nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2016‒04‒23
28 papers chosen by
Erik Thomson
University of Manitoba

  1. So what is Capital in the Twenty-First Century? Some notes on Piketty’s book Working paper, forthcoming in Capitalism & Society By Kornai, János
  2. The New Economics of Religion By Sriya Iyer; ; ;
  3. Octav Onicescu – Omul si opera Restituiri: contributii la dezvoltarea cercetarii economice Entropia informationala în economie - Versiune preliminara - By Preda, Vasile; Dedu, Silvia
  4. From Abstraction to Phenomenology in Social Theory: Yanis Varoufakis the Economist By Ugo Mattei
  5. Interest Groups and the Impossibility of Democratic Socialism: Hayek, Jewkes, and the Arrow Theorem By Makovi, Michael
  6. A progress report on Marxian economic theory: On the controversies in exploitation theory since Okishio (1963) By Naoki Yoshihara
  7. Money, Social Capital and Materialism. Evidence from Happiness Data By Piekalkiewicz, Marcin
  8. Animal Spirits in a Monetary Model By Farmer, Roger E A; Platonov, Konstantin
  9. Bounded Rationality and Correlated Equilibria By Germano, Fabrizio; Zuazo-Garin, Peio
  10. Abordagem multidisciplinar na teoria da decisão: psicologia evolucionária e economia By Lizia de Figueirêdo
  11. Can there be a market for cheap-talk information? Some experimental evidence By Cabrales, Antonio; Feri, Francesco; Gottardi, Piero; Meléndez-Jiménez, Miguel A.
  12. "Colonial American Paper Money and the Quantity Theory of Money: An Extension" By Farley Grubb
  13. Social Mobility and Stability of Democracy: Re-evaluating De Tocqueville By Acemoglu, Daron; Egorov, Georgy; Sonin, Konstantin
  14. Playing the game the others want to play: Keynes’ beauty contest revisited. By Camille Cornand; Rodolphe Dos Santos Ferreira
  15. The Heckscher-Ohlin-Samuelson Model and the Cambridge Capital Controversies By Kurose, Kazuhiro; Yoshihara, Naoki
  16. The Effect of Kinship on Intergenerational Cooperation: A Lab Experiment with Three Generations By Molina, José Alberto; Ferrer, Alfredo; Gimenez-Nadal, J. Ignacio; Gracia-Lazaro, Carlos; Moreno, Yamir; Sanchez, Angel
  17. "The Macrogenoeconomics of Comparative Development" By Quamrul Ashraf; Oded Galor
  18. Pareto Optimality and Indeterminacy of General Equilibrium under Knightian Uncertainty By Wei Ma
  19. Allocation rules for coalitional network games By Jean-François Caulier; Ana Mauleon; Vincent Vannetelbosch
  20. The Cold War Hot House for Modeling Strategies at the Carnegie Institute of Technology By Judy L Klein
  21. Fuzzy Measures and Integrals: Recent Developments By Michel Grabisch
  22. Bases and Transforms of Set Functions By Michel Grabisch
  23. The Dichotomy, Inconsistency, and Peculiar Outmodedness of the „Mainstream“ Textbook. The Example of Institutions By Elsner, Wolfram
