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on History and Philosophy of Economics |
| By: | Robert Sugden (University of East Anglia) |
| Abstract: | This paper compares two alternative answers to the question ‘Who is the addressee of welfare economics?' These answers correspond with different understandings of the status of the normative conclusions of welfare economics, and have different implications for how welfare economics should be adapted in the light of the findings of behavioural economics. The conventional welfarist answer is that welfare economics is addressed to a ‘social planner' whose objective is to maximise the overall well-being of society; the planner is imagined as a benevolent despot, receptive to the economist's advice. The alternative contractarian answer is that welfare economics is addressed to individuals who are seeking mutually beneficial agreements; a contractarian recommendation has the form ‘It is in the interests of each of you separately that all of you together agree to do x'. Each of these answers should be understood as a literary convention which uses a highly-simplified model of politics. I defend the contractarian approach and show that it is less supportive of ‘soft paternalism' than is the welfarist approach. |
| Keywords: | welfare economics, behavioural economics, social planner, contractarianism, soft paternalism |
| JEL: | D03 D60 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:12-05&r=hpe |
| By: | John K. Horowitz (Department of Agricultural and Resource Economics, University of Maryland); Kenneth E. McConnell (Department of Agricultural and Resource Economics, University of Maryland); James J. Murphy (Department of Economics, University of Alaska Anchorage) |
| Keywords: | experimental economics, hypothetical bias, contingent valuation, behavioral economics, stated preferences |
| JEL: | C90 Q20 Q51 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:ala:wpaper:2012-03&r=hpe |
| By: | Kakarot-Handtke, Egmont |
| Abstract: | This contribution to the Festschrift in memoriam of Karl Brandt and Alfred E. Ott establishes the axiomatic unity of circuit, money, price and distribution theory. From the history of economic methodology and from actual practice follows: one cannot not axiomatize. The crucial question is not axiomatization per se but the real world content of axioms which is not guaranteed by simply applying the method. Axioms can be empirically vacuous. This holds for the behavioral axioms of standard economics. In marked contrast, all structural axiomatic variables are measurable in principle. No metaphysical concepts like equilibrium are put into the premises. |
| Keywords: | new framework of concepts; structure-centric; axiom set; formal core; axiom of reals; real shares of output; spending pattern |
| JEL: | B41 |
| Date: | 2012–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44313&r=hpe |
| By: | Andrea Gallice |
| Abstract: | We present an endogenous timing game of action commitment in which play- ers can steal from each other parts of a homogeneous and perfectly divisible pie and the expected effectiveness of a player?s theft is proportional to the amount he currently owns. We show how the incentives to preempt or to follow the rivals change with the number of players involved in the game and we inves- tigate the conditions that lead to the occurrence of symmetric or asymmetric equilibria. |
| Keywords: | stealing, endogenous timing games. |
| JEL: | C72 C73 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:281&r=hpe |
| By: | Ishii, Ryosuke |
| Abstract: | We consider a game with " meta-players" who observe each other's actions before actual play. The observability exerts an effect like repeated games without discounting. The game has Nash equilibria with any individually rational payoff profiles. In addition, the outcomes that satisfy a modified version of evolutionary stability lead to Pareto efficiency in coordination games. |
| Keywords: | Metagame, Folk theorem, Evolutionarily stable set, Equilibrium selection |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ota:busdis:10252/4776&r=hpe |
| By: | Oriol Carbonell-Nicolau (Rutgers University); Richard McLean (Rutgers University) |
| Abstract: | We show that supermodular games satisfying sequential better-reply security possess a pure strategy perfect equilibrium and a strategically stable set of pure strategies. We illustrate that, in continuous supermodular games, perfect equilibria may contain weakly dominated actions. Moreover, in discontinuous supermodular games, perfect equilibria may involve play of actions in the interior of the set of weakly dominated actions. We prove that when the set of undominated actions is a sublattice, supermodular games satisfying sequential better-reply security possess pure strategy perfect equilibria that can be obtained as limits of undominated actions. |
| Keywords: | supermodular game, weakly dominated strategy, trembling-hand perfect equilibrium, strategically stable set |
| JEL: | C72 |
| Date: | 2012–12–26 |
| URL: | http://d.repec.org/n?u=RePEc:rut:rutres:201207&r=hpe |
| By: | David Gill; Victoria Prowse |
| Abstract: | In this paper we investigate how cognitive ability influences behavior, success and theevolution of play towards Nash equilibrium in repeated strategic interactions. We study behaviorin a p-beauty contest experiment and find striking differences according to cognitiveability: more cognitively able subjects choose numbers closer to equilibrium, converge morefrequently to equilibrium play and earn more even as behavior approaches the equilibriumprediction. To understand better how subjects with different cognitive abilities learn differently,we estimate a structural model of learning based on level-k reasoning. We find asystematic positive relationship between cognitive ability and levels; furthermore, the averagelevel of more cognitively able subjects responds positively to the cognitive ability of theiropponents, while the average level of less cognitively able subjects does not respond at all.Our results suggest that, in strategic environments, higher cognitive ability translates intobetter analytic reasoning and a better ‘theory of mind’. |
| Keywords: | Cognitive ability, bounded rationality, level-k, convergence, learning non-equilibrium behavior, beauty contest, repeated games, structural modeling, theory of mind, intelligence, Raven test |
| JEL: | C92 C73 D83 |
| Date: | 2013–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:641&r=hpe |
