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on History and Philosophy of Economics |
| By: | Dohmen, Thomas (University of Bonn) |
| Abstract: | In the past decades, behavioural economics has become an influential and important field of economics. Interest in behavioural economics derives from unease with standard economic models that are based on restrictive assumptions, which confine the nature of human motivation. Although Adam Smith, the founding father of modern economics, had highlighted the multitude of psychological motives that drive human behaviour, and despite the fact that many influential economists thereafter believed in tenets of modern behavioural economics, the homo economicus assumption became prevalent, until this construct was challenged by compelling evidence on social, cognitive and emotional factors that drive decision-making and social interaction. Since human interaction is germane to labour markets, one would expect behavioural economics to be highly relevant for labour economics. This paper gauges whether and how behavioural economics has left its mark on labour economics, considers the timing and structure of this development, and contemplates its future impact on labour economics. |
| Keywords: | behavioural economics, labour economics, behavioural labour economics |
| JEL: | J00 J01 D03 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8263&r=hpe |
| By: | Drakopoulos, Stavros A. |
| Abstract: | There is a persistent aversion towards methodological discourse by most mainstream economists. Frank Hahn (1992) exemplified this attitude and provoked a number of reactions concerning the role and the reasons for methodological aversion. After offering a categorization of the main explanations for methodological aversion, the paper suggests an explanation that is based on the role of the physics scientific ideal. It argues that the strive to achieve the high scientific status of physics by following the methods of physics, contributed to the negative mainstream attitude towards economic methodology. This can be reinforced by examining the writings of extremely influential mainstream economists such as Irwin Fisher and Milton Friedman. These works clearly imply that the hard science status of economics renders methodological discussions and especially methodological criticism, rather pointless. Given that the existing prescriptions for making economic methodology more attractive do not give much thought to this important aspect of mainstream economics, the paper also argues for a more systematic discussion of this issue. |
| Keywords: | Economic Methodology; History of Economic Thought; Economics and Physics. |
| JEL: | B0 B3 B4 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57222&r=hpe |
| By: | Kirchgässner, Gebhard |
| Abstract: | First the assumption of self-interest as applied in Economics is presented. Here we also discuss areas in which (many) people behave less self- but more other-regarding than traditional economic models assume. Then, greedy behaviour is considered as existing in the political and economic ‘world’. Here we refer to corruption as well as to the role of money as a positional good. We also discuss such behaviour in the academic world, in which money plays a role as well as reputation. Thus, while the assumption of mutually disinterested rationality is a very powerful instrument for analysing individual behaviour, to explain some phenomena we have to recognise that people are not only sometimes other-regarding, but also sometimes greedy, and that they might value money much more than traditional Economics assumes. We conclude with some remarks on what we can learn in this respect from Behavioural Economics. |
| Keywords: | Economic Model of Behaviour, Self-Interest, Altruism, Greed, Corruption |
| JEL: | B41 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2014:16&r=hpe |
| By: | Ambrosino, Angela (University of Turin) |
| Abstract: | The mediation procedure, as outlined by D.lg 28/2010 and subsequent amendments, introduced in our legal system a new tool for coordinating the decisions of economic agents. The new civil mediation is proposed, therefore, as an instrument characterized by a different procedure and objectives from those of ordinary judgment. The evaluation of its efficiency requires the introduction of new theoretical tools that allow to evaluate the different aspects of social interaction in mediation. The traditional cost-benefit analysis proposed by the economic analysis of law, or simple considerations on Pareto-efficiency proposed by standard economics seem not sufficient analytical tools in this perspective. This article shares Mitchell’s cognitive approach to the theory of law, and it is aimed at analyzing the new model of mediation introduced into Italian legislation through the lens offered by F.A. Hayek’s theory of law (1973, 1976, 1979), with particular reference to the distinction he made between law and legislation and its consequence on the analysis of the role of the judge in common law as the discoverer of law. Moreover, Hayek’s legal theory will be analyzed jointly to his concept of social order. In the light of the contribution of this author, in fact, the choice of our legislator seems to be close to the idea of developing regulatory structures that simply delineate the action of subjects without imposing specific behaviors or ex ante solutions to given situations |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:uto:cesmep:201401&r=hpe |
