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on History and Philosophy of Economics |
| By: | Gilboa, Itzhak; Rouziou, Maria; Sibony, Olivier |
| Abstract: | Decision theory offers a formal approach to decision making, which is often viewed and taught as the rational way to approach managerial decisions. Half a century ago it generated high hopes of capturing and perhaps replacing intuition, and providing the “right” answer in practically all managerial situations. Today it seems fair to say that decision theory has not lived up to these expectations. Behavioral science provides ample evidence that managers fail to follow the dicta of decision theory, even when these are explained to them. As a result, executives often find decision theory frustrating and useless and prefer to rely on their intuition. This paper suggests that this extreme conclusion is unwarranted and calls for a re-appraisal of decision theory. We propose that it should not always be regarded as a mathematical tool that produces the answer; rather, it can be viewed as a framework for a dialog between the decision maker and the decision theorist. In one extreme, the decision theorist studies the problem and provides the “correct’’ answer. But in another, the decision theorist only challenges the decision maker’s intuition and logic. In between, a whole gamut of possible dialogs exists, in which decision theory doesn’t replace intuition, but supports and refines it. |
| Keywords: | decision theory; decision maker’s intuition |
| JEL: | A10 |
| Date: | 2018–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1266&r=hpe |
| By: | Gordon Menzies (University of Technology Sydney); Thomas Simpson (Blavatnik School of Government, University of Oxford); Donald Hay (University of Oxford); David Vines (Department of Economics, Balliol College, St Antony’s College, and Institute for New Economic Thinking (INET) at the Oxford Martin School, University of Oxford; Crawford School of Public Policy, Australian National University; and Centre for Economic Policy Research) |
| Abstract: | Bonuses in finance represents a bad equilbrium among multiple equilibria. Motivating agents with bonuses can promote untruthfulness, via motivation crowding out, justifying the decision to pay them bonuses. In the equilibrium that works in other professions, moral norms are upheld enough to not require bonuses. Escaping the bad equilibrium is difficult if banks engage in an ‘optimal’ amount of deceit (moral optimization). Restoring trust instead requires that untruthfulness be ruled out a priori (moral prioritization). Reinstating truth telling in finance must contend with a tendency for ethics to be confined to the private domain and motivation crowding out in finance. |
| Keywords: | Bank Bonuses; Trust; Deregulation |
| JEL: | G21 G28 H12 E52 |
| Date: | 2018–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:ecowps:48&r=hpe |
| By: | Nicolas Pinsard (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Le Cartel des Gauches resta au gouvernement de juin 1924 à juillet 1926, mois au cours duquel R. Poincaré revint aux affaires. Trois jours après que l'on sut que R. Poincaré avait accepté de diriger le gouvernement, le franc s'apprécia de 20 % par rapport à la livre sterling. Ce fut la fin de la crise du franc sur le marché des changes, et cela sans qu'aucune annonce politique soit faite, et avant même la déclaration d'investiture du gouvernement. Comment expliquer le "miracle Poincaré" ? La monnaie est "un lien de confiance", elle se décline en trois types de confiance : la confiance méthodique, éthique et hiérarchique. Or, la crise du franc, lors du gouvernement du Cartel, est essentiellement due à une perte de confiance hiérarchique en ce gouvernement. En effet, celui-ci n'était plus capable d'assurer son rôle de souverain monétaire, c'est-à-dire garantir la valeur du franc. Or, la monnaie est ce qui représente symboliquement l'unité d'une communauté de compte, et si celle-ci entre en crise, c'est la communauté en elle-même qui est fragilisée. Ainsi, il y eut une perte de confiance hiérarchique dans la monnaie. Comment expliquer que la crise économique ait suffisamment d'ampleur pour projeter dans la sphère politique des problèmes initialement économiques ? Comment s'opère le passage d'une crise économique à une crise politique qui se traduit par une perte de confiance hiérarchique ? Comment expliquer l'arrêt de la crise monétaire, à la fois économique et politique, et, in fine, comment la confiance hiérarchique a-t-elle été recouvrée, alors