nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒04‒02
twenty-six papers chosen by
Erik Thomson
University of Manitoba

  1. A.C. Pigou’s The Theory of Unemployment and its Corrigenda: The Letters of Maurice Allen, Arthur L. Bowley, Richard Kahn and Dennis Robertson By Karen Knight
  2. The Welfare Costs of Rent-Seeking: A Methodologically Individualist & Subjectivist Revision By Makovi, Michael
  4. Were Hayek’s Monetary Policy Recommendations Inconsistent?* By Martin Komrska; Marek Hudík
  5. Obituary: Gary Becker and the Art of Economics By Aloysius Siow
  6. Policy Implications of Economic Complexity and Complexity Economics By Elsner, Wolfram
  7. Generalizations of the General Lotto and Colonel Blotto Games By Dan Kovenock; Brian Roberson
  8. Orthodoxy versus heterodoxy: Inflation, unemployment, growth, profit By Manera, Carlos
  9. Ultimatum game: A meta-analysis of the past three decades of experimental research By Jean-Christian Tisserand
  10. Unemployment: Walras’s Voluntary and Keynes’s Involuntary By Ezra Davar
  11. Isolating and identifying motivations: A voluntary contribution mechanism experiment with interior Nash equilibria By Takehisa Kumakawa; Tatsuyoshi Saijo; Takehiko Yamato
  12. UWA Discussion Papers in Economics: The First 750 By Joshua Bon
  13. A. C. Pigou’s Membership of the ‘Chamberlain-Bradbury’ Committee Part I: The Historical Context By Michael McLure
  14. Pigou, Del Vecchio and Sraffa: The 1955 International ‘Antonio Feltrinelli’ Prize for the Economic and Social Sciences By Rogério Arthmar; Michael McLure
  15. Economic Integration Theories and the Developing Countries By Marinov, Eduard
  16. Agency, Human Dignity and Subjective Well-Being By Daniel Hojman; Alvaro Miranda
  17. A Fundamental Cause of Economic Crisis By Koji Akimoto
  18. Price Revelation and Existence of Financial Equilibrium with Incomplete Markets and Private Beliefs By Lionel de BOISDEFFRE
  19. Dynamic Games with Almost Perfect Information By Wei He; Yeneng Sun
  20. State of Exception, Human Rights and the Exclusion Required by Neoliberal Societies: how Rome Statute protect victims of economy. By Gustavo Bussmann Ferreira
  21. Fra Marx e List: sinistra, nazione e solidarietà internazionale By Sergio Cesaratto
  22. Keynes; İstatistik, Ekonomik İstatistikler, Ulusal Gelir ve Ekonometri By Ercan Uygur
  23. Shared intentions: the evolution of collaboration By Newton, Jonathan
  24. Bargaining under surveillance: Evidence from a three-person ultimatum game By Lauri Saaksvuori; Abhijit Ramalingam
  25. Credit, Financial Stability, and the Macroeconomy By Taylor, Alan M.
  26. Equal distribution or equal payoffs? Reciprocity and inequality aversion in the investment game By Rodriguez-lara, Ismael

  1. By: Karen Knight (University of Western Australia)
    Abstract: Shortly after the appearance of the first printing run of A.C. Pigou’s The Theory of Unemployment, Macmillan and Company made available to purchasers a Corrigenda slip. Reviewers of the book identified additional errors and slips, particularly in Pigou’s mathematical work. This paper considers the broad evolution of Pigou’s economic thought on unemployment and the implications of unpublished correspondence discovered in the Marshall Library archives alerting Pigou to errors appearing in the first printings of The Theory of Unemployment. Pigou’s departure from the Marshallian tradition of placing mathematics in the background of economic theorising, and reasons why his 1933 text required a substantial corrigenda, are examined. It is argued that the impact of Pigou’s treatise on unemployment on the development of economic thought extended beyond its contributions to unemployment theory.
