nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2016‒11‒20
twenty-one papers chosen by
Erik Thomson
University of Manitoba

  1. A productive clash of cultures : injecting economics into leadership research By Zehnder, Christian; Herz, Holger; Bonardi, Jean-Philippe
  2. Friedman's lack of influence on British economic policy By James Forder
  3. Les auteurs des sciences des organisations du débat actuel sur l’innovation By Yvon Pesqueux
  4. What Piketty said in Capital in the Twenty-first Century and how economists reacted By Riccardo De Bonis
  5. Harry Johnson on the Phillips Curve By James Forder
  6. Toward Economics as a New Complex System By Taisei Kaizoji
  7. Interacting Information Cascades: On the Movement of Conventions Between Groups By James C.D. Fisher; John Wooders
  8. Public goods games and psychological utility: Theory and evidence. By Sanjit Dhami; Mengxing Wei; Ali al-Nowaihi
  9. "Financial Stability and Secure Currency in a Modern Context" By Jan Kregel
  10. Voter Motivation and the Quality of Democratic Choice By Lydia Mechtenberg; Jean-Robert Tyran
  11. Three decades of publishing research in population economics By Brown, Alessio J.G.; Zimmermann, Klaus F.
  12. Posner’s Wealth Maximization for Welfare Maximization: Separating Efficiency and Equality Considerations By Yew-Kwang Ng
  13. Heterogeneity in Guessing Games: An Experiment By Liu, Tianwei
  14. Liquidity, insolvency and the state By Ehnts, Dirk H.
  15. To disqualify or not to qualify: This is the other question By Rodríguez Alcantud, José Carlos; Laruelle, Annick
  16. Staatscompliance - Rechtstreue ist keine Einbahnstraße By Bültmann, Barbara
  17. Nodewise Decay in Two-way Flow Nash Network: a Study of Network Congestion By Charoensook, Banchongsan
  18. Normative individualism and research on inequality By Kasy, Maximilian
  19. Neural networks would 'vote' according to Borda's Rule By Burka, Dávid; Puppe, Clemens; Szepesváry, László; Tasnádi, Attila
  20. Der Ordoliberalismus: Chance oder Gefahr für Europa? Einführende Bemerkungen By Krieger, Tim
  21. The Thermo-Economic 'Progress' of Social/Global Poverty By Ternyik, Stephen I.

  1. By: Zehnder, Christian; Herz, Holger; Bonardi, Jean-Philippe
    Abstract: Research on leadership in economics has developed in parallel to the literature in management and psychology and links between the fields have been sparse. Whereas modern leadership scholars mostly focus on transformational and related leadership styles, economists have mainly emphasized the role of contracts, control rights, and incentives. We argue that both fields could profit from enriching their approach with insights from the other field. We review and synthesize the economics literature on leadership in organizations and discuss how leadership scholars in management and psychology can benefit from the detailed understanding of transactional methods that economists have developed. We link the contributions in economics to a broad set of topics including the foundations of leadership, leader emergence, and leader effectiveness. At the same time, we also point out limitations of the economic approach and outline how the integration of leadership research and economics would broaden the scope of future studies.
    Keywords: Leadership; Economics; Foundations; Emergence; Effectiveness
    JEL: D3 D21 D23 M50
    Date: 2016–11–11
  2. By: James Forder
    Abstract: Using a range of sources, it is argued that, contrary to common belief, Milton Friedman had no special influence on British policy in the 1970s and 1980s. The opposing impression appears to be derived in part from the work of Friedman’s admirers, but principally from the allegations of Margaret Thatcher’s opponents who believed they could taint her with his name.
    Keywords: Friedman,monetarism,Thatcherism
    Date: 2016–09–01
  3. By: Yvon Pesqueux (LIRSA - Laboratoire Interdisciplinaire de Recherche en Sciences de l'Action - Conservatoire National des Arts et Métiers [CNAM])
    Abstract: La conception interactionniste de l’innovation de S. J. Kline & N. Rosenberg et l’innovation incrémentale C. Christensen et la notion de « technologie – innovation » de rupture E. von Hippel et l’innovation démocratique L’innovation ouverte de H. Chesbrough L’ambidextrie organisationnelle Innovation frugale (ou l’économie de la frugalité) Les Fab Labs
    Keywords: innovation, innovation ouverte, innovation frugale
    Date: 2016–11–05
  4. By: Riccardo De Bonis (Bank of Italy, Directorate General for Economics, Statistics and Research)
    Abstract: This work rehearses the main themes of Piketty.s book and summarizes the debate it triggered. The paper dwells on the rise in the ratio of household wealth to GDP in the rich countries since the 1980s and the role played by the build-up of saving and variations in house and financial asset prices; on the various justifications put forward for the increasing income and wealth inequality that has accompanied the rise in the wealth/income ratio, especially in the US and Britain; on the relationship between the rate of return on capital and the economic growth rate; on the ties between rising income inequality and the financial crisis of 2007-08; on the feasibility of Piketty.s proposals for higher taxation of top incomes and a progressive global tax on net household wealth; and on the progress that has been made in the US and Europe in exchanging information on citizens. income and foreign assets.