| By: | José Luis Ramos Gorostiza (Departamento de Historia e Instituciones Económicas I. Facultad de CC. Económicas y Empresariales Universidad Complutense de Madrid) |
| Abstract: | Marshall, los Webb y Schumpeter, tres grandes nombres de la historia del pensamiento económico, viajaron a Estados Unidos en distintos momentos de la llamada Época Dorada del capitalismo, entre comienzos del último tercio del siglo XIX y la Gran Guerra. Este periodo coincidió con la fase de ascenso de Estados Unidos al indiscutible liderazgo conómico internacional, tras una rápida e intensa transformación desde una sociedad aún esencialmente agraria y rural a otra industrial y urbana. Marshall visitó Estados Unidos en 1875, los Webb en 1898, y Schumpeter en 1913. Los tres descubrieron una nueva realidad económica que contrastaba con la vieja Europa, pero las diferencias de percepción fueron notables, tanto porque visitaron el país en tres momentos distintos de su rápido proceso de transformación, como porque contemplaron la novedosa realidad que se les presentaba desde tres miradas bien dispares. |
| Abstract: | Marshall, Schumpeter, and the Webbs, three great names in the history of economic thought, traveled to the United States at different times of the so-called Golden Age of capitalism, between the beginning of the last third of the nineteenth century and the Great War. This period coincided with the ascent of the United States to the undisputed world economic leadership. Marshall visited the young country in 1875, the Webbs in 1898, and Schumpeter in 1913. The three discovered a new economic reality that contrasted with the old Europe, but the differences in perception were remarkable, because they visited the country in three different times of its rapid and intense process of transformation from an agrarian and rural society to an industrial and urban one, and also because they watched this new economic reality from very disparate looks. |
| Keywords: | Marshall, Webb, Schumpeter, Estados Unidos, Época Dorada, United States, Golden Age. |
| JEL: | B00 B10 B30 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doctra:14-02&r=hpe |
| By: | Xavier De Scheemaekere; Kim Oosterlinck; Ariane Szafarz |
| Abstract: | Economists have been blamed for their inability to forecast and address crises. This paper attributes this inability to intertwined factors: the lack of a coherent definition of crises, the reference class problem, the lack of imagination regarding the nature of future crises, and sample selection biases. Specifically, economists tend to adapt their views on crises to recent episodes, and omit averted and potential crises. Threshold-based definitions of crises run the risk of being ad hoc. Using historical examples, this paper highlights some epistemological shortcomings of the current approach. |
| Keywords: | Economic Crisis; Single-Case Probability; Epistemology; Economic History |
| JEL: | B40 G00 N00 |
| Date: | 2014–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/171717&r=hpe |
| By: | Gabriel Fagan (European Central Bank); Vito Gaspar (International Monetary Fund); Peter McAdam (European Central Bank and University of Surrey) |
| Abstract: | Despite the modern origins of endogenous growth theory, we argue that the ‘Idea for a Universal History with a Cosmopolitan Aim’ written by Immanuel Kant in 1784 provides an early and coherent example of such a theory. Kant’s endogenous growth mechanism is driven by the inherent rivalry that exists between agents which increases effort and strengthens the accumulation of knowledge, which in turn is carried through generations. In an exercise in rational reconstruction, we present a mathematical model of Kant’s mechanism. We use the model to contribute to the contemporary policy debate as to whether “keeping up with the Joneses†leads to excessive effort. |
| JEL: | A12 B3 N0 O38 O40 P1 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:sur:surrec:0214&r=hpe |
| By: | Giménez Gómez, José M. (José Manuel); Osório, António (António Miguel) |
| Abstract: | In this paper we present a model of representative behavior in the dictator game. Individuals have simultaneous and non-contradictory preferences over monetary payoffs, altruistic actions and equity concerns. We require that these behaviors must be aggregated and founded in principles of representativeness and empathy. The model results match closely the observed mean split and replicate other empirical regularities (for instance, higher stakes reduce the willingness to give). In addition, we connect representative behavior with an allocation rule built on psychological and behavioral arguments. An approach consistently neglected in this literature. Key words: Dictator Game, Behavioral Allocation Rules, Altruism, Equity Concerns, Empathy, Self-interest JEL classification: C91, D03, D63, D74. |