    Date: 2014
  2. By: Makovi, Michael
    Abstract: Gordon Tullock is recognized for being the first to recognize the true costs of rent-seeking as including not only the Harberger triangle but also the Tullock rectangle. This rectangle does not constitute merely a lossless transfer of wealth, but it causes a misallocation of resources as rent-seekers invest resources in lobbying. However, a close reading of Tullock’s several articles on the subject shows that his arguments are formulated in a holistic fashion, speaking of what is efficient or inefficient for society. Rent-seeking is inefficient because it reduces societal welfare. But according to a methodologically individualist and subjectivist economics, such a claim is invalid. We recast Tullock’s argument accordingly, and conclude that we must distinguish between positive economic fact and normative moral philosophy. Rent-seeking does indeed cause a reallocation of resources – as per Tullock – but only normative moral philosophy can pronounce this to be “bad.”
    Keywords: Tullock; rent-seeking; interest groups; efficiency; subjectivism; methodology
    JEL: B31 B41 D61 D63 D72
    Date: 2015–03–25
  3. By: utku altunöz (Social Science);
    Abstract: Dominant neo classical system is criticized for not solving the problems of current economics. In other words, it is seen the reason of current economic issues. And also it is believed that unsolved problems come with global crisis were developed by dominant classical thought. In 2000’s Post Autistic economic movement came to the scene with published declaration by pupils of Ecole Normale Superieure in France. According to declaration dominant economic thought turn into the autistic characteristic. Due to this fact, economic science is vanished by intense mathematical formulas. So that had broken of connection with real life. In this paper first, basic hypothesis of neo classical thought will be examined. Following that, solving suggestion for problematic area in the light of autistic movement will be explained. In the other words, especially in the course of time, the current economic system remains incapable to meet society’s expectations, demands, and requirements, the system and method debate has been increasing. Recently, the basic reason that led to criticism by focusing the global economic crisis has developed in the direction of the Neo-classical system. Another purpose of this study is to open discussion of last 2008 global crisis to Turkey’s assessment from the view point of Post Autistic Economics.
    Keywords: The Post Autistic Economics Movement, Neo-classical Economics, The 2008 Global Economic Crisis
    JEL: E13 P16 P51
    Date: 2014–06
  4. By: Martin Komrska (University of Economics, Prague); Marek Hudík (Centre for Theoretical Study, Charles University and Academy of Sciences, Prague)
    Abstract: Contrary to the received view, we maintain that Hayek’s monetary policy recommendations were not inconsistent. The prevalent perception of early Hayek as the money stream stabilizer and late Hayek as the price level stabilizer is attributable to an unjustified normative interpretation of Hayek’s positive analysis. We argue that in his contributions to monetary theory, Hayek took the goals of monetary policy as exogenously given and analysed the efficiency of different means to achieve these goals. Hayek’s allegedly inconsistent switch from being a critic to an advocate of price level stabilization is explained by a change in the issues on which he focused, rather than by a change in his theoretical views. We also claim that Hayek was always aware that every practical monetary policy involves difficult trade-offs and was thus reluctant to impose his own value judgments about what people should strive for.*We would like to thank Pavel Potužák for his helpful comments on an earlier draft. Any mistakes are, of course, ours.
    Keywords: F. A. Hayek; monetary policy; Austrian business cycle theory; price level stabilization; money stream stabilization
    JEL: B22 B31 B53
    Date: 2014–07
  5. By: Aloysius Siow
    Abstract: The obituary discusses why Gary Becker is one of the most successful social scientist in the second half of the twentieth century. It argues that his success was due to his ability to recognize which resources are scarce in non-market situations and environments, and to use economics to analyze how these scarcities affected the non-market outcomes.
    Keywords: obituary, Gary Becker
    JEL: B0
    Date: 2015–03–24
  6. By: Elsner, Wolfram
    Abstract: Policy implications of complexity economics (CE) are investigated. CE deals with “Complex Adaptive (Economic) Systems” [CA(E)S], generally characterized by mechanisms and properties such as “emergence” of structure or some capacity of “self-organization”. With this, CE has manifold affinities with economic heterodoxies. CE has developed into a most promising economic research program in the last decades. With some time lag, and boosted by the financial crisis and Great Recession, a surge to explore their policy implications recently emerged. It demonstrated the flaws of the “neoliberal” policy prescriptions mostly derived from the neoclassical mainstream and its underlying more simplistic and teleological equilibrium models. However, most of the complexity-policy literature still remains rather general. For a subset of CA(E)S, those with heterogeneous human agents interacting, particularly on networks, using evolutionary games in the “evolution-of-cooperation” tradition, therefore, we exemplarily derive more specific policy orientations and tools, and a framework policy approach called Interactive Policy.