    Keywords: ratio household wealth/GDP; distribution of income and wealth; taxation; welfare State
    JEL: C80 D14 D31 D91 E62 H26
    Date: 2016–11
  5. By: James Forder
    Abstract: It is noted that Harry G. Johnson was widely admired for his broad knowledge of economics, and particularly for the excellence and synthesizing quality of much of his writing. His discussions of the “Phillips curve” and related matters are considered. It is found that they are brief, inaccurate, and inconsistent. It is clear that, despite his reputation, they should not be treated as authoritative. It is further suggested that rather than supposing that Johnson’s knowledge and capabilities have been grossly exaggerated, it may be better to conclude that the Phillips curve was not nearly so important in the literature of the 1960s and 1970s as has been supposed.
    Keywords: Phillips curve,Harry Johnson,expectations,Phillips curve,Phillips curve myth
    JEL: B22 B29 E61
    Date: 2016–09–01
  6. By: Taisei Kaizoji
    Abstract: The 2015 Nobel Prize in Economic Sciences was awarded to Eugene Fama, Lars Peter Hansen and Robert Shiller for their contributions to the empirical analysis of asset prices. Eugene Fama [1] is an advocate of the efficient market hypothesis. The efficient market hypothesis assumes that asset price is determined by using all available information and only reacts to new information not incorporated into the fundamentals. Thus, the movement of stock prices is unpredictable. Robert Shiller [2] has been studying the existence of irrational bubbles, which are defined as the long term deviations of asset price from the fundamentals. This drives us to the unsettled question of how the market actually works. In this paper, I look back at the development of economics and consider the direction in which we should move in order to truly understand the workings of an economic society.
    Date: 2016–11
  7. By: James C.D. Fisher (Department of Economics, University of Arizona); John Wooders (Economics Discipline Group, University of Technology, Sydney)
    Abstract: When a decision maker is a member of multiple social groups, her actions may cause information to spill overfrom one group to another. We study the nature of these spillovers in an observational learning game where two groups interact via a common player, and where conventions emerge when players follow the decisions of the members of their own groups rather than their own private information. We show that: (i) if a convention develops in one group but not the other group, then the convention spills over via the common player; (ii) when conventions disagree, then the common players decision breaks the convention in one group; and (iii) when no conventions have developed, then the common players decision triggers conventions on the same action in both groups. We also nd that information spillovers may reduce welfare.
    Date: 2015–01–16
  8. By: Sanjit Dhami; Mengxing Wei; Ali al-Nowaihi
    Abstract: We consider a public goods game which incorporates guilt-aversion/surprise- seeking and the attribution of intentions behind these emotions (Battigalli and Dufwenberg, 2007; Khalmetski et al., 2015). We implement the induced beliefs method (Ellingsen et al., 2010) and a within-subjects design using the strategy method. Previous studies mainly use dictator games - whose results may not be robust to adding strategic components. We …nd that guilt-aversion is far more important than surprise-seeking; and that the attribution of intentions behind guilt- aversion/surprise-seeking is important. Our between-subjects analysis confirms the results of the within-subjects design.
    Keywords: Public goods games; psychological game theory; surprise-seeking/guilt- aversion; attribution of intentions; induced beliefs method; strategy method; within- subjects design.
    JEL: D01 D03 H41
  9. By: Jan Kregel
    Abstract: Against the background of modern-day monetary proposals, ranging from a return to the gold standard to the wholesale abolition of currency, this paper seeks to draw implications from David Ricardo's "Proposals for an Economical and Secure Currency" for plans to reform the operation of central banks and extraordinary monetary policy. Although 200 years old, the "Ingot plan," proposed during a period in which gold convertibility was suspended, appears to be applicable to modern monetary conditions and suggests possible avenues of reform.
