nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2013‒06‒09
seventeen papers chosen by
Erik Thomson
University of Manitoba

  1. Notes sur Keynes et la crise. By Paulo Nakatani; Rémy Herrera
  2. Incomplete Information Models of Guilt Aversion in the Trust Game By Giuseppe Attanasi; Pierpaolo Battigalli; Elena Manzoni
  3. Accepting Zero in the Ultimatum Game: Selfish Nash Response? By Gianandrea Staffiero; Filippos Exadaktylos; Antonio M. Espín
  4. What Do We Learn From Schumpeterian Growth Theory? By Philippe Aghion; Ufuk Akcigit; Peter Brown
  5. Endogenous vs. Exogenous Transmission of Information: An Experiment By Aurora García-Gallego; Penélope Hernández-Rojas; Amalia Rodrigo-González
  6. Newcomb`s Problem: Paradox Lost By Menahem Yaari
  7. Être keynésien au XXIe siècle : Patriotisme économique ou mondialisation keynésienne ? By Christophe Lavialle
  8. Social Democracy and Distributive Conflict in the UK, 1950-2010 By Carlo V. Fiorio; Simon Mohun; Roberto Veneziani
  9. The role of income inequality in crisis theories and in the subprime crisis By Thomas Goda
  10. Stochastic games with short-stage duration By Abraham Neyman
  11. "The Wrong Risks: What a Hedge Gone Awry at JPMorgan Chase Tells Us about What's Wrong with Dodd-Frank" By Rainer Kattel; Ringa Raudla
  12. Waves on Waves – Long Waves on the Seven Seas By Helenius Anttiheikki
  13. Tangible temptation in the social dilemma: Cash, cooperation, and self-control By Kristian Ove R. Myrseth; Gerhard Riener; Conny Wollbrant
  14. Kondratieff Waves in the World System Perspective By Korotayev Andrey; Grinin Leonid
  15. Marc Barbut au pays des médianes By Bernard Monjardet
  17. Social Identity and Punishment By Jeffrey V. Butler; Pierluigi Conzo; Martin A. Leroch

  1. By: Paulo Nakatani (Universidade federal do Espírito Santo - Brasil); Rémy Herrera (Centre d'Economie de la Sorbonne)
    Abstract: This working paper proposes an analysis – from a Marxist point of view – of the relationships between John Maynard Keynes and the economic mainstream of his time (first part), then presents the theoretical elements on the crisis developed by this author (second part), and finally questions, in the context of the current crisis, the opportunity for a return to so-called “Keynesian” policies (third part).
    Keywords: Keynes, crisis, Marxism, maintream economics, capitalism.
    JEL: B31 B51 E40 E50 G1
    Date: 2013–05
  2. By: Giuseppe Attanasi; Pierpaolo Battigalli; Elena Manzoni
    Abstract: In the theory of psychological games it is assumed that players' preferences on material consequences depend on endogenous beliefs. Most of the applications of this theoretical framework assume that the psychological utility functions representing such preferences are common knowledge. But this is often unrealistic. In particular, it cannot be true in experimental games where players are subjects drawn at random from a population. Therefore an incomplete-information methodology is called for. We take a first step in this direction, focusing on models of guilt aversion in the Trust Game. We consider two alternative modeling assumptions: (i) guilt aversion depends on the role played in the game, because only the trustee can feel guilt for letting the co-player down, (ii) guilt aversion is independent of the role played in the game. We show how the set of Bayesian equilibria changes as the upper bound on guilt sensitivity varies, and we compare this with the complete-information case. Our analysis illustrates the incomplete-information approach to psychological games and can help organize experimental results in the Trust Game.
    Keywords: Psychological games, Trust Game, guilt, incomplete information
    JEL: C72 C91 D03
    Date: 2013–06
  3. By: Gianandrea Staffiero (Universitat Pompeu Fabra); Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies,Istanbul Bilgi University); Antonio M. Espín
    Abstract: The rejection of unfair proposals in ultimatum games is often quoted as evidence of other-regarding preferences. In this paper we focus on those responders who accept any proposals, setting the minimum acceptable offer (MAO) at zero. While this behavior could result from the randomization between the two payoff-maximizing strategies (i.e. setting MAO at zero or at the smallest positive amount), it also implies that the opponent’s payoff is maximized and the “pie†remains intact. We match subjects’ behavior as ultimatum responders with their choices in the dictator game, in two large-scale experiments. We find that those who set MAO at zero are the most generous dictators. Moreover, they differ substantially from responders whose MAO is the smallest positive offer, who are the greediest dictators. Thus, an interpretation of zero MAOs in terms of selfish, payoff-maximizing behavior could be misleading. Our evidence indicates that the restraint from punishing others can be driven by altruism and by the desire to maximize social welfare.
