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on History and Philosophy of Economics |
| By: | Parkash Chander (Jindal School of Government and Public Policy); Myrna Wooders (Vanderbilt University) |
| Abstract: | We propose a cooperative solution concept for games in extensive form that incorporates both cooperation and subgame perfection. This new concept, which we label the subgame-perfect core, is a refinement of the core of an extensive game in the same sense as the set of subgame-perfect Nash equilibria is a refinement of the set of Nash equilibria. Moreover, each subgame perfect core payoff vector can be obtained as a subgame-perfect Nash equilibrium payoff vector of a modified extensive game. We establish several additional properties of the subgame-perfect core and demonstrate its applicability by studying three applications: the centipede game, the two-player infinite bargaining game of alternating offers, and a dynamic game of climate change. In addition, we motivate and introduce a concept of subgame-perfect strong Nash equilibrium of an extensive game and show that it is coalition proof. |
| Keywords: | Extensive game, subgame perfection, characteristic function game, core, centipede game, coalition-proof Nash equilibrium |
| JEL: | C7 D0 |
| Date: | 2016–03–13 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:vuecon-sub-16-00009&r=hpe |
| By: | Giovanna d’Adda (Politecnico di Milano); Valerio Capraro (Center for Mathematics and Computer Science (CWI)); Massimo Tavoni (Politecnico di Milano, Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center on Climate Change (CMCC)) |
| Abstract: | We examine whether spillovers of pro-social behavior depend on how behavioral changes are induced. We conduct a large experiment using economic games, with a Dictator Game (DG) followed by either an identical game or a Prisoner’s Dilemma (PD). We influence initial behavior through widely used policy instruments, either behaviorally informed (default, social norms) or with an economic/regulatory rationale (incentives, regulation). Our results provide evidence of positive spillovers to subsequent economic games (which are not treated), but only for the traditional economic/regulatory interventions and within the same game type. Specifically, inducing higher giving in the first stage leads to subsequent higher altruism in the DG, but not to more cooperation in the PD. The carry over of pro-social behavior appears to be driven by an anchoring on the initial donation. We also measure observers’ beliefs and we find that these results are not correctly anticipated by third parties, who systematically overestimate both the direct effect of behaviorally informed interventions on initial donations and their spillover to subsequent donations. |
| Keywords: | Pro-social Behavior, Traditional and Behavioral Policies, Spillover Effects, Online Experiment |
| JEL: | H4 I3 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2015.108&r=hpe |
| By: | Yoshihara, Naoki |
| Abstract: | This report explores the development of exploitation theory in mathematical Marxian economics by reviewing the main controversies surrounding the proper definition of exploitation since the contribution of Okishio (1963). The report first examines the debates on the Fundamental Marxian Theorem and Class-Exploitation Correspondence Principle, developed mainly in the 1970s and 1980s, followed by the property relation theory of exploitation by Roemer (1982). Then, the more recent exploitation theory proposed by Vrousalis (2013) and Wright (2000) is introduced. Finally, the report introduces and comments on recent axiomatic studies of exploitation by focusing on the work of Veneziani and Yoshihara (2015). |
| Keywords: | Proper Definitions of UE Exploitation, Property Relations Definition of Exploitation, Profit-Exploitation Correspondence Principle |
| JEL: | D63 D51 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hituec:632&r=hpe |
| By: | James Andreoni; Michael A. Kuhn; Larry Samuelson |
| Abstract: | We report experimental results for a twice-played prisoners’ dilemma in which the players can choose the allocation of the stakes across the two periods. Our point of departure is the assumption that some (but not all) people are principled to “do the right thing,” or cooperate, as long as their opponent is sufficiently likely to do so. The presence of such types can be exploited to enhance cooperation by structuring the twice-played prisoners’ dilemma to “start small,” so that the second-stage stakes are larger (but not too much larger) than the first-stage stakes. We compare conditions where the allocation of stakes is chosen exogenously to conditions where it is chosen by the players themselves. We show that players are able to find and choose the payoff maximizing strategy of starting small in a twice-played prisoners’ dilemma, and that the salutary payoff effects of doing so are larger than those that arise when the same allocation is exogenously chosen. |
| JEL: | C92 D64 Z13 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21934&r=hpe |