    Keywords: David Ricardo; Monetary Systems; Ingot Plan; Gold Standard
    JEL: B12 E42 N10
    Date: 2016–11
  10. By: Lydia Mechtenberg (Faculty of Business Economics and Social Sciences, University of Hamburg); Jean-Robert Tyran (Department of Economics, University of Copenhagen)
    Abstract: The quality of democratic choice critically depends on voter motivation, i.e. on voters’ willingness to cast an informed vote. If voters are motivated, voting may result in smart choices because of information aggregation but if voters remain ignorant, delegating decision making to an expert may yield better outcomes. We experimentally study a common interest situation in which we vary voters’ information cost and the competence of the expert. We find that voters are more motivated to collect information than predicted by standard theory and that voter motivation is higher when subjects demand to make choices by voting than when voting is imposed on subjects.
    Keywords: voting, experiment, information acquisition, information aggregation
    JEL: C91 D71 D72
    Date: 2016–09–15
  11. By: Brown, Alessio J.G. (UNU‐MERIT); Zimmermann, Klaus F. (UNU-MERIT, and Harvard University)
    Abstract: The Journal of Population Economics is celebrating its thirtieth birthday. When the first issue was published, population economics was non-existent as a field. Hence, the aim has been to provide a high quality outlet to publishing excellent theoretical and applied research in all areas of population economics. The article summarises key developments in the Journal's editorial process, thematic orientation, international reach and successes. Furthermore, we discuss the benefits of working papers in economics and investigate the impacts of the present working paper culture on journal citations. Finally, we try to identify the citation impacts in the Journal itself. The Journal of Population Economics has established itself as the leader in its field. Publishing in working papers and in the Journal seem to be complementary activities.
    Keywords: Demographical economics, population economics, working papers, Kuznets prize, citation impacts
    JEL: A11 A14 B20 J10
    Date: 2016–10–11
  12. By: Yew-Kwang Ng (Division of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.)
    Abstract: Posner’s proposal for wealth maximization in judiciary decisions has not been widely accepted, but the influence of the economic analysis of law it propelled has increased tremendously. In the face of criticism, Posner himself has retreated into a pragmatism with wealth maximization not the only principle used. This leads to a lack of both moral justification and consistency. This paper argues that, if not used as the ultimate objective, but as an instrument for welfare maximization, wealth maximization is much more acceptable, if it is also supplemented by appropriate redistribution in the general equality policy. This is especially so as efficiency supremacy in specific issues including the judiciary (close to wealth maximization) would then make every income group better off. This is so despite the presence of disincentive effects in general redistribution. The separation of the judiciary and the legislative may then also be justified.
    Keywords: Wealth maximization; efficiency; welfare; utilitarianism; judiciary.
    JEL: K0 H0
    Date: 2016–11
  13. By: Liu, Tianwei
    Abstract: In interactions under strategic complementarity, naive players have a disproportionally large effect on the aggregate outcome, resulting in a nonlinear relationship between the proportion of sophisticated and naive players and the aggregate outcome. This paper studies this relationship in a beauty contest game by informing some players the game theoretic solution and systematically varying the proportion of informed players. The results show that the conditions predicted by strategic complementarity stand empirical test.
    Keywords: Beauty contest, Strategic complementarity, Beliefs, Bounded rationality
    JEL: C72 D03 D8
    Date: 2016–11–10
  14. By: Ehnts, Dirk H.
    Abstract: The importance of liquidity and insolvency for nation states and banks has been highlighted by current economic woes in the eurozone and elsewhere. The concepts are grounded in monetary theory, which determine the way they are interpreted. Connected to the discussion of autometallism and Chartalism in the early 20th century, monetary economists of today have come full circle. Discussing some modern authors, it is argued that the concepts of liquidity and insolvency are connected. However, if the central bank functions as lender of last resort the link is cut. Also, fiscal policy has the potential to remove problems of illiquidity and insolvency in the financial system. Illiquidity and insolvency are signals of stress in the real economy. Their oppression through central bank policy might lead to the (wrong) perception that all is well in the economy.
    Keywords: monetary policy,fiscal policy,balance sheets,autometallism,Chartalism
    JEL: E5 E6 G21
    Date: 2016
  15. By: Rodríguez Alcantud, José Carlos; Laruelle, Annick
    Abstract: In this paper we study ternary trichotomous rules, that allows for three levels of input, positive, neutral and negative and three levels of output, positive, undetermined and negative. We illustrate the interest of such rules on collective identity functions that deal with formation of clubs. Usually the question addressed is whether the individual quali es or does not, and the answer is either positive or not. In some situations it may be relevant to distinguish between unquali cation and disquali cation.