  24. A PDE View of Games Options By Gunter H Meyer
  25. Reward and punishment in a team contest By Heine F.A.; Strobel M.
  26. On the Origins of Moral Hazard: Politics, International Finance and the Latin American Debt Crisis of 1982 By Altamura, Carlo Edoardo; Flores Zendejas, Juan
  27. Network Cognition By Roberta Dessi; Edoardo Gallo; Sanjeev Goyal;
  28. The Unreasonable Fairness of Maximum Nash Welfare By Ioannis Caragiannis; David Kurokawa; Herve Moulin; Ariel D. Procaccia; Nisarg Shah; Junxing Wang

  1. By: Kornai, János
    Abstract: This study was inspired by Piketty’s excellent and important book. Its title and numerous statements in it arouse in readers expectations of a comprehensive analysis of capitalism. By comparison the author of this paper felt important aspects were lacking. The capitalist system has numerous immanent traits and innate tendencies, of which the paper takes a closer look at three properties. 1. One basic feature is dynamism, innovation, and creative destruction. No picture of capitalism can be full if this basic aspect is ignored. 2. Capitalism inevitably brings about a high degree of inequality; this must be eased by reforms, but cannot be entirely overcome. 3. The basic characteristics of capitalism – private ownership and the dominance of market coordination – give rise to strong incentive mechanisms that encourage but owners and enterprise executives to innovate and to cooperate effectively. One of the main incentives is competition, especially oligopolistic competition. There are strong mutual effects among these three important tendencies. It is impossible to understand well Piketty’s main subject, the distribution of income and wealth, if it is divorced from the other two tendencies. The study ends with its author’s own value judgements on the favourable and harmful, unjust attributes of the capitalist system.
    Keywords: capitalism, comparative approach, innovation, income distribution, incentives, sources of top income
    JEL: D21 D30 D60 N10 O31 P10 P51
    Date: 2016–04–11
  2. By: Sriya Iyer; ; ;
    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.
    Date: 2015–01–01
  3. By: Preda, Vasile; Dedu, Silvia
    Abstract: The aim of this paper consists in a thorough research of the activity and work of the academician Octav Onicescu, in order to highlight his most important contributions to the development of education and research in economics and mathematics and to the economic and social progress as well. An essential issue of the activity of Octav Onicescu consists in the multidisciplinary nature of his research and activity. The most important contributions he brought are based on the results he obtained in science. The new concepts and approaches introduced by Octav Onicescu are discussed in relationship with their contributions to the progress of science. Also, the activity of the famous Romanian scientist in some key positions will be presented in order to prove his contributions to the development of the economic and social domains in Romania.
    Keywords: Octav Onicescu, economic research, mathematics, social science
    JEL: A12 B30 B31 C10 C18
    Date: 2015–10
  4. By: Ugo Mattei (UC Hastings, University of Turin & IUC Turin)
    Abstract: This document contains the text of the academic 'laudatio' delivered by IUC Academic Coordinator Ugo Mattei, upon appointing Yanis Varoufakis a Honorary Professor of the IUC in March 2016. The address presents an overview of Yanis Varoufakis' intellectual development and trajectory, to demonstrate how the latter fulfils the motivations underpinning his honorary appointment, namely: (i) Varoufakis' denunciation, informed by disciplinary acumen, of the theoretical and practical failure of the current mainstream approach in economics; (i) his deep theoretical contribution to the discipline of Political Economy through the recovery of the humanistic thought of Karl Marx; (iii) his lucid analysis of the reasons for the collapse of austerity policies in Europe and elsewhere; (iv) his vivid demonstration of the fallacy – also theoretical – of the extractive financial policies that victimize the working classes, the poor and the commons in Europe; (v) the clarity, in his theoretical work, about the incompatibility with the democratic ideal of a macroeconomic framework devoid of government instruments able to cushion the shock to the markets imposed by the capitalist mode of production in the absence of regulation and control of financial speculation.
    Keywords: Yanis Varoufakis, political economy, heterodox economics, economic uncertainty, Europe, Greece, democracy
    JEL: B1 B31 B51
    Date: 2016–01
  5. By: Makovi, Michael
    Abstract: Andrei Shleifer and Robert W. Vishny (1994) have used Public Choice analysis to criticize market socialism. Peter J. Boettke (1995) and Peter T. Leeson and Boettke (2002) have argued that F. A. Hayek's Road to Serfdom (2007 [1944]) constituted a form of Public Choice analysis as well. Boettke and Leeson say that Hayek adumbrated a form of Arrow's Impossibility Theorem. This essay shows that Hayek was joined by John Jewkes in presaging a form of the Arrow theorem. In addition, this essay expands on the analysis by Boettke and Leeson, elucidating the broader implications which the Arrow theorem has for democratic socialism in particular. Democratic socialism is demonstrated to be impossible, in the sense that it cannot successfully accomplish the goals of its advocates. This is because the Arrow theorem implies that democratic political institutions are fundamentally incompatible with socialist economics.
