nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒09‒26
thirteen papers chosen by
Erik Thomson
University of Manitoba

  1. Orwell's 1984 and the Dangers of Constructing the World By Paul Kingsley
  2. Marx, Profits and Fractal Properties: notes on countertendencies to the fall of the rate of profit, simulation models and metamorphoses of capitalism By Leonardo Costa Ribeiro; Pedro Mendes Loureiro; Eduardo da Motta e Albuquerque
  3. Was ist fair? Echte und strategische Fairness in einem sequentiellen Ultimatum- und Diktatorspiel By Stoetzer, Matthias Wolfgang; Blass, Tom; Grimm, Anika; Gwosdz, Robert; Schwarz, Jan
  4. On commercial gluts Unexpected affinities between Jean-Baptiste Say and the Saint-Simonians By Adrien Lutz
  5. Why the Federal Reserve Failed to See the Financial Crisis of 2008: The Role of “Macroeconomics†as a Sense making and Cultural Frame By Fligstein, Neil; Brundage, Jonah S; Schultz, Michael
  6. Social Identity and Punishment By Jeffrey V. Butler; Pierluigi Conzo; Martin A. Leroch
  7. Waiting to Cooperate? Cooperation in one-stage and two-stage games By Todd Kaplan, Bradley Ruffle
  8. Solitude and Life in the World in the Letters of Antoine Arnauld By Elizaveta A. Al-Faradzh
  9. Behavioural rules: Veblen, Nelson-Winter, Oström and beyond By Blind, Georg
  10. Lucky Bias in Bribery Market: An Experimental Evidence from Drug Market Game By Thanee Chaiwat
  11. On pure-strategy Nash equilibria in price-quantity games By Bos A.M.; Vermeulen A.J.
  12. The Impact of Redistribution Mechanisms in the Vote with the Wallet Game: Experimental Results By L. Becchetti; V. Pelligra; F. Salustri
  13. Contre Husson By Yoann Verger

  1. By: Paul Kingsley (University of Liverpool / Laureate Online Education)
    Abstract: Educational constructivists maintain that knowledge is constructed by students as they learn. Sometimes this involves a weakening of the epistemological claim that knowledge involves discovering facts about an independent reality. In the terminology of Immanuel Kant, we are claimed to have access to phenomena or appearances, but not to things in themselves. This approach is closely linked to Husserl’s belief that objects must be “for” some consciousness, and the early Wittgenstein’s view that the self is not part of the world. All of these views place a great deal of emphasis on the notion of a disembodied consciousness that somehow constructs the world it perceives. They tend to weaken our belief in an independent world about which we can have objective knowledge. Is this a mere philosophical quibble of no practical importance? Does it really matter?George Orwell, in his novel, 1984, introduces his unlikely hero, Winston Smith. He asks the question, “If both the past and the external world exist only in the mind, and if the mind itself is controllable what then?” Smith’s tormentor, O’Brien, eventually supplies the answer. “But I tell you, Winston, that reality is not external. Reality exists in the human mind, and nowhere else. Not in the individual mind, which can make mistakes, and in any case soon perishes: only in the mind of the Party, which is collective and immortal. Whatever the Party holds to be the truth, is truth. It is impossible to see reality except by looking through the eyes of the Party.” In short, the state engages in fabrications which are an extreme form of knowledge construction. Just once, Smith held in his hand absolute proof that the state had lied. He comes to see this mind-independent evidential challenge as the most radical kind of threat to a totalitarian state. Orwell outlines a situation where the distinction between constructing and discovering knowledge does matter. If important issues are at stake, we must take the greatest care before making claims that our knowledge is constructed. I shall argue that Kant, Husserl, and Wittgenstein conducted thought experiments with flawed research designs.
