nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2012‒12‒06
sixteen papers chosen by
Erik Thomson
University of Manitoba

  1. The Origin of the Sylos Postulate: Modigliani’s and Sylos Labini’s Contributions to Oligopoly Theory By Rancan, Antonella
  2. Denial, Rationalization, and the Administered Price Thesis By Gu, Gyun Cheol
  3. A Note on Backhouse and Medema: On Walras’ Contribution to the Definition of Economics By Vahabi, Mehrdad
  4. Experiments, Passive Observation and Scenario Analysis: Trygve Haavelmo and the Cointegrated Vector Autoregression By Kevin Hoover; Katarina Juselius
  5. Right conclusion with weak evidence: A review of <The Failure of Capitalist Production> By Jeong, Sangjun
  6. Equilibrium in Two-Player Nonzero-Sum Dynkin Games in Continuous Time By Rida Laraki; Eilon Solan
  7. Reconciling economics and psychology on intrinsic motivation By Bruno, Bruna
  8. Collapsing Worlds and Varieties of welfare capitalism: In search of a new political economy of welfare By Waltraud Schelkle
  9. Games with Strategic Heterogeneity By Andrew Monaco; Tarun Sabarwal
  10. Wie (un-) fair sind Ökonomen? Neue empirische Evidenz zur Marktbewertung und Rationalität By Ruske, René; Suttner, Johannes
  11. Ségrégation et fragmentation socio-spatiale – L’épreuve de la mesure. By Wachsberger, Jean-Michel
  12. The Inadequacy of Friedman and Savage’s Critique of Diminishing Marginal Utility By William Coleman
  13. Die 'Soziale Marktwirtschaft' unter Globalisierungsbedingungen: Eine kritische Bestandsaufnahme By Heise, Arne
  14. Use and Abuse of Authority By Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
  15. "Wir müssen hier sehr schnell konstruieren": Diskurs und Institutionelle Reflexivität By Hallensleben, Tobias; Jain, Anil K.
  16. Asymmetric Nash Bargaining Solutions: A Simple Nash Program By Nejat Anbarci; Ching-jen Sun

  1. By: Rancan, Antonella
    Abstract: Paolo Sylos Labini’s Oligopoly Theory and Technical Progress (1957) is considered one of the major contributions to entry-prevention models, especially after Franco Modigliani’s famous formalization. Nonetheless, Modigliani neglected Labini’s major aim when reviewing his work (JPE, 1958), particularly his demonstration of the dynamic relation between industrial concentration and economic development. Modigliani addressed only Sylos’ microeconomic analysis and the determination of the long-run equilibrium price and output, concentrating on the role played by firms’ anticipations. By doing so he shifted attention from Sylos' objective analysis to a subjective approach to oligopoly problem. This paper discusses Sylos’ and Modigliani’s differing approaches, derives the origin of the Sylos postulate and sets Modigliani’s interpretation of Sylos’ oligopoly theory in the context of his 1950s research into firms’ behaviour under uncertainty.
    Keywords: Modigliani, Sylos Labini, Sylos Postulate, Oligopoly Theory
    JEL: B13 B21 B31
    Date: 2012–11–19
  2. By: Gu, Gyun Cheol
    Abstract: This paper analyzes neoclassical reactions to Gardiner Means's administered price thesis during 1980-2000. It shows that his original idea has been continuously denied by mainstream economists. At the same time, it has been transformed through a multiplicity of rationalization processes into one or another bastardized form. However, their attempts to deny and/or rationalize the thesis are unsuccessful as their sanitized versions of Means’s theory turn out to be self-contradictory in the neoclassical framework.
    Keywords: Gardinar Means; Price rigidity; Administered price
    JEL: B21 B50 D43
    Date: 2012–05–01
  3. By: Vahabi, Mehrdad
    Abstract: In this paper, I argue that the insightful and rich collection of various definitions of economics provided by Backhouse and Medema (2009a,b) suffers from a major shortcoming: it misses Walras’ contributions on this topic. Borrowing from the authors’ taxonomy, I will show that Walras’ ‘synthetic method’ provides a particular interpretation that brings together ‘wealth-based,’ ‘scarcity-based,’ and ‘market-exchange based’ definitions of economics. Finally, I will argue that the ‘scarcity-based’ definition of economics originated with the Walrases (the father and son) rather than Robbins ([1932]1935). Walras pioneered the notion of scarcity as a subjective agent-based reality existing at an individual level.
