nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒10‒25
25 papers chosen by
Erik Thomson
University of Manitoba

  1. The structure of Nash equilibria in Poisson games By Claudia Meroni; Carlos Pimienta
  2. Joan Robinson and MIT By Harvey Gram; Geoffrey Harcourt
  3. Social norms theory and development economics By Eriksson,Lina Maria Jorun
  4. Crisis without End: Neoliberalism in a Globalized Environment Modeling the Historic Rise of Neoliberalism and its Systematic Role in Recent Economic Downturns By Rambarran, Richard
  5. Morality and Value Neutrality in Economics: A Dualist View By Li, Cheng
  6. Fighting the Last War: economists on the lender of last resort By Richard S. Grossman; Hugh Rockoff
  7. Self-Interest: The Economist’s Straightjacket By Robert Simons
  8. Is Economics a Good Major for Future Lawyers? Evidence from Earnings Data By Winters, John V.
  9. Clio’s Contributions to Economics and History By Claude Diebolt; Michael Haupert
  10. Oligopolistic Equilibrium and Financial Constraints By Beviá, Carmen; Corchón, Luis C.; Yasuda, Yosuke
  11. National Well-being Policy and a Weighted Approach to Human Feelings By O'Donnell, Gus; Oswald, Andrew J.
  12. Social Ties in Academia: A Friend is a Treasure By Colussi, Tommaso
  13. Bayesian Nash Equilibrium and Variational Inequalities By UI, Takashi
  14. If the Worst Comes to the Worst. Dictator Giving When Recipient’s Endowments are Risky By Christoph Engel; Sebastian Goerg
  15. The Subversive Nature of Inequality: Subjective Inequality Perceptions and Attitudes to Social Inequality By Kuhn, Andreas
  16. The Economics of the Right to be Forgotten By Byung-Cheol Kim; Jin Yeub Kim
  17. Ex Post Inequality of Opportunity Comparisons By Fleurbaey, Marc; Peragine, Vito; Ramos, Xavi
  18. Capital Account Liberalization and Management By Ocampo Jos. Antonio
  19. New Horizons of the Theory of Social Events: The Creation of Event-Analytical Model of the Study of Social Action By Stepantsov, Pavel; Erofeeva, Maria
  20. Comment appréhender les temporalités de l’histoire économique ? Plaidoyer pour une cliométrie des évènements rares By Claude Diebolt
  21. Trust as a Factor of Subjective Life Satisfaction By Anna Mironova
  22. Rethinking of Coase Theorem: Externalities and Uncertainty By Kuzmin, Evgeny A.; Semyonovykh, Sergei M.
  23. A Fibonacci Approach to Weighted Majority Games By Flavio Pressacco; Laura Ziani
  25. Liberty, religiosity, and effort By Joan Esteban; Gilat Levy; Laura Mayoral

  1. By: Claudia Meroni (Department of Economics (University of Verona)); Carlos Pimienta (School of Economics, The University of New South Wales, Sydney, Australia)
    Abstract: In finite games, the graph of the Nash equilibrium correspondence is a semialgebraic set (i.e. it is defined by finitely many polynomial inequal- ities). This fact implies many game theoretical results about the structure of equilibria. We show that many of these results can be readily exported to Poisson games even if the expected utility functions are not polynomials. We do this proving that, in Poisson games, the graph of the Nash equilibrium correspondence is a globaly subanalytic set. Many of the properties of semialgebraic sets follow from a set of axioms that the collection of globaly subanalytic sets also satisfy. Hence, we easily show that every Poisson game has finitely many connected components and that at least one of them contains a stable set of equilibria. By the same reasoning, we also show how generic determinacy results in finite games can be extended to Poisson games.
    Keywords: Poisson games, voting, stable sets, o-minimal structures, globaly subanalytic sets.
    JEL: C70 C72
    Date: 2015–10
  2. By: Harvey Gram (Ph. D. Program in Economics, Graduate Center, CUNY); Geoffrey Harcourt (University of New South Wales, Australia)
    Abstract: The great question which has always haunted the type of analysis offered by the MIT economists in answer to Robinson's provocative critique (1953) has always been her own question: how to get into equilibrium? If the notion of "vision at a distance", inherent in dynamic equilibrium analysis (Dorfman, Samuelson, and Solow, 1958) means co-ordination of long-term expectations, recent work shows theory, that "getting into equilibrium" is an impossibility. This vindicates Robinson's position in the capital controversy, at least with respect to the MIT economists.
