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on History and Philosophy of Economics |
| By: | Francis McLaughlin (Boston College) |
| Abstract: | John Commons' influence in American labor economics was eclipsed after World War II by a resurgent neoclassical labor economics that gradually relegated Commons' institutional orientation to the periphery of economic discourse. A common opinion is that the work of institutional economists in the Commons tradition was largely descriptive and lacked theoretical content. Commons, however, regarded his Institutional Economics as a work of economic theory. This paper contains a description of the theoretical core of Institutional Economics and an evaluation of it from the perspective of its potential usefulness in the teaching of modern labor economics. Part I describes the theoretical perspective of neoclassical economic theory in order to clarify the institutional perspective by contrast. Part II describes Commons’ alternative perspective. Part III presents the conclusions derived from this comparison of the two alternative perspectives. |
| Keywords: | John R. Commons, labor economics, history of thought |
| JEL: | A21 B31 B41 J01 |
| Date: | 2010–06–29 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:739&r=hpe |
| By: | Gala, Paulo; Araújo Fernandes, Danilo; Stuhlberger Wjuniski, Bernardo; Marques Corrêa, Taís |
| Abstract: | The objective of this paper is to bring elements from the philosophical movement ofhermeneutics and pragmatism to the discussion on methodology in economics, with aspecific concern on the theory of truth. Our aim is to present the concept of thehermeneutic space, developed by the philosopher Richard Rorty, as a rational justificationfor pluralism in economics. We consider the hermeneutic space an interesting conceptwhich should allow us to overcome the void left by the incapacity of epistemologicaltheories to explain the evolution of sciences. It defends the idea that our culture, values andways of interpreting things are what build the sciences, not any closed epistemologicalmethod. In this sense, pluralism is nothing more than letting the hermeneutic space work,without epistemological barriers, and understanding that this is desirable for the futuredevelopment of economics as a science. This approach differs from all othermethodological justifications for pluralism because it does not rely on any epistemologicalmethod, but assumes that the hermeneutic space can entirely fulfill the gap created by them. |
| Date: | 2010–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:eesptd:257&r=hpe |
| By: | Araujo, Luis; Camargo, Braz |
| Abstract: | A well–established fact in monetary theory is that a key ingredient for the essentialityof money is its role as a form of memory. In this paper we study a notion ofmemory that includes information about an agent’s past actions and trading opportunitiesbut, in contrast to Kocherlakota (1998), does not include information aboutthe past actions and trading opportunities of an agent’s past partners. We first showthat the first–best can be achieved with memory even if it only includes informationabout an agent’s very recent past. Thus, money can fail to be essential even if memoryis minimal. We then establish, more interestingly, that if information about tradingopportunities is not part of an agent’s record, then money can be better than memory.This shows that the societal benefit of money lies not only on being a record of pastactions, but also on being a record of past trading opportunities, a fact that has beenoverlooked by the monetary literature. |
| Date: | 2010–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:eesptd:224&r=hpe |
| By: | Cardenas, Juan-Camilo |
| Abstract: | Behavior in the local commons is usually embedded in a context of regulations and social norms that the group of users face. Such norms and rules affect how individuals value material and non-material incentives and therefore determine their decision to cooperate or over extract the resources from the common-pool. This paper discusses the importance of social norms in shaping behavior in the commons through the lens of experiments, and in particular experiments conducted in the field with people that usually face these social dilemmas in their daily life. Through a large sample of experimental sessions with around one thousand people between villagers and students, I test some hypothesis about behavior in the commons when regulations and social norms constrain the choices of people. The results suggest that people evaluate several components of the intrinsic and material motivations in their decision to cooperate. While responding in the expected direction to a imperfectly monitored fine on over extraction, the expected cost of the regulation is not a sufficient explanatory factor for the changes in behavior by the participants in the experiments. Even with zero cost of violations, people can respond positively to an external regulator that issues a normative statement about a rule that is aimed at solving the social dilemma. |
| Keywords: | social norms, regulations, cooperation, collective action, common-pool resources, experimental economics, field experiments., Public Economics, D71, Q0, Q2, C9, H3, H4, |
| Date: | 2009–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ulaedd:91168&r=hpe |
| By: | Sacha Bourgeois-Gironde (IJN - Institut Jean-Nicod - CNRS : UMR8129 - Ecole Normale Supérieure de Paris - ENS Paris - Ecole des Hautes Etudes en Sciences Sociales (EHESS)); Raphaël Giraud (CRESE - Centre de REcherche sur les Stratégies Economiques - Université de Franche-Comté) |
| Abstract: | Framing effects occur when different descriptions of thesame decision problem give rise to divergent decisions. They can be seen as a violation of the decision-theoretic version of the principle of extensionality (PE). The PE in logic means that two logically equivalent sentences can be substituted salva veritate. We explore what this notion of extensionality becomes in decision contexts. Violations of extensionality may have rational grounds. Following some ideas proposed by the psychologist C. McKenzie we contend that framing effects are justified when the selection of one particular frame conveys choice relevant information. We first discuss this idea from a philosophical point of view, and proceed next to formalize it in the context of the Bolker Jeffrey decision theory. |
| Keywords: | Framing effects; Extensionality; Invariance principle; Conversational implicatures; rationality |
| Date: | 2009–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00098001_v1&r=hpe |
| By: | Angel Asensio (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII) |