| By: | Robert Costanza (Crawford School of Public Policy, The Australian National University - Crawford School of Public Policy, The Australian National University); Richard B. Howarth (Environmental Studies Program, Dartmouth College - Environmental Studies Program, Dartmouth College); Ida Kubiszewski (Crawford School of Public Policy, The Australian National University - Crawford School of Public Policy, The Australian National University); Shuang Liu (CSIRO - Land & Water National Research Flagship); Chunbo Ma (School of Agricultural and Resource Economics, University of Western Australia - School of Agricultural and Resource Economics, University of Western Australia); Gaël Plumecocq (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - Institut d'Études Politiques [IEP] - Toulouse - UT1 - Université Toulouse 1 Capitole - UT2 - Université Toulouse 2 - École Nationale de Formation Agronomique - ENFA, AGIR - AGrosystèmes et développement terrItoRial - Institut national de la recherche agronomique (INRA)); David I. Stern (Crawford School of Public Policy, The Australian National University - Crawford School of Public Policy, The Australian National University) |
| Abstract: | We revisit the analysis of Costanza et al. (2004, Ecological Economics) of influential publications in ecological economics to discover what has changed a decade on. We examine which sources have been influential on the field of ecological economics in the past decade, which articles in the journal Ecological Economics have had the most influence on the field and on the rest of science, and on which areas of science the journal is having the most influence. We find that the field has matured over this period, with articles published in the journal having a greater influence than before, an increase in citation links to environmental studies journals, a reduction in citation links to mainstream economics journals, and possibly a shift in themes to a more applied and empirical direction. |
| Keywords: | Bibliometrics , Ecological economics |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01286862&r=hpe |
| By: | Woods, Daniel; Servátka, Maroš |
| Abstract: | This paper studies psychological forward induction and the updating of beliefs in the lost wallet game (Dufwenberg & Gneezy, 2000), which is required to derive a prediction for guilt averse agents. Our experiment tests whether the second movers psychologically induct forward and update their beliefs after observing their paired first movers’ decision by eliciting beliefs with different second mover knowledge of first mover decision, depending on treatment. We find that second movers do update their beliefs conditional on receiving information on the first mover’s action, supporting psychological forward induction. |
| Keywords: | beliefs, experiment, guilt aversion, lost wallet game, psychological forward induction, updating |
| JEL: | C70 C91 |
| Date: | 2016–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:69957&r=hpe |
| By: | Drew Fudenberg; David K Levine |
| Date: | 2016–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levarc:786969000000001307&r=hpe |
| By: | Lombardi, Michele; Yoshihara, Naoki |
| Abstract: | An individual may display an honesty standard which allows her to lie a little without that being harmful to her self view as an honest person. On this basis, the paper considers a society with a finite number of individuals involving partially-honest individuals and in which every individual has her own honesty standard. An individual honesty standard is modeled as a subgroup of the society, including the individual herself. A partially-honest individual is an individual who strictly prefers to tell the truth prescribed by her honesty standard whenever lying has no effect on her material well-being. The paper studies the impact of placing honesty standard restrictions on the mechanism designer for Nash implementation problems of that society. It offers a necessary condition for Nash implementation, called partial-honesty monotonicity, and shows that in an independent domain of preferences that condition is equivalent to Maskin monotonicity, provided that honesty standards of society are non-connected. They are non-connected if every individual is excluded from the honesty standard of another individual. Finally, it shows that the limitations imposed by Maskin monotonicity can be circumvented by a q-mechanism (Lombardi and Yoshihara, 2013) provided that there are at least n - q + 1 partially-honest individuals in a society and that no participant has a veto-power. |
| Keywords: | Nash implementation, partial-honesty, non-connected honesty standards, independent domain, q-mechanisms |
| JEL: | C72 D71 D82 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hituec:633&r=hpe |
| By: | Bolle, Friedel; Spiller, Jörg |
| Abstract: | In Binary Threshold Public Good (BTPG) games players contribute or not to the production of a public good which is produced if and only if there are "enough" contributors. There is a plethora of equilibria in BTPG games. We experimentally test general theoretical attributes of equilibria and proposals for equilibrium selection. As theory predicts, if the cost/benefit ratio is the same, then subjects play (almost) the same mixture of strategies and, after switching from a positive to a negative frame, the theoretically expected "mirrored" behavior can be observed, i.e. contrary to most linear Public Good experiments we do not find a framing effect. A finite mixture model successfully (i.e. without rejection in a chi-square test) describes behavior in all eight experimental games (same parameters for four thresholds and positive/negative frame). The Harsanyi-Selten theory of equilibrium selection is moderately supported. Efficiency as an equilibrium selection device and also risk dominance are clearly rejected. |
