nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2019‒10‒21
fifteen papers chosen by
Erik Thomson
University of Manitoba

  1. Applied history, applied economics, and economic history By Colvin, Christopher L.; Winfree, Paul
  2. Justice without romance. The history of the economic analyses of judges behavior -1960-1993 By Alain Marciano; Alessandro Melcarne; Giovanni Ramello
  3. Ronald H. Coase (1910–2013) By Alain Marciano
  4. The three fundamental frameworks for the unification of the macro social sciences By George McMillan III
  5. Note sur la conception de la science chez Cournot et Walras : critique et filiation au regard de la philosophie d’Etienne Vacherot By Ludovic Ragni
  6. How Can Experiments Play a Greater Role in Public Policy? 12 Proposals from an Economic Model of Scaling By Omar Al-Ubaydli; John List; Claire Mackevicius; Min Sok Lee; Dana Suskind
  7. The Stability of Conditional Cooperation: Egoism Trumps Reciprocity in Social Dilemmas By Luciano Andreozzi; Matteo Ploner; Ali Seyhun Saral
  8. An Introduction to Juergen Backhaus’s “Lawyers’ economics vs. economic analysis of law” By Alain Marciano
  9. Mathematical Economics - Marginal analysis in the consumer behavior theory By Marques, Jorge; Pascoal, Rui
  10. Calabresi: Heterodox Economic Analysis of Law By Alain Marciano; Giovanni Battista Ramello
  11. Higher orders of rationality and the structure of games By Francesco Cerigioni; Fabrizio Germano; Pedro Rey-Biel; Peio Zuazo-Garin
  12. Negotiation under the curse of knowledge By Pierrot, Thibaud
  13. Governance im Politikfeld Wirtschaftspolitik By Mause, Karsten
  14. Posner, Richard By Alain Marciano
  15. Is Corruption a Greater Evil than Sin? By Cigdem Borke TUNALI; Laurent WEILL

  1. By: Colvin, Christopher L.; Winfree, Paul
    Abstract: As a new field of academic enquiry, applied history has a unique opportunity to learn lessons from other applied fields. In this essay, we set out how we think applied historians can learn from the mistakes of applied economists and economic policymakers in their use, and abuse, of economic theory and economic history. What we call the New Applied History has the potential to improve the way policymaking is conducted. But only if its practitioners understand the power, and limitations, of theory. We apply our ideas to the case of budgetary policymaking in the United States.
    Keywords: applied history,budgetary policy
    JEL: B15 B22 E12 E63 N12 N41
    Date: 2019
  2. By: Alain Marciano (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier); Alessandro Melcarne (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Giovanni Ramello (Dipartimento di scienze giuridiche ed economiche, Universita degli studi del piemonte orientale - Universita degli studi del piemonte orienta)
    Abstract: Richard Posner's "What Do Judges and Justices Maximize?" (1993a) is not, as usually believed, the first analysis of judges' behaviors made by using the assumption that judges are rational and maximize a utility function. It arrived at the end of a rather long process. This paper recounts the history of this process, from the "birth" of law and economics in the 1960s to 1993. We show that economic analyses of judge behavior were introduced in the early 1970s under the pen of Posner. At that time, rationality was not modeled in terms of utility maximization. Utility maximization came later. We also show that rationality and incentives were introduced to explain the efficiency of Common Law. Around this theme, a controversy took place that led Posner, and other economists, to postpone their analysis of judicial behavior until the 1990s. By then, the situation had changed. New and conclusive evidence of judges' utility maximizing behavior demanded for a general theory to be expressed. In addition, the context was favorable to Chicago economists. It was time for Posner to publish his article.
    Keywords: Self-interest,Utility Maximization,Judges,Judicial decision making,Rationality
    Date: 2019–08
  3. By: Alain Marciano (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier)
    Abstract: The purpose of this chapter is to link Ronald Coase's methodological approach to what he 'learned' when he was at the London School of Economics (LSE) from Edwin Cannan and Arnold Plant. The main lesson Coase taught us and insisted upon was that economics should not be too 'abstract' and should not rely on a priori categories. He pleaded for more realism in economics, for a form of 'political economy': economists should use theory to generalise what facts tell us rather than trying to interpret facts by using a priori and abstract categories. This conception of economics is closer to the LSE of Cannan and Plant than to the Chicago of Stigler, Friedman, Becker, or Posner.
