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on History and Philosophy of Economics |
| By: | Edward Nelson |
| Abstract: | This paper finds a significant influence of Milton Friedman on U.K. economic policy from the 1970s onward, and especially during the period of the Thatcher Government. The finding is based on a consideration of statements by policymakers and key economic advisers, as well as an analysis of Friedman’s commentary in the 1970s, 1980s, and 1990s on U.K. economic developments. Explicit, public acknowledgments of Friedman's influence were given by Margaret Thatcher, Chancellor of the Exchequer Geoffrey Howe, Bank of England officials, and others in policy circles. Examples of Friedman's influence include the absorption into U.K. policy doctrine of the permanent income hypothesis and the natural rate hypothesis, the rejection from 1979 onward of incomes policy as a weapon against inflation, and U.K. officials' repeated appeals to monetary sovereignty when arguing against monetary union or a sterling peg. Evidence of influence by Friedman on privatization policy and on the official perspective on the current account deficit can also be discerned. Although he had only limited interaction with U.K. policymakers, Friedman had a major influence, reflected in the adoption into actual U.K. policymaking of recommendations made in his writings and in the fact that those writings-which were studied closely by a number of senior U.K. economic advisers-helped alter U.K. economists' conceptual framework and thereby fostered doctrinal changes in U.K. economic policy. This paper's analysis also shows that two prominent critics of the Thatcher economic policy-Labour's Harold Wilson and the Conservatives' Edward Heath-saw this policy as partly due to the influence of Friedman, whom each of them had met before the Thatcher era. |
| Keywords: | Incomes policy ; Milton Friedman ; Monetarism ; U.K. economic policy |
| JEL: | E51 E52 E58 |
| Date: | 2017–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2017-96&r=hpe |
| By: | Claudius Graebner (Institute for Institutional and Innovation Economics (iino), University of Bremen, Germany) |
| Abstract: | rom the two premises that (1) economies are complex systems and (2) the accumulation of knowledge about reality is desirable, I derive the conclusion that pluralism with regard to economic research programs is a more viable position to hold than monism. To substantiate this claim I discuss an epistemological framework of how scholars study their objects of inquiry and relate their models to reality. Furthermore, I argue that given the current institutions of our scientific system, economics self-organizes towards a state of scientific unity. Since such a state is epistemologically inferior to a state of plurality, critical intervention is desirable. |
| Keywords: | Complexity, Pluralism, Epistemology, Cumulative Causation |
| JEL: | A1 A2 B4 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:ico:wpaper:69&r=hpe |
| By: | Michael D. Bordo; Pierre L. Siklos |
| Abstract: | Central banks have evolved for close to four centuries. This paper argues that for two centuries central banks caught up to the strategies followed by the leading central banks of the era; the Bank of England in the eighteenth and nineteenth centuries and the Federal Reserve in the twentieth century. It also argues that, by the late 20th century, small open economies were more prone to adopt a new policy regime when the old one no longer served its purpose whereas large, less open, and systemically important economies were more reluctant to embrace new approaches to monetary policy. Our study blends the quantitative with narrative explanations of the evolution of central banks. We begin by providing an overview of the evolution of monetary policy regimes taking note of the changing role of financial stability over time. We then provide some background to an analysis that aims, via econometric means, to quantify the similarities and idiosyncrasies of the ten central banks and the extent to which they represent a network of sorts where, in effect, some central banks learn from others. |
| JEL: | E02 E31 E32 E42 E58 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23847&r=hpe |
| By: | Gerardo Infante (UEA - University of East Anglia (Norwich)); Guilhem Lecouteux (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique); Robert Sugden (UEA - University of East Anglia (Norwich)) |
| Abstract: | Neoclassical economics assumes that individuals have stable and context-independent preferences, and uses preference satisfaction as a normative criterion. By calling this assumption into question, behavioural findings cause fundamental problems for normative economics. A common response to these problems is to treat deviations from conventional rational choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic. |
| Keywords: | context-dependent preferences, behavioural welfare economics, libertarian paternalism,preference purification, inner rational agent |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01427046&r=hpe |
| By: | Corchon, Luis; Marini, Marco A. |
| Abstract: | We introduce here the first volume of Handbook of Game Theory and Industrial Organization: Theory, by L. C. Corchón and M. A. Marini (eds.), Edward Elgar, Cheltenam, UK and Northampton, MA, by describing its main aim and its basic structure. |
| Keywords: | Industrial Organization, Game Theory |
| JEL: | A1 C4 C5 C6 C65 C7 C71 C72 C78 D6 L0 L1 L2 |
| Date: | 2017–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:81443&r=hpe |
| By: | Corchon, Luis; Marini, Marco A. |
