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on History and Philosophy of Economics |
| By: | Leiashvily, Paata |
| Abstract: | The Arrow–Debreu model is regarded as the benchmark of rigor in neoclassical theory and the mathematical form of the “invisible hand.” This essay contests that status. Its starting claim is simple. The conditions under which the model proves the existence of equilibrium do not idealize the market but negate it: in a world of complete contingent markets, without money, irreversible time, or genuine uncertainty, a market is neither needed nor possible. The model proves equilibrium precisely where no market exists. Hence its central conclusion. The existence theorem and the two welfare theorems yield no gain in knowledge about the real economy. They yield knowledge about the properties of a specially constructed system; they are called “economic” by intended subject matter, not by the knowledge obtained. The essay shows how this differs from legitimate idealization in physics: a Galilean model can be de-idealized, the Arrow–Debreu model cannot, and reality does not converge to it even asymptotically (SMD). In this the author sees an epistemological crisis of the mainstream — one sustained not by the force of argument but by institutional reproduction through departments, journals, and textbooks. The critique takes an unusual form: four dialogues with artificial intelligence (DeepSeek, Claude, ChatGPT, Gemini). Its value lies not in the systems’ agreement but in the resistance that had to be overcome: independently trained yet disposed to defend the mainstream, under sustained pressure each denied the model the status of economic knowledge. The dialogues also expose a second theme — how a dominant paradigm entrenches itself as “common sense, ” including within AI tools. The stakes exceed academic dispute: they concern the content of economic education and the discipline’s way out of its crisis. |
| Keywords: | Arrow–Debreu model; general equilibrium; welfare theorems; economic methodology; epistemology; idealization and abstraction; Sonnenschein–Mantel–Debreu theorem; critique of neoclassical economics; economics education; AI in research. |
| JEL: | B41 B50 D50 |
| Date: | 2026–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:130906 |
| By: | Guo Xu |
| Abstract: | The study of bureaucracy as a key dimension of state capacity has gained increasing attention in economics. What organizational features create an effective bureaucracy, however, remains subject to debate. This paper focuses on the central role of civil service protections in delineating the boundary between politics and administration. I introduce a simple principal-agent framework to discuss the key theoretical channels through which political insulation can shape bureaucrat performance. Guided by the framework, I establish stylized facts and organize evidence from historical and contemporary civil service reforms. Overall, the micro-level evidence documents a positive effect of civil service protections on the quality of public service delivery. I conclude with open questions about the political economy of reform adoption. |
| JEL: | D73 M50 P0 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35568 |
| By: | Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Kariv, Shachar (Dept. of Economics, University of California, Berkeley); Kimbrough, Erik O. (Smith Institute for Political Economy and Philosophy, Chapman University); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration); Zame, William R. (Dept. of Economics, University of California, Los Angeles) |
| Abstract: | When decision-makers allocate resources between anonymous others, with their own payoffs held constant, own-payoff utility maximization places no restriction on behavior; consistent structure in choices therefore reveals a normative principle. We employ a graphical budget line design to elicit allocations of real money between two anonymous others across many budget sets that vary the relative prices of redistribution. Choices overwhelmingly satisfy the axioms of rational choice, revealing individual normative principles. Subjects reveal a widely shared principle of impartiality (symmetric treatment of the two recipients) but hold heterogeneous views about the best symmetric allocation, ranging from Rawlsian equality to utilitarian efficiency. |
| Keywords: | normative principles; distributive justice; impariality; equality; efficiency; revealed preference; constant elasticity of substitution; experiment |
| JEL: | C91 D63 D64 D81 |
| Date: | 2026–09–15 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhheco:2026_012 |
| By: | Chris Dong; Sonja Kraiczy; Rohit Vasishta; Markus Brill; Wesley H. Holliday; Niclas Boehmer |
| Abstract: | Society constantly has to determine the boundaries of what it deems acceptable, from legislative decisions to the guardrails governing autonomous systems. We initiate the axiomatic study of collective consent: given individuals' attitudes toward options, which options should receive societal consent? We organize our analysis around three principles: sufficient support, minority protection, and dominance by decisively better options. Each captures a distinct reason for withholding societal consent from an option. For each principle, we develop a corresponding solution concept that transparently implements the principle and is canonical in a mathematically precise sense. For example, for minority protection, the resulting concept is a consent-adapted version of Moulin's Proportional Veto Core. Balancing multiple principles simultaneously is more challenging. To address this, we develop a game-theoretic characterization of our veto core that naturally gives rise to a family of related concepts. From this family, we identify the Approval-Weighted Veto Core as particularly desirable. By making minorities' blocking power depend on the approval support of the options being challenged, it smoothly interpolates between proportional minority protection and majority support. Experiments on five datasets spanning high-stakes decision-making (such as political elections, ethical AI evaluations, and moral decision-making) show that solution concepts violating a principle in theory also violate it empirically. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.10759 |
| By: | O'Connor, Kelsey (STATEC Research – National Institute of Statistics and Economic Studies) |
| Abstract: | The Easterlin Paradox refers to the apparent contradiction between the cross-sectional and time-series relationships between GDP per capita and evaluative happiness – at a point in time, countries with greater GDP per capita are on average happier, but over time, long-run GDP growth does not correlate meaningfully with long-run happiness growth. Yet not everyone agrees. After more than fifty years since Easterlin's original article, the Paradox remains controversial and is frequently misunderstood. This article reviews the evolution of the Easterlin Paradox and briefly discusses its modern definition, explanations, best practices for testing, empirical extensions, and common misconceptions and critiques, with particular attention on methodology. Recent evidence indicates there is a broad range of long-run happiness changes, but these changes do not meaningfully correlate with long-run GDP growth rates, even in less developed countries. The implications are part of why the Paradox is so controversial. Economic growth alone does not constitute development or societal progress. In Easterlin’s words, it is time to move on [beyond GDP] and discover what explains why happiness grew in some countries and not others. |
| Keywords: | Easterlin Paradox, economic growth, income, happiness, life satisfaction, subjective well-being, development |
| JEL: | I31 D60 O10 O5 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18874 |
| By: | Adrien Jean-Guy Passant (Université Paris-Saclay, ISTEC - Institut supérieur des Sciences, Techniques et Economie Commerciales - ISTEC) |
| Abstract: | Cet article explore la diffusion de la pensée managériale en contexte colonial, à travers la formation comptable développée en Indochine dans les années 1920-1930. Il analyse les manuels de l'époque pour éclairer le rôle des « comptables colonisés » dans l'impérialisme occidental. En recontextualisant cet enseignement, l'étude enrichit l'histoire de la pensée managériale (HPM) et ouvre des pistes pour sa décolonisation. |
| Keywords: | Colonialisme; école de commerce; histoire de la gestion |
| Date: | 2025–06–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05714737 |