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on History and Philosophy of Economics |
| By: | Ezra Davar (r) |
| Abstract: | This paper shows that the post-Walras general equilibrium theory is irrelevant to real contemporary economic life. The main achievement of modern General Equilibrium Theory is the proof of equilibrium’s existence. It might be that the proof of the equilibrium existence is a mathematical achievement, but the question is whether these proofs are harmonious with the economic situation in reality. This paper traces concisely how Walras’s theory has been became causing economic science to deviate in an erroneous direction and reaching a deep crisis; because post-Walras’s economists, since Pareto, have misunderstood and misinterpreted Walras’s economic theory. This group of Post-Walras authors (Pareto, Cassel, Schlesinger, Wald, and von-Neumann, Hicks, Keynes, Lange, and Patinkin) then recast Walras’s theory into incorrect and wrong form; their error further compounded when a later group of economist-mathematicians (Arrow, Debreu, Friedman, Samuelson, Solow and others) accepted their interpretation without reservation. Post-Walras’s economists ignore Walras’s less known assumptions and blame him for disregarding the problem of equilibrium existence, uniqueness and stability and comparative-static. Therefore, their main objective since the beginning of the 20th century was the rigorous proof of equilibrium existence. However, this proof was based on unrealistic assumptions and along the road the goal of economics was lost. The nine crucial, unrealistic assumptions will be considered and will illustrate that modern general equilibrium theory is irrelevant to real economics and is also far removed from Walras’s general equilibrium theory. |
| Keywords: | Walras; post-Walras; General Equilibrium Theory; Modern Theory; Unrealistic Assumptions |
| JEL: | A1 B2 D5 E4 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pes:wpaper:2015:no46&r=hpe |
| By: | Antoinette Baujard (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France, Université Jean Monnet, Saint-Etienne, F-42000, France); Muriel Gilardone (Normandie Université, UNICAEN, CREM CNRS UMR 6211) |
| Abstract: | This paper aims to show that, contrary to the standard understanding of his work, Sen’s idea of justice does not consist in the defense of a capability theory. Under the dominant capability-centered view, Sen’s idea of justice is indeed characterized principally by a switch of focus from utility to capability. We demonstrate that this view amounts to the application of formal welfarism to capabilities. We reject this characterization and defend instead a heuristic account of the status of capability in Sen’s thought: capability was introduced to make a point against welfarism, but this does not imply that a commitment to a capability theory. The capability-centered view is shown to be inconsistent with Sen’s idea of justice, because the latter requires agents to be involved in the definition of their own welfare. Our study of the status of capability in Sen’s view of justice enables us to relocate his main contribution and to build the basis for an alternative theory of justice. |
| Keywords: | Capability, welfarism, justice, operationalization, paternalism, agency, public reasoning |
| JEL: | A13 B41 D63 D79 I31 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1508&r=hpe |
| By: | Gedeon, Péter |
| Abstract: | Hayek's theory of socio-cultural evolution is a generalization of his theory on spontaneous market order. Hayek explains both the emergence of market and social institutions serving as a social basis for that order within the framework of a unified evolutionary logic. This logic interprets the emergence and survival of spontaneous order and group-level rules of conduct as an unintended consequence of human action. In order to explain the emergence of social norms exclusively on the basis of methodological individualism, one would have to give up an exclusively evolutionary explanation of these norms. Since Hayek applies the invisiblehand explanation to the investigation of social norms, he combines the position of methodological individualism with functionalist-evolutionary arguments in his analysis. Hayek's theory of socio-cultural evolution represents a theory in the framework of which methodological individualism and functionalism do not crowd out but complement each other. |
| Keywords: | socio-cultural evolution, invisible-hand explanations, spontaneous market order, social norms, methodological individualism, functionalism |
| JEL: | A13 B25 B52 B53 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:2015/09&r=hpe |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Stephen Morris (Dept. of Economics, Princeton University) |