    Keywords: Economic complexity; complex adaptive (economic) systems; equilibrium modeling; self-organization; structural emergence; microfoundations; social-dilemma games; evolution of cooperation; economic policy; regulation; institutional design; recognized interdependence; futurity; rime horizons; network structures; interactive/institutional policy; meritorics; pragmatism; negotiated economy.
    JEL: B4 B5 C72 D02 H4 P41
    Date: 2015–03–26
  7. By: Dan Kovenock (Economic Science Institute, Argyros School of Business and Economics, Chapman University); Brian Roberson (Purdue University, Department of Economics, Krannert School of Management)
    Abstract: In this paper, we generalize the General Lotto game (budget constraints satisfied in expectation) and the Colonel Blotto game (budget constraints hold with probability one) to allow for battlefield valuations that are heterogeneous across battlefields and asymmetric across players, and for the players to have asymmetric resource constraints. We completely characterize Nash equilibrium in the generalized version of the General Lotto game and then show how this characterization can be applied to identify equilibria in the Colonel Blotto version of the game. In both games, we find that there exist sets of non-pathological parameter configurations of positive Lebesgue measure with multiple payoff nonequivalent equilibria.
    Keywords: Colonel Blotto game, General Lotto game, Multi-battle contest, Redistributive politics, All-pay auction
    JEL: C72 D72 D74
    Date: 2015
  8. By: Manera, Carlos
    Abstract: Institutions like the IMF, the ECB and many finance ministries and private banks in the world's richest countries are sending out unequivocal calls for strict control of prices to be addressed urgently, given their intrinsic relationship with how the budget deficit and government debt evolve. These messages allow very little room for nuances or interpretations, stating categorically that price stability is the essential factor that guarantees economic growth and therefore plays a key role in enabling countries to achieve good living standards. Nevertheless, inflation, which nobody doubts needs to be kept under control, requires a much deeper analysis to avoid over-mechanical, over- simplistic applications for the present situation. We mustn't fall into what Paul Samuelson called basing economic policy on "shibboleths" - that is, hard and fast slogans that take over serious, thoughtful discussion and exchange of opinions. Especially since in economics slogans become hallmarks that are constantly repeated, and this repetition gets in the way of the obvious truth. This trend has led to the sale of intellectual products with no scientific backing. A case in point is David H. Fischer's book on prices. Addressing business leaders, he asserts categorically that econo mic cycles and crises have ended, but the actual economic events have disproved this. As Robert Solow warns, there is not one set of laws of economics applicable to all times and all places, and the part of e conomics that is not dependent upon economic history and the social context is very small and of little interest.
    Keywords: inflation,economic growth,heterodox view
    JEL: B50 B41 N1
    Date: 2015
  9. By: Jean-Christian Tisserand (CRESE)
    Abstract: The ultimatum game undoubtely lists the largest experimental literature of the past three decades. In this article, we focus on the choice of the proposer of the ultimatum game and the explanatory variables that may influence the amount offered. We perform a meta-analysis with a total of 97 observations from simple ultimatum game gathered through 42 articles published between 1983 and 2012. While the theoretical prediction announces that the equilibrium offer should be zero, our results show that the weighted average offer is 42.3% of the amount at stake. Among the numerous variables studied, only being an economist has a significant impact on the amounts offered.