    Keywords: Hayek; Road to Serfdom; democratic socialism; market socialism; economic democracy; totalitarianism; public choice; government failure; arrow; impossibility; rent seeking; rent-seeking
    JEL: A12 B24 B25 B51 B53 D70 P10 P20 P30 P50
    Date: 2016–03–21
  6. By: Naoki Yoshihara (Department of Economics, University of Massachusetts Amherst)
    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 (2015a).
    Keywords: Proper Definitions of UE Exploitation, Property Relations Definition of Exploitation, Profit-Exploitation Correspondence Principle
    JEL: D63 D51
    Date: 2016–04
  7. By: Piekalkiewicz, Marcin
    Abstract: Are unhappiness, high concern for money and scarcity of social capital different faces of the same phenomenon? Economists tend to treat these variables as distinct correlates of well-being. On the contrary, positive psychologists argue that they all relate to materialism, a system of personal values ascribing great importance in life to extrinsic motivations and low priority to intrinsic motivations. Using data from two European cross-sectional surveys and the German Socio-Economic Panel, I test the hypothesis that material interests, proxied by the effects of individual and reference income on well-being, are associated with low levels of social capital. The results suggest that people with scarce social capital tend to have greater material interests, whereas the negative effect of income comparisons on well-being is eliminated for individuals exhibiting the highest levels of social capital. The implication of such finding is that promoting social capital reduces people's material concerns and has positive impact on their well-being. The results from a country-level analysis additionally show that, since social capital moderates the importance of income for well-being on individual level, the well-being gap between income groups is significantly smaller in countries with higher social capital.
    Keywords: subjective well-being, life satisfaction, social capital, materialism, relative income, social comparisons, happiness inequality
    JEL: D31 I31 Z13
    Date: 2016–03–23
  8. By: Farmer, Roger E A; Platonov, Konstantin
    Abstract: We integrate Keynesian economics with general equilibrium theory in a new way. Our approach differs from the prevailing New Keynesian paradigm in two ways. First, our model displays steady state indeterminacy. This feature allows us to explain persistent unemployment which we model as movements among the steady state equilibria of our model. Second, our model displays dynamic indeterminacy. This feature allows us to explain the real effects of nominal shocks by selecting a dynamic equilibrium where prices are slow to respond to unanticipated money supply disturbances. Price rigidity arises as part of a rational expectations equilibrium in which the equilibrium is selected by beliefs. To close our model, we introduce a new fundamental that we refer to as the belief function.
    Keywords: animal spirits; belief function; Keynesian economics; Unemployment
    JEL: E12 E3 E4
    Date: 2016–03
  9. By: Germano, Fabrizio; Zuazo-Garin, Peio
    Abstract: We study an interactive framework that explicitly allows for nonrational behavior. We do not place any restrictions on how players' behavior deviates from rationality. Instead we assume that there exists a probability p such that all players play rationally with at least probability p, and all players believe, with at least probability p, that their opponents play rationally. This, together with the assumption of a common prior, leads to what we call the set of p-rational outcomes, which we define and characterize for arbitrary probability p. We then show that this set varies continuously in p and converges to the set of correlated equilibria as p approaches 1, thus establishing robustness of the correlated equilibrium concept to relaxing rationality and common knowledge of rationality. The p-rational outcomes are easy to compute, also for games of incomplete information, and they can be applied to observed frequencies of play to derive a measure p that bounds from below the probability with which any given player chooses actions consistent with payoff maximization and common knowledge of payoff maximization. Keywords: strategic interaction, correlated equilibrium, robustness to bounded rationality, approximate knowledge, incomplete information, measure of rationality, experiments. JEL Classification: C72, D82, D83.
