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on History and Philosophy of Economics |
| By: | Orley Ashenfelter |
| Abstract: | In this essay I review Sylvia Nasar’s long awaited new history of economics, Grand Pursuit. I describe how the book is an economic history of the period from 1850-1950, with distinguished economists’ stories inserted in appropriate places. Nasar’s goal is to show how economists work, but also to show that they are people too--with more than enough warts and foibles to show they are human! I contrast the general view of the role of economics in Grand Pursuit with Robert Heilbroner’s remarkably different conception in The Worldly Philosophers. I also discuss more generally the question of why economists might be interested in their history at all. |
| Keywords: | economic history, book review, Nassar, Keynes |
| JEL: | B10 B20 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:dsp01j9602063p&r=hpe |
| By: | Kevin D. Hoover |
| Abstract: | Modern growth theory derives mostly from Robert Solow’s “A Contribution to the Theory of Economic Growth” (1956). Solow’s own interpretation locates the origins of his “Contribution” in his view that the growth model of Roy Harrod implied a tendency toward progressive collapse of the economy. He formulates his view in terms of Harrod invoking a fixed-coefficients production function. This paper, first, challenges Solow’s reading of Harrod, arguing that Harrod’s object in providing a “dynamic” theory had little to do with the problem of long-run growth as Solow understood it, but instead addressed the medium run fluctuations. It was an attempt to isolate conditions under which the economy might tend to run below potential. In making this argument, Harrod does not appeal to a fixed-coefficients production function – or to any production function at all, as that term is understood by Solow. The paper next traces the history of the dominance of Solow’s interpretation among growth economists. These tasks belong to the history of economics. The paper’s final task belongs to economic history. It offers an informal reexamination of economic history through the lens of Harrod’s dynamic model, asking whether there is a prima facie case in favor of Harrod’s model properly understood. |
| Keywords: | economic growth, Roy Harrod, Robert Solow, dynamics, dynamic instability, knife-edge, warranted rate of growth, natural rate of growth |
| JEL: | B22 O4 E12 E13 N1 B31 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2012-1&r=hpe |
| By: | Kevin D. Hoover |
| Abstract: | Trygve Haavelmo’s The Probability Approach in Econometrics (1944) has been widely regarded as the foundation document of modern econometrics. Nevertheless, its significance has been interpreted in widely different ways. Some modern economists regard it as a blueprint for a provocative, but ultimately unsuccessful, program dominated by the need for a priori theoretical identification of econometric models. They call for new techniques that better acknowledge the interrelationship of theory and data. Others credit Haavelmo with an approach that focuses on statistical adequacy rather than theoretical identification. They see many of Haavelmo’s deepest insights as having been unduly neglected. The current paper uses bibliometric techniques and a close reading of econometrics articles and textbooks to trace the way in which the economics profession received, interpreted, and transmitted Haavelmo’s ideas. A key irony is that the first group calls for a reform of econometric thinking that goes several steps beyond Haavelmo’s initial vision; while the second group argues that essentially what the first group advocates was already in Haavelmo’s Probability Approach from the beginning. |
| Keywords: | Trygve Haavelmo, econometrics, history of econometrics, the probability approach, econometric methodology, Cowles Commission |
| JEL: | B23 B40 C10 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2012-4&r=hpe |
| By: | Bruce Caldwell |
| Abstract: | In the paper I offer some vignettes on my relationship, both professional and personal, with Mark Blaug, and by way of example reflect on his impact on the history of economics. |
| Keywords: | Mark Blaug, history of economic thought, economic methodology, Karl Popper, falsificationism, Imre Lakatos |
| JEL: | B2 B31 B4 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2012-6&r=hpe |
| By: | Rindone, Fabio; Greco, Salvatore; Di Gaetano, Luigi |
| Abstract: | The aim of this paper is to introduce prospect theory in a game theoretic framework. We address the complexity of the weighting function by restricting the object of our analysis to a 2-player 2-strategy game, in order to derive some core results. We find that dominant and indifferent strategies are preserved under prospect theory. However, in absence of dominant strategies, equilibrium may not exist depending on parameters. We also discuss a different approach presented by Metzger and Rieger (2009) and give some interesting interpretations of the two approaches. |
| Keywords: | Game theory, Prospect theory, Nash equilibrium, Behavioural economics. |
| JEL: | C7 C70 D03 |
| Date: | 2013–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52131&r=hpe |
| By: | Oliveira, Livio Luiz Soares de |
