nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒09‒11
seventeen papers chosen by
Erik Thomson
University of Manitoba

  1. The New Economics of Religion By Iyer, Sriya
  2. Fair Reallocation in Economies with Single-Peaked Preferences By Kazuhiko Hashimoto; Takuma Wakayama
  3. Anfänge der amtlichen Statistik und der Sozialberichterstattung: die "politische" Arithmetik By Gert G. Wagner
  4. Quel domaine pour la comptabilité ? Une étude critique By Baupin Michel
  5. 'The Functions of the Executive' at 75: An Invitation to Reconsider a Timeless Classic By Mahoney, Joseph T.; Godfrey, Paul
  6. When and How the Punishment Must Fit the Crime By George J. Mailath; Volker Nocke; Lucy White
  7. Corporate Social Responsibility and the Role of Managers. An Update of Friedmand´s Ideas By Ignacio Ferrero
  8. El liberalismo económico en el nuevo orden social By Ignacio Ferrero
  9. Systematic Shared Value in Finance: Expanding Porter's Approach By Marta Rocchi; Ignacio Ferrero
  10. Duplication without Constraints: Alvarez Nogal and Chamley’s Analysis of Debt Policy under Philip II By Drelichman, Mauricio; Voth, Hans-Joachim
  11. The Poker-Litigation Game By Enrique Guerra-Pujol
  12. Asylum provision: A review of economic theories By Anjali Suriyakumaran; Yuji Tamura
  13. Impact of Artificial Intelligence on Economic Theory By Tshilidzi Marwala
  14. The Principle of the Malevolent Hiding Hand; or, the Planning Fallacy Writ Large By Bent Flyvbjerg; Cass R. Sunstein
  15. Over consumption. A horse race of Bayesian DSGE models By Argentiero, Amedeo; Bovi, Maurizio; Cerqueti, Roy
  16. Why are heterogeneous communities inefficient? Theory, history, and an experiment By David Hugh-Jones; Carlo Perroni
  17. La responsabilidad social y la responsabilidad limitada en Milton Friedman. De un modelo shareholder hacia un modelo stakeholder By Ignacio Ferrero

  1. By: Iyer, Sriya (University of Cambridge)
    Abstract: The economics of religion is a relatively new field of research in economics. This survey serves two purposes – it is backward-looking in that it traces the historical and sociological origins of this field, and it is forward-looking in that it examines the insights and research themes that are offered by economists to investigate religion globally in the modern world. Several factors have influenced the economics of religion: (1) new developments in theoretical models including spatial models of religious markets and evolutionary models of religious traits; (2) empirical work which addresses innovatively econometric identification in examining causal influences on religious behavior; (3) new research in the economic history of religion that considers religion as an independent rather than as a dependent variable; and (4) more studies of religion outside the Western world. Based on these developments, this paper discusses four themes – first, secularization, pluralism, regulation and economic growth; second, religious markets, club goods, differentiated products and networks; third, identification including secular competition and charitable giving; and fourth, conflict and cooperation in developing societies. In reviewing this paradoxically ancient yet burgeoning field, this paper puts forward unanswered questions for scholars of the economics of religion to reflect upon in years to come.
    Keywords: economics of religion
    JEL: Z12
    Date: 2015–08
  2. By: Kazuhiko Hashimoto; Takuma Wakayama
    Abstract: We consider the problem of fairly reallocating the individual endowments of a perfectly divisible good among agents with single-peaked preferences. We provide a new concept of fairness, called position-wise envy-freeness, that is compatible with individual rationality. This new concept requires that each demander (i.e., agent whose most preferred amount is strictly greater than his endowment) should not envy another demander who does not receive his endowment and that each supplier (i.e., agent whose most preferred amount is strictly less than his endowment) should not envy another supplier who does not receive his endowment. We establish that a rule is efficient, individually rational, strategy-proof, and position-wise envy-free if and only if it is the gradual uniform rule, which is an extension of the well-known uniform rule.
    Date: 2015–09
  3. By: Gert G. Wagner
    Abstract: Mit seinem Hauptwerk „Political Arithmetick“ legte William Petty die Grundlage der modernen Sozial- und Wirtschaftsstatistik und der soziologischen Sozial- Berichterstattung,. Sein Begriff der „politischen Arithmetik“ konnte sich allerdings gegen den vom europäischen Kontinent stammenden Begriff „Statistik“ – auch im britischen Mutterland Petty’s – nicht durchsetzen. Petty beeinflusste wahrscheinlich sowohl Adam Smith wie Karl Marx mit seinen Grundzügen einer Volkswirtschaftlichen Gesamtrechnung“ und seinen empirischen Analysen, die man als Vorläufer der Ökonometrie verstehen kann.