que ce phénomène de crise est auto-entraînant ? Gramsci et notamment ses concepts de crise organique et de césarisme seront mobilisés pour répondre à ces problématiques. Le concept de crise organique articule le passage de la crise économique à la crise politique. La notion de césarisme permet d'interpréter la cause du renversement soudain de la valeur du franc sur le marché des changes, dans la mesure où le "César" réussit à instrumentaliser la crise organique pour arriver au pouvoir et à l'arrêter lorsqu'il y parvient. Les raisons de la perte de confiance hiérarchique et son recouvrement peuvent alors être éclairées par ces deux concepts gramsciens qui complètent celui de confiance hiérarchique. |
| Keywords: | Monnaie , Raymond Poincaré , Cartel des Gauches , Théorie de la Régulation , Antonio Gramsci |
| Date: | 2016–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01367997&r=hpe |
| By: | Jérôme Hergueux (ETH Zurich); Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Stéphane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales); Jason Shogren (Departement of Economics and Finance, University of Wyoming - UW - University of Wyoming) |
| Abstract: | Real economic commitment (or the lack of it) of others affects a person's preferences to cooperate. But what if the commitment of others cannot be observed ex ante? Herein we examine how a classic non-monetary institution– a solemn oath of honesty –creates economic commitment within the public goods game. Commitment-through-the-oath asks people to hold themselves to a higher standard of integrity. Our results suggest the oath can increase cooperation (by 33%)– but the oath does not change preferences for cooperation. Rather people react quicker and cooperate, taking less time to ponder on the strategic free riding behavior. |
| Keywords: | WorkingPublic good game,Social Preference,Truth Keywords: Public good game |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01379060&r=hpe |
| By: | Dohmen, Thomas (University of Bonn and IZA); Quercia, Simone (University of Bonn); Willrodt, Jana (Düsseldorf Institute for Competition Economics (DICE)) |
| Abstract: | We show that the disposition to focus on favorable or unfavorable outcomes of risky situations affects willingness to take risk as measured by the general risk question. We demonstrate that this disposition, which we call risk conception, is strongly associated with optimism, a stable facet of personality and that it predicts real-life risk taking. The general risk question captures this disposition alongside pure risk preference. This enlightens why the general risk question is a better predictor of behavior under risk across different domains than measures of pure risk preference. Our results also rationalize why risk taking is related to optimism. |
| Keywords: | risk taking behavior, optimism, preference measures, risk conception |
| JEL: | D91 C91 D81 D01 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11642&r=hpe |
| By: | Emeline Bezin (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Grégory Ponthière (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We revisit the Tragedy of the Commons in an dynamic overlapping generations economy peopled of shepherds who decide how many sheep they let graze on a common parcel of land, while relying on di fferent forms of rationality (Nash players, Pure or Impure Kantian players). We examine the dynamics of heterogeneity and land congestion when the prevalance of those di fferent forms of rationality evolves over time follow- ing a vertical/oblique socialization process a la Bisin and Verdier (2001). We study the impacts of a quota and of a tax on the congestion of land, and we show that introducing a quota may, in some cases, reduce the proportion of Kantians (Pure and Impure), and worsen the Tragedy of Commons with respect to the laissez-faire. Finally, we examine whether a government should promote either a Pure or an Impure Kantian morality, by comparing the relative fi tness of Pure/Impure Kantians, and their interactions with the congestion of land. |
| Keywords: | fitness,overlapping generations,Tragedy of the Commons,heterogeneity,Kantian rationality,socialization |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01403244&r=hpe |
| By: | Lozovanu, Dmitrii; Pickl, Stefan |
| Abstract: | In Contributions to game theory and management, vol. XI. Collected papers presented on the Eleventh International Conference Game Theory and Management / Editors Leon A. Petrosyan, Nikolay A. Zenkevich. - SPb.: Saint Petersburg State University, 2018. - 330 p. The collection contains papers accepted for the Eleventh International Game Theory and Management (June 28-30, 2017, St. Petersburg State University, St. Petersburg, Russia). |