    Keywords: constructivism, Orwell, 1984, Kant, non Glasersfeld, truth, realism, Husserl, Peirce, Ingarden
    JEL: I29
  2. By: Leonardo Costa Ribeiro (Cedeplar-UFMG); Pedro Mendes Loureiro (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG)
    Abstract: What really matters to understand capitalist dynamics in the long run are the countertendencies to the tendential fall of the rate of profit. For researchers in 2015, with all historical and statistical information on capitalist dynamics (not available to Marx, Schumpeter or Bain), capitalism can be seen as an engine for the creation of countertendencies to the fall of the rate of profit. Since classical political economy (Smith, Ricardo, Mill) and Marx the behavior of the rate of profit is a key subject of investigation, that has been also investigated by Schumpeter, evolutionary economist and modern industrial economics. Contemporary debates on the rate of profit would have three advantages vis-à-vis previous rounds of this long-lasting discussion: 1) the MEGA Project has provided more information Marx's works; 2) there are data on the long-term behavior of the rate of profit; 3) there are new tools to investigate the logic of capitalism as a complex system - a dialogue with physics is useful for this analysis. This paper combines different approaches and methods: a short review of the history of economic thought, lessons from economic history, data analysis of the movements of the rate of profit and a simulation model to test our understanding of those movements - a model based on two very simple rules, inspired on an interpretation of Marx's insights about the contradictory interaction between the tendency and the countertendencies to the fall of the rate of profit. These different approaches and methods organize this paper.
    Keywords: the rate of profit, Marx, MEGA2 Project, complex systems, metamorphoses of capitalism
    JEL: P16 O33 B51
    Date: 2015–09
  3. By: Stoetzer, Matthias Wolfgang; Blass, Tom; Grimm, Anika; Gwosdz, Robert; Schwarz, Jan
    Abstract: Die vorliegende Arbeit untersucht das Fairnessverhalten von Studierenden unter-schiedlicher Studienrichtung. Hierzu wurden 289 Studierende der Ernst-Abbe-Hochschule Jena vor zwei verschiedene Entscheidungssituationen gestellt. In diesem Befragungsexperiment mussten die Studierenden wählen, wie viel von 100 EUR sie einem unbekannten Mitspieler überlassen würden. Beim Ultimatumspiel hatte der Mitspieler ein Vetorecht, beim Diktatorspiel nicht. Ziel war es erstens zu ermitteln, inwieweit Fairness, bzw. altruistisches Verhalten einerseits oder egoistisches Verhalten andererseits dominieren. Zweitens wurde untersucht, ob Studierende der Wirtschafts-, Sozial- und Ingenieurwissenschaften sich in ihrem Fairnessverhalten unter-scheiden. Durch den sequentiellen Aufbau des Experimentes können individuelle Unterschiede im Verhalten in beiden Spielen analysiert werden: Faires und unfaires Verhalten sind identifizierbar. Zur Unterscheidung von "fairem" und "unfairem" Verhalten werden dabei zwei ver-schiedene Definitionen herangezogen. Generell zeigt sich in dem Befragungsexperiment, dass echt faires Verhalten einerseits und unfaires bzw. strategisch faires Verhalten andererseits tendenziell gleich häufig auftreten. Unter der Voraussetzung, dass die Resultate extern valide sind, kann das neoklassische Modell des eigensüchtigen rationalen Verhaltens insoweit nur einen Teil individueller ökonomischer Entscheidungen erklären. Gleiches gilt aber auch für die Annahme einer Präferenz der Individuen für "Fairness". [...]
    Abstract: The present study examines the fairness behavior of students of various academic programs. For this purpose, 289 students from three different majors of the Ernst-Abbe-University Jena were faced with two decision situations. In this survey experi-ment, the students had to choose how much of 100 EUR they would leave to an unknown co-player. In the ultimatum game the co-players had a right to veto, while not in the dictator game. The aim was to determine, first, to what extent fairness, or altruistic behavior on the one hand or selfish behavior on the other hand dominate. Secondly, the experiment investigates whether students of economic, social and engineering sciences differ in their fairness behavior. The sequential structure of the experiment allows the analysis of individual differences of giving behavior in both games. To distinguish between "fair" and "unfair" giving behavior two different definitions are used. Overall the survey experiment reveals that really fair behavior on the one hand and unfair or strategic fairness on the other hand occur almost equally frequently. Assuming that the results are externally valid, the neoclassical model of selfish rational behavior cannot be completely discarded, but explains only part of individual economic decisions. [...]
