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on History and Philosophy of Economics |
| By: | Davis, John B. (Department of Economics Marquette University) |
| Abstract: | Kenneth Boulding’s AEA presidential address argued that economics is a moral science. His view derived from his general systems theory thinking, his three systems view of human society, and his early contributions to evolutionary economics. Boulding’s argument that economics could not be value-free should be distinguished from other well-known views of economics as a moral science, such as Gunnar Myrdal’s. This paper discusses the development and nature of Boulding’s thinking about economics as a moral science in the larger context of his thinking. |
| Keywords: | Boulding, moral science, general systems theory, three systems view, evolutionary economics |
| JEL: | A13 B31 B52 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:mrq:wpaper:2011-01&r=hpe |
| By: | Giancarlo Bertocco (Department of Economics, University of Insubria, Italy) |
| Abstract: | Keynes in the General Theory, explains the monetary nature of the interest rate by means of the liquidity preference theory. The objective of this paper is twofold. Fist, to point out the limits of an explanation of the monetary nature of the interest rate and thus of the non-neutrality of money based on the liquidity preference theory. Second, to present a different explanation of the monetary nature of the interest rate based on the arguments with which Keynes, following the General Theory, responded to the criticism levelled at the liquidity preference theory by supporters of the loanable funds theory such as Ohlin and Robertson. It is shown that this explanation is consistent with the definition of the non-neutrality of money that Keynes presented in his 1933 works in which he underlines the need to elaborate a monetary theory of production (Keynes 1933a, 408) in order to explain the phenomena of the crisis and the fluctuations in income and employment |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:ins:quaeco:qf1102&r=hpe |
| By: | Giancarlo Bertocco (Department of Economics, University of Insubria, Italy) |
| Abstract: | Dillard (1987) notes that to consider money as an institution of capitalism means to emphasise that the presence of money is an essential element in explaining fluctuations in income and employment. He states that Keynes?s General Theory offers a sound explanation of money as an institution of capitalism. Keynes?s explanation is based on a necessary condition, independent of money: the presence of uncertainty. The objective of the paper is to elaborate a different explanation of the role of money as an institution of capitalism according to which the presence of money constitutes the necessary condition to justify the importance of uncertainty. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:ins:quaeco:qf1103&r=hpe |
| By: | Marco, Passarella |
| Abstract: | In the last few years, many financial analysts and heterodox economists (but even some ‘dissenters’ among orthodox economists) have referred to the contribution of Hyman P. Minsky as fundamental to understanding the current crisis. However, it is well-known that the traditional formulation of Minsky’s ‘financial instability hypothesis’ shows serious internal logical problems. Furthermore, Minsky’s analysis of capitalism must be updated on the basis of the deep changes which, during the last three decades, have concerned the world economy. In order to overcome these theoretical and empirical troubles, this paper, first, introduces the reader to the ‘mechanics’ of the financial instability theory, according to the formulation of the traditional Minskian literature (section 2). Second, it shows ‘why’ Minsky’s theory cannot be regarded as a general theory of the business cycle (section 3). Third, the paper attempts to supply a simplified, but consistent, re-formulation of Minsky’s theory by inter-breeding it with inputs coming from the ‘New Cambridge’ theories and the current ‘formal Minskian literature’. The aim of this is to analyze the impact of both capital-asset inflation and consumer credit on the financial ‘soundness’ of the non-financial business sector (sections 4-7). Some concluding remarks are provided in the last part of the paper (section 8). |
| Keywords: | Financial Instability; Stock-Flow Consistency; Capital-asset Inflation |
| JEL: | E32 E12 B50 E44 |
| Date: | 2011–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:28499&r=hpe |
| By: | Davis, John B. (Department of Economics Marquette University) |