    Keywords: political economy,Cannan,Plant,realism,methodology,Coase,common sense,Chicago,LSE
    Date: 2019–07–11
  4. By: George McMillan III (Impact Analytics)
    Abstract: ? This opening slide set advances McMillan 2015 (IISES Amsterdam) and McMillan 2017 (IISES Vienna) and focuses on the lateral integration of the three primary macro conceptual areas of political, economic/demographic and geopolitical frameworks to generate a "unified theory of the philosophical and social sciences."? Specifically, the three essential frameworks are. (1) Aristotle's Six Forms of Government, (2) the per capita GNP ratio signifying economic growth/population growth proportions, and (3) the Four Category Geopolitical Form Model framework of First, Second, Third and Fourth World country gradations. ? These three frameworks: (a) explain the full range of behavior pertaining to their respective area, (b) can incorporate all the subfield theories in their respective areas, (c) vary directly with one another in terms of a tight vs catastrophically loose wage labor price continuum, which (d) integrates the primary macro disciplines into a singular causal model. ? The independent variable of interval level Government Form interval level model of Aristotle. links the economic growth/population rates of change proportions because liberal democracies and First World countries only seem to exist in relatively tight wage labor market conditions, i.e. high economic growth and low population growth proportions. The Government Form Categories and the per capita GNP ratio link directly to the two primary trends of technology and population growth throughout history, that give rise to the two secondary trends of migration of First World manufacturing facilities to the South, and the mass migration of people to the North to explain current geopolitical outcomes. ? This system of frameworks links to the persistent primary and secondary trends to explain the permanently declining global wage labor equilibrium process as it directly the changing of geopolitical Forms over the next few decades. This system measures relative equality-inequality and relative stability-instability continuums that covary with the tight vs catastrophically lose wage labor continuum. This integrated model affirms Harsanyi?s (1969) assertion that the isolated subfield theories do not adequately anticipate first, second and third order effects. ? This system achieves the three longstanding objectives of the behavioral economics movement of: (a) Harsanyi?s ?integrated explanatory theory? and ?core model? of the social sciences discussed in his 1960, 1966 and 1969 papers, (b) it extends the Integrated Causal Model (ICM) of Tooby and Cosmides 1992 throughout the philosophical and social sciences, and (c) achieves Gintis? 2006 and 2009 ?unification of the behavioral sciences.?
    Keywords: Unified Theory of the Philosophical and Social Sciences; Unification of the Behavioral Sciences; Integrated Explanatory Theory of the Social Sciences; Core Model of the Social Sciences; Unified Behavioral Economic Theory; Integrated Theory of the Macro Social Sciences; Core Model of the Social Sciences
    JEL: A12 F01 F22
    Date: 2019–10
  5. By: Ludovic Ragni (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: L’article réévalue les emprunts de Léon Walras à la philosophie d’Etienne Vacherot et d’Antoine Augustin Cournot. Walras indique en effet n’avoir emprunté à Cournot que sa seule méthode mathématique et considère que l’ouvrage de Vacherot, La métaphysique de la science, est son livre de chevet philosophique. Or, Vacherot se réfère largement à Cournot dans ses Essais de philosophie critique, ouvrage que Walras semble ne pas avoir lu. Dans un premier temps, l’article met en évidence les points de désaccords méthodologiques entre Walras et Cournot à propos de l’économie. Dans un deuxième temps, il montre que Walras à beaucoup plus emprunté à la philosophie de Cournot que sa seule lecture de la Métaphysique de la science ne le laisse supposer parce qu’il n’aurait pas perçu que Vacherot emprunte lui-même à la philosophie de Cournot. L’article met en évidence qu’une part importante de l’épistémologie de Cournot se retrouve dans l’œuvre de Walras par l’intermédiaire de Vacherot.
    Keywords: Epistémologie économique, Méthode mathématique, Philosophie des sciences, Antoine Augustin Cournot, Etienne Vacherot, Léon Walras
    JEL: A10 A12 B40 B41
    Date: 2019–10
  6. By: Omar Al-Ubaydli; John List; Claire Mackevicius; Min Sok Lee; Dana Suskind
    Abstract: Policymakers are increasingly turning to insights gained from the experimental method as a means to inform large scale public policies. Critics view this increased usage as premature, pointing to the fact that many experimentally-tested programs fail to deliver their promise at scale. Under this view, the experimental approach drives too much public policy. Yet, if policymakers could be more confident that the original research findings would be delivered at scale, even the staunchest critics would carve out a larger role for experiments to inform policy. Leveraging the economic framework of Al-Ubaydli et al. (2019), we put forward 12 simple proposals, spanning researchers, policymakers, funders, and stakeholders, which together tackle the most vexing scalability threats. The framework highlights that only after we deepen our understanding of the scale up problem will we be on solid ground to argue that scientific experiments should hold a more prominent place in the policymaker's quiver.
    Date: 2019
  7. By: Luciano Andreozzi (Department of Economics, University of Trento); Matteo Ploner (Department of Economics, University of Trento); Ali Seyhun Saral (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: An often-replicated result in the experimental literature on social dilemmas is that a large share of subjects reveal conditionally cooperative preferences. Cooperation generated by this type of preferences is notoriously unstable, as individuals reduce their contributions to the public good in reaction to other subjects free-riding. This has led to the widely-shared conclusion that cooperation observed in experiments (and its collapse) is mostly driven by imperfect reciprocity. In this study, we explore the possibility that reciprocally cooperative preferences may themselves be unstable. We do so by observing the evolution of subjects’ preferences in an anonymously repeated social dilemma. Our results show that a significant fraction of reciprocally cooperative subjects become selfish in the course of the experiment, while the reverse is rarely observed. We are thus driven to the conclusion that egoism is more resistant to exposure to social dilemmas than reciprocity.
