nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2019‒07‒29
sixteen papers chosen by
Erik Thomson
University of Manitoba

  1. Singularities and Catastrophes in Economics: Historical Perspectives and Future Directions By Michael S. Harr\'e; Adam Harris; Scott McCallum
  2. Gordon Tullock on Majority Voting: the Making of a Conviction. By Julien Grandjean
  3. Samuelson's Contributions to Population Theory and Overlapping Generations in Economics By Lee, Ronald D.
  4. Strategic complexity and the value of thinking By Gill, David; Prowse, Victoria
  5. Rationalizability, Observability and Common Knowledge By Antonio Penta; Peio Zuazo-Garin
  6. Luigi L. Pasinetti: An intellectual biography by Mauro L. Baranzini and Amalia Mirante. An analysis and comment By Schilirò, Daniele
  7. Going Dutch: The management of monetary policy in the Netherlands during the interwar gold standard By Colvin, Christopher L.; Fliers, Philip
  8. Measuring Success: Clio and the Value of Database Creation. By Claude DIEBOLT; Michael J. HAUPERT
  9. About the origins and development of the concept of the School of Salamanca By Marjorie Grice–hutchinson
  10. La transdisciplinarité, combien de divisions ? By Florent Pasquier
  11. Understanding the relationship between poverty, inequality and growth: a review of existing evidence By Abigail McKnight
  12. When happy people make society unhappy: How incidental emotions affect compliance behavior By Fochmann, Martin; Hechtner, Frank; Kirchler, Erich; Mohr, Peter
  13. Daunou’s Voting Method By Salvador Barberà; Walter Bossert; Kataro Suzumura
  14. Barter and the Origin of Money and Some Insights from the Ancient Palatial Economies of Mesopotamia and Egypt By Svizzero, Serge; Tisdell, Clement
  16. Your money and your life: risk attitudes over gains and losses By Oliver, Adam

  1. By: Michael S. Harr\'e; Adam Harris; Scott McCallum
    Abstract: Economic theory is a mathematically rich field in which there are opportunities for the formal analysis of singularities and catastrophes. This article looks at the historical context of singularities through the work of two eminent Frenchmen around the late 1960s and 1970s. Ren\'e Thom (1923-2002) was an acclaimed mathematician having received the Fields Medal in 1958, whereas G\'erard Debreu (1921-2004) would receive the Nobel Prize in economics in 1983. Both were highly influential within their fields and given the fundamental nature of their work, the potential for cross-fertilisation would seem to be quite promising. This was not to be the case: Debreu knew of Thom's work and cited it in the analysis of his own work, but despite this and other applied mathematicians taking catastrophe theory to economics, the theory never achieved a lasting following and relatively few results were published. This article reviews Debreu's analysis of the so called ${\it regular}$ and ${\it crtitical}$ economies in order to draw some insights into the economic perspective of singularities before moving to how singularities arise naturally in the Nash equilibria of game theory. Finally a modern treatment of stochastic game theory is covered through recent work on the quantal response equilibrium. In this view the Nash equilibrium is to the quantal response equilibrium what deterministic catastrophe theory is to stochastic catastrophe theory, with some caveats regarding when this analogy breaks down discussed at the end.
    Date: 2019–07
  2. By: Julien Grandjean
    Abstract: This paper participates in the formation of the history of public choice theory. In particular, it will focus on the role of Gordon Tullock and the analysis of the simple majority decision-making process promoted in the famous Calculus of Consent, written along with James M. Buchanan. This paper shows that Tullock has already think about the issue of majority voting prior to the writing of his common book with Buchanan. Between 1959 and 1961 in particular, while Tullock was a postdoctoral fellow at the Thomas Jefferson Center for Studies in Political Economy and Social Philosophy at the University of Virginia and later Assistant Professor in the Department of International Studies at the University of South Carolina, he had an interesting interaction with Anthony Downs about majority decision-making process in a democracy. This interaction that consists in a correspondence between Tullock, Downs and their editors can be found for a part in the Gordon Tullock papers of the Hoover Institution Archives. It gave birth to some major articles by the two authors such as The Problem of Majority Voting by Tullock in 1959, Why the Government Budget is Too Small in a Democracy by Downs in 1960, Problems of Majority Voting: In Defense of Majority Voting by Downs and Problems of Majority Voting: Reply to a Traditionalist by Tullock in 1961. Our purpose is to highlight the interaction that forms the basis of these publications and shows the way Tullock matured his view about the majoritarian rule – one of the cornerstones of the public choice theory – at this time.