| Abstract: | A game of incomplete information can be decomposed into a basic game and an information structure. The basic game defines the set of actions, the set of payoff states the payoff functions and the common prior over the payoff states. The information structure refers to the signals that the players receive in the game. We characterize the set of outcomes that can arise in Bayes Nash equilibrium if players observe the given information structure but may also observe additional signals. The characterization corresponds to the set of (a version of) incomplete information correlated equilibria which we dub Bayes correlated equilibria. We identify a partial order on many player information structures (individual sufficiency) under which more information shrinks the set of Bayes correlated equilibria. This order captures the role of information in imposing (incentive) constraints on behavior. |
| Keywords: | Correlated equilibrium, Incomplete information, Bayes Nash equilibrium, Bayes correlated equilibrium, Robust predictions, Information structure, Sufficiency, Blackwell ordering |
| JEL: | C72 D82 D83 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1909rrr&r=hpe |
| By: | Tiberiu Brãilean (Alexandru Ioan Cuza University of Iasi); Aurelian-Petrus Plopeanu (Alexandru Ioan Cuza University of Iasi) |
| Abstract: | Modern finance has become a very complicated field, which raises many questions about its economic and social mission. Many bankers’ ignorance of complex knowledge and care for the future are hostile ingredients that transform the markets’ volatility, through spillover effects, into economic and financial crisis and social anomy. What fuels the wildfire does not necessarily mean black swan events, but often it is the result of (un)conscious and (un)intended decisions of certain economic policy makers. The current financial system is discredited. It is necessary to reform the financial institutions and practices, with the core principle that money should serve the economy and society and not vice versa. In a world of financial capitalism, a world driven by money and adjacent institutions appear to be defective and unjust to many of us. The conflicts’ arena must be manageable. The hopes rely on the institutions that represent financial capitalism, institutions erected by people, and where they do not work, they have to be changed. |
| Keywords: | crisis, financial system, elite, reform, morality |
| JEL: | E5 F3 N20 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pes:wpaper:2015:no87&r=hpe |
| By: | Bernardo Alves Furtado; Patrícia Alessandra Morita Sakowski |
| Abstract: | This text was written as part of the project Modelling of Complex Systems for Public Policy. It reviews the classical authors who jointly contributed to establish the elements of what could constitute a “science of complexity”. Based on the original writings of these authors, the text discusses the central concepts of complex systems: i) the interaction between (homogeneous or heterogeneous) agents and the environment; ii) emergence and self-organization; iii) the importance of nonlinearity and scales; iv) the determinism of rules; v) the emphasis on dynamics and feedback; and vi) the notions of adaptation, learning and evolution. Finally, contemporary criticisms are presented. They suggest that the arguments of complex systems do not support the epistemological establishment of a supposedly new science, but they do not reject the advances proposed by complexity studies. Este texto está inserido no projeto Modelagem de Sistemas Complexos para Políticas Públicas e faz uma resenha dos autores clássicos que, em conjunto, contribuíram com os elementos do que seria uma “ciência da complexidade”. Com base no pensamento original destes autores, os conceitos centrais de sistemas complexos são discutidos, a saber: i) a interação entre agentes (homogêneos ou heterogêneos) e o ambiente; ii) as propriedades emergentes e a auto-organização; iii) a importância da não linearidade e das escalas; iv) as regras e seu determinismo; v) a ênfase na dinâmica e retroalimentação; e vi) as noções de adaptação, aprendizado e evolução. Por fim, críticas contemporâneas são apresentadas. Elas sugerem que os argumentos de sistemas complexos não sustentam epistemologicamente a constituição de suposta nova ciência, mas não rejeitam os avanços propostos nos estudos de complexidade. |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:ipe:ipetds:0203&r=hpe |
| By: | Alger, Ingela; Lehmann, Laurent; Weibull, Jörgen |