| By: | Ho Fai Chan; Bruno S. Frey; Jana Gallus; Benno Torgler |
| Abstract: | Despite the social importance of awards, they have been largely disregarded by academic research in economics. This paper investigates whether a specific, yet important, award in economics, the John Bates Clark Medal, raises recipients? subsequent research activity and status compared to a synthetic control group of non-recipient scholars with similar previous research performance. We find evidence of positive incentive and status effects that raise both productivity and citation levels. |
| Keywords: | Awards; Incentives; Research; John Bates Clark Medal; Synthetic control method |
| JEL: | A13 C23 M52 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2013-02&r=hpe |
| By: | Wilko Bolt; Alexander F. Tieman |
| Abstract: | This paper derives an equilibrium for a competitive multi-stage game in which an agents' current action influences his probability of survival into the next round of play. This is directly relevant in banking, where a banks' current lending and pricing de |
| Keywords: | Banks;Economic models; |
| Date: | 2013–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/302&r=hpe |
| By: | Gordon, Roger (University of California, San Diego); Dahl, Gordon B. (University of California, San Diego) |
| Abstract: | To what degree do economists disagree about key economic questions? To provide evidence, we make use of the responses to a series of questions posed to a distinguished panel of economists put together by the Chicago School of Business. Based on our analysis, we find a broad consensus on these many different economic issues, particularly when the past economic literature on the question is large. Any differences are unrelated to observable characteristics of the Panel members, other than men being slightly more likely to express an opinion. These differences are idiosyncratic, with no support for liberal vs. conservative camps. |
| Keywords: | consensus among economists |
| JEL: | A11 H0 J0 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7184&r=hpe |
| By: | Hoppe, Eva I.; Schmitz, Patrick W. |
| Abstract: | Principal-agent models in which the agent has access to private information before a contract is signed are a cornerstone of contract theory. We have conducted an experiment with 720 participants to explore whether the theoretical insights are reflected by the behavior of subjects in the laboratory and to what extent deviations from standard theory can be explained by social preferences. Investigating settings with both exogenous and endogenous information structures, we find that agency theory is indeed useful to qualitatively predict how variations in the degree of uncertainty affect subjects' behavior. Regarding the quantitative deviations from standard predictions, our analysis based on several control treatments and quantal response estimations shows that agents' behavior can be explained by social preferences that are less pronounced than in conventional ultimatum games. Principals' own social preferences are not an important determinant of their behavior. However, when the principals make contract offers, they anticipate that social preferences affect agents' behavior. |
| Keywords: | Agency theory; Adverse selection; Information gathering; Ultimatum game; Social preferences; Experiment |
| JEL: | D86 D82 C72 C91 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44240&r=hpe |
| By: | Kane, Richard |
| Abstract: | This paper explains the early U.S. Department of Commerce estimates of national income and product during the 1930s and 1940s, focusing on how both economic theory and the needs of policymakers influenced the methods and concepts used. The paper explores the debate between Simon Kuznets, author of Commerce’s first estimates of national income during the Great Depression, and Milton Gilbert, author of Commerce’s first estimates of gross national product (GNP) during World War II, over the meaning and measurement of the nation’s final product. |
| Keywords: | gross national product; gross domestic product; final product; national income; nipas; national account; wartime planning; fiscal policy; wartime fiscal policy; inflationary gap; great depression; world war II; simon kuznets; milton gilbert; robert nathan; bureau of economic analysis; keynes; clark warburton; colin clark; richard stone; george jaszi |
| JEL: | E62 B0 D63 C82 B22 E01 C19 B40 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44336&r=hpe |
| By: | Michael Kumhof; Jaromir Benes |
| Abstract: | At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiri |
| Keywords: | Bank credit;Banking systems;Economic models;Monetary systems; |
| Date: | 2013–01–50 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:12/202&r=hpe |
| By: | George S. Tavlas; James M. Boughton |
| Date: | 2013–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:91/16&r=hpe |
| By: | Akçomak, I. Semih (Middle East Technical University); Webbink, Dinand (Erasmus University Rotterdam); ter Weel, Bas (CPB Netherlands Bureau for Economic Policy Analysis) |
| Abstract: | This research provides an explanation for high literacy, economic growth and societal developments in the Netherlands in the period before the Dutch Republic. We establish a link between the Brethren of the Common Life (BCL), a religious community founded by Geert Groote in the city of Deventer in the late fourteenth century, and the early development of the Netherlands. The BCL stimulated human capital accumulation by educating Dutch citizens without inducing animosity from the dominant Roman Catholic Church or other political rulers. Human capital had an impact on the structure of economic development in the period immediately after 1400. The educated workforce put pressure on the Habsburg monarchy leading to economic and religious resentment and eventually to the Revolt in 1572. The analyses show that the BCL contributed to the high rates of literacy in the Netherlands. In addition, there are positive effects of the BCL on book production and on city growth in the fifteenth and sixteenth century. Finally, we find that cities with BCL-roots were more likely to join the Dutch Revolt. These findings are supported by regressions that use distance to Deventer as an instrument for the presence of BCL. The results are robust to a number of alternative explanations. |
| Keywords: | economic development, literacy, religion, societal change |
| JEL: | N33 N93 O15 J20 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7167&r=hpe |