| Keywords: | mean payoff game, pure stationary strategy, mixed stationary strategy, Nash equilibria, |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:sps:cpaper:10478&r=hpe |
| By: | Chadha, J. |
| Abstract: | We consider the role of money as a means of payment, store of value and medium of exchange. I outline a number of quantitative and qualitative experiences of monetary management. Successful regimes have sprung up in a variety of surprising places, and been sustained with state (centralised) interventions. Although the link between state and money, and its standard of identity and account may be clear, particularly in earlier stages of economic development, the extent to which the state is widely felt to hold responsibility for 'sound money' is less clear in modern democracies, where there are many other public responsibilities implying ongoing trade-offs. |
| Keywords: | money, gold standard, paper money, Samuelson |
| JEL: | B22 E02 E31 |
| Date: | 2018–08–02 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1842&r=hpe |
| By: | Schneider, Herbert |
| Abstract: | In the first section of Das Kapital by Karl Marx different forms of values are analysed. From a mathematical point of view one can find therein structures, which correspond to elements of the mathematical theory of categories. These are especially the limit of cones and the definition of subobjects as morphisms. Using the limit cone, the concept of money contains the categorial product of commodities. The concept of the value of a commodity contains the categorial definition of a subobject. |
| Keywords: | Marx, Kapital,capital, Ware,commodity, Geld, Money, Tauschsphäre, exchange space, Tausch, Exchange, Tauschwert, exchange-value, exchange value, Gebrauchswert, use-value, use value, Wertform, value-form, form of value, Äquivalentform, universal equivalent form, Äquivalentware, universal equivalent commodity, Wert, value, Arbeitsproduktivität, labour productivity, Mathematik, mathematics, Kategorientheorie, category theory, Kategorie, category, kategoriales Produkt, categorical product, Limeskegel, limit cone, Unterobjekt, subobject |
| JEL: | A12 B14 B16 B51 C02 C60 C65 P16 |
| Date: | 2018–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88207&r=hpe |
| By: | Gary Charness (Department of Economics, University of California, Santa Barbara); Alessandro Sontuoso (Philosophy, Politics and Economics, University of Pennsylvania); ; |
| Abstract: | We investigate how a player’s strategic behavior is affected by the set of notions she uses in thinking about the game, i.e., the “frame”. To do so, we consider matching games where two players are presented with a set of objects, from which each player must privately choose one (with the goal of matching the counterpart’s choice). We propose a behavioral theory positing that different player types are aware of different attributes of the strategy options, hence different frames; we then rationalize why differences in players’ frames may lead to differences in choice behavior. Unlike previous theories of framing, our model features an epistemic structure allowing for the case in which an individual learns new frames, given some initial unawareness (of the fact that her perception of attributes may be incomplete). To test our model, we introduce an experimental design in which we bring about different frames by manipulating subjects’ awareness of various attributes. The experimental results provide striking support for our theory. |
| Keywords: | frames, focal points, unawareness, coordination games |
| JEL: | C72 C91 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:ppc:wpaper:0013&r=hpe |
| By: | Sun, Fengyan; Parilina, Elena |
| Abstract: | In Contributions to game theory and management, vol. XI. Collected papers presented on the Eleventh International Conference Game Theory and Management / Editors Leon A. Petrosyan, Nikolay A. Zenkevich. - SPb.: Saint Petersburg State University, 2018. - 330 p. The collection contains papers accepted for the Eleventh International Game Theory and Management (June 28-30, 2017, St. Petersburg State University, St. Petersburg, Russia). |
| Keywords: | coalition structure, stability, the Shapley value, the ES-value, four-player cooperative games, |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:sps:cpaper:10483&r=hpe |