    Keywords: Joan Robinson, dynamic equilibrium
    JEL: A10 B30
    Date: 2015–10–09
  3. By: Eriksson,Lina Maria Jorun
    Abstract: Social norms affect almost every aspect of people?s lives, and can be an obstacle to or support economic development. This paper outlines what social norms are and how they work, providing examples from everyday life and from development case studies. Sometimes not much can be done about changing undesirable social norms. In those cases, development economists need to be aware of how the existence of those norms can impact the effects of the policies they advocate. But of particular importance to development economists is the ways in which social norms can be changed, at least under some circumstances. Understanding of social norm change is still patchy at best, but the paper outlines the theoretical underpinnings of change, with empirical evidence from various policies aimed at changing social norms. However, some of those policies raise ethical concerns that would require attention.
    Keywords: Gender and Social Development,Access to Finance,Population Policies,Ethics&Belief Systems,Anthropology
    Date: 2015–10–20
  4. By: Rambarran, Richard
    Abstract: Since the 1970’s, both politically and theoretically, neoliberalism as an ideology has been on a persistent rise to the point where, in the twenty first century, it has garnered hegemonic dominance. Despite several recurring crises in countries since the ascendance of neoliberalism, we yet remain reluctant to point out the political economy philosophy as the root cause of the crises. Instead, many of the academics within Economics prefer to offer bouts of highly technical reasons for the downturn- this is especially true and almost solely applicable to those who practice within the ‘neoclassical’ conjecture of Economics. In a typical Marxian sense, one would have to look no further than the economic system to determine both economic and social outcomes of a country. What dictates that economic system however is the political philosophy of the leaders who guide the economic system- the policy makers. This paper attempts to show the neoliberal political philosophy, as the common thread for major crises within the last two decades. It also proposes a societal trinity for which change is driven through complexed interactions among the political, economic and social spheres.
    Keywords: Neoliberalism, Crises, Liberalization, Recession, Financialization, Hegemony
    JEL: O11 O19 P12 P16
    Date: 2015–10–22
  5. By: Li, Cheng
    Abstract: In this paper, we argue that economics exhibits the properties of both moral science and value-free technique, thereby establishing a dualist view on the two identities of economics. This duality is implied by the fundamental logic of the economic way of thinking − investigating human behavior upon the means-end rationality principle. In this view, on the one hand, economics behaves as a moral science for two reasons: all economic theories and policy discussions are necessarily based on some moral premises about means-end considerations; economics as an analytical approach can be and has been applied to explanations of a wide range of ethical issues. On the other hand, economics remains neutral regarding judgmental positions. This is because economists cannot deal with the comparisons and choices among different value criteria, unless some ethical presuppositions of higher order are given to them. Therefore, economics is indeed featured by both morality and value neutrality.
    Keywords: Methodology; Rationality; Moral science; Value-free approach
    JEL: A11 B41 D60
    Date: 2015–10–16
  6. By: Richard S. Grossman (Department of Economics Wesleyan University and Institute for Quantitative Social Science Harvard University); Hugh Rockoff (Department of Economics Rutgers University)
    Abstract: In this paper we trace the evolution of the lender of last resort doctrine—and its implementation—from the nineteenth century through the panic of 2008. We find that typically the most influential economists “fight the last war”: formulating policy guidelines that would have dealt effectively with the last crisis or in some cases the last two or three. This applies even to the still supreme voice among lender-of-last-resort theorists, Walter Bagehot, who wrestled with how to deal with the financial crises that hit Britain between the end of the Napoleonic Wars and the panic of 1866. Fighting the last war may leave economists unprepared for meeting effectively the challenge of the next war.
    Keywords: lender of last resort, panic
    JEL: B0 N2
    Date: 2015–10–15
  7. By: Robert Simons (Harvard Business School, Accounting and Management Unit)
    Abstract: This paper examines contemporary economic theories that focus on the design and management of business organizations. In the first part of the paper, a taxonomy is presented that describes the different types of economists interested in this subject-market economists, regulatory economists, and enlightened economists-and illustrates the extent to which each tribe has been captured by the concept of self-interest. After arguing that this fixation has caused-and is likely to continue to cause-significant harm to our economy, the paper then presents an alternative approach based on a theory of business and discusses the implications for research and teaching.
