nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2017‒01‒22
twelve papers chosen by
Erik Thomson
University of Manitoba

  1. Does Experience Affect Fairness, Reciprocity and Cooperation in Lab Experiments? By V. Pelligra; T. Reggiani; T. Medda
  2. A Theory of Threshold Contracts By Becker, Johannes Gerd; Gersbach, Hans
  3. Asymmetric social norms By Camera, Gabriele; Gioffré, Alessandro
  4. If Life Throws You Lemons Try To Make Lemonade: Does Locus of Control Help People Cope with Unexpected Shocks By Steven Stillman; Malathi Velamuri
  5. Fair Utilitarianism By Marc Fleurbaey; Stéphane Zuber
  6. Can occupational norms foster cooperative behavior? An experimental study comparing cooperation by military officers and civilians By Johannemann, Kirsten; Morasch, Karl; Wiens, Marcus
  7. Narrative Economics By Robert J. Shiller
  8. Dynamic game under ambiguity: the sequential bargaining example, and a new "coase conjecture" By Besanko, David; Tong, Jian; Wu, Jianjun
  9. Behavioural types in public goods games: A re-analysis by hierarchical clutering By Francesco Fallucchi; R. Andrew Luccasen; Theodore L. Turocy
  10. Uncertain Rationality, Depth of Reasoning and Robustness in Games with Incomplete Information By Fabrizio Germano; Jonathan Weinstein; Peio Zuazo-Garin
  11. Responding to (Un)Reasonable Requests By V. Pelligra; T. Reggiani; D.J. Zizzo
  12. Money Versus the Soul: Neoliberal Economics in the Education Modernisation Reform of Post-Soviet Russia By Elena V. Minina

  1. By: V. Pelligra; T. Reggiani; T. Medda
    Abstract: One of the most common criticisms about the external validity of lab experiments in economics concerns the representativeness of participants usually considered in these studies. The ever-increasing number of experiments and the prevalent location of research centers in university campuses produced a peculiar category of subjects - Students with high level of laboratory experience built through repeated participations in experimental sessions. We investigate whether the experience accumulated in this way biases subjects’ behaviour in a set of simple games widely used to study social preferences (Dictator Game, Ultimatum Game, Trust Game, and Prisoner’s Dilemma Game). Our main finding shows that subjects with a high level of experience in lab experiments do not behave in a significantly different way from novices.
    Keywords: lab experiment,External Validity,Experimental Methodology,Experience
    Date: 2016
  2. By: Becker, Johannes Gerd; Gersbach, Hans
    Abstract: We consider an infinitely repeated reappointment game in a principal-agent relationship and examine the consequences of threshold contracts, which forbid reappointment if the principal's utility is too low. Typical examples are voter-politician or government-public servant relationships. The agent chooses costly effort and enjoys being in office until he is deselected. The principal observes a noisy signal of the agent's effort and decides whether to reappoint the agent or not. We analyse the stationary Markovian equilibria of this game with and without threshold contracts. We identify the circumstances under which such threshold contracts are welfare-improving or beneficial for the principal, which, in turn, may justify attempts to introduce such contracts in politics.
    Keywords: asymmetric information; commitment.; principal-agent model; reappointment; repeated game; stationary Markovian strategies; threshold contracts; threshold strategies
    JEL: C83 D82 D86 H11
    Date: 2017–01
  3. By: Camera, Gabriele; Gioffré, Alessandro
    Abstract: Studies of cooperation in infinitely repeated matching games focus on homogeneous economies, where full cooperation is efficient and any defection is collectively sanctioned. Here we study heterogeneous economies where occasional defections are part of efficient play, and show how to support those outcomes through contagious punishments
    Keywords: cooperation,repeated games,social dilemmas
    JEL: C6 C7
    Date: 2017
  4. By: Steven Stillman (Free University of Bolzano‐Bozen, Faculty of Economics and Management); Malathi Velamuri (Chennai Mathematical Institute)
    Abstract: A number of recent papers have found that non-cognitive skills and in particular, locus of control (LoC), are important predictors of success in life in terms of both traditional labor market and socioeconomic outcomes, and measures of subjective wellbeing. Specifically, the literature has found a strong correlation between having an internal locus of control and standard measures of success and happiness. In this paper, we examine whether having an internal LoC also helps people manage the consequences of two mainly unanticipated negative shocks, being a crime victim and experiencing a serious illness or injury. We find that these events have large negative consequences on both subjective wellbeing and objective economic outcomes. For men, these shocks have smaller effects on subjective wellbeing when they are more internal but that the long-run effects on income are no smaller. On the other hand, for women with an internal LoC, we find some evidence that these shocks have larger impacts. We draw on the psychology literature to discuss the results.
