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on History and Philosophy of Economics |
| By: | Rietz, Thomas; Schniter, Eric; Sheremeta, Roman; Shields, Timothy |
| Abstract: | Many economic interactions rely on trust, which is sometimes violated. The fallout from business fraud and other malfeasance shows serious economic consequences of trust violations. Simple rules mandating minimum standards are attractive because they prevent the most egregious trust violations. However, such rules may undermine more trusting and reciprocal (trustworthy) behavior that otherwise would have occurred and, thus, lead to worse outcomes. We use an experimental trust game to test the efficacy of exogenously imposed minimum standard rules. Rules fail to increase trust and reciprocity, leading to lower economic welfare. Although sufficiently restrictive rules restore welfare, trust and reciprocity never return. The pattern of results is consistent with participants who are not only concerned with payoffs, but also use the game to learn about trust and trustworthiness of others. |
| Keywords: | Trust, Reciprocity, Minimum Standards, Experiment |
| JEL: | C72 C90 D63 D64 L51 |
| Date: | 2017–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80275&r=hpe |
| By: | Cyrielle Poiraud |
| Abstract: | This paper focuses on Amartya Sen’s conception of equality regarding modern theories of justice. Starting from a question he considers crucial in this context, “Equality of what?”, which involves a conception of equality in terms of “space”, we move to the importance of a related issue: “Why equality?”, which refers to a more general idea of equality, implicit in Sen’s work. The paper sheds light on this distinction and more precisely on the second acceptation of equality, deeply connected to the impartiality requirement of justice. Furthermore, Sen’s account of impartiality reveals the relevance of the transcendental approach for his own idea of justice, although he rejects it in favour of the comparative one. |
| Keywords: | Equality, Amartya Sen, Normative theories, Impartiality, Justice. |
| JEL: | A13 D63 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2017-20&r=hpe |
| By: | Tesfatsion, Leigh |
| Abstract: | Real-world economies are open-ended dynamic systems consisting of heterogeneous interacting participants. Human participants are decision-makers who strategically take into account the past actions and potential future actions of other participants. All participants are forced to be locally constructive, meaning their actions at any given time must be based on their local states; and participant actions at any given time affect future local states. Taken together, these properties imply real-world economies are locally-constructive sequential games. This study discusses a modeling approach, agent-based computational economics (ACE), that permits researchers to study economic systems from this point of view. ACE modeling principles and objectives are first concisely presented. The remainder of the study then highlights challenging issues and edgier explorations that ACE researchers are currently pursuing. |
| Date: | 2017–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:201707110700001022&r=hpe |
| By: | LOMBARDI, Michele; YOSHIHARA, Naoki |
| Abstract: | This paper investigates the robustness of Dutta and Sen’s (2012) Theorem 1 to weaker notions of truth-telling. An individual honesty standard is modeled as a subgroup of the society, including the individual herself, for which she feels truth-telling concerns. An individual i is honest when she states her true preferences as well as rankings (not necessarily complete) of outcomes that are consistent with the true preferences of individuals in her honesty standard. The paper 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. |
| Keywords: | Nash implementation, partial-honesty, non-connected honesty standards, independent domain |
| JEL: | C72 D71 D82 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-47&r=hpe |
| By: | Emilio Calvo (Universidad de Valencia. ERI-CES); Esther Gutiérrez-López (Departamento de Economía Aplicada IV. Universidad del País Vasco U.P.V./E.H.U.) |
| Abstract: | We present a general bargaining protocol between n players in the setting of coalitional games with transferable utility. We consider asymmetric players. They are endowed with di¤erent probabilities of being chosen as proposers and with di¤erent probabilities of leaving the game if o¤ers are rejected. Two particular speci…cations of this bargaining protocol yield equilibrium proposals that we refer to as weighted solidarity values and weighted Shapley values. We compare the behavior of these values when the players’ probabilities are changed. We supplement the analysis with axiomatic characterizations of both values. |