| Keywords: | Disseny d'experiments, Microeconomia, Economia del benestar, Decisió de grup, 33 - Economia, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:urv:wpaper:2072/237595&r=hpe |
| By: | Nick Polson; Jan Hendrik Witte |
| Abstract: | Richard Bellman's Principle of Optimality, formulated in 1957, is the heart of dynamic programming, the mathematical discipline which studies the optimal solution of multi-period decision problems. In this paper, we look at the main trading principles of Jesse Livermore, the legendary stock operator whose method was published in 1923, from a Bellman point of view. |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1407.2642&r=hpe |
| By: | Michel Grabisch (Centre d'Economie de la Sorbonne - Paris School of Economics); Peter Sudhölter (COHERE - University of Southern Denmark) |
| Abstract: | We generalize the characterizations of the positive core and the positive prekernel to TU games with precedence constraints and show that the positive core is characterized by non-emptiness (NE), boundedness (BOUND), covariance under strategic equivalence, closedness (CLOS), the reduced game property (RGP), the reconfirmation property (RCP) for suitably generalized Davis-Maschler reduced games, and the possibility of nondiscrimination. The bounded positive core, i.e., the union of all bounded faces of the positive core, is characterized similarly. Just RCP has to be replaced by a suitable weaker axiom, a weak version of CRGP (the converse RGP) has to be added, and CLOS can be deleted. For classical games the prenucleolus is the unique further solution that satisfies the axioms, but for games with precedence constraints it violates NE as well as the prekernel. The positive prekernel, however, is axiomatized by NE, anonymity, reasonableness, the weak RGP, CRGP, and weak unanimity for two-person games (WUTPG), and the bounded positive prekernel is axiomatized similarly by requiring WUTPG only for classical two-person games and adding BOUND. |
| Keywords: | TU games, restricted cooperation, game with precedence constraints, positive core, bounded core, positive prekernel, prenucleolus. |
| JEL: | C71 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:14036&r=hpe |
| By: | Winschel, Evguenia; Zahn, Philipp |
| Abstract: | In most laboratory experiments concerning prosocial behavior subjects are fully informed how their decision influences the payoff of other players. Outside the laboratory, however, individuals typically have to decide without such detailed knowledge. To asses the effect of information asymmetries on prosocial behavior, we conduct a laboratory experiment with a simple non-strategic interaction. A dictator has only limited knowledge about the benefits his prosocial action generates for a recipient. We observe subjects with heterogenous social preferences. While under symmetric information only individuals with the same type of preferences transfer, under asymmetric information different types transfer at the same time. As a consequence and the main finding of our experiment, uninformed dictators behave more prosocially than informed dictators. |
| Keywords: | Asymmetric Information , Prosocial Behavior , Efficiency Concern , Inequality Aversion , Dictator Game |
| JEL: | D82 C91 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:mnh:wpaper:36632&r=hpe |
| By: | Amavilah, Voxi Heinrich |
| Abstract: | This comment is not a typical outcome of a typical research activity, and it not written like one. For example, although I have a list of references, I do not provide a formal literature review. The list is simply an acknowledge of the work that might have influenced my thoughts on the topic at hand. It is also not a review or any other evaluation of Lewis’s work, of which there are many by more eminent and famous friends, colleagues, and students of his. Lewis’s impact on Development Economics is well-known and appreciated. Less known and openly appreciated is his economic theory of growth and technological change, but I am not going to stress that either. My maintained claim is that the Newly-Industrialized Asian economies (NIAEs) have read carefully and followed closely and well Lewis’s theory in devising their growth and change strategies and policies, with local adjustments, of course. Many African countries on the other hand appear to have followed Lewis halfheartedly and in a helter-skelter way. Consequently, the difference in the performance of the two regions is no longer a matter of contention. The objective of this comment is to restate what I believe are Lewis’s key lessons to developing countries, and to show that although Lewis led all developing countries to water, proverbially speaking, some African countries have so far chosen not to drink. I find that there is a deliberateness in the order of the development