
on History and Philosophy of Economics 
By:  Ehnts, Dirk; Carrión Álvarez, Miguel 
Abstract:  The Alchemy of Finance, a book written by George Soros (1987) on the workings of financial markets, 'has found a place in the reading lists of business schools as distinct from economics departments', according to the author (2003, 4). His theory of reflexivity, which is at the center of the book, states that interdependence exists between the cognitive and manipulative functions of market participants. While Soros claims that imperfect knowledge rules on financial markets, academic orthodoxy assumes perfect knowledge and hence displays  in the absence of external shocks  financial markets as efficient. We review the work of Soros on reflexivity and follow up his claim that it can be used to attack the efficient market hypothesis. Both are discussed and then the ideas of Soros are compared to those of PostKeynesian economics. We argue that Soros' book is mainly ignored by neoclassical economists because they disagree with his axioms, and by heterodox economists because his ideas are not new.  
Keywords:  efficient market hypothesis,theory of reflexivity,George Soros 
JEL:  B26 D8 
Date:  2013 
URL:  http://d.repec.org/n?u=RePEc:zbw:ipewps:282013&r=hpe 
By:  Bellino, Enrico; Nerozzi, Sebastiano 
Abstract:  The formal representation of economic theories normally takes the form of a model, that is, a system of equations which connect the endogenous variables with the values of the parameters which are taken as given. Sometimes, it is possible to identify one or more equations which are able to determine a subset of endogenous variables priorly and independently of the other equations and of the value taken by the remaining variables of the system. The first group of equations and variables are thus said to determine causally the remaining variables. In Pasinetti’s works this notion of causality has often been emphasized as a formal property having the burden to convey some deep economic meaning. In this work, we will go through those Pasinetti’s works where this notion of causality plays a central role, with the purpose to contextualize it within the econometric debate of the Sixties, to enucleate its economic meaning and to show its connections with other fields of the modern classical approach. 
Keywords:  causality, interdependence, modern classical approach, Ricardo theory distribution, Keynes’ analysis, ‘given quantities’, surplus approach, structural dynamics, vertical integration 
JEL:  B00 B24 B51 C50 E12 
Date:  2013–12–12 
URL:  http://d.repec.org/n?u=RePEc:pra:mprapa:52179&r=hpe 
By:  Ruijgrok, Matthijs; Ruijgrok, Theo 
Abstract:  The replicator equation for a two person symmetric game, which has an interval of the real line as strategy space, is extended with a mutation term. Assuming that the distribution of the strategies has a continuous density, a partial differential equation for this density is derived. The equation is analysed for two examples. A connection is made with Adaptive Dynamics. 
Keywords:  Evolutionary games; Replicator equation; Mutation; Dynamic stability; Partial differential equations 
JEL:  C72 C73 
Date:  2013–12–13 
URL:  http://d.repec.org/n?u=RePEc:pra:mprapa:52198&r=hpe 
By:  Aviad Heifetz; Willemien Kets 
Abstract:  In an important paper, Weinstein and Yildiz (2007) show that if players have an innite depth of reasoning and this is commonly believed, types generically have a unique rationalizable action in games that satisfy a richness condition. We show that this result does not extend to environments where players may have a finite depth of reasoning, or think it is possible that the other player has a finite depth of reasoning, or think that the other player may think that is possible, and so on, even if this socalled "grain of naivete" is arbitrarily small. More precisely, we show that even if there is almost common belief in the event that players have an infinite depth of reasoning, there are types with multiple rationalizable actions, and the same is true for "nearby" types. Our results demonstrate that both uniqueness and multiplicity are robust phenomena when we relax the assumption that it is common belief that players have an infinite depth, if only slightly. 
Keywords:  Bounded rationality, finite depth of reasoning, global games, higherorder beliefs, generic uniqueness, robust multiplicity JEL Classification: C700, C720, D800, D830 
Date:  2013–12–11 
URL:  http://d.repec.org/n?u=RePEc:nwu:cmsems:1573&r=hpe 
By:  Pablo Arribillaga; Jordi Massó; Alejandro Neme 
Abstract:  We study cooperative and competitive solutions for a many tomany generalization of Shapley and Shubik (1972)�s assignment game. We consider the Core, three other notions of group stability and two alternative definitions of competitive equilibrium. We show that (i) each group stable set is closely related with the Core of certain games defined using a proper notion of blocking and (ii) each group stable set contains the set of payoff vectors associated to the two definitions of competitive equilibrium. We also show that all six solutions maintain a strictly nested structure. Moreover, each solution can be identified with a set of matrices of (discriminated) prices which indicate how gains from trade are distributed among buyers and sellers. In all cases such matrices arise as solutions of a system of linear inequalities. Hence, all six solutions have the same properties from a structural and computational point of view. 
Keywords:  assignment game, competitive equilibrium, core, group stability 
JEL:  C78 D78 
Date:  2013–10 
URL:  http://d.repec.org/n?u=RePEc:bge:wpaper:740&r=hpe 
By:  : Constantinos Antoniou; : Glenn W. Harrison; : Morten I. Lau; : Daniel Read 
Date:  2013 
URL:  http://d.repec.org/n?u=RePEc:wbs:wpaper:wpn1302&r=hpe 
By:  : Constantinos Antoniou; : Glenn W. Harrison; : Morten I. Lau; : Daniel Read 
Date:  2013 
URL:  http://d.repec.org/n?u=RePEc:wbs:wpaper:wpn1303&r=hpe 
By:  Gustavo Bergantiños; Jordi Massó; Inés Moreno de Barreda; Alejandro Neme 
Abstract:  We study how to partition a set of agents in a stable way when each coalition in the partition has to share a unit of a perfectly divisible good, and each agent has symmetric singlepeaked preferences on the unit interval of his potential shares. A rule on the set of preference profiles consists of a partition function and a solution. Given a preference profile, a partition is selected and as many units of the good as the number of coalitions in the partition are allocated, where each unit is shared among all agents belonging to the same coalition according to the solution. A rule is stable at a preference profile if no agent strictly prefers to leave his coalition to join another coalition and all members of the receiving coalition want to admit him. We show that the proportional solution and all sequential dictator solutions admit stable partition functions. We also show that stability is a strong requirement that becomes easily incompatible with other desirable properties like efficiency, strategyproofness, anonymity, and nonenvyness. 
Keywords:  division problem, symmetric singlepeaked preferences, stable partition 
JEL:  D71 
Date:  2013–10 
URL:  http://d.repec.org/n?u=RePEc:bge:wpaper:739&r=hpe 