nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2015‒11‒01
nineteen papers chosen by
Erik Thomson
University of Manitoba

  1. ¿Debería la Historia del Pensamiento Económico ser incluida en los Planes de Estudio de Economía en Pregrado? By Roncaglia, Alesandro
  2. Trade Bounded Rationality and Bounded Individuality By Davis, John
  3. Clio’s Contributions to Economics and History. By Claude Diebolt; Michael Haupert
  4. Dynamics of Socio-Economic Systems: Attractors, Rationality and Meaning By Andrzej Nowak; Jorgen Andersen; Wojciech Borkowski
  5. Industrialization 'without tariffs' Friedrich List as a forerunner of modern Development Economics By Jose Pedro Pontes; Armando J. Garcia Pires
  6. The making of inequality.Capital, labour and the distribution of income. By Maurizio Franzini; Mario Pianta
  7. Disputed (Disciplinary) Boundaries. Philosophy, Economics, Value Judgments. By Silvestri, Paolo
  8. Preferences-dependent learning in the Centipede game By Astrid, Gamba; Tobias, Regner
  9. Who cares about the balderdash I spouted yesterday?* – An experiment on the volatility of bargaining norms – By Stephan Schosser
  10. Myopic behavior and overall utility maximization - A study of linked hawks and doves - By Siegfried Berninghaus; Stephan Schosser; Bodo Vogt
  11. Modeling Risk and Ambiguity-on-Nature in Normal-form Games By Jian Yang
  12. Transformation Models of Explanation in the Social Sciences: The Utopian Imagination as a Resource for Sociological Theorizing By Vakhshtayn, Victor Semenovich; Erofeeva, Maria
  13. Deceptive Advertising with Rational Buyers By Salvatore Piccolo; Piero Tedeschi; Giovanni Ursino
  14. Mapeando o pós-keynesianismo: Uma abordagem cienciométrica By Bruno R. Dammski; Marco A. R. Cavalieri, José S. Paula Pinto
  16. New Public Management Also Came from the Left: The Case of Swedish Primary and Secondary Education By Wennström, Johan
  17. The Basic Concepts and Feature of Bank Liquidity and Its Risk By Sekoni, Abiola
  18. Is subjective wellbeing related to trust? An empirical evidence of selected countries and regions. By Tiiu Paas; Veronika Kuranova
  19. Analysis of Markovian Competitive Situations using Nonatomic Games---the Shock-driven Case and Its Dynamic Pricing Application By Jian Yang

  1. By: Roncaglia, Alesandro
    Abstract: Mainstream views concerning the uselessness or usefulness of HET are illustrated. These rely on a hidden assumption: a ‘cumulative view’ according to which the provisional point of arrival of contemporary economics incorporates all previous contributions in an improved way. Critiques of positivism led philosophy of science to recognise the existence of different approaches – in economics, as in other sciences. Conceptualisation, recognised by Schumpeter as the first stage in economic theorising, is the stage in which the different visions of the world underlying the different approaches, take shape – and are better recognised. In this, HET plays an essential role. As an illustration, the differences between the classical and marginalist conceptualisations of the economy are illustrated. Thus HET is essential in both undergraduate and graduate economic curricula, as a decisive help towards a better understanding and evaluation of formalised theories/models in the first case, and as an education to the philological method of research, essential in the first stage of theorising, in the case of graduate curricula Resumen: Este artículo discute los puntos de vista de la corriente de pensamiento dominante respecto a la utilidad o inutilidad de la Historia del Pensamiento Económico (en adelante HPE). Estos puntos de vista se basan en un supuesto oculto: una “visión acumulativa” según la cual el punto de llegada provisional de la economía contemporánea debe incorporar todas las contribuciones teóricas anteriores de una forma mejorada. Los críticos del positivismo le permitieron a la filosofía de la ciencia reconocer la existencia de diferentes enfoques, tanto en la economía como en otras ciencias. La conceptualización, reconocida por Schumpeter como la primera etapa en la teorización económica, permite que las diferentes visiones del mundo en las cuales se basan los diversos enfoques, tomen forma y alcancen un mayor reconocimiento. Es aquí donde la HPE juega un papel esencial. En este artículo se toma como ejemplo las diferencias entre los enfoques clásicos y marginalistas de la Economía. De esta forma, la HPE resulta esencial en los Planes de Estudio de Economía tanto a nivel de pregrado como de posgrado. En el primer caso como una ayuda decisiva para una mejor comprensión y evaluación de los teorías/modelos ya formalizados y, en el segundo caso, como una formación en el método filológico de investigación, esencial en la primera etapa de la teorización.