    Keywords: self-interest, economists, moral philosophers, agency theory, regulation, capture, organization design, economic theory, organization theory, management theory, business education, competition, customers, commitment, controls, boundaries.
    Date: 2015–10
  8. By: Winters, John V. (Oklahoma State University)
    Abstract: The current study examines earnings differences for practicing lawyers by undergraduate major with a focus on economics majors. Some majors do much better than others. Economics majors tend to do very well in both median and mean earnings, and both without and with controlling for individual characteristics. Electrical engineering, accounting, finance, and some other majors also do relatively well. This information is useful for undergraduates planning to attend law school and considering what undergraduate major field to study. Economics appears to be a very good option.
    Keywords: college major, earnings, economics major, lawyers, attorneys
    JEL: I20 J24 J31
    Date: 2015–10
  9. By: Claude Diebolt (BETA, University of Strasbourg Strasbourg, France); Michael Haupert (University of Wisconsin-La Crosse, USA)
    Date: 2015
  10. By: Beviá, Carmen (Universidad de Alicante, Universitat Autònoma de Barcelona and Barcelona GSE); Corchón, Luis C. (Universidad Carlos III de Madrid); Yasuda, Yosuke (Osaka University)
    Abstract: We provide a model of dynamic duopoly in which firms face financial constraints and disappear when they are unable to fulfill them. We show that, in some cases, Cournot outputs are no longer supported in equilibrium, because if these outputs were set, a firm may have incentives to ruin the other. In these cases, standard grim-trigger strategies in which collusion is sustained by infinite reversion to Cournot outputs cannot be used. We show that there is a stationary Markov equilibrium in mixed strategies where predation occurs with a positive probability. We also obtain a modified "folk theorem". We show that any bankruptcy-free outputs (outputs in which no firm can drive another firm to bankruptcy without becoming bankrupt itself) that attain individually rational profits (reflecting bankruptcy consideration) can be supported by a subgame perfect Nash equilibrium when firms are sufficiently long-sighted.
    Keywords: Financial Constraints, Bankruptcy, Firm Behavior, Dynamic Games
    JEL: D2 D4 L1 L2
    Date: 2015–10
  11. By: O'Donnell, Gus (House of Lords); Oswald, Andrew J. (University of Warwick)
    Abstract: Governments are becoming interested in the concept of human well-being and how truly to assess it. As an alternative to traditional economic measures, some nations have begun to collect information on citizens' happiness, life satisfaction, and other psychological scores. Yet how could such data actually be used? This paper is a cautious attempt to contribute to thinking on that question. It suggests a possible weighting method to calculate first-order changes in society's well-being, discusses some of the potential principles of democratic 'well-being policy', and (as an illustrative example) reports data on how sub-samples of citizens believe feelings might be weighted.
    Keywords: life satisfaction, anxiety, happiness, national well-being, mental health
    JEL: I31 I38 Z18
    Date: 2015–10
  12. By: Colussi, Tommaso (IZA)
    Abstract: This paper employs a unique dataset on articles, authors and editors of the top general interest journals in economics to investigate the role of social connections in the publication process. Ties between editors and authors are identified based on their academic histories. Results show that an editor's former PhD students and faculty colleagues experience an increase in their publication outcomes when this editor is in charge of a journal. The analysis of articles' citations suggests that connections ultimately improve the quality of published papers.
    Keywords: academia, networks, human capital
    JEL: A1 I23 J24
    Date: 2015–10
  13. By: UI, Takashi
    Abstract: This paper provides a sufficient condition for the existence and uniqueness of a Bayesian Nash equilibrium by regarding it as a solution of a variational inequality. The payoff gradient of a game is defined as a vector whose component is a partial derivative of each player's payoff function with respect to the player's own action. If the Jacobian matrix of the payoff gradient is negative definite for each state, then a Bayesian Nash equilibrium is unique. This result unifies and generalizes the uniqueness of an equilibrium in a complete information game by Rosen (Econometrica 33: 520, 1965) and that in a team by Radner (Ann. Math. Stat. 33: 857, 1962). In a Bayesian game played on a network, the Jacobian matrix of the payoff gradient coincides with the weighted adjacency matrix of the underlying graph.