    Keywords: Altruismus,Fairness,Homo Oeconomicus,Diktatorspiel,Ultimatum-spiel,Befragung,sequentielles Spiel,Studienfächer,Studienrichtungen,Altruism,Ultimatum Game,Dictator Game,Rational behavior,Survey,sequential game,academic programs,major
    JEL: A13 C91 C72 D01
    Date: 2015
  4. By: Adrien Lutz (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS)
    Abstract: A standard reading in the history of economic thought considers Saint-Simonianism to be embodied in the works of a set of European social thinkers including Robert Owen, William Godwin and Sismondi, all of whom are seen as standing in strict opposition to the doctrine of laissez-faire. This article, however, argues that, during the first quarter of the 19th century, the Saint-Simonians and the liberal economist Jean-Baptiste Say can be seen to adopt convergent views on commercial gluts. First, it shows how the Saint-Simonians and Say both see undersupply and lack of industry as causes of gluts. Next, we assert that their intellectual affinities are also visible in their belief that increasing production remains an appropriate solution for gluts. Finally, this convergence is explained by their common heritage: Saint-Simonianism is embedded in a neo-Smithian tradition for which Say can be taken as representative. We argue that this legacy explains their convergence.
    Keywords: Saint - S imonianism, Jean - Baptiste Say, Adam Smith, Laissez-faire, Commercial gluts
    Date: 2015–09–15
  5. By: Fligstein, Neil; Brundage, Jonah S; Schultz, Michael
    Abstract: One of the puzzles about the financial crisis of 2008 is why the regulators were so slow to recognize the impending collapse of the financial system. In this paper, we propose a novel account of what happened. We analyze the meeting transcripts of the Federal Reserve’s main decision-making body, the Federal Open Market Committee (FOMC), to show that they had surprisingly little recognition that a serious economic meltdown was underway even after the collapse of Lehman Brothers on September 15, 2008. This lack of awareness was a function of the inability of the FOMC to connect the unfolding events into a narrative reflecting the links between the housing market, the subprime mortgage market, and the financial instruments being used to package the mortgages into securities. We use the idea of sense-making to explain how this happened. The Federal Reserve’s main analytic framework for making sense of the economy, macroeconomic theory, made it difficult for them to connect the disparate events that comprised the financial crisis into a coherent whole. We use topic modeling to analyze transcripts of FOMC meetings held between 2000 and 2008, demonstrating that the framework provided by macroeconomics dominated FOMC conversations throughout this period. The topic models also suggest that each of the issues involved in the crisis remained a separate discussion and were never connected together. A close reading of the texts supports this argument. We conclude with implications for future such crises and for thinking about sense-making and the role of economics in policymaking more generally.
    Keywords: Social and Behavioral Sciences
    Date: 2014–09–01
  6. By: Jeffrey V. Butler (Department of Economics, University of Nevada); Pierluigi Conzo (University of Turin, Campus Luigi Einaudi and CSEF, Dept of Economics and Statistics, University of Naples Federico II); Martin A. Leroch (Institute of Political Science, Johannes Gutenberg-Universitaet Mainz)
    Abstract: Third party (bystander) punishment is crucial for sustaining cooperative behavior. Through laboratory experiments we investigate the interaction between group identi- cation and a bystander's punishment preferences by inducing minimal groups and giving a bystander the opportunity to levy a xed amount of punishment on the perpetrator of an unfair act towards a defenseless victim. We elicit the bystander's valuation for punishment in four cases: when the perpetrator, the victim, both or neither are members of the bystander's group. For predictions, we construct three separate frameworks diering by whether the primary eect of group identity is to create an empathetic bond between in-group members or to aect the weights placed on others' money earnings (distributional social preferences). The frameworks yield starkly dierent ordinal predictions about the bystander's value for punishment across two cases: i) when the perpetrator and victim are both members of the bystander's group; ii) when only the victim is an in-group member. The empathetic bond framework predicts that punishment will be more highly valued in the latter case, while the distributional preferences frameworks suggest the opposite. Our data support the predictions of the rst. Finally, we conduct control sessions where groups are not induced and nd that bystanders tend to treat others as in-group members unless specically divided into distinct groups.