    Keywords: history of economic analysis, undergraduate curricula, graduate curricula, heterodox approaches, stages of economic theorising. Historia del análisis económico, Planes de estudios de Economía de pregrado, Planes de estudios de Economía de posgrado, Enfoques heterodoxos, Etapas de la teorización económica.
    JEL: A20 B30
    Date: 2015–05–01
  2. By: Davis, John (Department of Economics Marquette University)
    Abstract: This paper argues that since the utility function conception of the individual is derived from standard rationality theory, the view that rationality is bounded suggests that individuality should also be seen as bounded. The meaning of this idea is developed in terms of two ways in which individuality can be said to be bounded, with one bound associated with Kahneman and Tversky's prospect theory and the "new" behavioral economics and a second bound associated with Simon's evolutionary thinking and the "old" behavioral economics. The paper then shows how different bounded individuality conceptions operate in nudge economics, agent-based modeling, and social identity theory, explaining these conceptions in terms of how they relate to these two behavioral economics views of bounded rationality. How both the "new" and "old" individuality bounds might then be combined in a single account is briefly explored in connection with Kirman's Marseille fish market analysis.
    Keywords: bounded rationality, bounded individuality, nudge economics, agent-based modeling, social identity theory, Marseille fish market
    Date: 2014–07
  3. By: Claude Diebolt; Michael Haupert
    Abstract: Economic history is a subset of history. Both economists and historians are trying to tell plausible stories about the past, and they succeed or fail by narrative standards to connect one event to another. Cliometrics has transformed the study of economic history from a narrative to a mathematical format. In the process, cliometricians have contributed to the development of both economics and history by combining theory with quantitative methods, constructing and revising databases, and adding the variable of time to traditional economic theories. This has made it possible to question and reassess earlier findings, thus expanding the frontier of our knowledge of the past and its ability to portend the future. The use of history as a crucible to examine economic theory has deepened our knowledge of how, why and when economic growth and development has and will occur.
    Keywords: Cliometrics, Economic History, Historical Economics, Econometric History, Economics, History, Epistemology, Methodology.
    JEL: N
    Date: 2015
  4. By: Andrzej Nowak (Institute for Social Studies, University of Warsaw - Institute for Social Studies, University of Warsaw,); Jorgen Andersen (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS); Wojciech Borkowski (Institute for Social Studies, University of Warsaw - Institute for Social Studies, University of Warsaw,)
    Abstract: Gintis and Helbing go beyond traditional boundaries of scientific disciplines and propose integration of major theories from the main disciplines of the social as well as natural sciences. The theory captures well many insights from social psychology. Several assumptions of the model, however, may be questioned. The assumption that social systems are at equilibrium is too narrow, because social systems may also be out of equilibrium. The notion of attractor dynamics shows that systems may converge on different types of attractors depending on the value of control parameters. The notion of rationality of human behavior may be challenged on the basis of new data from psychology, decision science and behavioral economics. Often individuals do not process the information, but rather copy the choices of others. Individuals interact by both direct and indirect means – though market mechanisms. Most importantly, social dynamics, in contrast to physical systems, is governed by meaning. Despite these limitations the theory of Gintis and Helbing represents an important step in the integration of the social sciences.
    Keywords: complex system,adaptive system,general equilibrium
    Date: 2015
  5. By: Jose Pedro Pontes; Armando J. Garcia Pires
    Abstract: In this paper, we analyse Friedrich List's contribution to the modern theory of economic development. We argue that Friedrich List saw economic development as a combination of a sectorial division of labour (following Adam Smith, 1776) and a geographical division of labour across regions and countries. In this sense, the passage from a traditional economy to an industrial one consists of balanced growth at both the sectorial and geographical level, as we see in modern development economics (see Rosentein-Rodan, 1943; and Murphy et al., 1989). In addition, List highlights the role of transport costs in the industrialization process not only in terms of the costs incurred by firms, but also how industrialization affects these costs, since modern technology produces goods that are ?lighter? to transport than goods produced with traditional technology. In this sense, contrary to what is usually attributed to List, tariffs are not the central part of his argument for industrialization. He puts more emphasis on the creation of a larger internal market via for instance a customs union and the complementarities between resources and sectors in a country. We illustrate these arguments with a model.