    Keywords: voting, rules, club, formation
    JEL: D71
    Date: 2016–10–10
  16. By: Bültmann, Barbara
    Abstract: Im Steuerrecht wird die öffentliche Debatte häufig von Forderungen nach mehr Steuermoral geprägt - von einer Besteuerungsmoral ist hingegen selten die Rede. Auch aufgrund des undurchsichtigen und unablässig von Änderungen durchzogenen Steuerrechts sinkt zunehmend das Vertrauen der Bürger in den Staat. Die Autorin Barbara Bültmann erklärt in ihrer Publikation "Staatscompliance - Rechtstreue ist keine Einbahnstraße" mithilfe diverser Kriterien, wie dieses Vertrauen wieder hergestellt werden kann, ohne dass der Staat seine eigenen Ziele vernachlässigt. Denn ein regelkonformes Verhalten des Staates ist ebenso essentiell, wie das von Unternehmen und Privatpersonen. Verständliche und verlässliche steuerliche Rahmenbedingungen sind dabei unverzichtbar. Bedeutende Bestandteile hierfür sind Transparenz und die Einbeziehung der Betroffenen. Darüber hinaus muss ein Schutz der an die Finanzverwaltung gegebenen Daten sichergestellt werden. Aber auch Ungleichbehandlungen, zum Beispiel bei der Berücksichtigung von Zinsen, sollten ausgeschlossen werden. Die Publikation bietet einen umfassenden Überblick über den Status quo und bewertet zum ersten Mal mit einer Compliance-Ampel zentrale Bereiche wie Gesetzgebung, Rechtssicherheit und Verfahrensablauf im Rahmen eines politischen Monitorings. Denn das Steuerrecht berührt weite Teile der Bevölkerung und ist somit ein geeigneter Gradmesser für das Verhältnis zwischen Staat und Bürger. "Hier entsteht Akzeptanz - oder wird Vertrauen zerstört", so das Fazit.
    Date: 2016
  17. By: Charoensook, Banchongsan
    Abstract: This paper studies a noncooperative model of network formation. Built upon the two-way flow model of Bala and Goyal (2000a), it assumes that information decay as it flows through each agent, and the decay is increasing and concave in the number of his links. This assumption results in the fact that a large set of Nash networks are disconnected and consist of components of different sizes, a feature that resembles that of real-world networks. Discussions on this insight are provided.
    Keywords: Two-way Flow Network, Network Formation, Information Network, Research and Development/Tech Change/Emerging Technologies, C72, D85,
    Date: 2016–11–04
  18. By: Kasy, Maximilian
  19. By: Burka, Dávid; Puppe, Clemens; Szepesváry, László; Tasnádi, Attila
    Abstract: Can neural networks learn to select an alternative based on a systematic aggregation of convicting individual preferences (i.e. a 'voting rule')? And if so, which voting rule best describes their behavior? We show that a prominent neural network can be trained to respect two fundamental principles of voting theory, the unanimity principle and the Pareto property. Building on this positive result, we train the neural network on profiles of ballots possessing a Condorcet winner, a unique Borda winner, and a unique plurality winner, respectively. We investigate which social outcome the trained neural network chooses, and find that among a number of popular voting rules its behavior mimics most closely the Borda rule. Indeed, the neural network chooses the Borda winner most often, no matter on which voting rule it was trained. Neural networks thus seem to give a surprisingly clear-cut answer to one of the most fundamental and controversial problems in voting theory: the determination of the most salient election method.
    Keywords: voting, social choice, neural networks, machine learning, Borda count
    JEL: D71
    Date: 2016–10–31
  20. By: Krieger, Tim
    Date: 2016
  21. By: Ternyik, Stephen I.
    Abstract: The statistical method, based on physical and observable quantities, can very precisely describe universal patterns of human progress and poverty, in terms of money, energy and wealth distribution over time. This research proposal points to the non-natural root cause of all social inequalities in the empirical history of human civilization and possible economic remedies. Poverty is not a natural phenomenon, but the economic result of the human privatization of nature.
    Keywords: rent, capital, thermo-economics, economic cycles, singularity, progress, poverty
    JEL: B41
    Date: 2016–11

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