    Keywords: reciprocity, conditional cooperation, strategy method
    JEL: C72 C91
    Date: 2019–10
  8. By: Alain Marciano (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier)
    Date: 2018
  9. By: Marques, Jorge; Pascoal, Rui
    Abstract: In the neoclassical theory, the economic value of a good is determined by the benefit that an individual consumer attributes to the last ("marginal") unit consumed. Marginal analysis was introduced to the theory of value by William Jevons, Carl Menger and Léon Walras, the founders of marginalism. Since the so-called “marginalist revolution” of the 1870s, differential (or infinitesimal) calculus has been applied to the mathematical modelling of economic theories. Our goal is to present some consumer behavior models, their advantages and limitations, using the methodology of economic science. It should be emphasized that each (re)formulation is based on different economic principles: diminishing marginal utility, diminishing marginal rate of substitution and weak axiom of revealed preference.
    Keywords: Marginal analysis, consumer behavior models, diminishing marginal rate of substitution, weak axiom of revealed preference
    JEL: C02 D03
    Date: 2018
  10. By: Alain Marciano (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier); Giovanni Battista Ramello (Università degli Studi del Piemonte Orientale-Amedeo Avogadro (ITALY))
    Abstract: Guido Calabresi is one of the founders of the law and economics movement. His approach, however, corresponds to a form of economic analysis of law that, we claim, is heterodox. We show why in this short notice.
    Date: 2018–08–13
  11. By: Francesco Cerigioni; Fabrizio Germano; Pedro Rey-Biel; Peio Zuazo-Garin
    Keywords: Rationality, higher-order rationality, revealed rationality, levels of thinking.
    JEL: C70 C72 C91 D01
    Date: 2019–08
  12. By: Pierrot, Thibaud
    Abstract: An individual is affected by the curse of knowledge when he fails to appreciate the viewpoint of a lesser-informed agent. In contrast to a rational person, the cursed individual behaves as if part of his private information were common knowledge. This systematic cognitive bias alters many predictions derived from game theory which involve an asymmetry of information between the players. We investigate in this article how the curse of knowledge modifies individual behaviours in negotiation situations. We report the results of a laboratory experiment that was designed to isolate the effect of the curse of knowledge by varying the information available to the players ceteris paribus. Our analysis of the expectations and choices of subjects playing the ultimatum game in different information settings indicates that the curse of knowledge can lead to an increase of impasses in the negotiation and partially explains empirically observed phenomenons such as abnormally high rates of bargaining failures. Unlike previous behavioural research, that is mostly based on motivated beliefs and actions, this work provides a purely nonstrategic explanation for negotiation impasses observed in many real life situations.
    Keywords: curse of knowledge,hindsight bias,negotiation,experiments
    JEL: C91 D80 D82 D83 D84
    Date: 2019
  13. By: Mause, Karsten
    Abstract: This paper gives an overview of the topic "economic governance". This term is used in economics and neighboring social sciences as a generic term under which usually all activities are subsumed that are conducted by economic policymakers to 'steer' or 'control' the economic system, individual markets therein or certain economic actors (e.g., businesses, consumers). In addition to a more detailed clarification of the concept of "economic governance" and the presentation of actors and instruments of economic governance, the paper discusses why and in what situations economic governance is necessary. The latter issue is the subject of a continuing debate in politics, the public and the social sciences.
    Keywords: Governance, Economic Policy, Political Economy, Governance Research, Public Policy Analysis, Market Failure, Government Activity.
    JEL: D72 D78 E6 H1 L51 P16
    Date: 2019
  14. By: Alain Marciano (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier)
    Abstract: Posner is one of the main contributors to what is known as "economic analysis of law". In this entry, we restrict our presentation to a few controversial claims he made (efficiency, wealth-maximization, Hicks-Kaldor, judicial decision making).
    Date: 2018
  15. By: Cigdem Borke TUNALI (Istanbul University); Laurent WEILL (LaRGE Research Center, Université de Strasbourg)
    Abstract: The aim of this paper is to provide new evidence on the relation between religion and attitude toward corruption at the individual level. We use World Values Survey data covering 59 countries during the period 2010-2014 to examine if religiosity and religious denominations are associated with attitude toward corruption. We find that religious people are more averse to corruption, supporting the view that religiosity favors honest behavior. Attitudes toward corruption differ across religious denominations. Protestantism and Hinduism are associated with greater aversion to corruption than Atheism, while other religious denominations do not have clear difference. This conclusion accords with the view that hierarchical religions favor greater tolerance to corruption than individualistic religions. Additional estimations on groups of countries with different dominant religions and on multi-religious countries show however that the relation between religious denomination and tolerance to corruption can vary with the religious environment of the country.
    Keywords: religion, corruption.
    JEL: H11 K42 Z12
    Date: 2019

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