    Keywords: Gordon Tullock, Anthony Downs, public choice, majority voting, logrolling, unanimity.
    JEL: B21 B31 D72
    Date: 2019
  3. By: Lee, Ronald D. (University of California, Berkeley)
    Abstract: Paul Samuelson made a series of important contributions to population theory for humans and other species, evolutionary theory, and the theory of age structured life cycles in economic equilibrium and growth. The work is highly abstract but much of it was intended to illuminate issues of compelling policy importance, such as declining fertility and population aging. While his work in population economics has been very influential, his work in population and evolution appears to have been largely overlooked, perhaps because he seldom published in demographic journals or went to population meetings. Here I discuss his many contributions in all these areas, but give particular attention to demographic aspects of his famous work on overlapping generation models, social security systems, and population growth.
    Keywords: Samuelson, overlapping generations, social security, population growth rate, reproductive value, population cycles, intergenerational transfers, predator-prey, altruism
    JEL: J11 J18 Q57 H55 D64
    Date: 2019–06
  4. By: Gill, David (Purdue University); Prowse, Victoria (Purdue University)
    Abstract: Response times are a simple low-cost indicator of the process of reasoning in strategic games. In this paper, we leverage the dynamic nature of response-time data from repeated strategic interactions to measure the strategic complexity of a situation by how long people think on average whenthey face that situation (where we categorize situations according to the characteristics of play in the previous round). We find that strategic complexity varies significantly across situations, and we find considerable heterogeneity in how responsive subjects’ thinking times are to complexity. We also study how variation in response times at the individual level across rounds affects strategic behavior and success. We find that ‘overthinking’ is detrimental to performance: when a subject thinks for longer than she would normally do in a particular situation, she wins less frequently and earns less. The behavioral mechanism that drives the reduction in performance is a tendency to move away from Nash equilibrium behavior. Overthinking is detrimental even though subjects who think for longer on average tend to be more successful. Finally, cognitive ability and personality have no effect on average response times.
    Keywords: Response time; decision time; thinking time; strategic complexity; game theory; strategic games; repeated games; beauty contest; cognitive ability; personality. JEL Classification: C72; C91.
    Date: 2019
  5. By: Antonio Penta; Peio Zuazo-Garin
    Abstract: We study the strategic impact of players' higher order uncertainty over the observability of actions in general two-player games. More specifically, we consider the space of all belief hierarchies generated by the uncertainty over whether the game will be played as a static game or with perfect information. Over this space, we characterize the correspondence of a solution concept which represents the behavioral implications of Rationality and Common Belief in Rationality (RCBR), where `rationality' is understood as sequential whenever a player moves second. We show that such a correspondence is generically single-valued, and that its structure supports a robust refinement of rationalizability, which often has very sharp implications. For instance: (i) in a class of games which includes both zero-sum games with a pure equilibrium and coordination games with a unique efficient equilibrium, RCBR generically ensures efficient equilibrium outcomes; (ii) in a class of games which also includes other well-known families of coordination games, RCBR generically selects components of the Stackelberg pro les; (iii) if common knowledge is maintained that player 2's action is not observable (e.g., because 1 is commonly known to move earlier, etc.), in a class of games which includes of all the above RCBR generically selects the equilibrium of the static game most favorable to player 1.
