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on History and Philosophy of Economics |
| By: | Roger E A Farmer |
| Abstract: | This article surveys a subset of literature in macroeconomics which embraces the existence of multiple equilibria. This indeterminacy agenda in macroeconomics uses multiple-equilibrium models to integrate economics with psychology. Economists have long argued that business cycles are driven by shocks to the productivity of labour and capital. According to the indeterminacy agenda, the selffulfilling beliefs of financial market participants are additional fundamental factors that drive periods of prosperity and depression. The indeterminacy agenda provides a microeconomic foundation to Keynes’ General Theory that does not rely on the assumption that prices and wages are costly to change. |
| Keywords: | macroeconomics, multiple equilibria, psychology, business cycles, labour and capital |
| JEL: | D5 E40 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:niesrd:507&r=all |
| By: | S. Nageeb Ali; Ce Liu |
| Abstract: | We develop a theory of repeated interaction for coalitional behavior. We consider stage games where both individuals and coalitions may deviate. However, coalition members cannot commit to long-run behavior (on and off the path), and anticipate that today's actions influence tomorrow's behavior. We evaluate the degree to which history-dependence can ward off coalitional deviations. If monitoring is perfect, every feasible and strictly individually rational payoff can be supported by history-dependent conventions. By contrast, if players can make secret side-payments to each other, every coalition achieves a coalitional minmax value, reducing the set of supportable payoffs to the core of the stage game. |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1906.00280&r=all |
| By: | Alonso, Ricardo; Câmara, Odilon |
| Abstract: | We consider a persuasion model in which a sender influences the actions of a receiver by selecting an experiment (public signal) from a set of feasible experiments. We ask: does the sender benefit from becoming an expert — observing a private signal prior to her selection? We provide necessary and sufficient conditions for a sender to never gain by becoming informed. Our key condition (sequential redundancy) shows that the informativeness of public experiments can substitute for the sender's expertise. We then provide conditions for private information to strictly benefit or strictly hurt the sender. Expertise is beneficial when the sender values the ability to change her experimental choice according to her private information. When the sender does not gain from expertise, she is strictly hurt when different types cannot pool on an optimal experiment. |
| Keywords: | information design; Bayesian persuasion; experts |
| JEL: | D83 |
| Date: | 2018–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:86370&r=all |
| By: | J. Aislinn Bohren, (University of Pennsylvania and Carnegie Mellon University); Kareem Haggag (Carnegie Mellon University); Alex Imas (Carnegie Mellon University); Devin G. Pope (University of Chicago) |
| Abstract: | Discrimination has been widely studied in economics and other disciplines. In addition to identifying evidence of discrimination, economists often categorize the source of discrimination as either taste-based or statistical. Categorizing discrimination in this way can be valuable for policy design and welfare analysis. We argue that a further categorization is important and needed. Specically, in many situations economic agents may have inaccurate beliefs about the expected productivity or performance of a social group. This motivates our proposed distinction between accurate (based on correct beliefs) and inaccurate (based on incorrect beliefs) statistical discrimination. We do a thorough review of the discrimination literature and argue that this distinction is rarely discussed. Using an online experiment, we illustrate how to identify accurate versus inaccurate statistical discrimination. We show that ignoring this distinction {as is often the case in the discrimination literature { can lead to erroneous interpretations of the motives and implications of discriminatory behavior. In particular, when not explicitly accounted for, inaccurate statistical discrimination can be mistaken for taste-based discrimination, accurate statistical discrimination, or a combination of the two. |
| Keywords: | Discrimination, Inaccurate Beliefs |
| JEL: | D90 J71 |
| Date: | 2019–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:19-010&r=all |
| By: | Emilien Prost |
| Abstract: | The aim of this paper is to study in a theoretical perspective how the choice of the ability on which an executive is evaluated to be promoted may be a crucial stake. We show that a procedure where an executive is selected on a managerial ability will allow to increase his own wage, compared to a procedure where he needs to demonstrate ability on the same task than his employee. The intuition is that it would neutralize the issue of rivalry with the employee by preserving the self confidence of the employee in spite he has failed at being promoted, making him easier to incentivize. The consequence is that selecting leaders on their ability to outperform their employee will tend to favor the emergence of a leadership culture of humility during the promotion process in a sense that opponents will strategically reduce their performance to preserve the self-confidence of their employee and then make him less costly to incentivize. On the contrary, selecting leaders on managerial ability will favor the emergence of a leadership culture of demonstration of strength. |
| Keywords: | Legitimacy, leadership, tournament, contract theory, moral hazard, personnel economics. |
| JEL: | D00 D86 J50 M50 M51 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-20&r=all |
| By: | Emilien Prost; Gaye del Lo |
| Abstract: | The aim of this experimental paper is to show how the willingness of an employee to accept inequality of wages between him and his executive will depend on the ability on which the executive is evaluated when he is promoted. This willingness to accept inequality is captured by the minimum wage enough to incentivize to work for his executive. We show that selecting an executive on his ability to outperform his employee at his own task will be counterproductive to make employee accepting inequality of wages. We argue that the efficiency of “merit-based” promotion procedure may be challenged by this result. |
| Keywords: | Legitimacy, leadership, tournament, contract theory, moral hazard, personnel economics. |
| JEL: | D00 J50 M50 M51 D86 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2019-21&r=all |
| By: | Ögren, Anders (Department of Economic History, Lund University) |
| Abstract: | A currency union is when several independent sovereign nations share a common currency. This has been a recurring phenomenon in monetary history. In this article I study the theoretical foundations of such unions, and discuss some important currency unions in history, most notably the case of the US. Finally I contrast the design of the EMU with economic theories and historical experiences of currency unions. |
| Keywords: | Central banks; Fiscal systems; Monetary theory; Monetary policy; Optimum Currency Areas |
| JEL: | E42 F33 N11 N13 |
| Date: | 2019–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luekhi:0204&r=all |
| By: | David Maddy (ProCredit Holding); Clara Mattei (Department of Economics, New School for Social Research) |
| Abstract: | We offer an interpretative framework to analyze a recurrent phenomenon of capitalism: working classes oft e n a ppro ve of polici es that are detrimental to their material conditions. We focus on the mechanism of t he diffusion of economic ideas from treatise to the domain of public opinion. The work of novelist Ayn Rand popularizes market liberal, inequality-based economic doctrines present in the work of Ludwig von Mises. We argue that the economic justification of inequalit y was successfully tra nsmit ted through the mechanism of pov ert y sha me that emerges out of Rand 's influential Atlas Shrugged. Through its didactic narrative and abusive language the reader is powerfully taught that if they are not successful in the market society, the reason lies in their own personal deficiency and inferiority. This conception is internalized chiefly through the emotion of shame. Through the mechanism of "ot hering " class solidarity breaks down and social demands languish, thus the unequal status quo is preserved. |
| Keywords: | Ayn Rand, Ludwig von Mises, Self-Help, American Conservative Movement , Poverty Shame |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:new:wpaper:1910&r=all |