| Keywords: | n-person bargaining; transferable utility games; asymmetric players; solidarity value; Shapley value. |
| JEL: | C71 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:dbe:wpaper:0217&r=hpe |
| By: | Luigi Zingales |
| Abstract: | Neoclassical theory assumes that firms have no power of fiat any different from ordinary market contracting, thus a fortiori no power to influence the rules of the game. In the real world, firms have such power. I argue that the more firms have market power, the more they have both the ability and the need to gain political power. Thus, market concentration can easily lead to a “Medici vicious circle,” where money is used to get political power and political power is used to make money. |
| JEL: | G3 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23593&r=hpe |
| By: | Gerke, Rafael; Hauzenberger, Klemens |
| Abstract: | The neo-Fisherian view does not consider a negative interest rate gap a prerequisite for boosting inflation. Instead, a negative interest rate gap is said to lower inflation. We discuss this counterintuitive response - known as the Fisher paradox - in a prototypical new-Keynesian model. We draw the following conclusions. First, with a temporarily pegged nominal rate during a liquidity trap (given an otherwise standard Taylor rule) the model generally produces multiple equilibrium paths: some of these paths are consistent with the neo-Fisherian view, others are not. Second, the unique optimal monetary policy at the lower bound on interest rates, which can be implemented in the model with interest rate rules and state-contingent forward guidance, does not result in a paradox. Third, if the assumption of perfect foresight or rational expectations is relaxed, the model produces an equilibrium that is not consistent with the neo-Fisherian view. |
| Keywords: | Neo-Fisherian,Interest Rates,Inflation,Multiple Equilibria,Rational Expectations |
| JEL: | E31 E43 E52 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:202017&r=hpe |
| By: | Kufenko, Vadim; Prettner, Klaus; Geloso, Vincent |
| Abstract: | We test the history-augmented Solow model with respect to its predictions on the patterns of divergence and convergence between the nowadays industrialized countries of the OECD. We show that the dispersion of incomes increased after the Industrial Revolution, peaked during the Second World War, and decreased afterwards. This pattern is fully consistent with the transitional dynamics implied by the history-augmented Solow model. |
| Keywords: | history-augmented Solow model,divergence,convergence,cross-country inequality |
| JEL: | J11 O11 O47 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hohdps:112017&r=hpe |
| By: | Matthew Weinzierl (Harvard Business School) |
| Abstract: | I propose and formalize an argument for why economists working in the welfarist normative tradition should include nonwelfarist principles in how they judge economic policy. The key idea behind this argument is that the world is too complex, and our ability to model it too limited, for us to fully trace a policyÂ’'s effects on welfare. Nonwelfarist principles can be valuable to a welfarist facing this limitation if they act as informational proxies, carrying accumulated knowledge about the effects of policy that otherwise cannot be considered. This argument can be seen both as extending a familiar logic for rule utilitarianism beyond the realm of individual ethics and as a specifiÂ…c version of a broader argument made for centuries by theorists from Hume to Hayek. I also provide evidence of an example in which real-world policy judgments are consistent with this theoretical argument. Results from a novel U.S. opinion survey show that approximately half of respondents reject redistribution driven by envy even though it generates direct utilitarian gains. That share rises as the role of envy is made more salient, consistent with respondents using nonwelfarist principles to encode concerns about the unobservable consequences of policy. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:158&r=hpe |
| By: | Köppl–Turyna, Monika; Christl, Michael |
| Abstract: | We comment on the work of Hanushek et al. (2015) and show that returns to skills are very heterogeneous and depend crucially on the tasks performed in the workplace, in line with the critique by Acemoglu and Autor (2011). Depending on the type of tasks performed at work, as well as on occupations, returns to cognitive skills can vary between null and numbers much higher than those reported by Hanushek et al. (2015). We show that tasks, as well as skills, are an important factor affecting returns on the labor market. |
| Keywords: | Cognitive skills,Education,Labor market,Earnings |
| JEL: | J31 I20 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:89&r=hpe |