nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2012‒09‒30
seventeen papers chosen by
Erik Thomson
University of Manitoba

  1. Codes of conduct, private information, and repeated games By Juan I. Block; David K. Levine
  2. Urban(c)idade: diálogo entre a Sociologia, a Arquitectura, a Economia e a Geografia - a experiência do Mestrado em Metropolização, Planeamento Estratégico e Sustentabilidade By Reis, Judite Lourenço; Salvador, Regina; Cardoso, Sónia Paulo; Marques, Bruno Pereira
  3. Liberty and the post-utilitarian society By Saint-Paul, Gilles
  4. A peculiar Archaeology: Searching for Mr. Giffen's Behaviour By Michael V. White
  5. Social costs and normative economics By Paolo Ramazzotti
  6. Evidential equilibria in static games By Sanjit Dhami; ali al-Nowaihi
  7. Book review: what money can’t buy: the moral limits of markets. By Shidlo, Gil
  8. Walras et la notion de bien d'intérêt public By Alain Béraud
  9. How can we anticipate crises? By Vieru, Elena Bianca
  10. Equilibrium Existence and Uniqueness In Network Games with Additive Preferences By Yann Rébillé; Lionel Richefort
  11. Equilibrium Selection in Experimental Games on Networks By Charness, Gary; Feri, Francesco; Meléndez-Jiménez, Miguel A.; Sutter, Matthias
  12. Addressing Economic Crises: The Reference-Class Problem By Xavier De Scheemaekere; Kim Oosterlinck; Ariane Szafarz
  13. "The Common Error of Common Sense: An Essential Rectification of the Accounting Approach" By Egmont Kakarot-Handtke
  14. Do I Care if You Know I Betrayed You? By James C. Cox; Danyang Li
  15. Efficiency, Team building, and Spillover in a Public-goods Game By Charness, Gary
  16. The negotiations which led to the creation of the European Monetary System thirty years ago can shed light on the Eurozone’s current crisis. By Mourlon-Druol, Emmanuel
  17. Liberté et société post-utilitariste By Gilles Saint-Paul

  1. By: Juan I. Block; David K. Levine
    Abstract: We examine self-referential games in which there is a chance of understanding an opponent’s intentions. Our main focus is on the interaction of two sources of information about opponents’ play: direct observation of the opponent’s code-of-conduct, and indirect observation of the opponent’s play in a repeated setting.
    Keywords: Game theory
    Date: 2012
  2. By: Reis, Judite Lourenço; Salvador, Regina; Cardoso, Sónia Paulo; Marques, Bruno Pereira
    Abstract: We should consider that, if mankind was “born” in the African savanna, it was in the Middle East agrarian communities that it became “civilized”. Thus, as mentioned by O. Spengler, world history is largely the history of cities. Far from being a theoretical essay and challenging of existing paradigms, we will try to transmit the personal and professional experiences of the communication proponents, students and faculty of the Master in Metropolization, Strategic Planning and Sustainability, with academic backgrounds raging from Sociology, to Architecture, Economics and Geography. Sociology, the present congress main subject, emerged as a Science in the 19 th Century, strongly supported in the need to understand the challenges presented by the emerging Industrial Revolution, i.e., the biunivocal relation between Urbanization and Industrialization. However, the “mark” of Urbanization in the Epistemology of Sociology was not limited to the, then emerging science, foundational act. Indeed, the 1920s and 1930s saw the emergence of the so-called Chicago School, more recently stood out authors such as Manuel Castells and Saskia Sassen, just to mention two of the best known contemporary urban sociologists. Thus, shown the importance of Sociology in the analysis of issues related to Cities and Urban Spaces, we will try to emphasize the contribution of other sciences and disciplines, because the approaches can be multiple and only through an interdisciplinary and systemic view we can understand in more detail the urban scale.