    Keywords: Applied political economy; pure political economy; scarcity; social economics; Walrasian definitions of economics
    JEL: B31 B13
    Date: 2012–04
  4. By: Kevin Hoover (Department of Economics and Department of Philosophy, Duke University); Katarina Juselius (Department of Economics, University of Copenhagen)
    Abstract: The paper provides a careful, analytical account of Trygve Haavelmo's unsystematic, but important, use of the analogy between controlled experiments common in the natural sciences and econometric techniques. The experimental analogy forms the linchpin of the methodology for passive observation that he develops in his famous monograph, The Probability Approach in Econometrics (1944). We show how, once the details of the analogy are systematically understood, the experimental analogy can be used to shed light on theory-consistent cointegrated vector autoregression (CVAR) scenario analysis. CVAR scenario analysis can be seen as a clear example of Haavelmo's 'experimental' approach; and, in turn, it can be shown to extend and develop Haavelmo's methodology and to address issues that Haavelmo regarded as unresolved.
    Keywords: Trygve Haavelmo, experiments, passive observation, CVAR, scenario analysis, probability approach, econometrics
    JEL: C30 C31 B41 B31 C50
    Date: 2012–11–05
  5. By: Jeong, Sangjun
    Abstract: This paper reviews Andrew Kliman's The Failure of Capitalist Production (2011) with a focus on his critique of the underconsumptionist account of the current crisis. He innovatively refutes the underconsumptionist claims that the deterioration of income distribution and hence the decline of demand is the root causes of the crisis. However, his counterevidence based on the alleged rise in the share of workers' income is not strong enough to support his relevant criticism of the underconsumptionist theory and its political implications. Rather, we suggest an outline of alternative critique which would refute underconsumptionism more effectively.
    Keywords: Andrew Kliman; Underconsumptionist; Worker’s income share; Alternative critique
    JEL: B14 G01 Y30
    Date: 2012–09
  6. By: Rida Laraki (Ecole Polytechnique - Ecole Polytechnique, IMJ - Institut de Mathématiques de Jussieu - CNRS : UMR7586 - Université Paris VI - Pierre et Marie Curie - Université Paris VII - Paris Diderot); Eilon Solan (School of Mathematical Sciences [Tel Aviv] - Raymond and Beverly Sackler Faculty of Exact Sciences)
    Abstract: We prove that every two-player nonzero-sum Dynkin game in continuous time admits an "epsilon" equilibrium in randomized stopping times. We provide a condition that ensures the existence of an "epsilon" equilibrium in nonrandomized stopping times.
    Keywords: Dynkin games, stopping games, equilibrium, stochastic analysis, continuous time.
    Date: 2012–11–19
  7. By: Bruno, Bruna
    Abstract: The paper analyzes how the debate on intrinsic motivation was imported from psychology into economics. The most important differences between the two disciplines are in the definition of intrinsic motivation and in the timing of the undermining effect of rewards. The economic framework of inter-temporal choices is proposed to reconcile the different empirical and theoretical results arising in the literature, and it is shown how rewards induce substitution and income effects depending on whether they are transitory or permanent. Furthermore, a distinction between input and output oriented intrinsic motivation is introduced.
    Keywords: intrinsic motivation; rewards; crowding out; undermining
    JEL: D03 Z1 D90
    Date: 2012–11
  8. By: Waltraud Schelkle
    Abstract: The study of welfare capitalism is concerned with a founding question of political economy, namely how capitalism and democracy can be combined. Ever since the publication of Esping-Andersen’s Three Worlds of Welfare Capitalism in 1990, the answer was sought in identifying ideal types of welfare states that support a class compromise. The Varieties of (Welfare) Capitalism literature is increasingly used as a complementary theory of production systems although its rationale for social policies is largely incompatible with the Worlds typology. This article argues, first, that popular regime typologies have degenerated as a research programme, notwithstanding their many achievements. The main reason for this lies in a simplistic notion of the relationship between politics and economics in modern society. Secondly, the article outlines an alternative for analysing welfare provisions and their evolution, drawing on insights of the new politics and the new economics of welfare. This framework can give a systematic account of welfare program restructuring that undermines regime typologies. It suggests a different question for the political economy of welfare, namely how capitalism and democracy can be kept distinct.
    Keywords: welfare state, political economy, comparative politics, varieties of capitalism
    JEL: P16 H53 A12
    Date: 2012–11
  9. By: Andrew Monaco (Department of Economics, Colgate University); Tarun Sabarwal (Department of Economics, University of Kansas)
    Abstract: This paper studies games with both strategic substitutes and strategic complements, and more generally, games with strategic heterogeneity (GSH). Such games may behave differ- ently from either games with strategic complements or games with strategic substitutes. Under mild assumptions (on one or two players only), the equilibrium set in a GSH is totally unordered (no two equilibria are comparable in the standard product order). Moreover, under mild assumptions (on one player only), parameterized GSH do not allow decreasing equilibrium selections. In general, this cannot be strengthened to conclude in- creasing selections. Monotone comparative statics results are presented for games in which some players exhibit strategic substitutes and others exhibit strategic complements. For two-player games with linearly ordered strategy spaces, there is a characterization. More generally, there are sufficient conditions. The conditions apply only to players exhibiting strategic substitutes; no conditions are needed for players with strategic complements. Several examples highlight the results.