    Keywords: eductive coordination, extensive form uncertainty, first-mover advantage, Krpes hypothesis, higher order beliefs, Rationalizability, robustness, Stackelberg selections
    JEL: C70 C71 C72 D82 D83
    Date: 2019–07
  6. By: Schilirò, Daniele
    Abstract: This paper is an analysis with comments of the book by Mauro Baranzini and Amalia Mirante Luigi L. Pasinetti: An intellectual biography, London, Palgrave Macmillan, 2018
    Keywords: Luigi Pasinetti; intellectual biography; Cambridge School of Keynesian Economics; growtn theory; structural change
    JEL: B3 B5 O41
    Date: 2019–07
  7. By: Colvin, Christopher L.; Fliers, Philip
    Abstract: Under what conditions can policymakers make demonstrably poor policy choices? By providing a new account of monetary policy management in the Netherlands during the interwar gold standard, we show how policymakers can fail to escape their long-held beliefs and refuse to consider available policy alternatives. Using high-frequency macroeconomic data, we are the first to document that the Netherlands' policymakers were able to conduct an independent monetary policy in the 1930s. We then show how this independence was squandered on fixing the guilder's exchange rate, a policy which led only to deflation, trade deficits, corporate bankruptcies and mass unemployment. We explain the government's policy stance by documenting the beliefs of politicians and central bankers, and then by investigating how business leaders and public intellectuals attempted to influence these beliefs.
    Keywords: monetary policy,exchange rate policy,gold standard,interwar period,the Netherlands
    JEL: N14 E42 E52 E58
    Date: 2019
  8. By: Claude DIEBOLT; Michael J. HAUPERT
    Abstract: In a recent article Stefano Fenoaltea (2018) bemoaned the loss of respect and focus on the importance of creating databases, or “measurement” as he referred to it. Cliometrics has made and continues to make valuable contributions not just to the field of economic history, but economics in general. In particular, we focus on the contribution of cliometrics to the creation of datasets. We highlight several important cases in both the past and present, of recognized important contributions of new datasets to the economics discipline. We argue that Clio has continually focused on, and valued, the creation of new data sets and the clever and novel ways they have been exploited to further the frontiers of knowledge, and that these efforts are both appreciated and recognized.
    Keywords: Cliometrics, Databases, Economic history, Measurement.
    JEL: A10 A12 B41 C81 C82 N00 N01
    Date: 2019
  9. By: Marjorie Grice–hutchinson (Universidad de Málaga [Málaga])
    Abstract: After a long series of cumulative efforts, the historians of Economic Thought have agreed substantially on what have been the main contributions of Spanish scholasticism to economic science. They lie in the development of the theory of value and price, the integration of monetary theory in the general theory of prices, the quantitative theory of money, an interesting theory of changes, the general doctrine of interest and the analysis of the tax system. These are ideas that arose in the consideration of the great fundamental questions of just price, usury and tribute.
    Abstract: Después de una larga serie de esfuerzos acumulativos, los historiadores del Pensamiento Económico se han puesto sustancialmente de acuerdo sobre cuáles han sido los principales aportes de la escolástica española a la ciencia económica. Radican éstos en el desarrollo de la teoría del valor y del precio, la integración de la teoría monetaria en la teoría general de los precios, la teoría cuantitativa del dinero, una interesante teoría de los cambios, la doctrina general del interés y el análisis del sistema tributario. Se trata de ideas que surgieron en la consideración de las grandes cuestiones fundamentales del justo precio, de la usura y de los tributos.