| Abstract: | The availability of Piero Sraffa’s unpublished manuscripts and correspondence at Trinity College Library, Cambridge, has made it possible to begin to set out a more complete account of Sraffa’s philosophical thinking than previously could be done with only his published materials and the few comments and suggestions made by others about his ideas, especially in connection with their possible impact on Ludwig Wittgenstein’s later thinking. This makes a direct rather than indirect examination of Sraffa’s philosophical thinking possible, and also shifts the focus from his relationship to Wittgenstein to his own thinking per se. I suggest that the previous focus, necessary as it may have been prior to the availability of the unpublished materials, involved some distortion of Sraffa’s thinking by virtue of its framing in terms of Wittgenstein’s concerns as reflected in the concerns of scholars primarily interested in the change in the his thinking. This paper seeks to locate these early convictions in this historical context, and then go on to treat the development of Sraffa’s philosophical thinking as a process beginning from this point, arguing that his thinking underwent one significant shift around 1931, but still retained its early key assumptions. Thus the approach I will take to Sraffa’s philosophical thinking is to explain it as a process of development largely within a single framework defined by his view of how modern science determines the scope and limits upon economic theorizing. |
| Keywords: | Sraffa, supervenience physicalism, objectivism, physical real cost, Neurath, Carnap, Wittgenstein |
| JEL: | B41 B51 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:mrq:wpaper:2011-02&r=hpe |
| By: | Francesca Gino (Harvard Business School, Negotiation, Organizations & Markets Unit); Sreedhari D. Desai (Harvard Law School; Harvard Kennedy School) |
| Abstract: | Four experiments demonstrated that recalling memories from one's own childhood lead people to experience feelings of moral purity and to behave prosocially. In Experiment 1, participants instructed to recall memories from their childhood were more likely to help the experimenter with a supplementary task than were participants in a control condition, and this effect was mediated by self-reported feelings of moral purity. In Experiment 2, the same manipulation increased the amount of money participants donated to a good cause, and self-reported feelings of moral purity mediated this relationship. In Experiment 3, participants who recalled childhood memories judged the ethically-questionable behavior of others more harshly, suggesting that childhood memories lead to altruistic punishment. Finally, in Experiment 4, compared to a control condition, both positively-valenced and negatively-valenced childhood memories led to higher empathic concern for a person in need, which, in turn increased intentions to help. |
| Keywords: | Childhood, Ethics, Memories, Morality, Prosocial Behavior, Purity |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:11-079&r=hpe |
| By: | Zakharenko, Roman |
| Abstract: | In this paper, I merge two theories -- theory of "passionate individuals" by Gumilev(1989) and Memetics by Dawkins(1976) - to develop a formal growth theory that states that societies become more developed when their members have more intrinsic motivation to solve problems of social importance (i.e. make "cultural contributions"). Individuals derive utility from genetic fitness (i.e. the number of surviving children) as well as from cultural fitness, defined as the amount of appreciation ("honor") of one's cultural contribution by future generations. To make a cultural contribution, one must study/honor cultural contributions of the past, which leads to multiple steady states. In the survival steady state, individuals expect that no one in the future will be interested in their cultural contribution, which makes them allocate all energy onto maximization of genetic fitness and care little about cultural contributions of the past. In the passionate steady state, individuals expect high appreciation of their cultural contribution and thus spend a lot of energy onto making such a contribution, which makes them highly appreciate cultural contributions of the past. Empirical implications of theory are also discussed. |
| Keywords: | passionate individuals; human values; poverty traps; memetics; economic growth |
| JEL: | O11 O49 Z13 |
| Date: | 2011–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:28552&r=hpe |
| By: | Yang, Chun-Lei; Yao, Lan |
| Abstract: | We study the two-color problem by Ellsberg (1961) with the modification that the decision maker draws twice with replacement and a different color wins in each draw. The 50-50 risky urn turns out to have the highest risk conceivable among all prospects including the ambiguous one, while all feasible color distributions are mean-preserving spreads to one another. We show that the well-known second-order sophisticated theories like MEU, CEU, and REU as well as Savage’s first-order theory of SEU share the same predictions in our design, for any first-order risk attitude. Yet, we observe that substantial numbers of subjects violate the theory predictions even in this simple design. |
| Keywords: | Ellsberg paradox; Ambiguity; Second-order risk; Second-order preference theory; Experiment |
| JEL: | D81 C91 |