| Abstract: | This work aims to present the Economics of Religion. The methodology used is a literature review. Shows the importance of religion from the perspective of Economics . It addresses the connections between Economics of Religion and Rational Choice Theory. We present the concepts of religious commodity, consumer and religious producers . We discuss the differences between the Economics of Religion and the Secularization Thesis, emphasizing, mainly, the empirical reality of the persistence and intensity of religious factor. Is commented on the level of religious beliefs among researchers of Natural Sciences and Social Sciences in the USA It also presents the origin and subsequent development of the Economics of Religion . Explains the issues on which leans this discipline , ie, its object of study . The main conclusion is that , given the specificity of the Economics of Religion, research linking religion and economics can benefit both disciplines in different ways . |
| Keywords: | Religion, economics, market, rational. |
| JEL: | Z12 |
| Date: | 2013–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52012&r=hpe |
| By: | Cardaliaguet, Pierre; Rainer, Catherine; Rosenberg, Dinah; Vieille , Nicolas |
| Abstract: | We study a two-player, zero-sum, stochastic game with incomplete information on one side in which the players are allowed to play more and more frequently. The informed player observes the realization of a Markov chain on which the payoffs depend, while the non-informed player only observes his opponent's actions. We show the existence of a limit value as the time span between two consecutive stages vanishes; this value is characterized through an auxiliary optimization problem and as the solution of an Hamilton-Jacobi equation. |
| Keywords: | stochastic; zero sum; Markov chain; Hamilton-Jacobi equation; incomplete information |
| JEL: | C00 |
| Date: | 2013–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1007&r=hpe |
| By: | Samuli Leppälä |
| Abstract: | Following the development of knowledge economies, there has been a rapid expansion of economic analysis of knowledge, both in the context of technological knowledge in particular and the decision theory in general. This paper surveys this literature by identifying the main themes and contributions and outlines the future prospects of the discipline. The wide scope of knowledge related questions in terms of applicability and alternative approaches has led to the fragmentation of research. Nevertheless, one can identify a continuing tradition which analyses various aspects of the generation, dissemination and use of knowledge in the economy. |
| Keywords: | knowledge, information, belief, uncertainty, innovation, intellectual property rights, scientific research, technological change |
| JEL: | D80 O30 I20 B00 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hec:heccee:2012-5&r=hpe |
| By: | Piet Clement (Bank for International Settlements); Ivo Maes (National Bank of Belgium, Research Department; Université catholique de Louvain, Robert Triffin Chair; ICHEC Brussels Management School) |
| Abstract: | The Latin American debt crisis, which broke out in August 1982, was the first global financial crisis in the postwar period. While the crisis started in the "periphery", it constituted a threat to the "core" of the world economy, as the banking system was under severe pressure. Alongside the IMF, the BIS played an important role in coordinating the international response to the crisis. Moreover, a lot of work at the BIS in the second half of the 1970s had aimed at restraining the debt build-up. Discussions on the rising debt levels were highly influential in shaping the BIS view of financial stability, with the "macroprudential" concept at its core. However, in the analysis of the debt buildup, the role of financial innovations was not really captured. In this paper, we focus on the Latin American debt crisis, discussing first the debt build-up, different initiatives to restrain lending and the BIS role in the management of the crisis. We then turn to the ensuing efforts to strengthen the financial system and the emerging BIS approach to financial stability. |
| Keywords: | Latin American debt crisis, BIS, macroprudential, financial fragility, Lamfalussy |
| JEL: | A11 B22 B32 E3 F02 G10 N10 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:201312-247&r=hpe |
| By: | Todorova, Zdravka |
| Abstract: | The article discusses consumption as a social process that is a part of social provisioning and is in an evolutionary interplay with other social processes. The discussion is grounded in, but is not limited to the contributions of Thorstein Veblen. The first section delineates social provisioning as a framework for consumption inquiry. This section emphasizes that social provisioning is a part of collective life process embedded in culture and nature, and that it is comprised by two general sets of activities – those motivated by money and those that are not motivated by making money. The second section delineates features of capitalism as a system, so that it provides a social context for consumption inquiry. The third section formulates a categorization of social processes, one of which is the consumption process. Further, the section delineates the meaning and components of the concepts: social activities, institutions, and habits of life and thought. The fourth section applies these concepts to consumption social process in the specific context of capitalism. The section discusses consumption activities; institutions and systems of provision; and habits of life and thought – illustrating with examples obtained from various disciplines. The section introduces “gated consumption” as an example of a habit of life and thought. It is argued that the formulated analysis transcends the cultural-material dualism. Finally, the article draws implications of the offered analysis, concluding that the category of “consumers” is of little use to heterodox economics. |
| Keywords: | Consumption Process; Social Process; Institutions; Consumption Activities; Social Provisioning; Habits of Life and Thought; Heterodox Economics; Class; Thorstein Veblen |