    Keywords: politische Arithmetik, William Petty, Indikatoren, Sozialberichterstattung, gut leben
    JEL: B11 B31 B41 Z13
    Date: 2015
  4. By: Baupin Michel (NIMEC - Institut d'Administration des Entreprises (IAE) - Caen)
    Abstract: For centuries accounting recorded contractual trades in a personalistic scope and, under the influence of Dumarchey and his successors, it became a recording system for the resources and employment of the enterprise; In this system, the enterprise is conceived as an entity in which everything seems to be intended to be recorded. This evolution is founded on a conception of the enterprise with assets and thus with the ability to have an economic action, this is what we dispute as we offer another conception founded on the act of trades on the markets. In this scope, accounting is that of the company that bears legally the enterprise and not that of the enterprise itself, its role is then to record the trade in terms of the reproduction of the value through time.
    Abstract: Alors que pendant des siècles la comptabilité a enregistré des échanges contractuels dans un cadre personnalistique, sous l'influence de Dumarchey et de ses successeurs, elle est devenue un système d'enregistrement des ressources et des emplois de l'entreprise conçue comme une entité dans laquelle tout semble avoir vocation à être comptabilisé. Cette évolution est fondée sur une conception de l'entreprise disposant d'un patrimoine et donc pouvant avoir une action économique, ce que nous contestons en proposant une autre fondée sur l'acte d'échange sur les marchés. Dans ce cadre, la comptabilité est celle de la société qui porte juridiquement l'entreprise et non celle de l'entreprise, son rôle étant alors d'enregistrer l'échange sous l'angle de la reproduction de la valeur dans le temps.
    Date: 2015–05–19
  5. By: Mahoney, Joseph T. (University of IL); Godfrey, Paul (Brigham Young University)
    Abstract: The year 2013 marks the 75th anniversary of the publication of Chester I. Barnard's classic, 'The Functions of the Executive', a groundbreaking contribution to management theory. We maintain that Barnard's work provides a valuable perspective on the causes and potential solutions to challenges facing capitalism, business, and management consequent to the scandals and financial crises of the early 21st century. We suggest that Barnard would see a systemic failure of the moral dimension of organization as a driver of these crises. We look back on 'The Functions' and provide a review of key elements of Barnard's theory of organization. We then look forward from 'The Functions' and see unique insights and solutions into the ongoing challenges of managerial morality.
    Date: 2014
  6. By: George J. Mailath; Volker Nocke; Lucy White
    Abstract: In repeated normal-form (simultaneous-move) games, simple penal codes (Abreu,1986, 1988) permit an elegant characterization of the set of subgame-perfect outcomes.We show that the logic of simple penal codes fails in repeated extensive-form games. By means of examples, we identify two types of settings in which a subgame-perfect outcome may be supported only by a profile with the property that the continuation play after a deviation is tailored not only to the identity of the deviator, but also to the nature of the deviation.
    Keywords: Simple Penal Code, Subgame Perfect Equilibrium, Repeated Extensive Game, Optimal Punishment
    JEL: C70 C72 C73
    Date: 2015–02
  7. By: Ignacio Ferrero (University of Navarra)
    Abstract: Friedman has been traditionally interpreted as the exponent of the shareholder theory. According to this theory, among the various actors associated with a business, shareholders have unrivaled primacy, and hence, corporations should be managed so as to maximize their value alone, within certain limits. However, by framing these ideas in his libertarian philosophy, we present a more accurate interpretation, especially of the clauses limiting the managers' actions. This interpretation, together with the developments in the concepts of profit, property, and the role playing by the corporate culture, legitimates the inclusion of social responsibility into the managers' agenda, even in the shareholder model.
    Date: 2014–03–01
  8. By: Ignacio Ferrero (University of Navarra)
    Abstract: In the last decades globalization and the knowledge economy have caused socioeconomic and cultural changes, which have given rise to a new way of understanding politics. This way claims for different solutions to face the traditional conflict between State-individual, or planned economy-market economy. The route to go ahead is not a mid-road between socialism or capitalism, but to explore a new way where social agents could be complemented, and the civil society may have a prevailing role. The exam of the principal thesis of genuine liberalism, and its corollaries in economic policy recommendations, show how the liberal doctrine does not drive to that supposed incompatibilities.