    Keywords: Identity, social norms, culture, cheating, in-group bias, punishment
    JEL: D74 Z1
    Date: 2015–05–28
  7. By: Todd Kaplan, Bradley Ruffle (Wilfrid Laurier University)
    Abstract: Cooperation between two players often requires exactly one to take the available action, while the other acquiesces. If the decisions whether to pursue the action are made simultaneously, then neither or both may acquiesce leading to an inefficient outcome. However, inefficiency may be avoided if players move sequentially. We test experimentally whether two-stage versions of this entry-exit game enhance cooperation. In one version, players may wait in the first stage to see what their paired player did and then coordinate in the second stage. In another version, sequential decision-making is imposed by assigning one player to move in stage one and the other player in stage two. Although there are fewer cooperative decisions in the two-stage treatments, we show that subjects coordinate better on efficient cooperation and on avoiding both acquiescing. Consequently they achieve higher profits. Yet, the least cooperative pairs do worse in the two-stage games than their single-stage counterparts. They use the second stage not to facilitate coordination but to disguise their uncooperative play or to punish their opponents.
    Keywords: experimental economics, cooperation, efficiency, two-stage games, turn-taking.
    JEL: C90 Z13
    Date: 2015–09–16
  8. By: Elizaveta A. Al-Faradzh (National Research University Higher School of Economics)
    Abstract: This article features the correspondence of Antoine Arnauld, who lived close to the Port-Royal monastery, as a case study for the perception of solitude in the spiritual literature of the 17th century. For Arnauld the world is corrupt, as a man in it is prone to an excess of temptation. A truly virtuous life means retirement from the world, not monasticism, but a refusal to comply with a world ruled by passions since the original sin. In his letters, Arnauld speaks of seclusion not only from the world but also from human nature with its sinful inclinations. Denouncing the world and its temptations Arnauld sees it as a battlefield for truth and his own mission in the protection of the latter from profanation. Despite seeing the solitary life as the most dignified, he compares the life of a virtuous married woman to a nun’s. Thus, he does not exclude the chance of salvation for those who lead a virtuous secular life. By 1660s his views become more lenient; in one of the letters Arnauld comes up with an apology for the existing social order and its characteristic luxury, seeing it as a manifestation of God’s will. The heterogeneity of Arnauld’s views could be explained by the nature of our source, the letters, as his ideas there are in the process of development of which each letter only registers stages
    Keywords: Port-Royal, theology, early modern period, seclusion, Anthropology of religion, Counter-Reformation, correspondence, post-Trident Catholicism, secular virtue
    JEL: Z
    Date: 2015
  9. By: Blind, Georg
    Abstract: Rules as devices for the analysis of economic behaviour have earned increasing recognition since Elinor Ostrom’s work was awarded the Nobel Memorial Prize in Economics in 2009. This contribution illustrates the use of such analytical device in three foundational pioneering areas of application: The sociology of Thorstein Veblen, the organisational studies of Nelson and Winter, and Elinor Ostrom’s analysis of resource governance systems. A comparison of their respective uses of the analytical concept of behavioural rules reveals their major objective: the systematic interpretation of empirical observations. While their works provide convincing evidence on the analytical power of rules, neither has realised the full potential for generalisation toward a theory of rule-based economics. Such generalisation has recently been achieved by Dopfer and Potts. Adhering to ‘instrumental realism’ their theoretical framework integrates key elements of the reasoning about rules presented here, and achieves general applicability to the analysis of the origination and diffusion of rules, and of their use for economic operations.