    Keywords: Friedrich List; Economic Development; Industrial Agglomeration; Labor Division
    JEL: O14 R11 R30
    Date: 2015–10
  6. By: Maurizio Franzini (Department of Economics and Law, Sapienza University of Rome); Mario Pianta (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: Inequality is a major problem of today’s capitalism. The rise of disparities in income and wealth has been documented by many studies, and this paper provides a concise and updated documentation of facts and trends in advanced countries, contributing to an interpretation of the sources and dynamics of inequality. First, the evolution of relations between capital and labour is investigated, providing empirical evidence on the distribution of income between profits and wages. Second, the market processes that shape disparities of income – of individuals and households, before and after taxes, redistribution and public services – are addressed, showing the complexity of current trends. Third, disparities in wealth are examined, showing a much starker picture than that resulting from income inequality. The explanation of these developments points to four ‘engines of inequality’ – the power of capital over labour, the rise of ‘oligarchs capitalism’, the individualisation of economic conditions, the retreat of politics – that are at the source of today’s inequalities. A full analysis of the dynamics of inequality, an interpretation of its mechanisms and a set of policy proposals to reverse it are developed in our book “Explaining inequality” (Franzini and Pianta, 2015).
    Keywords: Inequality, Income distribution, Profits, Wages
    JEL: D31 D33 E24 I38
    Date: 2015
  7. By: Silvestri, Paolo (University of Turin)
    Abstract: The paper aims to address the following two questions: what kind of discourse is that which attempt to found or defend the autonomy or the boundaries of a discipline? Why do such discourses tend to turn into normative, dogmatic-excommunicating discourses between disciplines, schools or scholars? I will argue that an adequate answer may be found if we conceive disciplines as dogmatics, where such discourses often take the form of a discourse on the foundation of a discipline, a foundation in the name of which the scholar speaks and with which he/she entertains an identity relationship. To this purpose I will re-examine the methodological discourses of (and debates between)Pareto, Croce and Einaudi on the demarcation issue between philosophy, economics and value-judgments as highly instructive to understand such issues.
    Date: 2015–09
  8. By: Astrid, Gamba; Tobias, Regner
    Abstract: We study experimentally whether heterogeneity of behavior in the Centipede game can be interpreted as the result of a learning process of individuals with different preference types (more and less pro-social) and coarse information regarding the opponent's past behavior. We manipulate the quality of information feedbacks provided after each play. If subjects rely only on their personal database, long run behavior resembles a Self-confirming equilibrium whereby less pro-social types take at earlier nodes due to prediction errors. Aggregate information release decreases heterogeneity of behavior by increasing the passing rates of pro-selfs and play moves towards Bayesian Nash equilibrium.
    Keywords: Social preferences, Learning, Self-confirming equilibrium, Experiment
    JEL: C71 C73 C91 D83
  9. By: Stephan Schosser (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: When talking about possible bargaining results participants in the Nash bargaining game mainly use fairness norms to support their favored outcome. According to theory a variety of different, fair solutions exists from which the participants can choose. In this paper, we experimentally investigate Nash bargaining with a previous opportunity to chat about the bargaining outcome. We find that playing a dictator game prior to the Nash bargaining game establishes – without any additional communication – a fairness norm, the participants resort to. However, if nothing is played prior to the Nash bargaining game, participants discuss longer about what to play. In addition, we find that deviations in favor of one participant occur the longer preplay communication lasts.
    Keywords: bargaining game, dictator game, norms, experimental economics
    JEL: C7 C9
    Date: 2015–10
  10. By: Siegfried Berninghaus (Karlsruhe Institute of Technology); Stephan Schosser (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Bodo Vogt (Faculty of Management, Economics and Social Sciences, University of Cologne)
    Abstract: At present, in the domain of simultaneous action selection and network formation games, game-theoretic behavior and experimental observations are not consistent. While theory typically predicts inefficient outcomes for (anti- )co-ordination games, experiments show that subjects tend to play efficient (non-Nash) strategy profiles. One reason for this discrepancy is the tendency to model corresponding games as one-shot and derive predictions. In this paper, we calculate the equilibria for a finitely repeated version of the Hawk-Dove game with endogenous network formation and show that the repetition leads to additional sub-game perfect equilibria; namely, the efficient strategy profiles played by human subjects. However, efficiency crucially depends on the design of the game. This paper theoretically demonstrates that, although technically feasible, the efficient profiles are not sub-game perfect equilibria if actions are fixed after an initial period. We confirm this result using an experimental study that demonstrates how payoffs are higher if actions are never fixed.
