likely to be (nearly) minimal states. This literature tends to disregard Humboldt's arguments in favour of exposing the individual to varieties of situations that he can choose and from which he can learn to self-develop. Therefore, in part 4, I argue that the evolutionary merits of this exposure can be illustrated by regarding institutional competition as a Hayekian discovery procedure. In part 5, I look at the partial removal of borders within the European Union and, using some intuitions from club theory, I argue that, in terms of the size of European government, integration has become in most areas too deep whereas in terms of the size of membership in the Union the EU has grown too big in some areas and too small in others. I conclude with a plea for more decentralization and competition amongst jurisdictions as a way to lead, as if by an invisible hand, to at least somewhat more limited states. My qualified claim is thus: more, and more open, boundaries between states lead to more limited governments. --
    Date: 2011
  5. By: Benabou, Roland (Princeton University); Tirole, Jean (IDEI)
    Abstract: This paper analyzes how private decisions and public policies are shaped by personal and societal preferences ("values"), material or other explicit incentives ("laws") and social sanctions or rewards ("norms"). It first examines how honor, stigma and social norms arise from individuals' behaviors and inferences, and how they interact with material incentives. It then characterizes optimal incentive-setting in the presence of norms, deriving in particular appropriately modified versions of Pigou and Ramsey taxation. Incorporating agents' imperfect knowledge of the distribution of preferences opens up to analysis several new questions. The first is social psychologists' practice of "norms-based interventions", namely campaigns and messages that seek to alter people's perceptions of what constitutes "normal" behavior or values among their peers. The model makes clear how such interventions operate, but also how their effectiveness is limited by a credibility problem, particularly when the descriptive and prescriptive norms conflict. The next main question is the expressive role of law. The choices of legislators and other principals naturally reflect their knowledge of societal preferences, and these same "community standards" are also what shapes social judgements and moral sentiments. Setting law thus means both imposing material incentives and sending a message about society's values, and hence about the norms that different behaviors are likely to encounter. The analysis, combining an informed principal with individually signaling agents, makes precise the notion of expressive law, determining in particular when a weakening or a strengthening of incentives is called for. Pushing further this logic, the paper also sheds light on why societies are often resistant to the message of economists, as well as on why they renounce certain policies, such as "cruel and unusual punishments", irrespective of effectiveness considerations, in order to express their being "civilized".
    Keywords: motivation, incentives, esteem, reputation, honor, stigma, social norms, culture, taxation, law, punishments, norms-based interventions, expressive content
    JEL: D64 D82 H41 K1 K42 Z13
    Date: 2012–01
  6. By: Sebastian Ille
    Abstract: The Conflict Analysis approach by Hipel and Fraser (1984) is well equipped to model repeated games. Players are assumed to posses a sequential reasoning that allows them to ( not necessarily correctly) anticipate the reaction of other players to their strategies. An individual?s best response strategy is thus defined based on this projection, adding additional stability conditions to strategic choice and increasing the set of potential equilibria beyond pure Nash equilibria. Yet, the original Conflict Analysis approach lacks the ability to genuinely model dynamic repeated games, in which past play defines the condition for future interactions. This article will illustrate how the original model can be adapted to include endogenous individual preferences that are defined by the strategic choice of players during past play, allowing to model the reciprocal connection between preferential change and best response play in repeated games. A dummy game serves as an exemplar and helps to visualise the results obtained from this extension.
    Keywords: Game Theory, Repeated Games, Computational Methods, Non-Nash Equilibria, Dominated Strategies
    JEL: C62 C65 D74 D83 D84
    Date: 2012–02–13
  7. By: Aleksejus Kononovicius; Vygintas Gontis; Valentas Daniunas
    Abstract: We present examples of agent-based and stochastic models of competition and business processes in economics and finance. We start from as simple as possible models, which have microscopic, agent-based, versions and macroscopic treatment in behavior. Microscopic and macroscopic versions of herding model proposed by Kirman and Bass diffusion of new products are considered in this contribution as two basic ideas. Further we demonstrate that general herding behavior can be considered as a background of nonlinear stochastic model of financial fluctuations.