| Abstract: | The paper argues that the world economy might experiment inflationary pressures (or restrictive policies aimed at fighting them) when the economic depression triggered by the financial crisis is stabilized. The primary cause is that bad money has been (endogenously) delivered which did not lead to a proportionate increase of real wealth, thereby creating an artificial purchasing power into the economic system. According to Keynes and Post Keynesians 'true inflation' develops when the quantity of effective demand increases at full employment, but financial 'inventiveness' proved to be capable of creating the possibility for houses and assets prices to inflate whatever the level of unemployment is. If the ongoing reinforced regulations get to limit the artificial increase of assets prices, the circulating bad money may trigger a generalized inflationary process. Public deficits have been seriously damaged during the depression; in addition, authorities have provided the required liquidity to the banking system in exchange of private bad debt, part of which might have turned out irrecoverable. The paper also points out that this amounts to a collectivization of private losses, which carries lasting difficulties in terms of a trade-off between inflation and higher unemployment. Some general policy principles are suggested to relieve the post crisis growth regime of the bad debts/bad money plague. |
| Keywords: | inflation; stagflation; economic crisis; bad debts, money |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00496919_v1&r=hpe |
| By: | Rogers, F. Halsey |
| Abstract: | The global financial crisis has not only dealt a major blow to the global economy, but also shaken confidence in economic management in the developed world and the economic models that guide it. The crisis has revealed major market failures, especially in the housing bubble and its transmission to the financial system, but also glaring state failures that propagated and exacerbated the crisis. Will the events of the past two years lead to major shifts in thinking about development economics, and should they? This paper assesses that question for several key domains of development thinking, including the market-state balance, macroeconomic management, globalization, development financing, and public spending. On the one hand, changed global circumstances and new awareness of vulnerability should lead to some policy changes, as developing countries take steps to reduce and buffer risks, including risks generated in developed countries. At the same time, the crisis should largely reinforce the Post-Washington Consensus on development that has emerged over the past decade -- a world view that aims to achieve private sector-driven growth but sees a facilitating role for the state, promotes engaging with the global economy in ways that advance development, and values pragmatism, experimentation, and evidence-based policymaking over ideology. |
| Keywords: | Debt Markets,Economic Theory&Research,Banks&Banking Reform,Climate Change Economics,Emerging Markets |
| Date: | 2010–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5353&r=hpe |
| By: | Manfred Gärtner; Florian Jung |
| Abstract: | The current crisis is not only one of financial markets, but also of macroeconomics. Leading scholars call for a paradigm shift away from dynamic general equilibrium models, though some argue that the profession's arsenal already contains the tools and historical lessons needed to deal with such crises. Taking this view to the limit, this note demonstrates that the workhorse models of undergraduate macroeconomics not only permit a refined view and classification of financial crises. These models also identify scenarios under which either policymakers would be ill advised to follow conventional prescriptions, or full-scale depressions loom that cannot be fought by means of fiscal or monetary policy alone. |
| Keywords: | Teaching macroeconomics, lessons, graduate, undergraduate, financial crisis, liquidity trap, risk premium |
| JEL: | A20 E63 F01 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2010:2010-19&r=hpe |
| By: | Fabien Lange (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Keleti Faculty of Economics - Budapest Tech); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | The Shapley value is a central notion defining a rational way to share the total worth of a cooperative game among players. We address a general framework leading to applications to games with communication graphs, where the feasible coalitions form a poset whose all maximal chains have the same length. Considering a new way to define the symmetry among players, we propose an axiomatization of the Shapley value of these games. Borrowing ideas from electric networks theory, we show that our symmetry axiom and the efficiency axiom correspond to the two Kirchhoff's laws in the circuit associated to the Hasse diagram of feasible coalitions. |
| Keywords: | Regular set system; communication situation; regular game; Shapley value; Kirchhoff's laws. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00496553_v1&r=hpe |
| By: | Gerald Eisenkopf; Sabrina Teyssier |
| Abstract: | In tournaments, the large variance in effort provision is incompatible with standard economic theory. In our experiment we test theoretical predictions about the role of envy and loss aversion in tournaments. Our results confirm that envy implies higher effort while loss aversion increases the variance of effort. Moreover, we show that standard theory provides a good explanation for competitive behavior when envy and loss aversion do not play a role in the decision making process. |
| Keywords: | Tournament, Envy, Loss Aversion |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0052&r=hpe |
| By: | Joshua D. Angrist; Jörn-Steffen Pischke |
| Abstract: | This essay reviews progress in empirical economics since Leamer's (1983) critique. Leamerhighlighted the benefits of sensitivity analysis, a procedure in which researchers show howtheir results change with changes in specification or functional form. Sensitivity analysis hashad a salutary but not a revolutionary effect on econometric practice. As we see it, thecredibility revolution in empirical work can be traced to the rise of a design-based approachthat emphasizes the identification of causal effects. Design-based studies typically featureeither real or natural experiments and are distinguished by their prima facie credibility and bythe attention investigators devote to making the case for a causal interpretation of the findingstheir designs generate. Design-based studies are most often found in the microeconomicfields of Development, Education, Environment, Labor, Health, and Public Finance, but arestill rare in Industrial Organization and Macroeconomics. We explain why IO and Macrowould do well to embrace a design-based approach. Finally, we respond to the charge that thedesign-based revolution has overreached. |
| Keywords: | research design, natural experiment, quasi-experiment, structural models |
| JEL: | C01 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0976&r=hpe |