| Date: | 2011–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:28531&r=hpe |
| By: | Friederike Mengel (Maastricht University); Emanuela Sciubba (Birkbeck College London) |
| Abstract: | We study extrapolation between games in a laboratory experiment. Participants in our experiment first play either the dominance solvable guessing game or a Coordination version of the guessing game for five rounds. Afterwards they play a 3x3 normal form game for ten rounds with random matching which is either a game solvable through iterated elimination of dominated strategies (IEDS), a pure Coordination game or a Coordination game with pareto ranked equilibria. We find strong evidence that participants do extrapolate between games. Playing a strategically different game hurts compared to the control treatment where no guessing game is played before and in fact impedes convergence to Nash equilibrium in both the 3x3 IEDS and the Coordination games. Playing a strategically similar game before leads to faster convergence to Nash equilibrium in the second game. In the Coordination games some participants try to use the first game as a Coordination device. Our design and results allow us to conclude that participants do not only learn about the population and/or successful actions, but that they are also able to learn structural properties of the games. |
| Keywords: | Game Theory, Learning, Extrapolation |
| JEL: | C72 C91 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.148&r=hpe |
| By: | Klemina, Tatiana N. |
| Keywords: | theory of organization, school of thought, |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:sps:wpaper:180&r=hpe |
| By: | Dietrich Franz; List Christian (METEOR) |
| Abstract: | Rational choice theory analyzes how an agent can rationally act, given his or her preferences, but says little about where those preferences come from. Instead, preferences are usually assumed to be .xed and exogenously given. We introduce a framework for conceptualizing preference formation and preference change. In our model, an agent.s preferences are based on certain .motivationally salient.properties of the alternatives over which the preferences are held. Preferences may change as new properties of the alternatives become salient or previously salient ones cease to be so. We suggest that our approach captures endogenous preferences in various contexts, and helps to illuminate the distinction between formal and substantive concepts of rationality, as well as the role of perception in rational choice. |
| Keywords: | microeconomics ; |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2011005&r=hpe |
| By: | Charles Figuieres; David Masclet; Marc Willinger |
| Abstract: | We develop a model that accounts for the decay of the average contribution observed in experiments on voluntary contributions to a public good. The novel idea is that people’s moral motivation is "weak". Their judgment about the right contribution depends on observed contributions by group members and on an intrinsic "moral ideal". We show that the assumption of weakly morally motivated agents lead to the decline of the average contribution over time. The model is compatible with persistence of over-contributions, variability of contributions (across and within individuals), and the “restart effect”. Furthermore, it offers a rationale for conditional cooperation. <P>Cet article présente un modèle théorique qui permet d’expliquer le déclin des contributions observé dans les expériences de contribution volontaire au financement de biens publics répétés à horizon fini. Ce modèle s’appuie sur l’idée de motivation morale faible selon laquelle les agents auraient une motivation intrinsèque à contribuer un montant non nul au bien public et que cette motivation intrinsèque serait conditionnée à l’observation des contributions des autres membres du groupe. Ce modèle est compatible avec la persistance de la sur-contribution, la variabilité inter et intra individuelle dans les montants de contributions et l’effet de « restart ». |
| Keywords: | Conditional cooperation, voluntary contributions, moral motivation, experiments on public goods games, coopération conditionnelle, contributions volontaires, motivation morale, expériences de biens publics |
| JEL: | H00 H41 C72 |
| Date: | 2011–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2011s-09&r=hpe |
| By: | Falk, Armin (University of Bonn); Meier, Stephan (Columbia University); Zehnder, Christian (University of Lausanne) |