    Keywords: ultimatum game, dictator game, altruism, social welfare, costly punishment, selfishness, social preferences
    JEL: C93 C91 D03 C70
    Date: 2012–01
  4. By: Philippe Aghion (Department of Economics, Harvard University); Ufuk Akcigit; Peter Brown (Department of Economics, Brown University)
    Abstract: Schumpeterian growth theory has .operationalized. Schumpeter’s notion of creative destruction by developing models based on this concept. These models shed light on several aspects of the growth process that could not be properly addressed by alternative theories. In this survey, we focus on four important aspects, namely: (i) the role of competition and market structure; (ii) firm dynamics; (iii) the relationship between growth and development with the notion of appropriate growth institutions; and (iv) the emergence and impact of long-term technological waves. In each case Schumpeterian growth theory delivers predictions that distinguish it from other growth models and which can be tested using micro data.
    Keywords: Creative destruction, entry, exit, competition, .rm dynamics, reallocation, R&D, industrial policy, technological frontier, Schumpeterian wave, general purpose technology
    JEL: O10 O11 O12 O30 O31 O33 O40 O43 O47
    Date: 2013–06–03
  5. By: Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Penélope Hernández-Rojas (ERI-CES & Department of Economic Analysis, University of Valencia, Spain); Amalia Rodrigo-González (Department of Business Finance, University of Valencia, Spain)
    Abstract: Based on Gossner, Hernández and Neyman’s (2006) 3-player game (hereafter GHN) we analyze communication efficiency in the lab. In that game, player 1 represents random nature an i.i.d. procedure, player 2 is a fully informed player (wiser), and player 3 is the less informed player (agent). The game is repeated and players 2 and 3 get 1 if both actions match nature’s actions and 0 otherwise. We propose an experiment following this game. We implement two treatments: one without chat (NC) and one with chat (C). In the treatment with chat, players may first send messages to each other through an online chat application, and then play the game. After the chat time, only the wiser player has perfect information on the realized (random) sequence played by nature. The players then play the finitely repeated binary game. In treatment NC, subjects just play the game. In the experiment we observed endogenous communication treatment NC as well as exogenous in treatment C, both of which result in higher payoffs. Furthermore, when explicit communication is possible we observe a chat effect which can be interpreted as a higher level of efficiency in communication. Strategies used by subjects are in line with GHN strategies.
    Keywords: communication, transmission of information, efficiency, experiments
    JEL: D8 C91 C73
    Date: 2013
  6. By: Menahem Yaari
    Abstract: An agent needs to decide which of two available actions, A or B, to take. The agent's payoffs are such that A dominates B, i.e., taking A yields a better payoff than taking B, in every contingency. On the other hand, the agent's expected payoffs, given the action taken, are in the reverse order, i.e., E(payoff | B) > E(payoff | A) , which can happen if the probabilities of the various contingencies are not independent of the action being taken. What should the agent do? This dilemma has come to be known as Newcomb's Paradox (Nozick, 1969). The present essay shows that the rule "keep away, as much as possible, from any dominated action" is perfectly consistent with actually taking the dominated action, when appropriate. No paradox.
    Date: 2013–04
  7. By: Christophe Lavialle (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans)
    Abstract: Dans un texte de 1933 publié par The Yale Review, John Maynard Keynes présente ses arguments en faveur de l'autosuffisance nationale. Il y plaide pour le refus d'un internationalisme sans contrôle, et propose aux pays démocratiques adeptes du libéralisme politique de mettre en oeuvre le niveau de patriotisme économique adapté au maintien de leurs équilibres sociaux et à la promotion d'une " république sociale idéale ". Alors que la crise déclenchée en 2008, qui par bien des aspects montre les limites d'une globalisation financière et réelle sans contrôle, a remis au goût du jour l'enseignement du maître de Cambridge, cet article produit un écho tout à fait surprenant. Le pari de cette communication est alors qu'il peut être précisément éclairant d'analyser les enjeux de la période en cours à la lumière de cet écrit et des positions qu'y développe Keynes, pour voir, si sur ce thème aussi, sa pensée reste actuelle et riche d'enseignements. L'objet de la communication est donc de repérer les différents arguments avancés par Keynes dans son texte et d'en analyser l'actualité ou l'obsolescence. Il est aussi de rapprocher l'argumentaire, essentiellement intuitif, de celui, analytique, développé trois ans plus tard dans la Théorie Générale. Il est enfin de l'inscrire dans la philosophie globale qui est celle de Keynes des questions économiques, politiques et morales.
