nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2018‒01‒01
eight papers chosen by
Erik Thomson
University of Manitoba

  1. Game-Theoretic Accounts of Social Norms. The Role of Normative Expectations By Cristina Bicchieri; Alessandro Sontuoso
  3. Triffin: dilemma or myth? By Michael Bordo; Robert N McCauley
  4. Bounded rationality in differential games By Beckmann, Klaus B.
  6. The strong increase of Austrian government debt in the Kreisky era: Austro-Keynesianism or just stubborn forecast errors? By Florian Brugger; Joern Kleinert
  7. Averting defaults in turbulent times: controversies over the League of Nations preferred creditor status By Flores Zendejas, Juan
  8. Economie expérimentale : comportements individuels, stratégiques et sociaux - Introduction By Nicolas Jacquemet; Olivier L'Haridon

  1. By: Cristina Bicchieri; Alessandro Sontuoso (Philosophy, Politics and Economics, University of Pennsylvania)
    Abstract: This is a draft of a chapter in a planned book on behavioral game theory. Social norms and social preferences have increasingly become an integral part of the economics discourse. After disentangling the two notions, this paper focuses on social norms, which we stipulate as group-specific solutions to strategic problems. More precisely, we define social norms as behavioral regularities emerging in mixed-motive games, as a result of preferences for conformity conditional on an endogenous set of beliefs and expectations. To that end, we review models that explicitly feature normative expectations, as well as models that account for category-specific prescriptions. We finally survey some relevant experimental evidence.
    Keywords: social norms, social preferences, social dilemmas
    JEL: C72 C92
    Date: 2017–11
  2. By: Saverio M. Fratini
    Abstract: Absolute rent, in Marx’s view, has an upper limit represented by the difference between the value and the price of production of agricultural commodities. The actual relevance of this limit was questioned by Bortkiewicz and other scholars because of the difficulties concerning the argument which Marx based it on. The lack of this upper limit prompted a number of scholars to claim that there is no difference between absolute rent and a rent paid by a monopoly price. Referring to the classical/Marxian theory of monopoly price, we shall argue that is still possible— notwithstanding the missing upper limit—to distinguish absolute rent from a rent actually due to a monopoly price. In particular, the difference between the two rests on the removability (in the case of absolute rent) or the persistency (in the case of monopoly rent) of the obstacle to the expansion of agricultural production.
    Keywords: Marx, Bortkiewicz, absolute rent, monopoly price, effectual demand
    JEL: B12 B14 B51 Q15
    Date: 2017–12
  3. By: Michael Bordo; Robert N McCauley
    Abstract: Triffin gained enormous influence by reviving the interwar story that gold scarcity threatened deflation. In particular, he held that central banks needed to accumulate claims on the United States to back money growth. But the claims would eventually surpass the US gold stock and then central banks would inevitably stage a run on it. He feared that the resulting high US interest rates would cause global deflation. However, we show that the US gold position after WWII was no worse than the UK position in 1900. Yet it took WWI to break sterling's gold link. And better and feasible US policies could have kept Bretton Woods going. This history serves as a backdrop to our critical review of two later extensions of Triffin. One holds that the dollar's reserve role required US current account deficits. This current account Triffin is popular, but anachronistic, and flawed in logic and fact. Nevertheless, it pops up in debates over the euro's and the renminbi's reserve roles. A fiscal Triffin holds that global demand for safe assets will either remain dangerously unsatisfied, or force excessive US fiscal debt. Less flawed, this story posits implausibly inflexible demand for and supply of safe assets. Thus, these stories do not convince in their own terms. Moreover, each lacks Triffin's clear cross-over point from a stable system to an unstable one. Triffin's seeming predictive success leads economists to wrap his brand around dissimilar stories. Yet Triffin's dilemma in its most general form correctly points to the conflicts and difficulties that arise when a national currency plays a role as an international public good.
    Keywords: Triffin dilemma, foreign exchange reserves, gold, US current account, safe assets, world's banker
    JEL: F32 F33 F34 F41 H63
    Date: 2017–12
  4. By: Beckmann, Klaus B. (Helmut Schmidt University, Hamburg)
    Abstract: The present paper proposes a myopic, boundedly rational heuristic for individual decision-making in differential game settings. I demonstrate that this type of behaviour converges to Nash equilibrium in infinitely repeated stage games without a state variable if the stage game is strategically symmetric. Two examples are used to illustrate the application of the heuristic in differential games.
    Keywords: differential games; simulation; bounded rationality
    JEL: C72
    Date: 2017–12–19
  5. By: Giovanni Scarano