    Keywords: Meta-analysis, Ultimatum game, Experimental economics, Microeconomics, Behavioral economics
    JEL: C78 C91 D03
    Date: 2014–10
  10. By: Ezra Davar
    Abstract: This paper shows that Keynes’s involuntary unemployment derived from Walras’s voluntary unemployment by means of changing of the characteristic of the aggregate supply curve (function) of labour. On the one hand, when the original aggregate supply function is a strongly increasing function, as in Walras’s approach, there might be only voluntary unemployment, and its magnitude is the difference between the available quantity of labour and the equilibrium point. At the other hand, if the supply curve of labour is a weakly increasing, which means that the supply function may has a horizontal segment then there might be involuntary unemployment if the equilibrium point locates between boundary points of the horizontal segment, and the magnitude of involuntary unemployment is the difference between the right boundary point of the horizontal segment and an equilibrium point. According to Walras’s approach also might be considered “forced unemployment” which is the result of an intervention of external forces (government, monopoly, trade unions, and so on) into the market, and therefore, it is a disequilibrium phenomenon. Finally, in reality there are many types of labour, hence a suggested comprehensive approach of employment might be a useful tool for policy making and planning of economics.
    Keywords: Walras, Keynes, Voluntary Unemployment, Involuntary Unemployment, Aggregate Supply function
    JEL: B3 C6 D5 E0
    Date: 2015–03
  11. By: Takehisa Kumakawa (Osaka University); Tatsuyoshi Saijo (School of Economics and Management, Kochi University of Technology); Takehiko Yamato (Tokyo Institute of Technology)
    Abstract: What motivates subjects in their decision making is a lingering issue in public goods experiments. Using a nonlinear payoff function and a two-subject model, we create a one-toone correspondence between contributions and motivations, enabling us to isolate and identify the following three possible motivations: Nash, cooperative, and altruistic motivations. The experimental results show that Nash- motivated behavior accounts for more than 70% of all decisions. Some subjects reveal a cooperative motivation when they know the other subject's payoff information. Altruistic motivation is found to be rare throughout the experiment.
    Keywords: Motivation, Nash, Cooperation, Altruism, Voluntary contribution mechanism
    JEL: C92 H41
    Date: 2015–03
  12. By: Joshua Bon (University of Western Australia)
    Abstract: The UWA Economics Discussion Paper Series has, for the past 33 years, provided a platform for economic research, collaboration amongst academic economists, and the debate of policy issues. More than 750 papers have been published since the inception of the Series in 1980. The Discipline’s first 750 papers, the focus of this paper, contain a rich archive of economic thought generated by the economists and affiliates of UWA over these years. Further, the series represents a valuable store of data on the authors, their topics and subsequent publications owing to the Series. This paper explores the Economics Discussion Paper Series from a number of perspectives. The aim being firstly, to better record the legacy of the Series and secondly, provide some tools for future studies on collections of academic papers.
    Date: 2014
  13. By: Michael McLure (University of Western Australia)
    Abstract: In 1924-25 A. C. Pigou was a member of the “Committee on the Currency and Bank of England Note Issues”, which became known as the ‘Chamberlain-Bradbury’ Committee after its two successive chairmen. The Committee’s report is historically important for recommending a bold and quick return to the gold standard, which the British government accepted and acted on. This paper, which is the first in a three part study, briefly provide the historical context for the Committee’s establishment; and reviews those parts of the transcripts of testimony given to the Committee by its witnesses that Pigou highlighted and which are suggestive of his understanding of the Committee’s intended purpose. As such, the purpose of this paper is to lay the foundation for the subsequent two parts of the study of Pigou’s membership of the ‘Chamberlain-Bradbury’ Committee.
    Date: 2014
  14. By: Rogério Arthmar (Department of Economics, Universidade Federal do Espírito Santo, Vitória, Brazil; Visiting Fellow, Economics Program, University of Western Australia, Business School); Michael McLure (Business School, University of Western Australia)
    Abstract: In 1955 the Accademia Nazionale dei Lincei awarded the inagural Internazionale “Antonio Feltrinelli” Premio per le Scienze Economiche e Sociali to Arthur Cecil Pigou. This paper provides some context to the episode and considers the establishment of the prize; the membership of the 1955 selection committee; the activities of this committee, especially those of its secretary, Gustavo Del Vecchio. Correspondence between A. C. Pigou, Piero Sraffa and Del Vecchio pertaining to this prize is also examined. The most significant findings reported in this paper concern the discovery of Del Vecchio’s active role in supporting the nomination of Pigou for this prize; as well as Sraffa’s contention that Pigou had ‘never been honoured in proportion to his merits’ and his characterisation of the decision to award the International Antonio Feltrinelli Prize to Pigou as a ‘great act of justice’.