    Keywords: Network; Hawk-Dove; Game theory; Behavioral experiment; Finitely re- peated game
    JEL: D85 C72 C73 C92
    Date: 2015–07
  11. By: Jian Yang
    Abstract: We propose multi-player frameworks that mitigate decision-theoretical difficulties with the traditional normal-form game, where players are concerned with expected utility functions of their payoffs. We react to Allais's (1953) paradox by concerning players with potentially nonlinear functionals of the payoff distributions they encounter. To counter Ellsberg's (1961) paradox, we let players optimize on vectors of payoff distributions in which every component is a payoff distribution corresponding to one particular nature action. In the preference game we introduce, players merely express preferences over payoff-distribution vectors. Depending on ways in which players' mixed strategies are verified, there will emerge two equilibrium concepts, namely, the ex post and ex ante types. Conditions for equilibrium existence are identified; also, the unification of the two concepts at the traditional game is explained. When the preference relations lead to real-valued satisfaction functions, we have a satisfaction game. Two notable special cases are one coping with Gilboa and Schmeidler's (1989) ambiguity-averse worst-prior setup and another involving Artzner et al.'s (1999) coherent-risk measure with risk-averse tendencies. For both, searching for ex post equilibria boils down to solving sequences of simple nonlinear programs (NLPs).
    Date: 2015–10
  12. By: Vakhshtayn, Victor Semenovich (Russian presidental academy of national economy and public administration (RANEPA)); Erofeeva, Maria (Russian presidental academy of national economy and public administration (RANEPA))
    Abstract: The paper analyzes the potential and development of explanatory concept of "utopian imagination", the distinction between epistemic and normative dimensions of utopia. We consider the research programs in which the negation of the principle of neutrality of the value qualifies as a utopian practice in the normative sense, the class of Utopias that build linkages between social order and human nature (anthropological utopia), as well as the connection between the utopian imagination and the actual sociological thinking style. Stand stable characteristics of the utopian imagination, which combine epistemic and normative measure utopia: criticism, imazhinativnost, Universalism, Constructivism, transcendentism, denial of everyday life. Implemented conceptualization of the concept of "utopian imagination" as a common element of competing models explaining the social order. Using the concept of heterotopia made case report - an example of the ethnographic museum. Based on the consideration of the possibility of everyday morality it demonstrates that people in the performance of their practical activities also rely on the resources of the imagination. Substantiates the existence of different types of everyday imagination.
    Keywords: utopian imagination, social sciences
    Date: 2015–09–17
  13. By: Salvatore Piccolo (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Piero Tedeschi (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Giovanni Ursino (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: We study a game in which two competing sellers supplying experience goods of different quality can induce a perspective buyer into a bad purchase through (costly) deceptive advertising. We characterize the equilibrium set of the game and argue that an important class of these outcomes features pooling behavior at the pricing stage while requiring low quality sellers to air false claims about their product. These claims deceive the buyer and induce a bad purchase with positive probability. Although the low-quality product is purchased with positive probability in these equilibria, the buyer's (expected) utility can be higher than in a fully separating equilibrium. This result suggests that, surprisingly, deceptive practices may actually enhance competition. Finally, we characterize the optimal deterrence by a regulatory agency that seeks to punish deceptive practices. We show that consumer surplus maximization requires lower deterrence than social welfare maximization. The analysis is robust to various extensions.
    Keywords: Asymmetric Information, Bayesian Consumers, Deception, Misleading Advertising, Signaling
    JEL: L13 L15 L4
    Date: 2015–06
  14. By: Bruno R. Dammski; Marco A. R. Cavalieri, José S. Paula Pinto
    Abstract: O presente artigo tem por objetivo estudar a corrente pós-keynesiana na economia para delinear suas características. A metodologia usada para atingir este objetivo combina concepções filosóficas e linguísticas, com técnicas computacionais e cienciométricas. Primeiro, tal metodologia parte do conceito de finitismo de significados (meaning finitism) para compreender o que significa uma expressão do ponto de vista da sua construção social. A ideia de finitismo consiste em expandir o significado de um termo para permitir que ele seja formado por uma infinidade de conceitos, e não por uma a definição unívoca. Tal ideia é baseada na filosofia da linguagem de Ludwig Wittgenstein. Segundo, o contexto social em que o significado da expressão “Post Keynesian” surge tem que ser escolhido. Neste artigo, o contexto relevante é a comunidade acadêmica dos economistas, representada pelas revistas em que esses pesquisadores publicam seus artigos. Assim, o significado da expressão “Post Keynesian” é estudado a partir de uma base de dados formada por milhares de artigos acadêmicos. Terceiro, o modo especifico de estudar a expressão “Post Keynesian” neste contexto é através um programa computacional para construir um mapa de Co-word. Este mapa representa a co-ocorrência de palavras relevantes que co-ocorrem com a expressão em foco como distâncias em um espaço bidimensional. Quarto, a literatura pós-keynesiana é utilizada para estabelecer conexões entre as palavras que aparecem no mapa, dando origem a um quadro de significados e características da corrente pós-keynesiana. Em paralelo com esta metodologia, o presente artigo apresenta, ainda, um gráfico que mostra as ocorrências da expressão “Post Keynesian” nas revistas de economia, cotejando tal gráfico com a literatura histórica da corrente.