| JEL: | B41 B50 B52 B54 D11 P10 |
| Date: | 2013–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51516&r=hpe |
| By: | Friedrich Schneider |
| Abstract: | In this note, three major areas of Buchanan’s research are briefly described: (1) The ideas of Knut Wicksell on Buchanan’s work, (2) constitutional economics and the veil of ignorance, and (3) the role of government and/or the power to tax. It is shown that these three areas had a major influence on the European public choice movement, for example, at the European constitutional group. |
| Keywords: | Work of James Buchanan, constitutional economics, veil of ignorance, power to tax, European public choice Society, Knut Wicksell, role of government |
| JEL: | D78 E26 H2 H11 H26 K42 O5 O11 O16 O17 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2013_24&r=hpe |
| By: | J. Mark Ramseyer (Harvard Law School); Eric Rasmusen (Department of Business Economics and Public Policy, Indiana University Kelley School of Business) |
| Abstract: | Antitrust scholars have come to accept the basic ideas about exclusive dealing that Bork articulated in The Antitrust Paradox. Indeed, they have even extended his list of reasons why exclusive dealing can promote economic efficiency. Yet they have also taken up his challenge to explain how exclusive dealing could possibly cause harm, and have modelled a variety of special cases where it does. Some (albeit not all) of these are sufficiently plausible to be useful to prosecutors and judges. |
| JEL: | L0 K21 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2013-11&r=hpe |
| By: | Sebastien Courtin (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise); Bertrand Tchantcho (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise) |
| Abstract: | The desirability relation was introduced by Isbell (1958) to qualitatively compare the a priori influence of voters in a simple game. In this paper, we extend this desirability relation to simple games with coalition structure. In these games, players organize themselves into a priori disjoint coalitions. It appears that the desirability relation defined in this paper is a complete preorder in the class of swap-robust games. We also compare our desirability relation with the preorders induced by the generalizations to games with coalition structure of the Shapley-Shubik and Banzahf-Coleman power indices (Owen, 1977, 1981). It happens that in general they are different even if one considers the subclass of weighed voting games. However, if structural coalitions have equal size then both Owen-Banzhaf and the desirability preordering coincide. |
| Date: | 2013–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00914910&r=hpe |
| By: | Sylvain Béal (CRESE, Université de Franche-Comté); Eric Rémila (Gate Lyon Saint-Etienne, Université de Saint-etienne); Philippe Solal (Gate Lyon Saint-Etienne, Université de Saint-etienne) |
| Abstract: | If a player is removed from a game, what keeps the payoff of the remaining players unchanged? Is it the removal of a special player or its presence among the remaining players? This article answers this question in a complement study to Kamijo and Kongo (2012). We introduce axioms of invariance from player deletion in presence of a special player. In particular, if the special player is a nullifying player (resp. dummifying player), then the equal division value (resp. equal surplus division value) is characterized by the associated axiom of invariance plus efficiency and balanced cycle contributions. There is no type of special player from such a combination of axioms that characterizes the Shapley value. |
| Keywords: | weighted division values, equal division, weighted surplus division values, equal surplus division, Shapley value, null player, nullifying player, dummifying player, invariance from player deletion in presence of a special player |
| JEL: | C71 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2013-09&r=hpe |
| By: | Feltkamp, Vicent; Arin Aguirre, Francisco Javier; Montero García, María |
| Abstract: | This paper studies an allocation procedure for coalitional games with veto players. The procedure is similar to the one presented by Dagan et al. (1997) for bankruptcy problems. According to it, a player, the proposer, makes a proposal that the remaining players must accept or reject, and con ict is solved bilaterally between the rejector and the proposer. We allow the proposer to make sequential proposals over several periods. If responders are myopic maximizers (i.e. consider each period in isolation), the only equilibrium outcome is the serial rule of Arin and Feltkamp (2012) regardless of the order of moves. If all players are farsighted, the serial rule still arises as the unique subgame perfect equilibrium outcome if the order of moves is such that stronger players respond to the proposal after weaker ones. |
| Keywords: | veto players, bargaining, myopic behavior, serial rule |
| JEL: | C72 C78 C71 D70 |
| Date: | 2013–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:ikerla:11102&r=hpe |
| By: | José Pedro Pontes; Joana Pais |