| Abstract: | We introduce here the second volume of the Handbook of Game Theory and Industrial Organization, by L. C. Corchón and M. A. Marini (ed.), Edward Elgar, Cheltenam, UK and Northampton, MA, describing its main aim and its basic structure. |
| Keywords: | Industrial Organization, Game Theory. |
| JEL: | A1 C0 C5 C7 C70 C71 C72 C73 C78 C79 L0 L1 L13 L3 L30 L4 L40 L41 |
| Date: | 2017–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:81444&r=hpe |
| By: | Friedel BOLLE (European University Viadrina, Germany.); Jonathan H.W. TAN (University of Nottingham, UK.) |
| Abstract: | The Vendetta Game dynamically models conflict resolution processes in which players can take turns to steal from one another probabilities of winning a prize. Vendettas are far more prevalent in the laboratory than predicted in equilibrium, assuming self-interest or even spite. To make sense of this, we identify four behavioral types each with their temperaments: melancholic Gamesmen (27%) who play equilibrium, antisocially sanguine Sharks (53%) who optimistically demand more than their equilibrium share, choleric Educators (17%) who punish greedy co-players or otherwise play equilibrium, and phlegmatic Meeks (3%) who demand less than their equilibrium share. Within games, i.e. through the course of stealing and counter-stealing, non-Sharks become greedier. Across games, the characteristic profiles of subject types sharpen with experience. Sharks earn least and Meeks earn most. The clash of temperaments perpetuates feuds. We compare our four types with the types of players observed in the related Repeated Prisoner’s Dilemma game. |
| Keywords: | conflict; vendetta game; experiment; temperaments; types |
| JEL: | C72 D74 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:nan:wpaper:1708&r=hpe |
| By: | Elon Kohlberg (Harvard Business School, Strategy Unit); Abraham Neyman (The Hebrew University of Jerusalem) |
| Abstract: | A game of threats on a finite set of players, N, is a function d that assigns a real number to any coalition, S ? N, such that d(S) = -d(N\S). A game of threats is not necessarily a coalitional game as it may fail to satisfy the condition d(Ø) = 0. We show that analogs of the classic Shapley axioms for coalitional games determine a unique value for games of threats. This value assigns to each player an average of the threat powers, d(S), of the coalitions that include the player. |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:18-023&r=hpe |
| By: | W. Robert Reed (University of Canterbury) |
| Abstract: | There is growing concern that much of empirical research in labor economics and other applied areas may not be reproducible. Correspondingly, recent years have seen an increase in replication studies published in economics journals. Despite this increase, there are many unresolved issues about how replications should be done, and how to interpret their results. Replications have demonstrated a potential for clarifying the reliability and robustness of previous research. Much can be done to encourage more replication research, and to exploit the scientific value of existing replication studies. |
| Keywords: | Reproducibility, replication, replication crisis, labor economics |
| JEL: | A1 B4 |
| Date: | 2017–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:17/06&r=hpe |
| By: | Li, Shengwu |
| Abstract: | This paper examines the relationship between ethics and market design. It argues that market design should not rely wholly on preference utilitarianism in order to make ethical judgements. It exposits an alternative normative framework—informed neutrality between reasonable ethical positions. |
| Keywords: | Market Design, Ethics, Welfare Economics |
| JEL: | D60 D63 |
| Date: | 2017–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:81426&r=hpe |
| By: | Christophe Salvat (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet [Saint-Etienne] - Institut d'Études Politiques [IEP] - Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Choosing not to choose, the latest book by Cass Sunstein (author of Nudge), discusses the benefits one might expect from the generalisation of default rules in our society. The advantages offered by default rules have been corroborated by numerous studies in behavioural economics and have been extensively used to defend a new type of paternalism (Thaler and Sunstein 2008, Sunstein 2014a, b), often referred as referred to as libertarian or behavioural paternalism (Salvat 2014, Rizzo 2016, Lecouteux 2016). While Sunstein’s previous works discuss the benefits of default rules and other paternalistic policies, Choosing not to choose specifically addresses the pros and cons of impersonal as well as personal default rules. Sunstein’s ideas are less ideologically biased and more rigorously argued than in his other books and, more importantly, by introducing a distinction between impersonal and personal rules, he makes a real contribution to the debate on behavioural paternalism. |
| Keywords: | Paternalism,Libertarian Paternalism,Behavioral Science |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01590753&r=hpe |
| By: | Kukushkin, Nikolai S. |
| Abstract: | Philip Reny's approach to games with discontinuous utility functions can work outside its original context. The existence of Nash equilibrium and the possibility to approach the equilibrium set with a finite number of individual improvements are established, under conditions weaker than the better reply security, for three classes of strategic games: potential games, games with strategic complements, and aggregative games with appropriate monotonicity conditions. |
| Keywords: | discontinuous game; potential game; Bertrand competition; strategic complements; aggregative game |
| JEL: | C72 |
| Date: | 2017–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:81460&r=hpe |