    Keywords: Jocs no-cooperatius (Matemàtica), Teoria de la informació (Economia), 33 - Economia,
    Date: 2015
  10. By: Lizia de Figueirêdo (Cedeplar-UFMG)
    Abstract: We claim that there must be and interdisciplinary approach in discussing individual decisions, combining Evolutionary Psychology, Neuroscience and Economics (and other Social Sciences). The new approach requires change in the methodology of Economics and a strong review of decision theory. On the other hand, Economics can help Evolutionary Psychology through the characterization of the environment and to define modern human aims. We propose a method to approach a “microeconomic” problem, considering that the time span is small for environmental changes.
    Keywords: rationality, ecological rationality, gene-culture interaction, Economic Methodology
    JEL: A12 B4 D01 D03 D87
    Date: 2016–04
  11. By: Cabrales, Antonio; Feri, Francesco; Gottardi, Piero; Meléndez-Jiménez, Miguel A.
    Abstract: This paper reports on experiments testing the viability of markets for cheap talk information. We find that these markets are fragile. The reasons are surprising given the previous experimental results on cheap-talk games. Our subjects provide low-quality information even when doing so does not increase their monetary payoff. We show that this is not because subjects play a different (babbling) equilibrium. By analyzing subjects’ behavior in another game, we find that those adopting deceptive strategies tend to have envious or non-pro-social traits. The poor quality of the information transmitted leads to a collapse of information markets.
    Keywords: Experiment, Cheap talk, Auction, Information Acquisition, Information Sale
    JEL: D83 C72 G14
    Date: 2016
  12. By: Farley Grubb (Department of Economics, University of Delaware)
    Abstract: The quantity theory of money is applied to the paper money regimes of seven of the nine British North American colonies south of New England. Individual colonies, and regional groupings of contiguous colonies treated as one monetary unit, are tested. Little to no statistical relationship, and little to no magnitude of influence, between the quantities of paper money in circulation and prices are found. The failure of the quantity theory of money to explain the value and performance of colonial paper money is a general and widespread result, and not an isolated and anomalous phenomenon.
    Keywords: bills of credit, bills of exchange, border effects, price indices, purchasing power parity
    JEL: E31 E42 E51 N11
    Date: 2016
  13. By: Acemoglu, Daron; Egorov, Georgy; Sonin, Konstantin
    Abstract: An influential thesis often associated with De Tocqueville views social mobility as a bulwark of democracy: when members of a social group expect to join the ranks of other social groups in the near future, they should have less reason to exclude these other groups from the political process. In this paper, we investigate this hypothesis using a dynamic model of political economy. As well as formalizing this argument, our model demonstrates its limits, elucidating a robust theoretical force making democracy less stable in societies with high social mobility: when the median voter expects to move up (respectively down), she would prefer to give less voice to poorer (respectively richer) social groups. Our theoretical analysis shows that in the presence of social mobility, the political preferences of an individual depend on the potentially conflicting preferences of her "future selves", and that the evolution of institutions is determined through the implicit interaction between occupants of the same social niche at different points in time. When social mobility is endogenized, our model identifies new political economic forces limiting the amount of mobility in society - because the middle class will lose out from mobility at the bottom and because a peripheral coalition between the rich and the poor may oppose mobility at the top.
    Keywords: De Tocqueville; democracy; dynamics.; institutions; Social mobility; stability
    JEL: D71 D74
    Date: 2016–04
  14. By: Camille Cornand; Rodolphe Dos Santos Ferreira
    Abstract: In Keynes’ beauty contest, agents make choices by referring to their expectations of some fundamental value and of the conventional value to be set by the market. In doing so, agents respond to fundamental and strategic motives, respectively. The prevalence of either motive is usually set exogenously. Our contribution is to consider whether agents favor one of the two motives when the relative weights put on them are taken as strategic variables. We show that the strategic motive tends to prevail over the fundamental one, yielding a disconnection of agents’ actions from the fundamental. This is done in a simple valuation game emphasizing the role of public information. We then extend the same result to competition between the owners of two firms, by using a delegation game in which informational issues are embedded into a broader microfounded setting.