| Abstract: | A long-standing question in biology and economics is whether individual organisms evolve to behave as if they were striving to maximize some goal function. We here formalize the \as if" question in a patch-structured population in which individuals obtain material payoffs from (perhaps very complex) multimove social interactions. These material payoffs determine personal fitness and, ultimately, invasion fitness. We ask what goal function, if any, individuals will appear to be maximizing, in uninvadable population states, when what is really being maximized is invasion fitness at the genetic level. We reach two broad conclusions. First, no simple and general individual-based goal function emerges from the analysis. This stems from the fact that invasion fitness is a complex multi-generational measure of evolutionary success. Second, when selection is weak, all multi-generational effects of selection can be summarized in a neutral type- distribution quantifying identity-by-descent within patches. Individuals then behave as if they were striving to maximize a weighted sum of material payoffs (own and others). At an uninvadable state it is as if individuals choose their actions and play a Nash equilibrium of a game with a goal function that combines selfishness (own material payoff), Kantian morality (group material payoff if everyone does the same), and local rivalry (material payoff differences). |
| Keywords: | maximizing behavior, game theory, inclusive fitness, invadability, Nash equilibrium |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:29133&r=hpe |
| By: | Karol Sledzik |
| Abstract: | Economic development and transformation processes, have become much more intense in economic reality in the last years than they have ever been before. At this time has raised a lot of questions about the causes of the actual Global Crisis, future crises, the factors affecting the modern economy, about the essence of contemporary capitalism, demographic problems and overgrown bureaucracy. The most spectacular threat to capitalism, (based on private entrepreneurship) according to Schumpeter, stems from the high, growing and progressive taxation. Schumpeter saw clearly that the financing of public goods and services (requiring taxes, maybe even relatively high) is something other than a clerical control of the economic system that violates the natural economic mechanism. Moreover Schumpeter says explicitly, that entrepreneur does not have to be one person, he even states that the country (state) itself, or its agenda, can act as an entrepreneur. Therefore can be concluded that we may have to deal with “Tax State” which is typical for “fettered capitalism” and with “entrepreneurial state” which is typical for “unfettered capitalism”. The main goal of this paper is to present two different approaches to economic development concept: Schumpeter’s “fettered” and “unfettered” capitalism in the context of “Tax State” and interventionism. |
| Keywords: | Schumpeter, capitalism, Tax State, economic development |
| JEL: | A13 B15 K20 P20 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pes:wpaper:2015:no104&r=hpe |
| By: | Pintér, Miklós |
| Abstract: | We give a new proof of Young's characterization of the Shapley value. Moreover, as applications of the new proof, we show that Young's axiomatization of the Shapley value is valid on various well-known subclasses of TU games. |
| Keywords: | TU games, Shapley value, Young's axiomatization |
| JEL: | C71 |
| Date: | 2015–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:2015/07&r=hpe |
| By: | Camille Cornand (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Rodolphe Dos Santos Ferreira (BETA-Strasbourg University, 61 avenue de la Forêt Noire - 67085 Strasbourg Cedex, France; Catolica Lisbon School of Business and Economics) |
| Abstract: | In Keynes’ beauty contest, agents have to choose actions in accordance with an expected fundamental value and with the conventional value expected to be set by the market. In doing so, agents respond to a fundamental and to a coordination motive respectively, the prevalence of either motive being set exogenously. Our contribution is to consider whether agents favor the fundamental or the coordination motive as the result of a strategic choice that generates a strong strategic complementarity of agents’ actions. We show that the coordination motive tends to prevail over the fundamental one, which yields a disconnection of activity away from the fundamental. A valuation game and a competition game are provided as illustrations of this general framework. |
| Keywords: | beauty contest, financial markets, indeterminacy, oligopolistic competition,strategic complementarities |
| JEL: | D43 D84 E12 E44 L13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1501&r=hpe |
| By: | Zimmermann, Christian (Federal Reserve Bank of St. Louis) |
| Abstract: | RePEc is an open bibliography project driven entirely by volunteers and without a budget. It was created to enhance the dissemination of research in economics by making it more accessible to authors, publishers, and readers: 1800 publishers participate in this initiative, and 44000 authors are registered. Some of those authors became frustrated when their work was plagiarized and no action was taken. Many have asked whether RePEc could take action. The RePEc Plagiarism Committee was created to respond to this request. Because RePEc has no enforcement power, it can only “name and shame” verified offenders. This essay discusses the experience over the first years of the Committee. |
| Keywords: | Plagiarism; academic literature; naming and shaming; economics |
| JEL: | A13 A14 |