    Date: 2012–02
  8. By: Alain Béraud (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise)
    Abstract: La notion de chômage involontaire a longtemps occupé dans la théorie économique un rôle central. L'expression apparaît très tôt, dès le début du 20ème siècle, quand les économistes commencèrent à s'intéresser au chômage. Elle désigne simplement les chômeurs qui accepteraient de travailler au taux de salaire courant. Keynes donna de cette expression un définition différente, beaucoup plus étroite. Le chômage involontaire est, selon lui, le chômage qui trouve son origine dans l'insuffisance de la demande de biens. Au début des années 1970, Phelps, Alchian et Holt lui opposèrent une analyse où les agents ne disposent que d'une information imparfaite sur les salaires et les emplois. Leur idées furent reprises et développées notamment par Diamond, Mortensen et Pissarides. Dans la théorie du chômage d'équilibre, l'opposition entre chômage volontaire et chômage involontaire n'a pas de sens, que l'on définisse le chômage involontaire comme le faisait Keynes ou, plus simplement, comme l'offre de travail excédentaire. Mais, plus fondamentalement, ce que cette approche rejette c'est l'idée que l'on peut faire abstraction du " chômage frictionnel " dans l'analyse de la détermination du niveau de l'emploi. La décomposition du chômage en une série de catégories -- frictionnel, cyclique, volontaire, involontaire... -- n'est pas susceptible de nous aider dans une analyse théorique ou empirique du chômage.
    Keywords: Chômage volontaire, chômage d'équilibre, solution de marchandage de Nash, rigidité des salaires, fonction d'appariement, Keynes, Beveridge, Phelps, Diamond, Mortensen, Pissarides.
    Date: 2011
  9. By: Laurence M. Ball
    Abstract: From 2000 to 2003, when Ben Bernanke was a professor and then a Fed Governor, he wrote extensively about monetary policy at the zero bound on interest rates. He advocated aggressive stimulus policies, such as a money-financed tax cut and an inflation target of 3-4%. Yet, since U.S. interest rates hit zero in 2008, the Fed under Chairman Bernanke has taken more cautious actions. This paper asks when and why Bernanke changed his mind about zero-bound policy. The answer, at one level, is that he was influenced by analysis from the Fed staff that was presented at the FOMC meeting of June 2003. This answer raises another question: why did the staff's views influence Bernanke so strongly? I seek answers to this question in the social psychology literature on group decision-making.
    JEL: E52 E58 E65
    Date: 2012–02
  10. By: Moldaschl, Manfred; Weber, Wolfgang
    Abstract: Many economists and psychologists refuse the idea that behaviour could be based on any other motives than selfish and hedonistic ones, at least in the context of economy, mainly based on a methodological premise, not so often on empirical research. The corresponding image of man that is inherent in exchange theories and expectancy-value theories has had a strong influence on research over the last decades. Despite this, concepts like Organizational Citizenship or Corporate Identity are in search of potentials concerning voluntary work engagement. And in the 'civil society' practical campaigns are looking for voluntary workers who help compensate socially disintegrative effects of capitalism without adjectives (Vaclac Klaus) and give people back meaning in self-determined work. These are two very different things which are deeply linked though. In this article we address this difference, criticize the concepts like Organizational Citizenship Behaviour (OCB), discuss concepts of prosocial work motivation and organizational democracy, and bind this all together in a conceptual alternative of mutualistic-prosocial work orientation. --
    Date: 2011
  11. By: Shidiqi, khalifany ash; Pradiptyo, rimawan
    Abstract: Economic sanction has been widely used and increasingly a popular tool in maintaining peace and political stability in the world. The use of economic sanction, as opposed to the use of military power, to punish target countries have been supported by the Charter of United Nations (UN). Tsebelis (1990) modelled economic sanctions using game theory and found that any attempt to increase the severity of the sanctions was counterintuitive, namely the policy reduced the likelihood of sender country(s) in enforcing economic sanction, however, it did not change the probability of the target country(s) in violating international agreement/law. This paper focuses on the refinement of the sanction game proposed by Tsebelis (1990) to analyse international relations. Recent findings from various studies on the effectiveness of economic sanction have been used to reconstruct the game. In contrast to Tsebelis’(1990) findings, any attempt to increase the severity of economic sanction may reduce the probability of the target country(s) in violating international agreement/law. A similar result was obtained in the case for which the sender country(s) applies any policy in preventing violation of international agreement/law by providing aids, assistances, and incentives to the target country.
    Keywords: Economic Sanction; the Sanction/Inspection Games; Mixed Strategy Equilibrium
    JEL: F51 K42 C72
    Date: 2011–02–25
  12. By: Hausken, Kjell
    Abstract: Kovenock and Roberson’s (2012ab) replication of Hausken’s (2008a) equations and parameter restrictions do not enhance our insight into the defense and attack of reliability systems. This reply intends to fill the remaining understanding gaps.
    Keywords: Game theory; Reliability theory; OR in military; Conflict; Contest; Network; Colonel Blotto game
    JEL: D74 H56 C72
    Date: 2012

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