    Keywords: beauty contest, dispersed information, public signals, coordination, competition.
    Date: 2016
  15. By: Kurose, Kazuhiro (Graduate School of Economics and Management, Tohoku University); Yoshihara, Naoki (Department of Economics, University of Massachusetts, Amherst)
    Abstract: This paper examines the validity of the factor price equalisation theorem (FPET) in relation to capital theory. Additionally, it presents a survey of the literature on Heckscher–Ohlin–Samuelson (HOS) models that treat capital as a primary factor, beginning with Samuelson (1953). Furthermore, this paper discusses the Cambridge capital controversy, which contends that marginal productivity theory does not hold when capital is assumed to be as a bundle of reproducible commodities instead of as a primary factor. Consequently, it is shown that under this assumption, the FPET does not hold, even when there is no reversal of capital intensity. This paper also demonstrates that the recent studies on the dynamic HOS trade theory generally ignore the di¢ culties posed by the capital controversies and are thereby able to conclude that the FPET holds even when capital is modelled as a reproducible factor. Our analysis suggests that there is a need for a basic theory of international trade that does not rely on factor price equalisation and a model that formulates capital as a bundle of reproducible commodities.
    Keywords: factor price equalisation, capital as the bundle of reproducible commodities, reswitching of techniques, capital reversing.
    JEL: B51 D33 F11
    Date: 2016
  16. By: Molina, José Alberto (University of Zaragoza); Ferrer, Alfredo (University of Zaragoza); Gimenez-Nadal, J. Ignacio (University of Zaragoza); Gracia-Lazaro, Carlos (University of Zaragoza); Moreno, Yamir (University of Zaragoza); Sanchez, Angel (University of Zaragoza)
    Abstract: In this paper, we analyze how kinship among family members affects intergenerational cooperation in a public good game. 165 individuals from 55 families, comprising three generations (youths, parents, and grandparents), play a public good game in three different treatments: one in which three members of the same family play each other (family), a second with the youth and two non-family members but preserving the previous generational structure (intergenerational), and a third in which three randomly-selected players play each other (random). We find that players contribute more to the public good when they play with other family members, than when they play with non-family members. This effect is present in all three generations, and is independent of the gender of the players. We also observe the significant result that older generations contribute more to the public good, relative to their children.
    Keywords: intergenerational cooperation, evolutionary game theory, public goods game, kinship, social networks
    JEL: D03 D64 D70
    Date: 2016–03
  17. By: Quamrul Ashraf; Oded Galor
    Abstract: A vibrant literature has emerged in recent years to explore the influences of human evolution and the genetic composition of populations on the comparative economic performance of societies, highlighting the roles played by the Neolithic Revolution and the prehistoric “out of Africa” migration of anatomically modern humans in generating worldwide variations in the composition of genetic traits across populations. The recent attempt by Nicholas Wade’s A Troublesome Inheritance: Genes, Race and Human History to expose the evolutionary origins of comparative economic development to a wider audience provides an opportunity to review this important literature in the context of his theory.
    Date: 2016
  18. By: Wei Ma (International Business School Suzhou, Xi’an Jiaotong-Liverpool University, China; Department of Economics, University of Pretoria)
    Abstract: This paper studies general equilibrium theory, for both complete and incomplete markets, under Knightian uncertainty. Noting that the preference represented by Knightian uncertainty induces a set of complete preferences, we set ourselves the task of inquiring the relationship between an equilibrium under Knightian uncertainty and its counterpart under the induced complete preferences. It is shown that they are actually equivalent. The importance of this result is due to its applications, among which the existence of equilibria under Knightian uncertainty and their computation follow at once from the existing knowledge on general equilibrium theory under complete preferences. Moreover, by means of that equivalence, we are in a position to investigate the problem of efficiency and indeterminacy of equilibria under Knightian uncertainty.