process as conceptualized in Lewis’s theory of economic growth and technological change. First, for a country to grow it has to acknowledge that scarcity is real and to learn to be efficient, to economize. Second, efficiency requires good economic institutions to sustain it. Third, institutions need to not only have knowledge, defined as technological knowledge plus social knowledge, but more importantly such knowledge must grow, spread, and be used. The fourth “proximate cause” of growth in this order of preference is physical capital. Following capital, in the fifth and sixth places, respectively, are population (labor) and other natural resources (land), and government. Lewis is new classical (not to be confused with neo-classical) in that his theory of growth and change takes population and natural resources as given for any developing country, and counts government as a throwback to classical economics to suggest that economies perform best when government’s role is well defined and constrained. By implication good government is a function of good institutions, learning and knowledge growth. I conclude from this evidence that some African countries have refused to acknowledge scarcity, paid lip-service to knowledge accumulation, growth, and diffusion, over-stressed their need for physical capital and the abundance of their natural resources, neglected their populations, and failed to assign government its proper role. The result, until recently, has been slow growth. |
| Keywords: | Economic growth and technological change, Lewis and the Africans, Lewis and growth and change of African countries, lessons for growth and change, deep causes of growth and change of developing countries |
| JEL: | O11 O33 O47 O55 P52 |
| Date: | 2014–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57126&r=hpe |
| By: | Estrada, Fernando; González, Jorge Iván |
| Abstract: | We describe Hayek's position on taxation and its subsequent developments. Hayek defends the proportional tax system. If a majority rule corrects deviations from political power must also restrict the conditions of progressive taxation. According to Hayek the progressive tax system (SFP) violates a principle of constitutional law obligations to generate more work for those looking for the growth of the economy. In this sense, the progressive tax system operates counter to principles of democratic justice. |
| Keywords: | Tax power, Hayek, Buchanan, Tributación, Regla fiscal, Impuestos |
| JEL: | A10 A12 B22 B31 E01 E4 H2 H21 H23 H3 H32 H42 H43 K2 N0 N2 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57123&r=hpe |
| By: | Antoine Billot (LEMMA - Université Panthéon-Assas and IUF); Vassili Vergopoulos (Centre d'Economie de la Sorbonne - Paris School of Economics) |
| Abstract: | Harsanyi's axiomatic justification of utilitarianism is extended to a framework with subjective and heterogenous priors. Contrary to the existing literature on aggregation of preferences under uncertainty, society is here allowed to formulate probability judgements, not on the actual state of the world as individuals do, but rather on the opinion they each have on the actual state. An extended Pareto condition is then proposed that characterizes the social utility function as a convex combination of individual ones and the social prior as the independent product of individual ones. |
| Keywords: | Utilitarianism, prior heterogeneity, Pareto condition. |
| JEL: | D71 D81 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:14049&r=hpe |
| By: | Estrada, Fernando |
| Abstract: | The core issue raised in Globalization and its Discontents, what is the critical evaluation of the IMF's role in the financial crisis in Asian countries and modern Russian transition. The Asian crisis began in July 1997 when the Thai devaluation came to their impact throughout Southeast Asia, as the region plunged into a social setback never seen before. Stiglitz maintains that the main cause of the devaluation of financial liberalization was recommended by Washington in previous years. |
| Keywords: | Globalization, Stiglitz, IMF, Economic, Asian, Markets |
| JEL: | H0 H11 H44 I14 I18 O19 O53 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57140&r=hpe |
| By: | Umut \c{C}etin; Albina Danilova |
| Abstract: | We show the existence of a continuous-time Nash equilibrium in a financial market with risk averse market makers and an informed trader with a private information. The unwillingness of market makers to bear risk causes the informed trader to absorb large shocks in their inventories. The informed trader's optimal strategy is to drive the market price to its fundamental value while participating in the risk sharing with the market makers. The optimal strategies of the agents turn out to be solutions of a forward-backward system of partial and stochastic differential equations. In particular, the price set by the market makers is the solution to a non-standard `quadratic' backward stochastic differential equation. |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1407.2420&r=hpe |