| Date: | 2015–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2015-008&r=hpe |
| By: | Labrinidis, George |
| Abstract: | Distinguishing between the money that functions in the world market and the money that functions internally in an economy has troubled many theorists. This paper is informed by the Marxist approach to money in general and world money in particular and argues that the theoretical difficulty derives from a fundamental misconception with regard to the forms of money. Consequently, the paper offers an analysis of the forms of money and shows that a new form emerged as early as 1914 associated with the world market, which might be called quasi-world-money, such as the US dollar. The analysis provides a framework within which to comprehend the residual but essential role of gold in parallel to quasi-world-money. The framework also allows for money convertibility to be redefined appropriately. |
| Keywords: | forms of money, quasi-world money, gold, convertibility, USD |
| JEL: | B51 E42 F33 |
| Date: | 2014–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:59962&r=hpe |
| By: | Francesco Bogliacino; Laura Jiménez; Gianluca Grimalda |
| Abstract: | We report experimental results from three Colombian villages concerning the impact of a voting mechanism on interpersonal trust and trustworthiness. The vote is purely consultative in that participants are asked to declare in a secret ballot the most “appropriate” plan of action for individuals involved in a “Trust Game”. The plan of action that is most voted is then publicly announced. The mechanism is unbinding, as only the aggregate result of the voting is disclosed and it has no bearing on individual decisions. In spite of the strategic irrelevance of the announcement, we observe an increase in both trust and trustworthiness after the announcement is carried out, in comparison to the baseline case where no voting takes place. |
| Keywords: | Experiments, Trust, Voting. |
| JEL: | A13 C93 B49 D63 |
| Date: | 2015–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:col:000178:012696&r=hpe |
| By: | Cemal Eren Arbatli; Quamrul H. Ashraf; Oded Galor |
| Abstract: | This research establishes that the emergence, prevalence, recurrence, and severity of intrastate conflicts in the modern era reflect the long shadow of prehistory. Exploiting variations across national populations, it demonstrates that genetic diversity, as determined predominantly during the exodus of humans from Africa tens of thousands of years ago, has contributed significantly to the frequency, incidence, and onset of both overall and ethnic civil conflict over the last half-century, accounting for a large set of geographical and institutional correlates of conflict, as well as measures of economic development. Furthermore, the analysis establishes the significant contribution of genetic diversity to the intensity of social unrest and to the incidence of intragroup factional conflict. These findings arguably reflect the contribution of genetic diversity to the degree of fractionalization and polarization across ethnic, linguistic, and religious groups in the national population; the adverse influence of genetic diversity on interpersonal trust and cooperation; the contribution of genetic diversity to divergence in preferences for public goods and redistributive policies; and the potential impact of genetic diversity on economic inequality within a society. |
| JEL: | D74 N30 N40 O11 O43 Z13 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21079&r=hpe |
| By: | André de Melo Modenesi; Rui Lyrio Modenesi |
| Abstract: | o label the defense of capital controls (CC) as a left-wing proposal is a misconstruction. Such labeling uses the Borsa economicist criterion, which reduces the dichotomy between right and left to a distinction between liberalism and interventionism. Yet, under this criterion, the use of CC cannot be labeled as a leftist proposal. The interventionism underlying the defense of CC, as pioneered by Keynes and developed by Tobin, Davidson, Stiglitz and Rodrik, is not the fruit of an ideological conviction favoring widespread and indiscriminate State intervention. For them, CC are instruments to be used under specific economic circumstances. To call CC a practice typical of left-wing governments is also a misinterpretation. Among the countries using strict forms of CC since the 1990’s–Chile, China, India, Malaysia and Thailand–only China’s government may be called leftist. The other countries’ political panorama is more complex than may suppose those who believe in a simple and direct relationship between CC and political ideology. The discussion should be stripped of the prevalent ideological bias: CC are not inherent to the political leanings of the governments that adopt them but are an expedient used under a pragmatic justification. Recognizing this is an important step toward a more objective analysis of the incidental opportunity of using CC, without prejudice. CC should be used whenever the benefits surpass the costs of