    Keywords: General equilibrium, Knightian uncertainty, Pareto optimality
    Date: 2016–03
  19. By: Jean-François Caulier (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Ana Mauleon (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain, CEREC - Université Saint-Louis - Bruxelles); Vincent Vannetelbosch (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain, CEREC - Université Saint-Louis - Bruxelles)
    Abstract: Coalitional network games are real-valued functions defined on a set of players organized into a network and a coalition structure. We adopt a flexible approach assuming that players organize themselves the best way possible by forming the efficient coalitional network structure. We propose two allocation rules that distribute the value of the efficient coalitional network structure: the atom-based flexible coalitional network allocation rule and the player-based flexible coalitional network allocation rule.
    Keywords: cooperative game theory, allocation rules,Coalition, Networks
    Date: 2015–11
  20. By: Judy L Klein (Mary Baldwin College)
    Abstract: US Military needs during the Cold War induced a mathematical modeling of rational allocation and control processes while simultaneously binding that rationality with computational reality. Modeling strategies to map the optimal to the operational ensued and eventually became a driving force in the development of macroeconomic dynamics. Key features of macroeconomics that originated in US military-funded research on applied mathematics in the 1950s and 1960s included recursive optimization taking uncertainty into account, agents modeled as collections of decision rules, and the certainty equivalent and equilibrium modeling strategies. The modeling strategies that opened the door to economists’ agile underpinning of macroeconomics with microfoundations had their own foundation in empirical microeconomics. In the 1950’s the United States Air Force Project SCOOP (Scientific Computation of Optimum Programs) and the Office of Naval Research awarded contracts to establish and maintain a research center for the Planning and Control of Industrial Operations at the Graduate School of Industrial Administration of the Carnegie Institute of Technology in Pittsburgh. Faced with client demands for computable decision rules that would minimize costs in the face of uncertain demand, the Carnegie team reverse engineered effective computational protocols to derive optimal forms and properties. They also developed procedures to narrow the modeling choices in dynamic programming. The formal analysis of the statistical and mathematical properties of bridges connecting the rational with the computable formed a modeling selfconsciousness and channeled a new disciplinary focus on modeling strategies. The rational expectations theorists built on the modeling strategies that had been fabricated for planning in their attempt to bridge aggregative economics with the optimizing behavior of the individual and the clearing capacities of markets. The state-transition models that in the 1970s gave macroeconomists a framework for recursive optimization with uncertainty had similarly transformed control engineering in the 1960s. In both disciplines a “modeling-strategy turn†narrowed the primary analytical focus to the properties of mathematical models with less emphasis on the phenomena being modeled.
    Keywords: modeling strategy, bounded rationality, rational expectations, forecasting, dynamic programming, empirical microeconomics, macroeconomics, operations research, history of economics, Herbert E. Simon, John F. Muth, Carnegie Institute of Technology
    JEL: B22 B23 B41 C61 D8 D83 E17 E27
    Date: 2015–10
  21. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: This paper surveys the basic notions and most important results around fuzzy measures and integrals, as proposed independently by Choquet and Sugeno, as well as recent developments. The latter includes bases and transforms on set functions, fuzzy measures on set systems, the notion of horizontal additivity, basic Choquet calculus on the nonnegative real line introduced by Sugeno, the extension of the Choquet integral for nonmeasurable functions, and the notion of universal integral.
    Keywords: fuzzy measure, capacity, Choquet integral, Sugeno integral
    Date: 2015
  22. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: The paper studies the vector space of set functions on a finite set X, which can be alternatively seen as pseudo-Boolean functions, and including as a special cases games. We present several bases (unanimity games, Walsh and parity functions) and make an emphasis on the Fourier transform. Then we establish the basic dual-ity between bases and invertible linear transform (e.g., the Möbius transform, the Fourier transform and interaction transforms). We apply it to solve the well-known inverse problem in cooperative game theory (find all games with same Shapley value), and to find various equivalent expressions of the Choquet integral.
