New Economics Papers
on Neuroeconomics
Issue of 2013‒12‒20
three papers chosen by

  1. In brief...Top of the class By Richard Murphy; Felix Weinhardt
  2. In brief...'Smart and illicit': the making of a successful entrepreneur By Ross Levine; Yona Rubinstein
  3. The theory of reflexivity: A non-stochastic randomness theory for business schools only? By Ehnts, Dirk; Carrión Álvarez, Miguel

  1. By: Richard Murphy; Felix Weinhardt
    Abstract: Boys may be better off not going to the school with high-performing peers, according to research by Richard Murphy and Felix Weinhardt, which explores how much impact there is on later confidence and exam results from where a child ranks in primary school. They find that being ranked in the top quarter of your primary school peers as opposed to the bottom quarter improves later test scores by twice as much as being taught by a highly effective teacher for one year (with boys four times more affected by being top of the class than girls). Non-cognitive skills such as confidence, perseverance and resilience have big effects on achievement.
    Keywords: Rank, non-cognitive skills, peer effects
    JEL: I21 J24 D01
    Date: 2013–12
  2. By: Ross Levine; Yona Rubinstein
    Abstract: Smart teenagers who engage in illicit activities are much more likely to become entrepreneurs, according to research by Ross Levine and Yona Rubinstein. But, they note, being self-employed doesn't necessarily make someone an entrepreneur: recognising this distinction has enabled them to detect both the key characteristics of successful entrepreneurs and the true rewards to their innovations. The incorporated self-employed earn much more per hour and work many more hours than people on salaries and the unincorporated self-employed. To measure illicit activities, the study uses survey data on skipping school, using alcohol and marijuana, vandalism, shoplifting, drug dealing, robbery, assault and gambling. The point is not that these are desirable activities or that parents should help their kids get involved in them to encourage entrepreneurship: rather, they can be used to gauge someone's inclination to build and lead a successful and innovative business.
    Keywords: Self-employment, Occupational choice, Compensation, Firm organization, Corporate finance, Cognitive and Noncognitive traits
    JEL: L26 J24 J3 G32
    Date: 2013–12
  3. By: Ehnts, Dirk; Carrión Álvarez, Miguel
    Abstract: The Alchemy of Finance, a book written by George Soros (1987) on the workings of financial markets, 'has found a place in the reading lists of business schools as distinct from economics departments', according to the author (2003, 4). His theory of reflexivity, which is at the center of the book, states that interdependence exists between the cognitive and manipulative functions of market participants. While Soros claims that imperfect knowledge rules on financial markets, academic orthodoxy assumes perfect knowledge and hence displays - in the absence of external shocks - financial markets as efficient. We review the work of Soros on reflexivity and follow up his claim that it can be used to attack the efficient market hypothesis. Both are discussed and then the ideas of Soros are compared to those of Post-Keynesian economics. We argue that Soros' book is mainly ignored by neo-classical economists because they disagree with his axioms, and by heterodox economists because his ideas are not new. --
    Keywords: efficient market hypothesis,theory of reflexivity,George Soros
    JEL: B26 D8
    Date: 2013

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