| By: | Jean Baccelli (THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS - Centre National de la Recherche Scientifique, IHPST - Institut d'Histoire et de Philosophie des Sciences et des Techniques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - CNRS - Centre National de la Recherche Scientifique); Philippe Mongin (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, IHPST - Institut d'Histoire et de Philosophie des Sciences et des Techniques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We reexamine some of the classic problems connected with the use of cardinal utility functions in decision theory, and discuss Patrick Suppes' contributions to this field in light of a reinterpretation we propose for these problems. We analytically decompose the doctrine of ordinalism, which only accepts ordinal utility functions, and distinguish between several doctrines of cardinalism, depending on what components of ordinalism they specifically reject. We identify Suppes' doctrine with the major deviation from ordinalism that conceives of utility functions as representing preference differences, while being nonetheless empirically related to choices. We highlight the originality, promises and limits of this choice-based cardinalism. |
| Keywords: | ordinalism, Suppes, representation theorems, preference differences, cardinalism,ordinal utility, cardinal utility |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01462299&r=hpe |
| 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 plays a central role in economics, but there is a gap between theory, where it is dominant and applications, where monetary criteria are often used. For applications, a key difficulty for utilitarianism remains to define how utilities should be measured and compared across individuals. Drawing on Harsanyi's approach (Harsanyi, 1955) involving choices in risky situations, we introduce a new normalization of utilities that is the only one ensuring 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 embed these requirements in a new characterization of utilitarianism and study some implications of this "fair utilitarianism" for risk sharing, collective risk aversion and the design of health policy |
| Keywords: | Fairness; social risk; utilitarianism |
| JEL: | D63 D81 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:17005r&r=hpe |
| By: | Andrew Smyth (Department of Economics, Marquette University); Bart J. Wilson (Smith Institute for Political Economy and Philosophy and the Economic Science Institute, Chapman University) |
| Abstract: | We explore the intersection of growth theory and the theory of the firm with an experiment. Economic growth is possible in our experiment when agents specialize to exploit increasing returns. We find that low opportunity costs are sufficient for Marshallian internal economies, but that Marshallian external economies are slow to emerge in four probing treatment conditions. Transaction costs do not hamper external economies as we anticipated prior to collecting data. When external economies falter, it is because new ideas about the cost and value of more extensive specialization fail to emerge. Ideas are what make further divisions of the division of labor—and thus economic growth—either possible or impossible. |
| Keywords: | growth theory, theory of the firm, experimental economics, specialization, increasing returns, transaction costs |
| JEL: | C92 D23 L20 O40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:17-21&r=hpe |
| By: | Corak, Miles (University of Ottawa) |
| Abstract: | Income inequality is on the rise, and everyone, from President Obama and Pope Francis to Prince Charles and Standard & Poor's, is talking about it. But these conversations about what are arguably the most significant changes in the distribution of incomes and earnings since the 1940s are leading to very different views on how public policy should respond. This is as true in Canada as it is in almost all of the other rich countries where inequality has risen. In this paper I tell two stories about inequality – one from the perspective of those who feel it is not a problem worth the worry, and the other from the perspective of those who see it as "the defining challenge of our time" – in order to clarify the issues facing Canadians, and what public policy should do about them. |
| Keywords: | inequality, poverty, middle class, top incomes, social mobility |
| JEL: | D31 I32 J62 J65 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11005&r=hpe |
| By: | Bergstrom, Ted |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2017–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucsbec:qt9nt2h1tn&r=hpe |
| By: | Marco Faillo (University of Trento); Matteo Rizzolli (LUMSA University); Stephan Tontrup (New York University) |
| Abstract: | Abstract Some recent experimental literature on the taking game (a variation of the dictator game) suggests that human subjects may generally be taking averse, implying that the moral cost of taking exceeds the moral cost of not giving. In our experiment, our subjects could decide to take tangible objects (lottery scratchcards) brought from outside the lab and thus legally owned by other subjects. This legal treatment was compared with a more standard one where subjects earned their scratchcards inside the lab. Evidence is provided of a (weak) taking aversion that is greater when property is established inside the lab via an effort task than when it is pre-existing and legally enforceable outside the lab |
| Keywords: | property rights, dictator game, bully game, taking game, taking aversion, stealing, anonymity, effort, scratchcards. |
| JEL: | C91 D23 K11 P14 P26 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp63&r=hpe |