    Keywords: City; Interdisciplinarity; “Metropolização; Planeamento Estratégico e Sustentabilidade”; Sociology
    JEL: O18 R0 A12
    Date: 2012
  3. By: Saint-Paul, Gilles (TSE)
    Abstract: Utilitarian foundations for limited government are shaky insofar as they assume rational and consistent individuals. Recently economists’ assumption of rational actors has come under sustained attack. Behavioural economics has suggested that people are plagued by irrational biases and inconsistencies. The author elucidates how these developments have led to a post-utilitarianism which is held to justify paternalistic interventions by the state via ‘sin taxes’ , direct bans or new obligations. Individual responsibility is seriously undermined, as is faith in markets. He concludes that supporters of individual freedom need to move away from utilitarian reasoning, reassert core values of autonomy and responsibility, and define strict limits on the scope of government intervention.
    Keywords: behavioural economics, utilitarianism, government, paternalism
    Date: 2012–09
  4. By: Michael V. White
    Abstract: It has been claimed that references to ‘Giffen behaviour’ constituted a single research project, driven by attempts to establish whether an initial ‘conjecture’ by Alfred Marshall had empirical validity. There is, however, no stable basis for that claim, in part because Marshall produced contradictory accounts of Giffen behaviour and, while he referred to the statistician Robert Giffen as the source for his different accounts, Giffen rejected a key assumption made by Marshall. Moreover, by the mid-1920s, discussion of an upward-sloping demand curve attached no particular significance to an illustration referenced by Marshall because other and quite different explanations were regarded as equally important. The formulation of the Irish famine Giffen exemplar in P.A. Samuelson’s Economics textbook illustrates how Giffen behaviour was stabilised as the single possible exception to ‘the law of demand’ in the 1960s.
    Date: 2012–09
  5. By: Paolo Ramazzotti (University of Macerata)
    Abstract: The aim of the paper is to assess the notion of social costs from an evolutionary institutionalist perspective. It argues that: social costs can be defined as the difference between the actual outcome of a historically defined capitalist market economy and the outcome desired by the members of society; markets are only one of the possible coordinating instances in such economies, albeit the prevalent one, the others including non-profit organizations, the welfare state, households, etc.; under these circumstances, the assessment and organization of economic activities requires a meta-coordinating instance; the extension of capabilities, as theorized by Amartya Sen, may provide such an instance. The paper begins with a brief discussion of the themes of, and problems related to, the conventional theory of social costs. It then specifies the context of the discussion by situating it in a historically defined economy: a capitalist market one. It contends that the rationale of such an economy involves treating labor, nature and money as "fictitious commodities", and that the existence of social costs ultimately depends on this central feature. Based on this approach, it discusses Kapp's suggestion that policy should focus on minimal social requirements. It points out, in this respect, that a broader criterion is required. Drawing on Sen, the paper stresses that choices cannot be reduced to a single dimension - such as (economic) welfare - and that the economic context may preclude the freedom to choose how to conduct one's life. The implication is a qualification of social costs: they are determined by economic activities that prevent people from achieving the capabilities they need. The public policy implications of the above approach are that many alternatives to the status quo are possible. In the light of these features, the discussion reasserts the need for a normative approach to economic inquiry.
    Date: 2012–03
  6. By: Sanjit Dhami; ali al-Nowaihi
    Abstract: Under uncertainty about what others will do, evidence suggests that people often use evidential reasoning (ER), i.e., they assign diagnostic significance to their own actions in forming beliefs about the actions of others. ER successfully explains the evidence from many important games. We provide a formal theoretical framework for discussing ER by proposing evidential games and the relevant solution concept evidential equilibrium (EE). We derive the relation between a Nash equilibrium and an EE. We apply EE to several common games including the prisoners’ dilemma and oligopoly games.
    Keywords: Evidential and causal reasoning; evidential games; social projection functions; ingroups and outgroups; evidential equilibria and consistent evidential equilibria; Nash equilibria, common knowledge and epistemic foundations.
    Date: 2012–07
  7. By: Shidlo, Gil
    Abstract: In What Money Can’t Buy, Sandel examines one of the biggest ethical questions of our time and provokes a debate that’s been missing in our market-driven age: What is the proper role of markets in a democratic society, and how can we protect the moral and civic goods that markets do not honour and money cannot buy? Gil Shidlo feels that Sandel brings the issue to be debated and raises it in a way each one of us feels fully equipped to voice concerns.