    Keywords: Lattice games, strategic complements, strategic substitutes, strategic hetergeneity, equilibrium set, monotone comparative statics
    JEL: C70 C72
    Date: 2012–11
  10. By: Ruske, René; Suttner, Johannes
    Abstract: Der vorliegende Beitrag analysiert Unterschiede zwischen Ökonomen und Nicht-Ökonomen im Hinblick auf die Bewertung verschiedener Mechanismen zur Allokation einer knappen Ressource sowie den isolierten Einfluss von Rational Choice auf die Einstellung von Ökono-men. Zu diesem Zweck führten wir basierend auf Frey et al. (1993) und Haucap und Just (2010) unter über 600 Studenten verschiedener Fachrichtungen der Universität Münster eine Umfrage durch. Es zeigt sich, dass sich abhängig von ihrer Fachrichtung unterschiedliche Ansichten insbesondere über die Fairness des Marktmechanismus ergeben. Hauptsächlich ist dies auf Selbstselektionseffekte unter den Ökonomen zurückzuführen. Eine Konfrontation mit Rational Choice, mit der wir die Indoktrination der Ökonomen messen, führte aber kaum zu Änderungen bei der Einstellung der Ökonomen. -- The present document analyzes the differences between economists and non-economists with respect to the valuation of various mechanisms for the allocation of a scarce resource, as well as the isolated influence of rational choice on the fairness judgment of economists. For this purpose, we conducted a survey based on Frey et al. (1993) and Haucap and Just (2010) among more than 600 students of different fields of studies from the University of Münster. As a result, we show that there are different attitudes depending on the field of study, especially with regard to the fairness of the market mechanism. This fact could mainly be explained by self-selection effects of economists. Furthermore, this article shows that indoctrination with rational choice had almost no effect on the judgment of economists.
    Keywords: Ökonomen vs. Nicht-Ökonomen,Fairness,Rational Choice,Indoktrination,Selbstselektion,Economists vs. Non-economists,Fairness,Rational Choice,Indoctrination,Self-selection
    Date: 2012
  11. By: Wachsberger, Jean-Michel
    Abstract: This note is a reflection on the meaning and scope of segregation and socio-spatial fragmentation indicators and, beyond, on the role of statistics in sociological reasoning. It shows that if these indicators can be used to test theories of segregation or fragmentation, they must nevertheless themselves be put to the test of sociological reasoning. The choice of statistical indicators is actually not a purely technical exercise but is strongly linked to the meaning we give to the phenomenon. Their construction and interpretation always depend on how it was defined previously, how its causes have been pictured, and its consequences have been anticipated. In this sense, statistical indicators can only be a step in a particular argument.
    Keywords: Indicateurs statistiques; Raisonnement sociologique; Mesure; Réfutabilité; Segmentation; fragmentation; statistical indicators; sociological reasoning; measurement; falsifiability;
    JEL: C49
    Date: 2012
  12. By: William Coleman
    Abstract: In a well-known paper Friedman and Savage (1948) advocated a utility function in which the marginal utility of wealth is increasing in wealth above some critical level of wealth. In order to win a reception for this novel conception of the utility function Friedman and Savage took some pains in the first part of their paper to try to shake the grip that the 'law of diminishing marginal utility ' had on the mind of their fellow economists. To that end they criticised a classic 'elemental argument' in favour marginal utility being diminishing in wealth. Friedman and Savage's attempt to reconcile the rich man's avoidance of pain with increasing marginal utility is inadequate. We find that the 'elemental argument' that concludes in favour of diminishing marginal utility - on the basis of a comparison of rich and poor - is valid.