    Keywords: Keynes, nationalisme économique, libéralismes, pragmatisme.
    Date: 2012–08–22
  8. By: Carlo V. Fiorio (University of Milan); Simon Mohun (Queen Mary, University of London); Roberto Veneziani (Queen Mary, University of London)
    Abstract: In the last three decades, two questions have been central for the Left. Is there a future for electoral socialism and social democracy? And, is it any longer possible to promote a significant redistribution of income in favour of labour? Political and economic events seem to suggest negative answers. In his influential work, Adam Przeworski suggests that this is an irreversible trend that makes it impossible in the long-run to promote genuinely socialist objectives in capitalist democracies. In particular, the structural dependence of labour on capital severely constrains feasible income distributions. In this paper, a detailed quantitative and qualitative analysis of the post-war UK economy is provided which casts doubts on the structural dependence thesis. A short run profit-squeeze mechanism seems to exist, but income shares are more variable than the structural dependence argument suggests, and the power resources available to the two main classes in the economy are among the key determinants of distributive outcomes, different political-economic equilibria corresponding to different configurations of the balance of power between the two classes.
    Keywords: Social democracy, Income distribution, Structural dependence thesis
    JEL: D33 E32 J5
    Date: 2013–06
  9. By: Thomas Goda (Universidad EAFIT)
    Abstract: An increasing number of economists argue that income inequality was a root cause behind the subprime crisis of 2007. The aim of this paper is to outline and contrast the theoretical underpinnings of Marxian, Post Keynesian and mainstream crisis theories and to compare their viewpoints regarding the role that inequality plays. The main finding of this paper is that despite important theoretical differences, economists from all three strands provide a similar explanation for the link between inequality and the subprime crisis (even though conventional mainstream crisis theories do not regard inequality as destabilizing factor). This suggests that the rise in income inequality indeed played an important role in the build-up of the crisis. To ensure that a wider audience accepts inequality as a prominent causal factor for the crisis it is however necessary that the negative effects of wealth concentration are also taken into account.
    Keywords: income inequality, crisis theories, subprime crisis
    JEL: B0 D3 E25 G01
    Date: 2013–05
  10. By: Abraham Neyman
    Abstract: We introduce asymptotic analysis of stochastic games with short-stage duration. The play of stage $k$, $k\geq 0$, of a stochastic game $\Gamma_\delta$ with stage duration $\delta$ is interpreted as the play in time $k\delta\leq t<(k+1)\delta$, and therefore the average payoff of the $n$-stage play per unit of time is the sum of the payoffs in the first $n$ stages divided by $n\delta$, and the $\lambda$-discounted present value of a payoff $g$ in stage $k$ is $\lambda^{k\delta} g$. We define convergence, strong convergence, and exact convergence of the data of a family $(\Gamma_\delta)_{\delta>0}$ as the stage duration $\delta$ goes to $0$, and study the asymptotic behavior of the value, optimal strategies, and equilibrium. The asymptotic analogs of the discounted, limiting-average, and uniform equilibrium payoffs are defined. Convergence implies the existence of an asymptotic discounted equilibrium payoff, strong convergence implies the existence of an asymptotic limiting-average equilibrium payoff, and exact convergence implies the existence of an asymptotic uniform equilibrium payoff.
    Date: 2013–04
  11. By: Rainer Kattel; Ringa Raudla
    Abstract: What can we learn from JPMorgan Chase's recent self-proclaimed "stupidity" in attempting to hedge the bank's global risk position? Clearly, the description of the bank's trading as "sloppy" and reflecting "bad judgment" was designed to prevent the press reports of large losses from being used to justify the introduction of more stringent regulation of large, multifunction financial institutions. But the lessons to be drawn are not to be found in the specifics of the hedges that were put on to protect the bank from an anticipated decline in the value of its corporate bond holdings, or in any of its other global portfolio hedging activities. The first lesson is this: despite their acumen in avoiding the worst excesses of the subprime crisis, the bank's top managers did not have a good idea of its exposure, which serves as evidence that the bank was "too big to manage." And if it was too big to manage, it was clearly too big to regulate effectively.
    Date: 2012–06
  12. By: Helenius Anttiheikki
    Abstract: Kondratieff waves are an interesting subject of study and describe present global economic developments. The Global Financial Crisis of 2009 and the present economic situation have parallels with the Great Depression of the 1930s. Twice-in-a-century events are occurring again. On the other hand, many important innovations have been introduced during the last decades. These innovations have changed people's lives in a revolutionary manner and have contributed very positively to the global development. Study of the development of seafaring supports the claim of the existence of Kondratieff waves. Important innovations and milestones of development of seafaring coincided with the upswing phases of these waves. Moods of different eras manifest also in composition of shipping fleets and flotillas.One needs new creative approaches to solve global challenges. The study of long waves allows compelling insights and provides timeless wisdom for the study of economics.