    Date: 2014
  15. By: Marinov, Eduard
    Abstract: Economic integration theory goes through two development stages each of which addresses the relevant for its time political and economic context The first stage is regarded as classic theory or static analysis and includes the traditional theories of economic integration that explain the possible benefits of integration. The second stage includes the new economic integration theories that are often referred to as dynamic analysis of economic arrangements. Besides these two, there is a third type of integration theories that deals with the effects, benefits and constrains of economic integration arrangements of developing and least developed countries. The current paper tries to come up with a conclusion on what parts of the classic and new integration theories are applicable to integration arrangement among developing countries and to summarize these theories.
    Keywords: Economic Integration, Integration Theory, Developing Coun-tries Integration
    JEL: B2 F15 F55
    Date: 2014–09
  16. By: Daniel Hojman; Alvaro Miranda
    Abstract: In the last decades, our understanding of human well-being and development has shifted from a traditional focus on income and consumption towards a richer multidimensional approach. This shift has been strongly influenced by a body of research in subjective well-being (SWB) and the capabilities approach, which emphasizes the role of freedom and opportunities on well-being. This paper explores the relationship between different measures of subjective well-being and two â€hidden dimensions†of development, agency and discrimination. Using statistical techniques that allow to isolate personal traits that could affect both SWB and capabilities perceptions, we document a strong relationship between life satisfaction and agency, comparable to the effect of income variables. Discrimination perceptions seem to affect more job satisfaction than life satisfaction for those who work.
    Date: 2015–03
  17. By: Koji Akimoto (Kurume University in Japan)
    Abstract: The purpose of this paper is to study a fundamental cause of the economic crisis which suffers the current capitalism economy. The basic approach we adopt is as follows.Firstly, we show that the capitalism economy cannot largely deviate from the balance which is defined by natural economy. Our attentions are focused on the balance between the real economic sector which produces GDP and the monetary sector which invests capital to the production of GDP. For the balance to be kept, there exists a rigorous range of the interest rate which the monetary sector can require from the real economic sector. The fundamental cause of economic crisis is the large deviation from this balance. Secondly, the capitalism economy is constructed by the economic agents who necessary accomplish their decision makings. Therefore, we construct our model by macro- economic game. Players of the game are the agents who are selected by the real economic sector and the monetary sector. Thirdly, we show that the deviation from the solution of the game is considered as the one from natural economy. Therefore, we conclude that the large deviation from the solution of the game is a fundamental cause of economic crisis.The game is defined by the macro-economic differential game with infinite horizon. In the usual cases, the solution of the game is defined by the stable steady point, or an equilibrium. However, our game has no stable steady point. Therefore, it is shown that the aid of financial policy is necessary for the game to have its solution. The aid is defined by controlling the distribution rate of GDP to the monetary sector. The financial policy is defined as the policy rule. This distribution rate has the rigorous restriction for the game to have its solution. It is shown that the solution of the game has the character of natural economy. The policy rule plays an important role to keep the balance of the economy and hence to prevent the economy from deviate from natural economy. In the final section, we investigate the actual transitions of distribution rate in USA, Euro area and Japan and analyze the fundamental cause of financial crisis.
    Keywords: Balance of real economic and monetary sector, natural distribution rate to monetary sector, deviation from natural economy financial policy rule, differential game
    JEL: E00 E10 E60
    Date: 2014–10
  18. By: Lionel de BOISDEFFRE
    Abstract: We consider a pure exchange financial economy, where rational agents, possibly asymmetrically informed, forecast prices privately, with no model of how they are determined. Therefore, agents face both 'exogenous uncertainty', on the future state of nature, and 'endogenous uncertainty', on the future price. At a sequential equilibrium, all consumers expect the 'true' price as a possible outcome and elect optimal strategies at the first period, which clear on all markets, ex post. The paper's purpose is twofold. First, it defines no-arbitrage prices, which comprise all equilibrium prices, and displays their revealing properties. Second, it shows, under mild conditions, that a sequential equilibrium always exists in this model, whatever agents' prior beliefs or the financial structure. This outcome suggests that standard existence problems, which followed Hart (1975) and Radner (1979), stem from the rational expectation and perfect foresight assumptions of the classical model.