    Date: 2012–11
  13. By: Heise, Arne
    Abstract: Nur wenige Nationalökonomien sind mit eindeutigen begrifflichen Zuschreibungen versehen - die bundesdeutsche Volkswirtschaft aber ist weltweit als 'Soziale Marktwirtschaft' bekannt und gemeinhin wird diese Wirtschaftsordnung als Grundstein des wirtschaftlichen Erfolges der Bundesrepublik - in den 1960er Jahren als 'Wirtschaftswunder' mystifiziert, später immer mal wieder in entsprechend 'guten' Zeit als 'neues Wirtschaftswunder' beschrieben - angesehen (vgl. z.B. Giersch/Paqué/Schmieding 1993, Kerber/Hartig 1999, Zweynert 2008). Abgesehen davon, dass die 'Wirtschaftswunderjahre' vor dem Hintergrund des Wiederaufbaus der deutschen Wirtschaft nach dem 2. Weltkrieg als ziemlich normale Rekonstruktions- bzw. 'catching-up'- Entwicklung längst relativiert wurden (vgl. z.B. Lindlar 1995), lässt sich tatsächlich ernsthaft diskutieren, ob eine bestimmte Wirtschaftsverfassung die Bundesrepublik zu einem 'Modell' gemacht hat, das als hochproduktiv, international extrem wettbewerbsfähig ('Exportweltmeister Deutschland') und auch sehr widerstandsfähig - offenbar hat Deutschland die beiden 'Schocks' der deutschen Einigung (vgl. Streeck 1997) und der jüngsten Weltfinanzkrise wesentlich besser verarbeitet als die meisten anderen hochentwickelten Länder den alleinigen 'Schock' der Weltfinanzkrise - angesehen werden kann. Es gilt im Folgenden, die institutionellen Bestandteile dieses 'Modells Deutschland' zusammenzutragen und danach zu fragen, ob sie tatsächlich wissenschaftlich in einem Konzept der 'Sozialen Marktwirtschaft' verankert werden können. Es gilt aber auch zu untersuchen, ob einerseits dieses 'Modell Deutschland' auch unter den so genannten 'Globalisierungsbedingungen' noch zukunftsfähig ist und schließlich auch potentielle (negative) Nebeneffekte aufzuzeigen. --
    Date: 2012
  14. By: Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
    Abstract: Employment contracts give a principal the authority to decide flexibly which task his agent should execute. However, there is a tradeoff, first pointed out by Simon (1951), between flexibility and employer moral hazard. An employment contract allows the principal to adjust the task quickly to the realization of the state of the world, but he may also abuse this flexibility to exploit the agent. We capture this tradeoff in an experimental design and show that principals exhibit a strong preference for the employment contract. However, selfish principals exploit agents in one-shot interactions, inducing them to resist entering into employment contracts. This resistance to employment contracts vanishes if fairness preferences in combination with reputation opportunities keep principals from abusing their power, leading to the widespread, endogenous formation of efficient long-run employment relations. Our results inform the theory of the firm by showing how behavioral forces shape an important transaction cost of integration – the abuse of authority – and by providing an empirical basis for assessing differences between the Marxian and the Coasian view of the firm, as well as Alchian and Demsetz’s (1972) critique of the Coasian approach.
    Keywords: theory of the firm; transaction cost economics; authority; power abuse; employment relation; fairness; reputation
    JEL: C91 D23 D86 M5
    Date: 2012–11
  15. By: Hallensleben, Tobias; Jain, Anil K.
    Abstract: In diesem Beitrag werden Organisationen als Diskursordnungen konzipiert (vgl. auch Diaz-Bone/Krell 2009). Mit dieser Perspektive wird insbesondere ein Zugang zu den Mechanismen der Abschließung von Reflexivität eröffnet. Denn über die diskursive Konstruktion von Organisation, so die paradigmatische Grundannahme, wird organisationales Handeln geformt und reglementiert, Wirklichkeit erzeugt und strukturiert und damit der Rahmen absteckt, in dem Neues hervorgebracht, weitergeführt und stabilisiert wird. Demgemäß gehört die Analyse der diskursiven Dimension organisationaler Veränderungsprozesse zum Kern einer sozialwissenschaftlich fundierten Innovationsforschung. Der erste Teil dieses Beitrags ist der theoretischen Grundlegung der diskursiven Perspektive sowie ihrer Verortung im Konzept der Institutionellen Reflexivität (vgl. Moldaschl 2005; 2006) gewidmet. Im zweiten Teil liefern zwei Fallstudien (bei einem high-tech Engineering-Dienstleister sowie einem deutschen Automobilhersteller) Anschauungsmaterial für die diskursive Erzeugung von Lernbarrieren und die Normalität des Scheiterns standardisierter Verfahren und Praktiken des Innovationsmanagements. --
    Date: 2012
  16. By: Nejat Anbarci; Ching-jen Sun
    Abstract: This article proposes a simple Nash program. Both our axiomatic characterization and our noncooperative procedure consider each distinct asymmetric and symmetric Nash solution. Our noncooperative procedure is a generalization of the simplest known sequential Nash demand game analyzed by Rubinstein, Safra and Thomson (1992). We then provide the simplest known axiomatic characterization of the class of asymmetric Nash solutions, in which we use only Nash’s crucial Independence of Irrelevant Alternatives axiom and an asymmetric modification of the well-known Midpoint Domination axiom.
    Keywords: Asymmetric Nash bargaining solutions, Nash program, axiomatic characterization, noncooperative foundations, economics of search.
    JEL: C78 D74
    Date: 2012–11–17

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