    Keywords: Post Keynesian; Mining finitism; Co-word analysis; History of economic thought
    JEL: B29 B49 B59
    Date: 2015–10–27
  15. By: Francesca Tosi
    Abstract: One of the main debates around multidimensional poverty assessment concerns the degree of arbitrariness used to inform poverty analysis. Which dimensions matter and who should be selecting them are questions that repeatedly raise issues of ethics and legitimacy. We hold that, in order to justify normative decisions in support of poverty assessment, the latter has to be addressed as a social justice question. We propose a reconceptualization of multidimensional poverty analysis starting from John Rawls’ seminal work on the conception of justice by (i) reviewing the most influential philosophical frameworks for analysing social justice; (ii) showing that Rawls’ principles of justice can frame investigations on multidimensional poverty in constitutional democracies; and (iii) analysing the idea of an overlapping consensus to show that the scrutiny of national Constitutions can serve the purpose of unambiguously informing empirical poverty analyses as they undoubtedly convey people’s value judgements and public shared ideas.
    Keywords: Multidimensional poverty; Social justice; Constitutional approach; Dimensions selection; Overlapping consensus
    JEL: D30 D63 I30 I32
    Date: 2015–10
  16. By: Wennström, Johan (Research Institute of Industrial Economics (IFN))
    Abstract: New Public Management (NPM) reforms have emerged in the public administration systems of many Western countries in recent decades. The dominant view in international research on NPM is that these reforms are the product of neo-liberal ideas. In this article, I set out to nuance this view by studying the political ideas that paved the way for NPM in the Swedish school system. I analyze political books and articles on teaching and education and find that both Left and Right views on education are congruent with the central aspects of NPM as it is commonly defined and operationalized. This finding casts the ideological basis for NPM reforms in a new light, at least in the context of the Swedish school system.
    Keywords: New Public Management; Education; Teachers; Intrinsic motivation
    JEL: B24 H83 I20
    Date: 2015–10–09
  17. By: Sekoni, Abiola
    Abstract: Liquidity is fundamental to the well-being of financial institutions particularly banking. It determines the growth and development of banks as it ensures proper functioning of financial markets. Inadequacy of liquidity causes adverse effect on the market values of asset.. Therefore studying and understanding liquidity has very important practical implications. However, understanding the term liquidity is an arduous task due the diversity in its meanings and connotations. This paper attempts to examine different liquidity definitions and the concepts as well as discusses sources of liquidity and its risk.
    Keywords: Liquidity, Financial institution, Financial Markets, risk
    JEL: P45
    Date: 2015
  18. By: Tiiu Paas; Veronika Kuranova
    Abstract: Economic growth and improvement of citizens? wellbeing are obligate targets of economic, social and institutional development of all countries and their governments. At the same time empirical evidence often shows that economic growth and increase of people?s income do not always have outcomes indicating that individual?s wellbeing has been improved. There are several non-economic and economic determinants of subjective well-being and knowing them is unavoidable in order to formulate and achieve targets for improvement of people?s wellbeing.
    Keywords: subjective wellbeing; economic development; trust; institutions
    JEL: I30 D31 O52 O12
    Date: 2015–10
  19. By: Jian Yang
    Abstract: We show that equilibria derived for nonatomic games (NGs) can be used by large finite games to achieve near-equilibrium performances. Rather than single-period games, we deal with dynamic games in which the evolution of a player's state is influenced by his own action as well as other players' states and actions. We focus on the case where both random state transitions and random actions are driven by independently generated shocks. The NG equilibria we consider are random state-to-action maps. The simple NG equilibria are adoptable to a variety of real situations where awareness of other players' states can be anywhere between full and none. Transient results here also form the basis for a link between an NG's stationary equilibrium (SE) and good stationary profiles for large finite games. Our approach works well for certain dynamic pricing games, both without and with production.
    Date: 2015–10

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