    Keywords: Kondratieff wave, global economic development, Great Depression, innovations, shipping fleet,
    JEL: N7 O B2 L9
    Date: 2013–02–28
  13. By: Kristian Ove R. Myrseth (ESMT European School of Management and Technology); Gerhard Riener (DICE, University of Düsseldorf); Conny Wollbrant (University of Gothenburg)
    Abstract: The social dilemma may contain, within the individual, a self-control conflict between urges to act selfishly and better judgment to cooperate. Examining the argument from the perspective of temptation, we pair the public good game with treatments that vary the degree to which money is abstract (merely numbers on-screen) or tangible (tokens or cash). We also include psychometric measures of self-control and impulsivity. Consistent with our hypothesis, we find in the treatments that render money more tangible a stronger positive association between cooperation and self-control—and a stronger negative association between cooperation and impulsivity. Our results shed light on the conditions under which self-control matters for cooperation.
    Keywords: Self-control, pro-social behavior, public good experiment, temptation
    JEL: D01 D03 D64 D70
    Date: 2013–05–24
  14. By: Korotayev Andrey; Grinin Leonid
    Abstract: The analysis of long economic cycles allows us to understand long-term world-system dynamics, to develop forecasts, to explain crises of the past, as well as the current global economic crisis. The article offers an historical sketch of research on K-waves; it analyzes the nature of Kondratieff waves that are considered as a special form of cyclical dynamics that emerged in the industrial period of the World System history. It offers a historical and theoretical analysis of K-wave dynamics in the World System framework; in particular, it studies the influence of the long wave dynamics on the changes of the world GDP growth rates during the last two centuries. Special attention is paid to the interaction between Kondratieff waves and Juglar cycles. The article is based on substantial statistical data, it extensively employs quantitative analysis, contains numerous tables and diagrams. On the basis of the proposed analysis it offers some forecasts of the world economic development in the next two decades.
    Keywords: economic cycles, world system, Kondratieff waves, Juglar cycles
    JEL: B1 E3 E6 N1
    Date: 2013–02–28
  15. By: Bernard Monjardet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CAMS - Centre d'analyse et de mathématique sociale - CNRS : UMR8557 - École des Hautes Études en Sciences Sociales [EHESS])
    Abstract: La notion de médiane apparue d'abord en statistique (notamment sous forme métrique) l'a été ensuite en algèbre et combinatoire. Marc Barbut a été le premier à développer le lien entre ces deux aspects. Je présente ses travaux précurseurs reliant les médianes métriques et les médianes latticielles d'un treillis distributif et utilisant leurs liens dans le cadre d'une " procédure médiane " en analyse des données. Je fais aussi un bref survol du développement de la théorie (plus générale) des " espaces à médianes " et des problèmes posés par la procédure médiane.
    Keywords: Demi-treillis à médianes; espace métrique; graphe à médianes; procédure médiane; relation majoritaire; treillis distributif
    Date: 2013–04
  16. By: Charles-Henri Dimaria (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans, STATEC - Institut National de la Statistique et des Etudes Economiques - Luxembourg)
    Abstract: This paper reexamines an important early contribution to the growth literature highlighted in 2000 by Cannon in the American Economic Review: "The production function in allocation and growth: A synthesis" by Marvin Frankel in 1962. First this contribution provides a formal proof in the continuous time framework of trajectories that are not provided by Frankel and Cannon. Second it shows that in this framework poverty traps are possible while it was not detected by these authors.
    Keywords: Economic growth, Poverty traps.
    Date: 2012–06–22
  17. By: Jeffrey V. Butler (EIEF); Pierluigi Conzo (University of Turin); Martin A. Leroch (University of Mainz)
    Abstract: Third party punishment is crucial for sustaining cooperative behavior. Still, little is known about its determinants. In this paper we use laboratory experiments to investigate a long-conjectured interaction between group identification and bystanders' punishment preferences using a novel measure of these preferences. We induce minimal groups and give a bystander the opportunity to punish the perpetrator of an unfair act against a defenseless victim. We elicit the bystander's valuation for punishment in four cases - when the perpetrator, the victim, both or neither are members of the bystander's group. We generate testable predictions about the rank order of punishment valuations from a simple framework incorporating group-contingent preferences for justice which are largely confirmed. Finally, we conduct control sessions where groups are not induced. Comparing punishment across treatment and control suggests that third-party punishers tend to treat others as in-group members unless otherwise divided.
    Date: 2013

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