    Keywords: set function, capacity, basis, transform, Moebius transform, Choquet integral
    Date: 2016
  23. By: Elsner, Wolfram
    Abstract: This paper critically reviews the leading microeconomic textbooks of Varian, Pindyck/Rubinfeld, and Schumann/Meyer/Stroebele, with a focus on their theoretical inconsistencies and their lack of an institutional perspective.
    Keywords: microeconomics; economic teaching; textbooks; institutions
    JEL: A20 A22 A23
    Date: 2016–04–03
  24. By: Gunter H Meyer (Georgia Institute of Technology)
    Abstract: Game put and call options are defined and solved with an approach based on differential equations which completely bypasses their usual treatment as stochastic Dynkin games. The view is taken that when the writer of the option plans to cancel an American put or call at particular values of the underlying asset, then those assets function as twosided barriers for the cancellable option. A game option results when the location of the barriers is chosen such that the value of the option is minimized. With elementary maximum and comparison principles from differential equations, optimal cancellation strategies can be readily found and interpreted graphically for perpetual options. An analogous treatment appears possible for finite time game options. An application of the approach to an American game CEV call and to callable stock loans is described.
    Date: 2016–03–01
  25. By: Heine F.A.; Strobel M. (GSBE)
    Abstract: A team contest entails both public good situations within the teams as well as a contest across teams. In an experimental study, we analyse behaviour in such a team contest when allowing to punish or to reward other group members. Moreover, we compare two types of contest environment One in which two groups compete for a prize and another one in which we switch off the between-group element of the team contest. Unlike what experimental studies in isolated public goods games indicate, we find that reward giving, as opposed to punishing, induces higher contributions to the group project. Furthermore, comparing treatment groups, expenditures on rewarding other co-players are significantly higher than those for punishing. This is particularly pronounced for the between-group contest.
    Keywords: Cooperative Games; Design of Experiments: Laboratory, Group Behavior; Microeconomic Behavior: Underlying Principles;
    JEL: C92 D01 C71
    Date: 2015
  26. By: Altamura, Carlo Edoardo; Flores Zendejas, Juan
    Abstract: A consensus has not been reached in the ongoing debate on the effects of lender of last resort functions by the IMF, given the contradictory results from macroeconomic analyses that depend upon samples and periods. This paper sheds new light on the relationship between international banks and their home governments, the IMF and international regulators during the years that preceded the debt crisis of 1982. Based on new archival evidence, we find that commercial banks’ decisions to lend were largely based on home governments’ preferences, competition, and the assumption that home governments and international organizations would provide lending of last resort functions to support borrowing governments. These factors also influenced loan pricing. While previous works suggest that the 1982 debt crisis was unexpected, we show that banks reacted to the deteriorating macroeconomic situation in many emerging economies once the role of international organizations as lenders of last resort became uncertain.
    Keywords: Sovereign debt markets, Sovereign defaults, International finance, Moral hazard, Country risk
    JEL: F3 N2 F5
    Date: 2016
  27. By: Roberta Dessi; Edoardo Gallo; Sanjeev Goyal;
    Abstract: We study individual ability to memorize and recall information about friendship networks using a combination of experiments and survey-based data. In the experiment subjects are shown a network, in which their location is exogenously assigned, and they are then asked questions about the network after it disappears. We find that subjects exhibit three main cognitive biases: (i) they underestimate the mean degree compared to the actual network; (ii) they overestimate the number of rare degrees; (iii) they underestimate the number of frequent degrees. We then analyse survey data from two `real' friendship networks from a Silicon Valley firm and from a University Research Center. We find, somewhat remarkably, that individuals in these real networks also exhibit these biases. The experiments yield three further: findings: (iv) network cognition is a affected by the subject's location, (v) the accuracy of network cognition varies with the nature of the network, and (vi) network cognition has a significant effect on economic decisions.
    Date: 2014–08–27
  28. By: Ioannis Caragiannis; David Kurokawa; Herve Moulin; Ariel D. Procaccia; Nisarg Shah; Junxing Wang
    Keywords: Fair division, Resource allocation, Nash welfare, Maximum product
    Date: 2016–03

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