    Date: 2012–06–17
  8. By: Alain Béraud (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise)
    Abstract: Walras définit les biens d'intérêt public comme ceux dont le besoin n'est senti dans toute son étendue que par la communauté ou l'Etat. L'article étudie la cohérence de cette définition, ses implications et ses rapports avec les définitions que les économistes avaient données ou donnent aujourd'hui des biens publics.
    Keywords: Walras; biens publics; services publics
    Date: 2012–09–14
  9. By: Vieru, Elena Bianca
    Abstract: Every crisis should teach us a valuable lesson. However, it seems that we learn almost nothing since they still occur from time to time strongly affecting the world economies. The basic question from where we started our research and to which we tried to answer as clearly as possible is the following: How can we anticipate future crises before they begin to make their presence felt on the global economic scene? The answer is both simple and handy, as the most consistent and relevant explanations in this regard come from the Austrian School of economics. We refer, in particular, to the theory of business cycle. Analyzing this problem, we discovered multiple causes, or better said clues that might help us anticipate and recognize the onset time of economic recessions. We will focus on two of them, considered to be the most important ones. The first clue is closely linked to an expansionary monetary policy that led to a deterioration of credit and to inflation. The second sign that we will be argued in this paper, a sign in close connection with the first clue, is due to the application of protectionist measures or, in other words, the second cause was actually the state’s interventionism.
    Keywords: Austrian School; business cycle; crisis; expansion; interventionism
    JEL: E32 E51 E40 B25 B53 G21
    Date: 2011–11
  10. By: Yann Rébillé (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Lionel Richefort (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: A directed network game of imperfect strategic substitutes with heterogeneous players is analyzed. We consider concave additive separable utility functions that encompass the quasi-linear ones. It is found that pure strategy Nash equilibria verify a non-linear complementarity problem. By requiring appropriate concavity in the utility functions, the existence of an equilibrium point is shown and equilibrium uniqueness is established with a P -matrix. Then, it appears that previous findings on network structure and sparsity hold for many more games.
    Keywords: network game ; additive preferences ; complementarity problem ; P -matrix ;
    Date: 2012–09–17
  11. By: Charness, Gary; Feri, Francesco; Meléndez-Jiménez, Miguel A.; Sutter, Matthias
    Abstract: We study behavior and equilibrium selection in experimental network games. We varytwo important factors: (a) actions are either strategic substitutes or strategic complements, and(b) subjects have either complete or incomplete information about the structure of a randomnetwork. Play conforms strongly to the theoretical predictions, providing an impressivebehavioral confirmation of the Galeotti, Goyal, Jackson, Vega-Redondo, and Yariv (2010)model. The degree of equilibrium play is striking, even with incomplete information. We findthat under complete information, subjects typically play the stochastically-stable (inefficient)equilibrium when the game involves strategic substitutes, but play the efficient one with strategiccomplements. Our results suggest that equilibrium multiplicity may not be a major concern.Subjects’ actions and realized outcomes under incomplete information depend strongly on boththe degree and the connectivity. When there are multiple equilibria, subjects begin by playing theefficient equilibrium, but eventually converge to the inefficient one.
    Keywords: Economics, General, Economics, Other, random networks, incomplete information, strategic substitutes, strategic complements, experiment
    Date: 2012–02–18
  12. By: Xavier De Scheemaekere; Kim Oosterlinck; Ariane Szafarz
    Abstract: Addressing crises raises a sharp reference-class problem in economics. Namely, economic theory lacks an inclusive and consistent classification of crises. This problem stems from the fact that economists tend to adapt their views on crises to recent episodes, and omit averted and potential crises. They thus fail to imagine innovations in the forms crises can take. We identify three main factors that hamper the economic analysis of crises: the lack of imagination, sample biases, and the Peso problem. Using several historical examples, this paper argues that only an ex ante classification of crises derived from a conceptual approach would address the reference-class problem properly. Multiple-solution models offer a promising avenue to solve this problem.