    Date: 2015–03
  19. By: Wei He; Yeneng Sun
    Abstract: This paper aims to solve two fundamental problems on finite or infinite horizon dynamic games with perfect or almost perfect information. Under some mild conditions, we prove (1) the existence of subgame-perfect equilibria in general dynamic games with almost perfect information, and (2) the existence of pure-strategy subgame-perfect equilibria in perfect-information dynamic games with uncertainty. Our results go beyond previous works on continuous dynamic games in the sense that public randomization and the continuity requirement on the state variables are not needed. As an illustrative application, a dynamic stochastic oligopoly market with intertemporally dependent payoffs is considered.
    Date: 2015–03
  20. By: Gustavo Bussmann Ferreira (Federal University of Paraná, Brazil)
    Abstract: In his trilogy "Homo Sacer", "State of Exception" and "What remains of Auschwitz", Giorgio Agamben analyzes important aspects of the human condition and the ways in which human rights were perceived over the centuries. Through an internationalist perspective, and based on the concepts brought about by Agamben’s Homo Sacer, this study has the aim of argue that the State of Exception is constantly in force and coexist with the universality of human rights – thus the coexistence of the universality of the exception and the universality of human rights is a new reality, not ignoring the debates on universalism versus relativism and the hazard of imposing a ‘one-size-fits-all’ approach to every situation.Additionally, taking into consideration the boundaries between the human citizens and the Homo Sacer, this study questions the possibility of an international vindication of human rights and the legitimacy of external interferences in States that are lenient towards violations of human rights. This analysis will be guided by the concept of jus cogens and the role of the International Criminal Court as a mechanism of deterrence of further abuses and of reinforcement of human rights standards. Also, a great part of this concerns, we must admit, is related to the supremacy of economic interests and the neoliberal societies that forget human perspectives when promoting the capitalism in its strict understanding. Thus, firstly the necessary definition is about the State of Exception and how the neoliberal societies depend on the exclusion of some individuals who are ignored by everyone. Secondly, the intent is to highlight the importance of the recognizement of this victims once there is no only one testimony to be given. There is no group of survivors or homogeneity of the victims of the regime, what makes them a human waste and the perpetrators, criminals agains humanity. And lastly, it will be important to define what the Homo Sacer is and the idea of the irreducible minimum, which will be important to defend a human rights theory and its importance on the protection of it alongside the rules of capital and the necessities of the capitalist regime.
    JEL: K33 A14
    Date: 2014–10
  21. By: Sergio Cesaratto (University of Siena)
    Abstract: In questo breve saggio esaminiamo l’importanza attribuita da Friedrich List allo Stato nazionale nell’emancipazione economica di un paese a fronte della visione cosmopolita del capitalismo e degli interessi dei lavoratori che Marx gli contrappone. Rifacendoci a uno spunto di Massimo Pivetti sosteniamo che lo Stato nazionale sia lo spazio più prossimo in cui una classe lavoratrice nazionale può legittimamente sperare di modificare a proprio vantaggio i rapporti di forza. Nell'aver sostenuto lo svuotamento della sovranità nazionale in nome di un europeismo tanto ingenuo quanto superficiale, la sinistra ha contribuito a far mancare a sé stessa e ai propri ceti di riferimento il terreno su cui espletare efficacemente l’azione politica contribuendo in tal modo allo sbandamento democratico del paese.
    Keywords: Socialist Marxian Sraffian, Central banks and their policies, Current account adjustment, International lending and debt problems, Macroeconomics issues of monetary unions.