their implementation. Rotular o controle de capitais como uma proposta da esquerda é um duplo equívoco. Tal rotulação tem como base critério economicista à Borsa, que reduz a dicotomia entre direita e esquerda à distinção liberalismo econômico versus intervencionismo. Além disso, o intervencionismo econômico subjacente à defesa do controle de capitais por parte dos autores analisados (Keynes, Tobin, Davidson, Stiglitz e Rodrik) não é fruto de convicção ideológica em prol de ampla e indiscriminada interferência do Estado na economia. Para eles, controles são instrumentos de utilização tópica, justificada pragmaticamente, ou seja, de acordo com circunstâncias econômicas específicas. Taxar o controle de capitais como prática de governos de esquerda também é incorreto. Dos cinco principais países que usaram controle de capitais a partir da década de 1990 – Chile, China, Índia, Malásia e Tailândia –, só o governo chinês pode ser considerado de esquerda. O panorama político dos demais países é muito mais complexo do que supõem os que acreditam haver uma relação simples e direta entre o controle de capitais e o posicionamento ideológico dos governos que o praticam. Reconhecer isso é um importante passo na direção de uma avaliação mais objetiva da eventual oportunidade de se adotar controle de capitais, sem preconceito. Controles devem ser usados sempre que os benefícios de sua adoção suplantem os custos. |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:ipe:ipetds:0183&r=hpe |
| By: | Techmeier, Ingo |
| Abstract: | [Einleitung] Ökonomen geben oft normative Empfehlungen. Im wirtschaftspolitischen Bereich ist dies naheliegend, da hier ihr ökonomisches Fachwissen die politische Handlung anleiten kann. Doch sehen viele Ökonomen ihre Wissenschaft nicht durch einen Bezug auf die Wirtschaft definiert, sondern durch ihre spezifische ökonomische Methode, die es ihnen erlaubt, ihren Forschungsbereich prinzipiell auf alle sozialen Interaktionen auszudehnen. Diese inzwischen als ökonomischer Imperialismus geläufige Ausweitung des Gegenstandsbereichs hat eine Vielzahl sozialer Phänomene vom Heiratsverhalten bis hin zur Kriminalität der ökonomischen Forschung erschlossen. Eine so angeleitete Politik ist immer mit zwei Schwierigkeiten konfrontiert: Zum einen kann natürlich auch fachlicher Rat irrig sein und zum anderen kann dieser Rat so sehr von einer fachlichen Rationalität durchdrungen sein, dass er (nicht nur) außerhalb des eigenen Fachs keineswegs als angemessen aufgefasst wird. Tatsächlich sind Ökonomen aus methodischen Gründen allenfalls eingeschränkt in der Lage, Empfehlungen abseits der ökonomischen Rationalität zu machen. Vor dem Hintergrund der Wissenschaftskonzeption des Begründers der allgemeinen Gleichgewichtstheorie, Léon Walras, werden im Folgenden die Grenzen der ökonomischen Methode diskutiert. Walras' Konzeption eignet sich aufgrund ihrer methodischen Stringenz und Differenzierung, um methodische Defizite herauszustreichen, die auftreten, wenn die ökonomische Rationalität auf beliebige soziale Phänomene angewandt wird. Dennoch soll seine Konzeption lediglich als eine Folie der Kritik benutzt und keinesfalls als eine Alternative zur Neoklassik vorgeschlagen werden. Zu Beginn werden einige Beispiele für die normative Ausweitung des Gegenstandsbereichs der Ökonomik gegeben, die illustrieren, welche normativen Aussagen auf Basis der ökonomischen Methode gemacht. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cessdp:47&r=hpe |
| By: | Schmallowsky, Katrin |
| Abstract: | [Einleitung ...] Dieser Artikel hat das Ziel, die Bewertung von Unternehmen mit Hilfe der Monte-Carlo-Simulation darzustellen. Dazu wird im nächsten Abschnitt zunächst eine Übersicht über die gängigen Verfahren zur Unternehmensbewertung gegeben, bevor im dritten Abschnitt die Grundlagen der Monte-Carlo-Simulation erläutert werden. Dieser Abschnitt widmet sich den Anpassungen, welche zur Bewertung von Unternehmen vorgenommen werden müssen. Es wird der Ablauf einer Unternehmensbewertung mit Hilfe der Monte-Carlo-Simulation dargestellt sowie die Möglichkeiten der Informationsgewinnung aus den Ergebnissen des vorgestellten Verfahrens erläutert. |
| JEL: | C15 G17 G32 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hswwdp:022015&r=hpe |
| By: | Honore, Bo E. (Princeton University); Hu, Luojia (Federal Reserve Bank of Chicago) |
| Abstract: | The bootstrap is a convenient tool for calculating standard errors of the parameters of complicated econometric models. Unfortunately, the fact that these models are complicated often makes the bootstrap extremely slow or even practically infeasible. This paper proposes an alternative to the bootstrap that relies only on the estimation of one-dimensional parameters. The paper contains no new difficult math. But we believe that it can be useful. |
| Keywords: | bootstrap; standard error; inference; structural models; parametric estimation |
| JEL: | C10 C18 |
| Date: | 2015–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2015-01&r=hpe |