nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2017‒11‒12
eight papers chosen by
Erik Thomson
University of Manitoba

  1. Gravity, Distance, and International Trade By Scott L. Baier; Amanda Kerr; Yoto V. Yotov
  2. Reactivity in Economic Science By Bruno S. Frey
  3. Kuhn's Theorem for Extensive Games with Unawareness By Burkhard Schipper
  4. Strategic Teaching and Learning in Games By Burkhard Schipper
  5. The economics and the political economy of new-developmentalism By Pereira, Luiz C. Bresser
  6. Production and distribution in political-economic systems : a non-atomic game By Alex Coram
  7. The Myth of Deconsolidation: Rising Liberalism and the Populist Reaction By Alexander, Amy C.; Welzel, Christian
  8. Scaling for economists: lessons from the non-adherence problem in the medical literature By Omar Al-Ubaydli; John List; Danielle LoRe; Dana Suskind

  1. By: Scott L. Baier; Amanda Kerr; Yoto V. Yotov
    Abstract: We review and interpret the main theoretical developments in the gravity literature from its very early, a-theoretical applications to the latest structural contributions. We also discuss challenges and implement methods to estimate empirical gravity equations. We finish with a presentation and examples of numerical simulations with the structural gravity model. Throughout the analysis we attempt to emphasize the links and importance of transportation costs for the trade literature and we outline avenues where we believe interdisciplinary contributions between the international trade and transportation economics fields will be most valuable.
    Keywords: structural gravity, estimation, simulation, transportation costs
    JEL: F10 F43 O40
    Date: 2017
  2. By: Bruno S. Frey
    Abstract: There is a fundamental difference between the natural and the social sciences due to reactivity. This difference remains even in the age of Artificially Intelligent Learning Machines and Big Data. Many academic economists take it as a matter of course that economics should become a natural science. Such a characterization misses an essential aspect of a social science, namely reactivity, i.e. human beings systematically respond to economic data, and in particular to interventions by economic policy, in a foreseeable way. To illustrate this finding, I use three examples from quite different fields: Happiness policy, World Heritage policy, and Science policy.
    Keywords: economics, social, and natural science, reactivity, data, happiness, economic policy
    JEL: A10 B40 C70 C80 D80 Z10
    Date: 2017
  3. By: Burkhard Schipper (Department of Economics, University of California Davis)
    Abstract: We extend Kuhn's Theorem to extensive games with unawareness. This extension is not entirely obvious: First, extensive games with non-trivial unawareness involve a forest of partially ordered game trees rather than just one game tree. An information set at a history in one tree may consist of histories in a less expressive tree. Consequently, perfect recall takes a more complicated form as players may also become aware of new actions during the play. Second, strategies can only be partially an object of ex-ante choice in games with unawareness. Finally, histories that a player may expect to reach with a strategy profile may not be the histories that actually occur with this strategy profile, requiring us to define appropriate notions of equivalence of strategies.
    Keywords: perfect recall, mixed strategy, behavior strategy, unawareness.
    JEL: C72 D83
    Date: 2017–11–02
  4. By: Burkhard Schipper (Department of Economics, University of California Davis)
    Abstract: It is known that there are uncoupled learning heuristics leading to Nash equilibrium in all finite games. Why should players use such learning heuristics and where could they come from? We show that there is no uncoupled learning heuristic leading to Nash equilibrium in all finite games that a player has an incentive to adopt, that would be evolutionary stable or that could "learn itself". Rather, a player has an incentive to strategically teach such a learning opponent in order to secure at least the Stackelberg leader payoff. The impossibility result remains intact when restricted to the classes of generic games, two-player games, potential games, games with strategic complements or 2 x 2 games, in which learning is known to be "nice". More generally, it also applies to uncoupled learning heuristics leading to correlated equilibria, rationalizable outcomes, iterated admissible outcomes, or minimal curb sets. A possibility result restricted to "strategically trivial" games fails if some generic games outside this class are considered as well.
    Keywords: Learning in games, Interactive learning, Higher-order learning
    JEL: C72 C73
    Date: 2017–05–02
  5. By: Pereira, Luiz C. Bresser
    Abstract: This paper resumes new developmentalism – a theoretical framework being defined since the early 2000s to understand middle-income countries. It contains a political economy, the beginning of a microeconomics and a macroeconomics. It is originated in development economics or classical developmentalism and in post-Keynesian macroeconomics. While classical developmentalism asked for protection of the manufacturing industry, new developmentalism asks for the levelling of the playing field, which the tendency to the cyclical and chronic overvaluation of the exchange rate denies. New developmentalism is focused in the current account and the corresponding exchange rate. It offers a new theory of the determination of the exchange rate, based on the distinction between a value and a price of the foreign money, and on the tendency to the overvaluation of the exchange rate. Counterintuitively, it argues that middleincome countries do not require foreign finance, and, so, it defends that developing countries show a balanced current account, or, if it faces the Dutch disease, a current account surplus proportional to the severity of the disease.
    Date: 2017–10
  6. By: Alex Coram (University of Massachusetts Amherst)
    Abstract: Societies are often compared in terms of the relative shares of the domestic product controlled by government but we don’t have much by way of analytical tools to allow us to think about the ways in which changes in these shares affect the characteristics of production and distribution. This paper treats production and distribution as a cooperative game with a continuum of players. Outcomes depend on politics and economics. It has a number of unexpected results. Among these are that relative shares do not depend on the majority rule the production function and that the characteristics of inegalitarian and egalitarian systems may converge.
    Date: 2017
  7. By: Alexander, Amy C.; Welzel, Christian
    Abstract: [Introduction] In two widely read articles, Roberto Foa and Yascha Mounk reach the alarming conclusion that support for democracy is in a rapid generational decline. The remarkable point about this diagnosis is its emphasis on the Millennial generation’s fading support for democracy and the claim that democratic support is steeply eroding in even the most mature democracies. The latter contention marks a significant turning point in the debate. Public discourse has taken a pessimistic tone since quite some time, bemoaning the apparently ubiquitous resurgence of authoritarianism outside the Western world. But the mature democracies of the West seemed to constitute an insurmountable firewall against the authoritarian offense. The novelty in Foa and Mounk’s analysis is that it questions this very premise, resonating with growing concerns in the face of spreading populism. Indeed, Foa and Mounk imply that the generational erosion of democratic support is responsible for the populist turn throughout the electorates of mature democracies, especially among younger cohorts. In conclusion, Foa and Mounk suggest that democracy itself is in danger, including places where it seemed safest over many generations...
    Date: 2017
  8. By: Omar Al-Ubaydli; John List; Danielle LoRe; Dana Suskind
    Date: 2017

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