    Date: 2019–07–25
  10. By: Florent Pasquier (COSTECH - Connaissance Organisation et Systèmes TECHniques - UTC - Université de Technologie de Compiègne)
    Abstract: Cet article vise à rendre compte de la présence et des formes actuelles de la transdisciplinarité dans les domaines de la recherche et de l'enseignement. Il en présente les origines épistémologiques et en explicite des concepts fondamentaux théoriques. Puis il expose plusieurs exemples d'applications contemporaines en Sciences de l'éducation ou en rapport avec les nouvelles technologies éducatives. Mots-clés Transdisciplinarité, transpersonnel, information, réalité, conscience, pédagogie. Abstract This article aims at presenting transdisciplinarity as a current paradigm in the fields of research and education. It presents the epistemological origins and some fundamental theorical concepts. Then, I produce several examples of contemporary applications in educational sciences, among them, some using information and communication technologies. Introduction Le titre de cet article est un détournement de la célèbre phrase de Staline à propos du pouvoir papal en 1935 : « Le pape, combien de divisions ? ». Cette question évaluative peut se poser également en ce qui concerne la dimension que la transdisciplinarité atteint de nos jours. Revenons donc à la définition de la division, terme polysémique. Selon le Larousse en ligne 2 , elle peut être communément : « une dissension, désunion, due à la séparation des intérêts ou des idées ». Et aussi « une réunion sous un même chef de plusieurs bureaux ayant des attributions voisines », ce qui va donc dans le sens d'une union des forces en présence. Concernant la transdisciplinarité, les auteurs qui travaillent avec ce sujet sont désormais nombreux. Ils explorent chacun cette pensée selon des approches et des orientations portant la marque de leur parcours de vie et de leurs personnalités singulières. Ils peuvent alors apparaître éloignés ou « divisés ». Certains théoriciens et certaines écoles peuvent même se sentir en rivalité, une attitude qui se trouve à l'opposé d'une vision qui tend à l'inverse la plupart du temps à unifier et à mettre en synergie les différents domaines du savoir dans une vision méta. Ce titre souligne aussi que l'approche transdisciplinaire n'a pas encore trouvé une place affirmée dans l'échiquier académique des formations, pas plus que dans l'éventail de la répartition des sciences en différents domaines de connaissances. Rares sont les formations à la transdisciplinarité en tant que telle. Et de fait, une grande partie de la communauté des enseignants et des chercheurs travaille encore selon le paradigme du monde initié par Pascal et Descartes, caractérisé par une approche fragmentée du monde. Et pourtant, dès 1986, un colloque sous l'égide de l'Unesco, « la science face aux confins de la connaissance : le prologue de notre passé culturel », aboutit à la Déclaration de Venise, qui dans 3 de ses 6 articles 3 insiste sur la nécessaire prise en compte de la transdisciplinarité dans l'évolution de la
    Keywords: Transdisciplinarity,transpersonal,information,reality,consciousness,pedagogy
    Date: 2017–11–09
  11. By: Abigail McKnight
    Abstract: This paper reviews the theoretical literature and empirical evidence on the relationship between poverty, inequality and economic growth. It finds evidence that economic inequality is good for growth as well as new convincing evidence that inequality is bad for growth. Variation in data quality, methodologies, the range of countries included in different studies makes it difficult to compare the evidence. A recent hypothesis that the relationship between inequality and growth might be non-linear, with very low and very high levels of inequality being harmful to growth but a range in between where the relationship is not clearly defined might provide a means to unify some of the conflicting findings.
    Keywords: Poverty, inequality, growth
    JEL: I32 D31 O47
    Date: 2019–07
  12. By: Fochmann, Martin; Hechtner, Frank; Kirchler, Erich; Mohr, Peter
    Abstract: Emotions have a strong impact on our everyday life, including our mental health, sleep pattern, overall well-being, and judgment and decision making. Our paper is the first study to show that incidental emotions, i.e., emotions not related to the actual choice problem, influence the compliance behavior of individuals. In particular, we provide evidence that individuals have a lower willingness to comply with social norms after being primed with positive incidental emotions compared with aversive emotions. This result is replicated in a second study. As an extension to our first study, we add a neutral condition as a control. Willingness to comply in this condition ranges between the other two conditions. Importantly, this finding indicates that the valence of an emotion but not its arousal drives the influence on compliance behavior. Furthermore, we show that priming with incidental emotions is only effective if individuals are - at least to some extent - emotionally sensitive.