| By: | Francesco Saraceno (Observatoire français des conjonctures économiques) |
| Abstract: | This paper gives an assessment of the current state of the debate on fiscal policy effectiveness. I begin with an account of the theory of fiscal policy, and how it has evolved from the pre-Keynesians to the emergence of a “New Consensus” that dominated theory (and policy-making) until the crisis of 2008. Fiscal policy, a critical underpinning behind the full employment policies of the Post-WWII period, was removed from the policy-makers’ toolbox by the New Consensus, and preference given to rules over discretion in government interventions. The paper then highlights how the Economic and Monetary Union of the European Union (EMU) is an incarnation of the New Consensus, and argues that this had a rather negative impact on the growth performance of the Eurozone. The Stability and Growth Pact, the EMU fiscal rule, is then dissected to conclude that it is far from optimal even if it was never really applied. The paper then shows how the crisis has shaken the Consensus, and is leading to a reassessment of the utility of fiscal policy |
| Keywords: | Fiscal rules; Fiscal policy; EMU; Multipliers; History of economic thought; United States |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/eul7jlnf19iq8tdp0vlfv63n5&r=hpe |
| By: | Nicolas J. Duquette (Sol Price School of Public Policy, University of Southern California); Enda Hargaden (Department of Economics, University of Tennessee) |
| Abstract: | This paper demonstrates that economic inequality has a negative, causal effect on prosocial behavior, specifcally, charitable giving. Standard theories predict that greater inequality increases giving, though income tax return data suggest the opposite may be true. We develop a new theory which, incorporating insights from behavioral economics and social psychology, predicts when greater inequality will lower charitable giving. We test the theory in an experiment on donations to a real-world charity. By randomizing the income distribution, we identify the effect of inequality on giving behavior. Consistent with our model, heightened inequality causes total giving to fall. Policy agendas that rely on charitable giving and other voluntary, prosocial behaviors to mitigate income and wealth inequality are likely to fail. |
| Keywords: | Inequality; charitable giving; social distance; lab experiments |
| JEL: | C91 D31 D64 H23 N32 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ten:wpaper:2018-03&r=hpe |
| By: | Margaret Insley (Department of Economics, University of Waterloo); Peter A. Forsyth (Cheriton School of Computer Science, University of Waterloo) |
| Abstract: | We study three different climate change games and compare with the outcome of choices by a Social Planner. In a dynamic setting, two players choose levels of carbon emissions. Rising atmospheric carbon stocks increase average global temperature which damages player utilities. Temperature is modeled as a stochastic differential equation. We contrast the results of a Stackelberg game with a game in which both players as leaders (a Leader-Leader or Trumpian game). We also examine a game, called an Interleaved game, where there is a significant time interval between player decisions. One or both players may be better off in these alternative games compared to the Stackelberg game, depending on state variables. We conclude that it is important to consider alternate game structures in examining strategic interactions in pollution games. We also demonstrate that the Stackelberg game is the limit of the Interleaved game as the time between decisions goes to zero. |
| JEL: | C61 C73 Q52 Q54 |
| Date: | 2018–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:wat:wpaper:1804&r=hpe |
| By: | Gordon Menzies (University of Technology Sydney) |
| Abstract: | A simplifed Lewis model with evidence-based assumptions treats all rural output as nontraded, and pays rural workers a convex combination of their average and marginal products. Lewis style transition is characterized as an increase in the weight on marginal product in the determination of the rural wage. This integration with standard trade models underscores the importance of trade for development, and predicts a real exchange rate appreciation for economies undergoing a Lewis style transition. |
| Keywords: | Dual Economy; Lewis Model; Neoclassical trade models |
| JEL: | F11 F31 F41 O13 O14 |
| Date: | 2018–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:uts:ecowps:46&r=hpe |