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on History and Philosophy of Economics |
| By: | Virginia Cecchini Manara (University of Trento); Lorenzo Sacconi (University of Milan) |
| Abstract: | This work aims at filling a gap in the cognitive representation of institutions, starting from Aoki’s account of institutions as equilibria in a game- theoretical framework. We propose a formal model to explain what happens when different players hold different representations of the game they are playing. In particular, we assume that agents do not know all the feasible strategies they can play, because they have bounded rationality; grounding on the works by Johnson-Laird and his coauthors, we suggest that individuals use parsimonious mental models that make as little as possible explicit to represent the game they are playing, because of their limited capacity of working memory and attention. Second, we rely on Bacharach’s variable frame theory: agents transform the objective game into a framed game, where strategies are “labeled†in some sense. In such a context, we argue that a social contract – given its prescriptive and universalizable meaning – may provide a shared mental model, accepted by all players, that allows agents to select a joint plan of action corresponding to an efficient and fair distribution. |
| Keywords: | social institutions, shared beliefs, mental models, framing, social contract |
| JEL: | B52 C7 D02 D83 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp71&r=all |
| By: | Burkhard C. Schipper; Martin Meier; Aviad Heifetz (Department of Economics, University of California Davis) |
| Abstract: | We define a cautious version of extensive-form rationalizability for generalized extensive-form games with unawareness that we call prudent rationalizability. It is an extensive-form analogue of iterated admissibility. In each round of the procedure, for each tree and each information set of a player a surviving strategy of hers is required to be rational vis-a-vis a belief system with a full-support belief on the opponents' previously surviving strategies that reach that information set. We demonstrate the applicability of prudent rationalizability. In games of disclosure of verifiable information, we show that prudent rationalizability yields unraveling under full awareness but unraveling might fail under unawareness. We compare prudent rationalizability to extensive-form rationalizability. We show that prudent rationalizability may not refine extensive-form rationalizability strategies but conjecture that the paths induced by prudent rationalizable strategy profiles (weakly) refine the set of paths induced by extensive-form rationalizable strategies. |
| Keywords: | Caution, extensive-form rationalizability, unawareness, disclosure, verifiable information, persuasion games, iterated admissibility, common strong cautious belief in rationality |
| JEL: | C72 D83 |
| Date: | 2019–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:cda:wpaper:332&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Paul N. Acha-Anyi (Walter Sisulu University, South Africa) |
| Abstract: | Reconciling the two dominant development models of the Washington Consensus (WC) and Beijing Model (BM) remains a critical challenge in the literature. The challenge is even more demanding when emerging development paradigms like the Liberal Institutional Pluralism (LIP) and New Structural Economics (NSE) schools have to be integrated. While the latter has recognized both State and market failures but failed to provide a unified theory, the former has left the challenging concern of how institutional diversity matter in the development process. We synthesize perspectives from recently published papers on development and Sino-African relations in order to present the relevance of both the WC and BM in the long-term and short-run, respectively. While the paper postulates for a unified theory by reconciling the WC and the BM to complement the NSE, it at the same time presents a case for economic rights and political rights as short-run and long-run development priorities respectively. By attempting to reconcile the WC with the BM, the study contributes at the same to macroeconomic NSE literature of unifying a development theory and to the LIP literature on institutional preferences with stages of development. Hence, the proposed reconciliation takes into account the structural and institutional realities of nations at different stages of the process of development. |
| Keywords: | Economic thought; Development; Beijing model; Washington Consensus; Africa |
| JEL: | B10 O11 O19 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:19/050&r=all |
| By: | Virginia Cecchini Manara (University of Trento); Lorenzo Sacconi (University of Milan) |
| Abstract: | The Social Responsibility of Business usually involves self-regulation, which entails spontaneous compliance with social norms or standards that are not imposed by hard law. In this paper we discuss the mechanisms that lead economic agents to comply with socially responsible norms that are not legally enforced, and do not coincide with profit, or self-interest, maximization. Companies exist because individuals need to cooperate and some institutions can facilitate cooperation, but at the same time these institutions may turn into places where unfair distributions are amplified and cooperative behaviours and motivations disrupted. The agents who decide to organize themselves into firms are usually motivated by the need to earn some benefit from mutual cooperation: since they have limited knowledge and bounded rationality, team production can highly improve their results. Therefore the main motivation to enter an organization is to gain from cooperation; but this also brings problems of how to divide the surplus that is generated and we find conflicts on the attribution of benefits among stakeholders, with a particular problem of abuse of authority by those who hold power. One of the drivers of socially responsible behaviour is the quest for reputation, which in turn induces a cooperative response from the stakeholders. This can be described in game-theoretical terms with a repeated Trust Game between a trustor (the stakeholder) and a trustee (the management of the firm). The problem with reputation is that it is compatible with multiple equilibria, included the one in which stakeholders always trust the firm, and the firm often abuses this trust. This leads to consider an alternative mechanism for norm compliance: conformity and reciprocity that derive from an impartial agreement among stakeholders. The present work analyses in depth the role of an agreement on cognitions and motivations, grounding on insights from psychology, game theory and experimental findings. |
| Keywords: | corporate culture, CSR, social contract, agreement, trust game |
| JEL: | C72 M14 L14 D91 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ent:wpaper:wp73&r=all |
| By: | Morten Hedegaard (Department of Economics, University of Copenhagen, Denmark); Rudolf Kerschbamer (University of Innsbruck, Austria); Daniel Müler (University of Innsbruck, Austria); Jean-Robert Tyran (Department of Economics, University of Copenhagen, Denmark) |
| Abstract: | We use a large and heterogeneous sample of the Danish population to investigate the importance of distributional preferences for behavior in a public good game and a trust game. We find robust evidence for the significant explanatory power of distributional preferences. In fact, compared to twenty-one covariates, distributional preferences turn out to be the single most important predictor of behavior. Specifically, subjects who reveal benevolence in the domain of advantageous inequality contribute more to the public good and are more likely to pick the trustworthy action in the trust game than other subjects. Since the experiments were spread out more than one year, our results suggest that there is a component of distributional preferences that is stable across games and over time. |
| Keywords: | Distributional preferences, social preferences, Equality-Equivalence Test, representative online experiment, trust game, public goods game, dictator game |
| JEL: | C72 C91 D64 |
| Date: | 2019–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1906&r=all |
| By: | Suzuki, Taku; Mizobata, Satoshi |
| Abstract: | While studies of transitions to market economies have long focused on the issue of corruption, the perspectives from which their analyses have been based have diverged. Accordingly, this paper employs a systematic review through testing 14 hypotheses from the perspectives of political and economic causes, as well as culture and values, based on 558 works from the literature on the subject. Its findings make it clear that the liberalization and privatization of ownership both expand and contract corruption; the effects of culture and values also should not be overlooked, while mostly rejecting the so-called "greasing-the-wheels" hypothesis. |
| Keywords: | corruption, systems, economic growth, democracy, tradition, systematic review |
| JEL: | C00 O17 P24 P26 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hituec:690_v2&r=all |
| By: | Rohan Dutta; David K Levine; Salvatore Modica |
| Date: | 2019–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levarc:11694000000000006&r=all |