    Keywords: compliance behavior,emotions,cheating,tax evasion,norms,experimental economics
    JEL: C91 D91 H26
    Date: 2019
  13. By: Salvador Barberà; Walter Bossert; Kataro Suzumura
    Abstract: Pierre Daunou, a contemporary of Borda and Condorcet during the era of the French Revolution and active debates on alternative voting rules, proposed a method that chooses the strong Condorcet winner if there is one, otherwise eliminates Condorcet losers and uses plurality voting on the remaining alternatives. We axiomatically characterize his method which combines potentially conflicting criteria of majoritarianism by ordering them lexicographically. This contribution serves not just to remind ourselves that a 19th-century vintage may still retain excellent aroma and taste, but also to open up a novel way of applying potentially conflicting desiderata by accommodating them lexicographically.
    Keywords: voting rules, Daunou's method, Condorcet criterion
    JEL: D71 D72
    Date: 2019–07
  14. By: Svizzero, Serge; Tisdell, Clement
    Abstract: The "Metallist" origin of money, used as a medium of exchange, is based on the presumed low efficiency of barter. However, barter is usually ill-defined and archaeological evidence about it is inconclusive. Moreover, the transaction costs associated with barter seem to have been exaggerated by metallists. Indeed, the introduction of a unit of account reduces the complexity of the relative prices system usually associated with barter. Similarly, in-kind transactions have timing constraints which are often labeled as "the double coincidence of wants"; with a system of debt and credit, delayed exchange, that is lending, is possible. Such adaptability of barter is confirmed by the study of Mesopotamian and ancient Egyptian palatial economies. They provide evidence that non-monetary transactions have persisted during millennia, challenging the metallist vision about the origin of money.
    Keywords: Financial Economics, International Relations/Trade
    Date: 2019–07–22
  15. By: Elena S. Korchmina (National Research University Higher School of Economics)
    Abstract: Luxury has always been an intrinsic part of world history, but only in the 18th century the core of this phenomenon came up for discussion in Europe. During these debates the concept of luxury was gradually demoralized by economic liberalism and reshaped as “modern and more objective economic concept”. Eventually the concept of luxury became a universal concept with the only commonly accepted meaning (Sekora). A seminal role in this process played translations, as far as for the continental translators of the key writings “there was no need to invent an entirely new vocabulary of political economy or of cultural practice…” (Reinert). Thus, European thinkers coordinated their positions even if they disagreed with each other. But, how had the notion of luxury been conceptualizing outside of the European Roman world? Russia is an interesting example raising some intellectual puzzles. First of all, it was a relatively backward country, where luxury per se was the essential part of national self-representation. This contradiction caused the real economic problems of indebtedness. One way of fixing it up was the introduction of sumptuary laws which became an important channel of defining the concept of luxury. Secondly, starting from Petrine time Russia got more acquainted with the European political economy masterpieces, translating and adopting them. But “translators lost the security of compatibility when they turned to extra-European languages and traditions” (Reinert). How did Russian translators accomplish the task of describing such a relatively new phenomenon as luxury? By the 1760s, as a result of two processes of the development of legislation and translation the European writings starting the concept of luxury became not an economic term on a large scale, as in European tradition, but a pedagogical project, when the subjects had to acquire mostly the unwritten rules of permissible levels of luxury.
    Keywords: luxury, Russia, economic history, legislature, law.
    Date: 2019
  16. By: Oliver, Adam
    Abstract: Prospect theory is the most influential descriptive alternative to the orthodox model of rational choice under risk and uncertainty, in terms of empirical analyses of some of its principal parameters and as a consideration in behavioural public policy. Yet the most distinctive implication of the theory – a fourfold predicted pattern of risk attitudes called the reflection effect – has been infrequently studied and with mixed results over money outcomes, and has never been completely tested over health outcomes. This article reports tests of reflection over money and health outcomes defined by life years gained from treatment. With open valuation exercises, the results suggest qualified support for the reflection effect over money outcomes and strong support over health outcomes. However, in pairwise choice questions, reflection was substantially ameliorated over life years, remaining significant only for treatments that offered short additional durations of life.
    Keywords: Expected utility theory; Markowitz; Prospect theory; Reflection effect; Risk
    JEL: B21 C12 C91
    Date: 2019–08

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