    JEL: B51 E58 F32 F34
    Date: 2015–03
  22. By: Ercan Uygur (The Turkish Economic Association, Turkey)
    Abstract: John Maynard Keynes, ekonomi dünyasında düşünceleri, kuramları ve politika önerileriyle gündemden düşmez, sürekli tartışmaların konusu olur. Keynes, iktisatta istatistik, ekonometri ve matematik gibi teknik yöntemler kullanılmasını nasıl değerlendirmişti? Kendisi bu yöntemleri ne ölçüde kullandı? Keynes bu yöntemler konusunda yeterli miydi? Bu yazının birinci amacı, bu ve benzeri sorulara yanıt vermeye çalışmaktır. Bu çerçevede, Keynes’in olasılık, endeks sayıları ve genel olarak istatistiğe; ulusal gelir hesapları ve diğer ekonomik istatistiklere; ekonometriye; ekonomiyle ve istatistiklerle ilgili kurumlara yaptığı katkıları ve etkileri ortaya koymak, bunlara dikkat çekmek bir diğer amaçtır. Son bir amaç da, yakın yıllarda bu konularda yapılan bazı tartışmaları okuyucuyla paylaşmaktır.
    Date: 2015
  23. By: Newton, Jonathan
    Abstract: The ability to share intentions and adjust one's choices in collaboration with others is a fundamental aspect of human nature. We discuss the forces that would have acted for and against the evolution of this ability for a large class of dilemmas and coordination problems that would have been faced by our hominin ancestors. In contrast to altruism and other non-fitness maximizing preferences, the ability to share intentions proliferates when rare without requiring repeated interaction or assortativity in matching.
    Keywords: Evolution, shared intentions, norm
    Date: 2015–03
  24. By: Lauri Saaksvuori (University of Hamburg); Abhijit Ramalingam (University of East Anglia)
    Abstract: This paper examines how third-party surveillance influences preferences over distributional outcomes. In addition, we examine what motivates people to invest economic resources to monitor decision-making processes. Our results show that a large majority of individuals is willing to pay for a right to monitor decision-making processes over distributional outcomes despite pecuniary incentives to the contrary. We find that electronic third-party surveillance does not affect distributional outcomes in a three-person ultimatum game. Finally, we find that third- parties are the most over-optimistic about their own outcomes when they have a chance to signal their presence to the negotiators. Our results suggest that people may overestimate the impact of transparent decision-making on economic outcomes.
    Keywords: bargaining, communication, distributional preferences, experiment, negotiations, surveillance
    JEL: C72 C92 D01 D03 D83
    Date: 2015–03
  25. By: Taylor, Alan M.
    Abstract: Since the 2008 global financial crisis, and after decades of relative neglect, the importance of the financial system and its episodic crises as drivers of macroeconomic outcomes has attracted fresh scrutiny from academics, policy makers, and practitioners. Theoretical advances are following a lead set by a fast-growing empirical literature. Recent long-run historical work has uncovered a range of important stylized facts concerning financial instability and the role of credit in advanced economies, and this article provides an overview of the key findings.
    Keywords: banks; financial crisis; financial history; leverage; macroeconomic history; macroprudential policy; monetary policy; recessions
    JEL: E02 E31 E32 E42 E44 E51 E58 F32 F42 G01 G20 G28 N10 N20
    Date: 2015–03
  26. By: Rodriguez-lara, Ismael
    Abstract: We report experimental evidence on second-movers' behavior in the investment game (also known as the trust game) when there exists endowment heterogeneity. Using a within-subject analysis, we investigate whether second-movers have a tendency to be reciprocal (i.e., they return to first movers at least what they have received from them), or exhibit some taste for inequality aversion (i.e., they return a larger (smaller) share of the available funds to first-movers who are initially endowed with a lesser (larger) endowment, respectively). Our results suggest that second-movers' behavior is consistent across distribution of endowments, what indicates that second-movers (on average) do not take into consideration the level of endowments when making their decisions. This finding, in turn, implies that subjects behave according to our definition of reciprocity and that inequality-aversion receives little support from our data.
    Keywords: reciprocity, inequality aversion, investment game, trust game, endowment heterogeneity
    JEL: C72 C91 D3 D63
    Date: 2015–03–25

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