    Keywords: Economic Crisis; Economic History; Single-Case Probability; Epistemology
    JEL: B40 G10 N00
    Date: 2012–09–10
  13. By: Egmont Kakarot-Handtke
    Abstract: This paper takes the explanatory superiority of the integrated monetary approach for granted. It will be demonstrated that the accounting approach could do even better, provided it frees itself from theoretically ill-founded notions like GDP and other artifacts of the equilibrium approach. National accounting as such does not provide a model of the economy but is, rather, the numerical reflex of the underlying theory. It is this theory that will be scrutinized, rectified, and ultimately replaced in what follows. The formal point of reference is "the integrated approach to credit, money, income, production and wealth" of Wynne Godley and Marc Lavoie.
    Keywords: New Framework of Concepts; Structure-Centric; Axiom Set, Primacy of Theory; Income; Profit; Distributed Profit; Money; Flow; Residual; Transaction Matrix; General Complementarity
    JEL: B41 E01
    Date: 2012–09
  14. By: James C. Cox; Danyang Li
    Abstract: It has been reported that betrayal aversion in influences the trust decision (Bohnet and Zeckhauser 2004; Bohnet et al. 2008). This paper adds to the literature by examining how concern for others' disutility from betrayal can affect the decision to repay trust. We compare trustees' behavior when betrayal is obfuscated to an identical monetary payoffs situation where betrayal is revealed. We find that more trustees choose to defect in our experiment when betrayal is obfuscated than when it is revealed. Our result suggests that concern for betrayal costs influences not only the decision to trust but also the decision to repay trust.
    Keywords: Experiments, Betrayal Cost, Trust, Cooperation
    JEL: C72 C91
    Date: 2012–09
  15. By: Charness, Gary
    Abstract: The notions of one’s social identity, group membership, and homophily have recentlybecome topics for economic theory and experiments. Yet, since people are members of manygroups (e.g., race, gender, handedness) what determines which identity or identities are the mostsalient in different environments? Further, how do these factors trade off against one’s financialinterest? We conduct public-goods experiments in which we permit endogenous group-formationand vary whether there is a team-building exercise and whether some people receive anendowment twice as much as others receive. We do see evidence that team identity affectsendogenous networks when there is only one endowment type; however, when both identities arepresent, high-endowment participants are strongly attracted to linking up with each other. Oneinteresting result is that the team-building exercise greatly increases the level of contributionwithout respect to whether one is linked to people from one’s team-building exercise.Apparently the positive feeling engendered by the group exercise spills over to participants whowere in another team; however, this is not the case when one group has been in a 4-person teamand the other four participants have not.
    Keywords: Economics, Other, Economics, General, experiment, identity, team building, homophily
    Date: 2012–05–04
  16. By: Mourlon-Druol, Emmanuel
    Abstract: The Euro’s roots can be traced back to the creation of the European Monetary System (EMS) in 1979. Emmanuel Mourlon-Druol argues that the negotiations that led to the establishment of the EMS can shed light on the current travails of the Eurozone, and that there are some striking similarities with recent Eurozone summits. Looking at the EMS negotiations now furthers our understanding of European integration and the evolution of the world monetary system.
    Date: 2012–07–17
  17. By: Gilles Saint-Paul (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, TSE - Toulouse School of Economics - Toulouse School of Economics)
    Abstract: Les fondements utilitaristes d'un gouvernement limité sont instables, dans la mesure où ils supposent des individus rationnels et cohérents. L'hypothèse d'agent rationnel faite par les économistes a récemment été l'objet d'attaques soutenues. L'économie comportementale a suggéré que les individus sont en proie à des biais irrationnels et des incohérences. L'auteur explique comment ces développements ont mené à un post-utilitarisme, qui justifie des interventions paternalistes de l'Etat via des " impôts sur le vice ", des interdictions directes ou de nouvelles obligations. La responsabilité individuelle est sévèrement dépréciée, tout comme la confiance dans les marchés. Il conclut que les défenseurs de la liberté individuelle doivent s'éloigner du raisonnement utilitariste, réaffirmer les valeurs fondamentales d'autonomie et de responsabilité, et définir les limites strictes du champ d'intervention du gouvernement.
    Keywords: Economie comportementale ; Utilitarisme ; Gouvernement ; Paternalisme
    Date: 2012–09

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