    Keywords: rule-based economics, behavioural economics, evolutionary economics, institutional economics
    JEL: B15 B25 B41 D03
    Date: 2015–09–20
  10. By: Thanee Chaiwat (Faculty of Economics, Chulalongkorn University)
    Abstract: Crime is a big problem in every society. In economic aspect, Becker (1974) proposed that the decision on criminal activities depends on the probability to be caught and the degree of penalty. An agent would evaluate his net return before make his decision. However individual may perceive the probability to be caught different from the real known value. This paper employed Tedeschi (2007)’s Drug Market Game to run class experiments of 156 economics students of Chulalongkorn University (Bangkok) and Walailuk University (Nakon Si Thammarat) to observe how individual perceived the probability to be caught. This game divided the subjects into 3 types of buyers, including the addict, the casual, and the curious and 2 types of sellers, including the big supplier and the small supplier. The experimental game started with free market situation, following decriminalization. The police would be inserted into the game with various amounts to vary the caught factor, so both buyers and sellers seem to have reacted rationally. Later, the game proposed the chance to negotiate bribe before being caught under some proportion of the group of police. The results showed that individuals think for themselves and believe that they would be lucky that they can bribe even they know the probability to be caught and the proportion of good police. So they have reacted as same as in the free market situation. This is because individuals have lucky bias for themselves, and create supply in bribery market. So policy implication should concern this lucky bias to restrict bribery supply and reduce crime effectively.
    Keywords: Bribery, Experimental Economics, Behavioral Economics, Law and Economics
    JEL: K42 C91 D03
  11. By: Bos A.M.; Vermeulen A.J. (GSBE)
    Abstract: This paper examines the existence and characteristics of pure-strategy Nash equilibria in oligopoly models in which firms set both prices and quantities. Existence is proved for a broad and natural class of price-quantity games. With differentiated products, the equilibrium outcome is similar to that of a price-only model. With undifferentiated products and limited spillover demand, there are rationing equilibria in which combined production falls short of market demand. Moreover, there might again be an equilibrium reflecting the outcome of a price game. Competition in price and quantity may thus yield Bertrand outcomes under a variety of market conditions.
    Keywords: Microeconomic Policy: Formulation; Implementation; Evaluation; Market Structure, Firm Strategy, and Market Performance: General;
    JEL: D04 L10
    Date: 2015
  12. By: L. Becchetti; V. Pelligra; F. Salustri
    Abstract: We use the Vote-with-the-Wallet game (VWG) to model socially or environmentally responsible consumption, an increasingly relevant but still under-researched phenomenon. Based on a theoretical model outlining game equilibria and the parametric interval of the related multiplayer prisoners’ dilemma (PD) we evaluate with a controlled lab experiment players’ behavior in the game and test the effects of an ex post redistribution mechanism between defectors and cooperators. Our findings document that the redistribution mechanism interrupts cooperation decay and stabilizes the share of cooperators at a level significantly higher, even though inferior to the Nash equilibrium.
    Keywords: vote with the wallet, prisoner’s dilemma, lab experiment
    JEL: C72 C73 C91 M14
    Date: 2015
  13. By: Yoann Verger (REEDS - REEDS - Centre international de Recherches en Economie écologique, Eco-innovation et ingénierie du Développement Soutenable - UVSQ - Université Versailles Saint-Quentin-en-Yvelines)
    Abstract: Cet article répond à la re-publication du texte de Michel Husson intitulé “Contre Sraffa - La transformation des valeurs en prix” (Husson, 1982 (2014)). Mon but est de démontrer que la vision de Husson sur le travail de Sraffa est fausse, notamment à la lumière de la nouvelle interprétation de Sraffa par Sinha (2012). Je m'en tiens (en premier lieu peut-être) uniquement à la critique des propositions concernant le travail de Sraffa, et n'aborderai pas les relations entre les travaux de Sraffa et Marx.
    Keywords: Sraffa,Valeur,Prix,Capital fixe,Taux de profit,Rente
    Date: 2015–09–12

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