    Keywords: locus of control, crime, illness, wellbeing, HILDA
    JEL: I31 J16
    Date: 2017–01
  5. By: Marc Fleurbaey (Woodrow Wilson School and Center for Human Values - Princeton University); Stéphane Zuber (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: Utilitarianism is a prominent approach to social justice that has played a central role in economic theory. A key issue for utilitarianism is to define how utilities should be measured and compared. This paper draws on Harsanyi's approach (Harsanyi, 1955) to derive utilities from choices in risky situations. We introduce a new normalization of utilities that ensures that: 1) a transfer from a rich to a poor is welfare enhancing, and 2) populations with more risk averse people have lower welfare. We propose normative principles that reflect these fairness requirements and characterize fair utilitarianism. We also study some implications of fair utilitarianism for risk sharing and collective risk aversion
    Keywords: Fairness; utilitarianism; risk sharing; collective risk aversion
    JEL: D63 D81
    Date: 2017–01
  6. By: Johannemann, Kirsten; Morasch, Karl; Wiens, Marcus
    Abstract: In this experimental study we examine the behavior of Bundeswehr officers and officer candidates regarding their willingness to cooperate. Due to the military training which focuses on comradeship and reliable teamwork even under extreme conditions, we expect a strong bond between soldiers and therefore more cooperation among them. Furthermore there are additional norms for soldiers that explicitly call for social responsibility and an appropriate behavior relative to civilians. For that reason we also expect more altruism and trust of soldiers compared to pure civilian groups. To explore these issues in an experimental setting, the subjects had to play the dictator game, the ultimatum game, and the trust game. These three established experiments allow us to measure and distinguish between different aspects of social and cooperative motivation. We find that soldiers are on average more altruistic, more cooperative, and more trusting as well as more trustworthy. These results do not only hold for the interaction among soldiers but in most cases also with regard to the behavior of soldiers towards civilians.
    Keywords: Experiment,Dictator Game,Ultimatum Game,Trust Game,Cooperative Behavior,Professional Norms,Military
    JEL: C72 C78 C91 D01 D63 D64
    Date: 2016
  7. By: Robert J. Shiller (Cowles Foundation, Yale University)
    Abstract: This address considers the epidemiology of narratives relevant to economic fluctuations. The human brain has always been highly tuned towards narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives “go viral” and spread far, even worldwide, with economic impact. The 1920-21 Depression, the Great Depression of the 1930s, the so-called “Great Recession” of 2007-9 and the contentious political-economic situation of today, are considered as the results of the popular narratives of their respective times. Though these narratives are deeply human phenomena that are difficult to study in a scientific manner, quantitative analysis may help us gain a better understanding of these epidemics in the future.
    Keywords: Economic fluctuations, Business cycles, Story, Meme, Epidemic, SIR model, Kermack and McKendrick, Multipliers, Bubbles, Depression of 1920, Profiteer, Great Depression, Stock market crash, 2008 financial crisis, Post-truth
    JEL: E00 E03 E30 G02 N1
    Date: 2017–01
  8. By: Besanko, David; Tong, Jian; Wu, Jianjun
    Abstract: Conventional Bayesian games of incomplete information are limited in their ability to represent severe incompleteness of information. Using an illustrative example of (seller offer) sequential bargaining with one-sided incomplete information, we analyze a dynamic game under ambiguity. The novelty of our model is the stark assumption that the seller has complete ignorance---represented by the set of all plausible prior distributions---over the buyer's type. We propose a new equilibrium concept---Perfect Objectivist Equilibrium (POE)---in which multiple priors and full Bayesian updating characterize the belief system, and the uninformed player maximizes the infimum expected utility over non-weakly-dominated strategies. We provide a novel justification for refining POE through Markov perfection, and obtain a unique refined equilibrium. This results in a New "Coase Conjecture"---a competitive outcome arising from an apparent monopoly, which does not require the discount rate to approach zero, and is robust to reversion caused by reputation equilibria.