| Abstract: | This paper addresses the issue of industrial development using a coordination game. Complementarities between transport infrastructure provision by the Government and consumer goods manufacturing firms, and among consumer goods firms themselves dictate the outcome: either the transport infrastructure (i.e., a highway) is not built and firms keep doing “home” production, thus supplying mainly nearby consumers and dispensing with a highway; or they switch to “factory” production, a more spatially centralized regime, where output must be sold over long distances, thus implying the construction of a highway. In relation to the existent literature, this paper presents two main innovations. Firstly, the two sources of linkage, namely cost linkage, through the provision of an indivisible input (the highway), and demand linkage, through the wage rise brought about by industrialization, are not treated separately, but they are integrated in the same model. Consequently, the game has now two levels of equilibrium selection. Secondly, the paper does not limit itself to checking that there can arise multiple Nash equilibria under certain circumstances, but it discusses methods for the selection of a unique outcome. Consequently, in addition to the classical Nash equilibria mentioned above, there is a third possible solution where the Government builds the highway but the consumer goods firms refrain from using it and stick to “home” production. Hence, the transport infrastructure becomes a “white elephant”. |
| Keywords: | Big Push, Coordination Games, Economic Development, Equilibrium selection, Industrialization. |
| JEL: | C72 O12 O14 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp292013&r=hpe |
| By: | Andrei Shleifer |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:69731&r=hpe |
| By: | Le Bris, David |
| Abstract: | Law and finance theory emphasizes the negative consequences of civil law on financial and, subsequently, economic development. Before the Revolution, French territory was strictly divided according to the legal regime. Since the Middle-Ages, the southern part of France was under Justinian civil law and the north was under customary laws which, as with common law, gave more flexibility to judges and less right to the state. This dichotomy offers the unique opportunity to test the law and finance theory free from cross-country bias. Using fiscal revenues across 79 Departments from 1817-1821, we test if Departments under civil law, over the centuries and up to 15 years ago, exhibit lower financial and economic outcomes. We find that civil law Departments do exhibit lower economic performances but this difference is not robust when controlled for fundamental factors. The civil law appears even to have a positive effect in many specifications. Old Regime France does not confirm the law and finance theory. |
| Keywords: | Law and Finance, Economic development, France, history. |
| JEL: | N23 N43 O1 O43 P48 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52123&r=hpe |
| By: | Paul, Duguid |
| Abstract: | In 1863, a one-term senator introduced a trademark bill to the California legislature that the Daily Alta California at first reported as of little more than parochial interest. In fact, when seen in local context, the bill might seem to have been aimed primarily at the senator's own business interests. Yet the ensuing law represents the first trademark registration law in the common law jurisdictions. As such, the law is particularly intriguing, because standard histories of law and business usually credit manufacturing interests and states for pioneering trademark law, and in 1863 California was hardly a classic manufacturing state. This essay thus attempts to explore the background of this law in order to answer the questions why California and why then? |
| Keywords: | trademark registration, California, Second Industrial Revolution, wine |
| JEL: | K0 L2 N4 |
| Date: | 2013–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51854&r=hpe |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Tibor Heumann (Dept. of Economics, Yale University); Stephen Morris (Dept. of Economics, Princeton University) |
| Abstract: | We analyze a class of games with interdependent values and linear best responses. The payoff uncertainty is described by a multivariate normal distribution that includes the pure common and pure private value environment as special cases. We characterize the set of joint distributions over actions and states that can arise as Bayes Nash equilibrium distributions under any multivariate normally distributed signals about the payoff states. We characterize maximum aggregate volatility for a given distribution of the payoff states. We show that the maximal aggregate volatility is attained in a noise-free equilibrium in which the agents confound idiosyncratic and common components of the payoff state, and display excess response to the common component. We use a general approach to identify the critical information structures for the Bayes Nash equilibrium via the notion of Bayes correlated equilibrium, as introduced by Bergemann and Morris (2013b). |
| Keywords: | Incomplete information, Bayes correlated equilibrium, Volatility, moments restrictions, Linear best responses, Quadratic payoffs |
| JEL: | C72 C73 D43 D83 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1928&r=hpe |
| By: | Tibor Neugebauer,; Sascha Fullbrunn (LSF) |
| Abstract: | We model the safety net problem as a social dilemma game involving moral hazard, risk taking and limited liability. The safety net game is compared to both an individual decision task involving full liability and the deterministic public goods game. We report experimental data to show that limited "liability leads to higher risk taking in comparison to full liability;" nevertheless, the difference is much smaller than predicted by theory. In the safety net game, subjects behave as if socially responsible for the losses they impose on the group. With repetition, nevertheless, a gradual emergence of the moral hazard problem arises. |
| Keywords: | Forthcoming: Economic Inquiry |
| JEL: | C9 D7 D8 H4 I1 I3 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:crf:wpaper:12-12&r=hpe |