    Abstract: Subsequent to the financial crisis of 2007-2008 there has been a revival of theories on the possibility of a “secular stagnation”. Some of these theories hark back to Alvin Hansen’s doctrine, developed on Keynesian bases. Nevertheless, they have shifted attention toward a disproportion between saving and investment only explained on the basis of demographic and technological factors, typical of a neoclassical framework of growth theory. However, the idea that neo-capitalist economies have an inherent tendency to stagnation has also long been the main research objective of many heterodox economists, in particular Kaleckian and neo-Marxist, who found stagnation to be a major result of the monopolistic nature of big corporations and the features of their monopolistic forms of competition. The paper deals with some of these theories and focuses on the role that corporate governance in big corporations can play in producing growing corporate savings and putting them into financial channels.
    Keywords: Stagnation, Capacity Utilization, Corporate Savings, Financialisation, Financial Crises.
    JEL: B51 E11 E12 E32 G35
    Date: 2017–12
  6. By: Florian Brugger (University of Graz, Austria); Joern Kleinert (University of Graz, Austria)
    Abstract: In the Kreisky era (1970–1983), Austrian government debts increased strongly. Historically, the attitude of Kreisky and the Social Democrats towards Keynesian fiscal policy measures to fight unemployment during the oil crises has been held to be responsible for the successive budget deficits. Kreisky’s ideological debt policy has become a narrative that has strongly influenced Austrian fiscal policy until today. While this explanation for the strong increase in public debt during the Kreisky era is widely accepted, it is not necessarily true. In this paper, we assess a different explanation: the deficits might simply have resulted from forecast errors of GDP growth in those turbulent times. We find that about one-third of the increase in the debt-over-GDP ratio is directly explained by short-run forecast errors, i.e., the difference between the approved and the realized budget, and an additional one-fifth is the lower bound of forecast error regarding the long-run growth rate.
    Keywords: Fiscal policy; Government debt; Forecast errors; Narrative economics
    JEL: H62 H68 E37 E65
    Date: 2017–12
  7. By: Flores Zendejas, Juan
    Abstract: Loans by the IMF are considered to have “preferred creditor status”. However, given the potential distortions for the allocation of resources in IMF lending, the current debt crisis in Greece has raised new questions about the need for such treatment. This paper brings a historical dimension to the debate and analyzes the link between a multilateral’s preferred creditor status and its capacity to support countries in financial distress. During the early 1930s, the League of Nations attempted to secure a preferred status for the loans it promoted. At the onset of the Great Depression, while these loans were not legally senior, governments granted the League loans a de facto preferred status under the assumption that averting default would foster renewed support from the League. However, when support did not materialize, the loans’ exceptional treatment vanished, further weakening the position of the League to secure emergency lending.
    Keywords: sovereign defaults, preferred creditor status, IMF, sovereign debt markets
    JEL: N24 F34 F42 F55
    Date: 2017
  8. By: Nicolas Jacquemet (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Olivier L'Haridon (Economie industrielle et economie comportementale - CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - CNRS - Centre National de la Recherche Scientifique - TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Les vingt-cinq dernières années ont vu se populariser un renouveau des méthodes empiriques dans de nombreux domaines de l'analyse économique. Parmi celles-ci une place de plus en plus importante a été accordée à l'emploi de méthodes expérimentales, notamment comme outil empirique privilégié d'étude des nouvelles perspectives offertes par l'économie comportementale. L'élargissement des méthodes empiriques qui a suivi ce mouvement, l'accumulation de nombre de résultats significatifs a conduit l'Actualité Economique à proposer un panorama de cette littérature, non seulement pour en présenter les prémisses et en tirer un bilan intermédiaire mais également pour en présenter les perspectives. Au sens strict, les méthodes d'économie expérimentale emploient les principes de la méthode expérimentale, inspirée des sciences naturelles, pour évaluer les prédictions des modèles économiques en se concentrant plus particulièrement sur les comportements individuels. Les piliers sur lesquels s'appuie cette méthode sont traditionnellement au nombre de trois. Le premier pilier est constitué par le contrôle de l'environnement dans lequel se font les choix individuels. Dans une expérience de laboratoire, le chercheur essayer de contrôler le plus possible le contexte dans lequel les agents économiques prennent leurs décisions, afin d'isoler l'effet d'un traitement particulier. Typiquement, la méthode expérimentale permet de spécifier de manière fine et précise les institutions d'échanges et la forme des interactions sociales, les modes de présentation des choix et les échelles de réponse afin de contrôler au mieux l'environnement de choix. Le deuxième pilier est le contrôle de l'assignation aléatoire des participants dans différents traitements. Ce deuxième pilier est fondamental pour l'identification des effets de traitements et l'évaluation empirique sous-jacente qui en est espérée. Le troisième pilier, le plus contesté, repose sur la présence d'incitations monétaires assurant que les choix effectués en laboratoire sont associés à de réelles conséquences économiques.
    Keywords: Economie expérimentale
    Date: 2016

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