    Date: 2014–04–01
  9. By: Marta Rocchi (Pontificia Università della Santa Croce); Ignacio Ferrero (Universidad de Navarra)
    Abstract: The publication of Michael Porter and Mark Kramer's Creating Shared Value (Harvard Business Review, 2011) challenges both the academic literature on corporate social responsibility as well as business practice. Porter and Kramer argue that there is a better way of integrating social goals within business practice, without distracting a firm from its primary purpose of achieving profit. This paper aims to expand Porter and Kramer's approach and to apply the shared value model to the financial sector, through analyzing the ways of systematic shared value creation in finance. We begin with an examination of Porter and Kramer's concept. Next, we evaluate the impact of shared value creation on academic literature. We distinguish between four groups of works related to shared value: Porter's work, Porter's co-authors, supporters (divided into followers and innovators), and critics.After implementing these steps, we address the two-fold purpose of this paper: 1. To examine Porter and Kramer's process-centered theory and 2. To investigate the financial application of a revised concept of shared value. In particular, we will explore the role of virtues as a missing pillar in Porter and Kramer's original theory. Integrating the shared value approach with virtues leads us from their process-centered approach to the person-centered approach that we call Systematic Shared Value. We believe that finance professionals can apply this new paradigm, formulating new ways of shared value creation. We conclude the article by presenting a preliminary systematic approach to shared value creation in finance. Corporate reputation (CR) has become a fashionable topic due, among other reasons, to the recent financial and economic crisis and spreading corporate scandals. Given its interdisciplinary character and intangible nature, CR has been a frequent issue in many disciplines, but scarcely present in the business ethics field. This neglect is odd since a good reputation is one of the most valuable consequences of doing the right things and the things right. In this paper, we intend to explain this absence through three hypotheses: a) business ethics literature largely identifies corporate reputation and corporate social responsibility; b) corporate reputation overlaps with corporate image and corporate identity, resulting interchangeable constructs; and c) business ethics scholars have focused on the negative side of the reputation phenomenon, highlighting reputational risk more than benefits. Based on a bibliometric analysis of the top journal of business ethics literature over a recent decade (2002-2011), we finally confirmed the three hypotheses although c) only partially. In addition, the findings of this study will allow for a deeper understanding of the link between looking good and doing well.
    Date: 2014–10–01
  10. By: Drelichman, Mauricio; Voth, Hans-Joachim
    Abstract: Carlos Alvarez-Nogal and Christophe Chamley (henceforth AC) recently published a paper in the Economic History Review on “Debt policy under constraints: Philip II, the Cortes, and Genoese bankersâ€. In this note, we show that several claims in their article are very similar to earlier research results, published or circulated long before AC’s original submission, by ourselves and other scholars. These results are repeated without attribution or even mention of the earlier work. In addition, we show that what AC present as new quantitative insights are actually replications of earlier results of ours. Finally, AC misrepresent our contributions, as well as those of several other scholars.
    Keywords: plagiarism; lack of attribution; misrepresentation;
    JEL: N24 N44 G13 H63
    Date: 2015–09–02
  11. By: Enrique Guerra-Pujol
    Abstract: Is litigation a serious search for truth or simply a game of skill or luck? Although the process of litigation has been modeled as a Prisoner's Dilemma, as a War of Attrition, as a Game of Chicken and even as a simple coin toss, no one has formally modeled litigation as a game of poker. This paper is the first to do so. We present a simple "poker-litigation game" and find the optimal strategy for playing this game.
    Date: 2015–06
  12. By: Anjali Suriyakumaran; Yuji Tamura
    Abstract: In recent years, using economic theories, a small number of researchers have examined asylum provision by non-persecutor countries. Unfortunately, the nature of their analyses makes the results inaccessible to many who are interested in understanding the topic from multidisciplinary perspectives but are unfamiliar with mathematical methods in economics. We communicate the findings of those studies in non-mathematical fashion, thereby contributing to a facilitation of interdisciplinary research on asylum policy.
    Keywords: asylum provision, asylum policy
    Date: 2015–06
  13. By: Tshilidzi Marwala
    Abstract: Artificial intelligence has impacted many aspects of human life. This paper studies the impact of artificial intelligence on economic theory. In particular we study the impact of artificial intelligence on the theory of bounded rationality, efficient market hypothesis and prospect theory.
