nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2020‒12‒21
nine papers chosen by
Erik Thomson
University of Manitoba

  1. Savage's response to Allais as Broomean reasoning By Franz Dietrich; Antonios Staras; Robert Sugden
  2. Autonomous components of aggregate demand and capital accumulation in Richard Cantillon’s Essai? An inquiry through the lens of modern demand-led growth theory By Santiago José Gahn
  3. Decision making in Economics -- a behavioral approach By Amitesh Saha
  4. Understanding the Organization in light of Design By Christophe Schmitt
  5. Reasoning In versus About Attitudes: How Attitude Formation is Beyond Logic By Franz Dietrich; Antonios Staras
  6. Do People Engage in Motivated Reasoning to Think the World Is a Good Place for Others? By Michael Thaler
  7. Do the Values of Economists Matter in the Art and Science of Economics? By van Dalen, Harry
  8. From the First World War to the National Recovery Administration (1917-1935) - The Case for Regulated Competition in the United States during the Interwar Period By Thierry Kirat; Frédéric Marty
  9. Did U.S. Politicians Expect the China Shock? By Matilde Bombardini; Bingjing Li; Francesco Trebbi

  1. By: Franz Dietrich (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CNRS - Centre National de la Recherche Scientifique); Antonios Staras (Cardiff University); Robert Sugden (UEA - University of East Anglia [Norwich])
    Abstract: Leonard Savage famously contravened his own theory when first confronting the Allais Paradox, but then convinced himself that the had made an error. We examine the formal structure of Savage's ‘error-correcting' reasoning in the light of (i) behavioural economists' claims to identify the latent preferences of individuals who violate conventional rationality requirements and (ii) John Broome's critique of arguments which presuppose that rationality requirements can be achieved through reasoning. We argue that Savage's reasoning is not vulnerable to Broome's critique, but does not provide support for the view that behavioural scientists can identify and counteract errors in people's choices.
    Keywords: behavioural economics,reasoning,rationality,Broome,Allais Paradox,Savage
    Date: 2020
  2. By: Santiago José Gahn
    Abstract: Recently, some authors have severely criticised the incorporation of the notion of autonomous components of aggregate demand in demand-led growth theory. We show that these components are present in Richard Cantillon’s Essai written in the XVIIth century, and that an implicit demand-led theory of capital accumulation can be also developed based on his writings.
    Keywords: Cantillon, Growth theory, History of Economic Thought
    JEL: E11 C22
    Date: 2020–11
  3. By: Amitesh Saha
    Abstract: We review economic research regarding the decision making processes of individuals in economics, with a particular focus on papers which tried analyzing factors that affect decision making with the evolution of the history of economic thought. The factors that are discussed here are psychological, emotional, cognitive systems, and social norms. Apart from analyzing these factors, it deals with the reasons behind the limitations of rational decision-making theory in individual decision making and the need for a behavioral theory of decision making. In this regard, it has also reviewed the role of situated learning in the decision-making process.
    Date: 2020–12
  4. By: Christophe Schmitt (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)
    Abstract: Herbert Simon used design as a cornerstone of his studies on the Sciences of the Artificial. This article aims to show the contribution of his work in understanding the organization. Even after more than 50 years, his work is still considered of high topicality. Hence, this article first shows how the concept of design was formed over time, then depicts the contributions and perspectives of design to understand the organization, and finally, discusses the implications on the positions to conduct research, support and train on design.
    Abstract: Herbert Simon a fait de la conception une pierre angulaire de sa réflexion sur les sciences de l'artificiel. Cet article se propose de montrer l'apport de ses travaux pour la compréhension de l'organisation. Même ayant plus de 50 ans, sa réflexion est encore largement d'actualité. L'article aborde donc la construction de la notion de conception dans le temps, puis les apports et les perspectives de la conception pour comprendre l'organisation et, enfin, les implications sur les postures pour faire de la recherche, accompagner et former à la conception.
    Date: 2019
  5. By: Franz Dietrich (CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Antonios Staras