    Date: 2016–12–16
  9. By: Francesco Fallucchi (University of East Anglia); R. Andrew Luccasen (Mississippi University for Women); Theodore L. Turocy (University of East Anglia)
    Abstract: We re-analyse participant behaviour in standard economics experiments studying voluntary contributions to a public good. Previous approaches were based in part on a priori models of decision-making, such as maximising personal earnings, or reciprocating the behaviour of others. Many participants however do not conform to one of these models exactly, requiring ad hoc adjustments to the theoretical baselines to identify them as belonging to a given behavioural type. We construct a typology of behaviour based on a similarity measure between strategies using hierarchical clustering analysis. We identify four clearly distinct behavioural types which together account for over 90% of participants in six experimental studies. The resulting type classification distinguishes behaviour across groups more consistently than previous approaches.
    JEL: C65 C71 H41
    Date: 2017–01–12
  10. By: Fabrizio Germano; Jonathan Weinstein; Peio Zuazo-Garin
    Abstract: Predictions under common knowledge of payoffs may differ from those under arbi- trarily, but finitely, many orders of mutual knowledge; Rubinstein’s (1989) Email game is a seminal example. Weinstein and Yildiz (2007) showed that the discontinuity in the example generalizes: for all types with multiple rationalizable (ICR) actions, there exist similar types with unique rationalizable action. This paper studies how a wide class of departures from common belief in rationality impact Weinstein and Yildiz’s discontinuity. We weaken ICR to ICR?, where ? is a sequence whose nth term is the probability players attach to (n - 1)th -order belief in rationality. We find that Weinstein and Yildiz’s discontinuity holds when higher-order belief in rationality remains above some threshold (constant ?), but fails when higher-order belief in rationality eventually becomes low enough (? converging to 0).
    Keywords: robustness, Rationalizability, bounded rationality, Incomplete Information, belief hierarchies
    JEL: C72 D82 D83
    Date: 2017–01
  11. By: V. Pelligra; T. Reggiani; D.J. Zizzo
    Abstract: We consider the notions of static and dynamic reasonableness of requests in a trust game experiment. We vary systematically the experimental norm of what is expected from trustees to return to trustors, both in terms of level of each request and in terms of sequence of the requests. Static reasonableness matters in a self-biased way, in the sense that low requests justify returning less but high requests tend to be ignored. Dynamic reasonableness also matters, in the sense that, if requests keep increasing, trustees return less than if requests of different size are presented in random or decreasing order. Requests never systematically increase trustworthiness, but may decrease it.
    Keywords: trust,trustworthiness,norms,reasonableness,moral wiggle room,moral licensing
    Date: 2016
  12. By: Elena V. Minina (National Research University Higher School of Economics)
    Abstract: Through the examination of the concept of ‘commercial service’ the article explores the ideological underpinnings and cultural embeddings of the market economy in post-Soviet education modernisation reform vis-a-vis the makeup of indigenous Russian culture and pedagogy. While post-Soviet Russia’s educational sector has been extensively commercialised, the public attitude towards the new educational economics have remained largely antagonistic. By bringing together the economic and the ideological angles, I show how bottom-up resistance is maintained and normalised, triggering a policy backlash. The article probes the obstinate public resistance to the idea of education as a ‘commodity’ and exposes the cultural logic behind it. Drawing on discourse studies and policy borrowing frameworks, the analysis demonstrates how the market values of competitive individualism, material profit and entrepreneurship were left under-conceptualised in the official discourse and consequently rejected in the public discourse in favour of domestic values of egalitarianism, collegiality, moral education, and an orientation towards non-materialist values
    Keywords: Russian education reform post-Soviet education, neoliberalism, education commercialisation
    JEL: Z
    Date: 2016

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