    Keywords: Bayesian game, network game, potential game, team, variational inequality, payoff gradient, strict monotonicity
    JEL: C72 D82
    Date: 2015–10
  14. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Goerg (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Donors may often not be sure whether a recipient really deserves their help. Does this uncertainty deter generosity? In an experiment we find that, to the contrary, under most specifications of uncertainty, dictators give more, compared with the donation the same dictator makes to a recipient they know to have the expected value of the endowment with certainty. They are particularly concerned about the possibility that a recipient leaves the lab with no payoff from the game.
    Keywords: Dictator Game, Uncertainty, Donation
    JEL: D81 C91 D03
    Date: 2015–10
  15. By: Kuhn, Andreas (Swiss Federal Institute for Vocational Education and Training)
    Abstract: This paper shows that higher levels of perceived wage inequality are associated with a weaker (stronger) belief into meritocratic (non-meritocratic) principles as being important in determining individual wages. This finding is robust to the use of an instrumental-variable estimation strategy which takes the potential issue of reverse causality into account, and it is further corroborated using various complementary measures of individuals' perception of the chances and risks associated with an unequal distribution of economic resources, such as their perception of the chances of upward mobility. I finally show that those individuals perceiving a high level of wage inequality also tend to be more supportive of redistributive policies and progressive taxation, and that they tend to favor the political left, suggesting a feedback effect of inequality perceptions into the political-economic sphere. Taken together, these findings suggest that high levels of perceived wage inequality have the potential to undermine the legitimacy of market outcomes.
    Keywords: inequality perceptions, attitudes to social inequality, support of redistribution, legitimacy of market outcomes, beliefs about the causes of economic success, political preferences
    JEL: D31 D63 J31
    Date: 2015–10
  16. By: Byung-Cheol Kim (School of Economics, Georgia Institute of Technology, 221 Bobby Dodd Way, Atlanta, GA 30332-0615); Jin Yeub Kim (Department of Economics, University of Nebraska-Lincoln, 1240 R Street, Lincoln, NE 68588-0489)
    Abstract: We offer an economic analysis of the right to be forgotten (RTBF)-- the right to remove links from the search results --through a legal dispute game between a petitioner and a search engine. Our analysis suggests that the global expansion of the RTBF does not necessarily increase the likelihood of link removals. We also find that the RTBF expansion can either improve or reduce welfare from a social perspective. Therefore, the ongoing debate should be guided by the perspective of achieving a socially optimal level of link removals rather than of a conflict between privacy rights and free speech.
    Keywords: right to be forgotten; privacy; litigation; search engine
    JEL: C72 D82 K20 K41 L86
    Date: 2015–10
  17. By: Fleurbaey, Marc (Princeton University); Peragine, Vito (University of Bari); Ramos, Xavi (Universitat Autònoma de Barcelona)
    Abstract: In this paper we propose different criteria to rank income distributions according to equality of opportunity. Different from existing ones, our criteria explicitly recognize the interplay between circumstances and effort. We characterize them axiomatically and we compare them with existing criteria; then we propose some scalar measures. We show that our ex post criteria are mostly obtained from "seemingly" ex ante properties. In the second part of the paper we apply our new criteria to measuring inequality of opportunity in Germany. We illustrate our ex-post inequality of opportunity approach based on classes by means of the German Socio-Economic Panel (SOEP) for the first decade of the 2000s.
    Keywords: equality of opportunity, ex post/ex ante, compensation, reward, SOEP, Germany
    JEL: D3 D63 D71
    Date: 2015–10
  18. By: Ocampo Jos. Antonio
    Abstract: This paper reviews the history and controversies associated with capital account management. It first looks at the transition from the acceptance at the Bretton Woods conference of capital account regulations as a normal policy instrument to the liberaliz
    Keywords: Accounting, Capital, Financial institutions, International
    Date: 2015
  19. By: Stepantsov, Pavel (Russian presidental academy of national economy and public administration (RANEPA)); Erofeeva, Maria (Russian presidental academy of national economy and public administration (RANEPA))
    Abstract: The subject of research of this paper is the prospect of using the theory of social events (in particular, one of its varieties - frame analysis) in the modification of the theory of social action. We have proposed an event-analytical model of explaining social action that meet the challenges of a fundamental social theory of XX century (the development of the sociology of everyday life, turn to the material). The main theoretical and methodological resources used are frame analysis and actor-network theory.