    Abstract: One reasons not just in beliefs, but also in intentions, preferences, and other attitudes. For instance, one forms preferences from preferences, or intentions from beliefs and preferences. Formal logic has proved useful for modelling reasoning in beliefs-the formation of beliefs from beliefs. Can logic also model reasoning in multiple attitudes? We identify principled obstacles. Logic can model reasoning about attitudes. But this models the discovery of attitudes of (usually) others, not the formation of one's own attitudes. Beliefs are special in that reasoning in beliefs can follow logical entailment between belief contents. This makes beliefs the privileged target of logic, when applying logic to psychology.
    Date: 2020–11–25
  6. By: Michael Thaler
    Abstract: Motivated reasoning is a bias in inference in which people distort their updating process in the direction of more attractive beliefs. Prior work has shown how motivated reasoning leads people to form overly "positive" beliefs that also serve to bolster one's self-image in domains such as intelligence, prosociality, and politics. In this paper, I study whether positivity-motivated reasoning persists in domains where self-image does not play a role. In particular, I analyze whether individuals motivatedly reason to think that the world is a better place for others. Building off of the design from Thaler (2020), I conduct a large online experiment to test for positivity-motivated reasoning on issues such as cancer survival rates, others' happiness, and infant mortality. I find no systematic evidence for positivity-motivated or negativity-motivated reasoning, and can rule out modest effects. Positivity is not a sufficient condition for motivated reasoning.
    Date: 2020–12
  7. By: van Dalen, Harry (Tilburg University, School of Economics and Management)
    Date: 2019
  8. By: Thierry Kirat; Frédéric Marty
    Abstract: The experience of the war economy during the First World War in the United States reinforced the influence of arguments in favour of managed competition. By extending the principles of scientific management to the economy as a whole, this approach aimed to coordinate firms through the exchange of information, which was seen as a necessity both in terms of economic efficiency and response to cyclical fluctuations. Such a stance greatly reduced the application of competition rules. Nevertheless, the proposals that emerged during the 1929 crisis – leading to the reproduction of the war-economy experience in peacetime at the risk of steering the US economy towards the formation of cartels under the supervision of the federal government – were rejected by President Herbert Hoover, despite his defence of a model for regulated competition in the 1920s. The paradox was President Franklin D. Roosevelt’s resumption of these projects within the framework of the First New Deal. This paper deals with the arguments that were put forward to evade competition rules and explains why the Democratic administration ultimately decided to return to a resolute enforcement of the Sherman Act.
    Keywords: War Economy,Cartelization,Competition Rules,Scientific Management,Information Exchange,
    JEL: L40 L51 N12
    Date: 2020–12–09
  9. By: Matilde Bombardini; Bingjing Li; Francesco Trebbi
    Abstract: In the two decades straddling China's WTO accession, the China Shock, i.e. the rapid trade integration of China in the early 2000's, has had a profound economic impact across U.S. regions. It is now both an internationally litigated issue and the casus belli for a global trade war. Were its consequences unexpected? Did U.S. politicians have imperfect information about the extent of China Shock's repercussions in their district at the time when they voted on China's Normal Trade Relations status? Or did they have accurate expectations, yet placed a relatively low weight on the subconstituencies that ended up being adversely affected? Information sets, expectations, and preferences of politicians are fundamental, but unobserved determinants of their policy choices. We apply a moment inequality approach designed to deliver unbiased estimates under weak informational assumptions on the information sets of members of Congress. This methodology offers a robust way to test hypotheses about the expectations of politicians at the time of their vote. Employing repeated roll call votes in the U.S. House of Representatives on China's Normal Trade Relations status, we formally test what information politicians had at the time of their decision and consistently estimate the weights that constituent interests, ideology, and other factors had in congressional votes. We show how assuming perfect foresight of the shocks biases the role of constituent interests and how standard proxies to modeling politician's expectations bias the estimation. We cannot reject that politicians could predict the initial China Shock in the early 1990's, but not around 2000, when China started entering new sectors, and find a moderate role of constituent interests, compared to ideology. Overall, U.S. legislators appear to have had accurate information on the China Shock, but did not place substantial weight on its adverse consequences.
    JEL: F13 P16
    Date: 2020–11

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