    Date: 2015–07
  14. By: Bent Flyvbjerg; Cass R. Sunstein
    Abstract: We identify and document a new principle of economic behavior: the principle of the Malevolent Hiding Hand. In a famous discussion, Albert Hirschman celebrated the Hiding Hand, which he saw as a benevolent mechanism by which unrealistically optimistic planners embark on unexpectedly challenging plans, only to be rescued by human ingenuity, which they could not anticipate, but which ultimately led to success, principally in the form of unexpectedly high net benefits. Studying eleven projects, Hirschman suggested that the Hiding Hand is a general phenomenon. But the Benevolent Hiding Hand has an evil twin, the Malevolent Hiding Hand, which blinds excessively optimistic planners not only to unexpectedly high costs but also to unexpectedly low net benefits. Studying a much larger sample than Hirschman did, we find that the Malevolent Hiding Hand is common and that the phenomenon that Hirschman identified is rare. This sobering finding suggests that Hirschman's phenomenon is a special case; it attests to the pervasiveness of the planning fallacy, writ very large. One implication involves the continuing need for unbiased cost-benefit analyses and other economic decision support tools; another is that such tools might sometimes prove unreliable.
    Date: 2015–09
  15. By: Argentiero, Amedeo; Bovi, Maurizio; Cerqueti, Roy
    Abstract: Standard dynamic stochastic general equilibrium (DSGE) models are populated by fully-informed-optimising Muth-rational agents. This kind of agent is at odds with well-known psychological biases, not to mention real life people. In particular, there are strong theoretical and empirical reasons to believe that consumers are overly optimistic. Also, the size of over optimism is likely to show cyclical features. In this paper we simulate two DSGE models, one standard with Muth-rational consumers, the other different just because agents are allowed to over consume. We then compare them throughout different cyclical phases. Results show that taking into account psychological biases allows the DSGE to fit better actual data in the long-run and in an economic boom scenario. Recessions are instead characterized by pessimism. We also find that over consumption is a structural trait. Moreover, booms enlarge significantly the magnitude of the bias. These findings are in line with - and enrich - both the economic and psychological literature, implying i) that the business cycle has a non trivial psychological content, and ii) that the size of psychological biases is affected by macroeconomic evolutions.
    Keywords: DSGE models, Psychological Biases, Business Cycle.
    JEL: C30 E32
    Date: 2015–09–03
  16. By: David Hugh-Jones (University of East Anglia); Carlo Perroni (University of Warwick)
    Abstract: We examine why heterogenous communities may fail to provide public goods. Current work characterizes sanctioning free-riders as an under-supplied public good. We argue that often free-riders can be punished by the coordinated action of a group. This punishment can be profitable, and need not be undersupplied. But the power to expropriate defectors can also be used to expropriate outgroups. Heterogenous societies may be inefficient because minorities, rather than free-riders, are expropriated. Even if this is not so, groups’ different beliefs about the reasons for expropriation may make the threat of punishment less effective at preventing free-riding. We illustrate our theory with evidence from California mining camps, contemporary India, and US schools. In a public goods experiment using minimal groups and a profitable punishment institution, outgroups were more likely to be punished, and reacted differently to punishment than in group members.
    Keywords: group coercion, social heterogeneity
    JEL: H1 H4 N4 D02
    Date: 2015–04–02
  17. By: Ignacio Ferrero (Universidad de Navarra)
    Abstract: Este artículo aborda las implicaciones de la responsabilidad limitada de las empresas en la doctrina de Milton Friedman acerca de la responsabilidad social corporativa y la obligación fiduciaria de los directivos con los shareholders. Desde que la responsabilidad limitada permite a las empresas privatizar sus beneficios mientras socializa sus pérdidas, atribuye ilegítimamente a los ejecutivos la capacidad de imponer impuestos. Esta atribución amenaza la propiedad privada y el intercambio voluntario, supuestos en los que Friedman basa su sistema. Por tanto, o Friedman rechaza la responsabilidad limitada o reconsidera estos supuestos, aceptando sus consecuencias. Basándonos en sus ideas libertarias, explicamos cómo la responsabilidad limitada modificaría el concepto de propiedad, obligando al directivo a incorporar el interés de todos los stakeholders en la dirección de la empresa, presentando el modelo stakeholder como la respuesta coherente y ética a la presencia de la responsabilidad limitada en las economías modernas.
    Date: 2014–07–01

This nep-hpe issue is ©2015 by Erik Thomson. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.