| Abstract: | Social preference research has received considerable attention among economists in recent years. However, the empirical foundation of social preferences is largely based on laboratory experiments with self-selected students as participants. This is potentially problematic as students participating in experiments may behave systematically different than non-participating students or non-students. In this paper we empirically investigate whether laboratory experiments with student samples misrepresent the importance of social preferences. Our first study shows that students who exhibit stronger prosocial inclinations in an unrelated field donation are not more likely to participate in experiments. This suggests that self-selection of more prosocial students into experiments is not a major issue. Our second study compares behavior of students and the general population in a trust experiment. We find very similar behavioral patterns for the two groups. If anything, the level of reciprocation seems higher among non-students suggesting that results from student samples might be seen as a lower bound for the importance of prosocial behavior. |
| Keywords: | methodology, selection, experiments, prosocial behavior |
| JEL: | C90 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5475&r=hpe |
| By: | André Vanoli |
| Abstract: | The Commission’s aim was to ascertain the limits of Gross Domestic Product (GDP) as an indicator of economic performance and social progress, and to propose more appropriate indicators. Within a short period of time, a considerable amount of work was generated and a very interesting report was produced. This document reviews the main ideas and proposals which have been put forward and discussed during the last forty years in relation to problems such as the measurement of growth, development, well-being, and environment. They also concern, in more recent formulations, sustainable development and the general progress of society. As might have been expected, no new world-shattering idea was presented by the Commission. It mainly attempted to organize the present materials and to identify tools that are available or can be developed according to the different goals that are pursued. By assessing their relevance, the Commission could issue recommendations on paths to be primarily followed so as to improve our general knowledge. In so doing, many useful clarifications have been achieved, even if the clarification effort was not always sufficient in my opinion. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:rsw:rswwps:rswwps162&r=hpe |
| By: | Irene Valsecchi (University of Milano-Bicocca) |
| Abstract: | Two agents are engaged in a joint activity that yields a common perperiod payoff at two rounds of play. The expert announces the probability that the current state of the world is low, instead of high, at each stage. Having received the report of the expert, the decision-maker takes action at every period according to his posterior beliefs. At the end of each round of play, the true current state is verifiable. The distinctive assumption of the paper is that the decision-maker makes a subjective appraisal of the expert’s reliability: he considers the expert’s true forecasts as the outcomes of an experiment of unknown statistical bias. The paper shows that the expert will have instrumental reputational concerns, related to the future estimate of the systematic error associated to his predictions. In contrast with previous work, reputational concerns are shown to enhance the credibility of the initial messages, and to increase both the agents’ expected payoff at the first round of play in equilibrium. The equilibrium messages will be noisy, but noisiness will be less costly than it would be in single-stage games. |
| Keywords: | Opinion, Expert, Strategic Communication |
| JEL: | D81 D84 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.143&r=hpe |
| By: | Itzhak Gilboa; Massimo Marinacci |
| Abstract: | This is a survey of some of the recent decision-theoretic literature involving beliefs that cannot be quantified by a Bayesian prior. We discuss historical, philosophical, and axiomatic foundations of the Bayesian model, as well as of several alternative models recently proposed. The definition and comparison of ambiguity aversion and the updating of non-Bayesian beliefs are briefly discussed. Finally, several applications are mentioned to illustrate the way that ambiguity (or “Knightian uncertainty”) can change the way we think about economic problems. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:379&r=hpe |
| By: | Gabriele Galati; Richhild Moessner |
| Abstract: | The recent financial crisis has highlighted the need to go beyond a purely micro approach to financial regulation and supervision. In recent months, the number of policy speeches, research papers and conferences that discuss a macro perspective on financial regulation has grown considerably. The policy debate is focusing in particular on macroprudential tools and their usage, their relationship with monetary policy, their implementation and their effectiveness. Macroprudential policy has recently also attracted considerable attention among researchers. This paper provides an overview of research on this topic. We also identify important future research questions that emerge from both the literature and the current policy debate. |
| Keywords: | macroprudential policy |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:337&r=hpe |