| Keywords: | Binary Threshold Public Goods,framing,equilibrium selection,payoff dominance,risk dominance,efficiency,experiment |
| JEL: | C72 D72 H41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:euvwdp:379&r=hpe |
| By: | Bertola, Giuseppe |
| Abstract: | Labour incomes depend on structural as well as politico-economic factors, because labour market policies partially remedy the financial market imperfections that make labour income shocks difficult to insure, and have different implications for labour and capital income. This paper illustrates such theoretical insights with a simple model, and reviews evidence of their empirical relevance generated by international economic, monetary, and financial integration. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11163&r=hpe |
| By: | Atif Ansar; Bent Flyvbjerg; Alexander Budzier; Daniel Lunn |
| Abstract: | In this paper we characterise the propensity of big capital investments to systematically deliver poor outcomes as "fragility," a notion suggested by Nassim Taleb. A thing or system that is easily harmed by randomness is fragile. We argue that, contrary to their appearance, big capital investments break easily - i.e. deliver negative net present value - due to various sources of uncertainty that impact them during their long gestation, implementation, and operation periods. We do not refute the existence of economies of scale and scope. Instead we argue that big capital investments have a disproportionate (non-linear) exposure to uncertainties that deliver poor or negative returns above and beyond their economies of scale and scope. We further argue that to succeed, leaders of capital projects need to carefully consider where scaling pays off and where it does not. To automatically assume that "bigger is better," which is common in megaproject management, is a recipe for failure. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1603.01416&r=hpe |
| By: | Aurélien Goutsmedt (Centre d'Economie de la Sorbonne) |
| Abstract: | The stagflation phenomenon is regarded as one of the cause of the Keynesian paradigm breakdown in the 1970s. The New Classical school took advantage of this breakdown. However, its discourse on the stagflation was not so clear and remained in a implicit shape. The paper aim at rebuilding the New Classical tale of the stagflation that stroke the United-States economy in the 1970s. We show that psychological ideas (expectations, beliefs, credibility) lay in the heart of the explanation. In the same time, oil shocks were left in the background. Besides, the New Classical school put much more emphasis on the inflation issue and experienced some difficulties to deal with the increase in unemployment |
| Keywords: | History of macroeconomics; Macroeconomics; New Classical School; Stagflation |
| JEL: | B22 E32 E52 N12 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:16018&r=hpe |
| By: | De Francesco, Massimo A.; Salvadori, Neri |
| Abstract: | The paper is the second part of a trilogy in which we extend the analysis of price competition among capacity-constrained sellers beyond duopoly to triopoly. In the first part of the trilogy we provided some general results, highlighting features of a duopolistic mixed strategy equilibrium that generalize to triopoly and provided a first partition concerning the pure strategy equilibrium regions and the mixed strategies equilibrium region and then the partition of this region in a part in which the payoffs of the two smallest firm are proportional to their capacities and another in which the smallest firm obtains a payoff proportinally higher than that of the middle sized firm. In this paper we provide a complete characterization of the set of mixed strategy equilibria in the part in which the payoffs of the two smallest firms are proportional to their capacities. This part is partitioned according to equilibrium features and in each part it is determined whether equilibria are uniquely determined or not and in the latter case it is proved that the equilibria constitute a continuum. Further we determine the circustances in which supports of an equilibrium strategy may be disconnected and show how gaps are then determined. We also prove that the union of supports is indeed connected, a property which cannot be extended to the case in which the smallest firm obtains a payoff proportinally higher than that of the middle sized firm. The third part of the trilogy will be devoted to a complete characterization of the mixed strategy equilibria when the smallest firm obtains a payoff proportinally higher than that of the middle sized firm. This will allow also to determine the payoff of the smallest firm. |
| Keywords: | Bertrand-Edgeworth; Price game; Oligopoly; Triopoly; Mixed strategy equilibrium |
| JEL: | C72 D43 L13 |
| Date: | 2016–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:69999&r=hpe |
| By: | Mario J. Crucini (Vanderbilt University); Gregor W. Smith (Queen's University) |
| Abstract: | We study the role of distance and time in statistically explaining price dispersion across 32 Swedish towns for 19 commodities from 1732 to 1914. The resulting large number of relative prices (502,689) allows precise estimation of distance and time effects, and their interaction. We find an effect of distance that declines significantly over time, beginning in the 18th century, well before the arrival of canals, the telegraph, or the railway. |
| Keywords: | distance effect, law of one price |
| JEL: | N70 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1357&r=hpe |