    Keywords: theory of social events, event-analytical model, actor-network theory
    Date: 2015–09–17
  20. By: Claude Diebolt (BETA, University of Strasbourg Strasbourg, France)
    Date: 2015
  21. By: Anna Mironova (National Research University Higher School of Economics)
    Abstract: This paper analyses the relation between trust as the element of social capital and individual subjective life satisfaction. It answers the question of whether trustful people are happier than suspicious people. Using the concept of social capital, we consider three main types of trust: general, institutional and social. The article estimates the level of trust in Russia using data from value research in two federal districts in Russia. This research was conducted by the Centre for Comparative Social Research in summer 2012. The main hypothesis, that there a positive relationship between the level of trust and subjective life satisfaction, was tested using the method of structural equation modelling.
    Keywords: social capital, trust, subjective life satisfaction.
    JEL: Z
    Date: 2015
  22. By: Kuzmin, Evgeny A.; Semyonovykh, Sergei M.
    Abstract: A behaviour of economic agents in many respects depends on taking into account those conditions that have appeared around them. Traditionally, to such conditions, researchers have referred the uncertainty and factors of the institutional control, often projected on a value of the transaction costs. Studies in stimulants for any form of the agents’ behaviour lead us to an analysis of the Coase theorem, which is expected to explain a number of similar regularities. However, ambiguous approaches to the theorem interpretation generate conflicts in a perception and identification of externalities. It is a solution to this challenge, which is a focus of this research. In a critical review of works by Coase and his followers, the theorem statement has been made clearer; we have also put forward a hypothesis on an origin of the externalities and introduced additional criteria to identify them. The paper has given a scientific rationale for an author's assumption that the utility of impure goods depends on the vector of the externalities, which ultimately determines the stratification in a field of the externalities (positive or negative).
    Keywords: Externalities, Coase Theorem, Uncertainty
    JEL: A11 B25 B40
    Date: 2015–10
  23. By: Flavio Pressacco (DIES - DIES - Dept. of Economics and Statistics - University of Udine, Italy); Laura Ziani (DIES - DIES - Dept. of Economics and Statistics - University of Udine, Italy)
    Abstract: We define Fibonacci games as the subset of constant sum homogeneous weighted majority games whose increasing sequence of all type weights and the minimal winning quota is a string of consecutive Fibonacci numbers. Exploiting properties of the Fibonacci sequence, we obtain closed form results able to provide a simple and insightful classification and characterization of such games.
    Keywords: minimal winning coalition, homogeneous representation,Weighted majority games, type weight vector, satellite games, Fibonacci numbers.
    Date: 2015–10–14
  24. By: Alain Béraud (Université de Cergy-Pontoise, THEMA)
    Abstract: Lisant l’appel à communication que j’avais reçu, je me suis arrêté, pour fixer le sujet de ma communication, au premier mot figurant dans le titre que l’on avait donné à ces journées de travail. Les économistes sont friands de fictions. On ne sait pourquoi. Pour susciter l’intérêt? Pour expliquer ? Pour démontrer ? Les orateurs ont employé ce procédé dans des circonstances bien différentes.
    Date: 2015
  25. By: Joan Esteban; Gilat Levy; Laura Mayoral
    Abstract: In this paper we study the role of religiosity and individual liberties in influencing the choice of labor effort. To a standard model with consumption and effort, we add a third (public) good: civil liberties with a cap established by law. We assume that the higher the degree of religiosity of an individual the less he likes liberties, such as divorce, abortion, gender parity, or gay marriage. With standard assumptions on individual preferences, our model implies that individual labor supply is decreasing in the level of personal religiosity and that this negative relationship is enhanced by the width of liberties. We show empirically that this holds and that the size of the effect is large. Specifically, we construct an index of civil liberties and find solid evidence in support of the joint effect of religiosity and liberties on labor effort.
    Keywords: religiosity, civil liberties, labor supply
    JEL: Z12 J22
    Date: 2015–09

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