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on History and Philosophy of Economics |
| By: | Peter Skott (University of Massachusetts Amherst) |
| Abstract: | Mainstream macroeconomics has pursued .micro founded.models based on the explicit optimization by representative agents. The result has been a long and wasteful detour. But elements of the Lucas critique are relevant, also for heterodox economists. Challenging common heterodox views on microeconomics and formalization, this paper argues that (i) economic models should not be based purely on empirically observed regularities,(ii) heterodox economists must be able to tell an integrated story about goal-oriented micro behavior in a specific macro environment, and (iii)relatively simple analytical models have an essential role to play. JEL Categories: E1; B5 |
| Keywords: | micro foundations, pluralism, old Keynesian theory, Kaleckian investment function. |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2012-04&r=hpe |
| By: | Diewert, Erwin |
| Abstract: | There are four main approaches to bilateral index number theory: the fixed basket, stochastic, test and economic approaches. The paper reviews the contributions of Irving Fisher to these approaches to index number theory which are still in use today. The paper also reviews Fisher’s contributions to multilateral index number theory. The main themes of the paper are developed in the context of a review of the early history of index number theory: a history that conveys a wealth of information and insight into the making and use of index numbers today. |
| Keywords: | Price indexes, quantity indexes, bilateral price indexes, multilateral price indexes, the Fisher ideal index, the test approach to index number theory |
| JEL: | B16 B31 C43 C81 E01 E31 |
| Date: | 2012–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:bricol:erwin_diewert-2012-9&r=hpe |
| By: | He, Junnan |
| Abstract: | This paper is concerned with the axiomatic foundation of the revealed preference theory. Many well-known results in literature rest upon the ability to choose over budget sets that contains only 2 or 3 elements, the situations which are not observable in real life. In order to give a more realistic approach, this paper shows that many of the famous consistency requirements, such as those proposed by Arrow, Sen, Samuelson etc., are equivalent if the domain of choice functions satisfy some set theoretical properties. And these properties, unions and inclusions for example, are proposed in a way that gives observability. |
| Keywords: | Revealed Preference Theory; Rationality; Ordering; Preference; Choice function |
| JEL: | D11 D01 |
| Date: | 2011–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37094&r=hpe |
| By: | Carfì, David; Musolino, Francesco |
| Abstract: | The aim of this paper is to propose a methodology to stabilize the financial markets by adopting Game Theory, in particular, the Complete Study of a Differentiable Game and the new mathematical model of Coopetitive Game, proposed recently in the literature by D. Carfì. Specifically, we will focus on two economic operators: a real economic subject and a financial institute (a bank, for example) with a big economic availability. For this purpose we will discuss about an interaction between the two above economic subjects: the Enterprise, our first player, and the Financial Institute, our second player. The only solution which allows both players to win something, and therefore the only one collectively desirable, is represented by an agreement between the two subjects: the Enterprise artificially causes an inconsistency between spot and future markets, and the Financial Institute, who was unable to make arbitrages alone, because of the introduction by the normative authority of a tax on economic transactions (that we propose to stabilize the financial market, in order to protect it from speculations), takes the opportunity to win the maximum possible collective (social) sum, which later will be divided with the Enterprise by contract. We propose hereunder two kinds of agreement: a fair transferable utility agreement on the an initial natural interaction and a same type of compromise on a quite extended coopetitive context. |
| Keywords: | Financial Markets and Institutions; Financing Policy; Financial Risk; Financial Crises; Game Theory; Arbitrages; Coopetition |
| JEL: | D53 C7 E44 G32 G01 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37098&r=hpe |
| By: | Attanasi, Giuseppe; Garcia-Gallego, Aurora; Georgantzis, Nikolaos; Montesano, Aldo |
| Abstract: | We apply an alternating proposals protocol with a confirmation stage as a way of solving a Prisoner’s Dilemma game. We interpret players’ proposals and (no) confirmation of outcomes of the game as a tacit communication device. The protocol leads to unprecedented high levels of cooperation in the laboratory. Assigning the power of confirmation to one of the two players alone, rather than alternating the role of a leader significantly increases the probability of signing a cooperative agreement in the first bargaining period. We interpret pre-agreement strategies as tacit messages on players’ willingness to cooperate and on their beliefs about the others’ type. |
| Keywords: | Prisoner’s Dilemma; Bargaining; Confirmed Proposals; Confirmed Agreement; Tacit Communication. |
| JEL: | C72 C91 C92 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:25463&r=hpe |
| By: | Maasland, E. (Tilburg University) |
| Abstract: | Auction theory is a branch of game theory that considers human behavior in auction markets and the ensuing market outcomes. It is also successfully used as a tool to design real-life auctions. This thesis contains five essays addressing a variety of topics within the realm of auction theory. The first essay gives an easily accessible overview of the most important insights of auction theory. The second essay, motivated by the UMTS-auctions that took place in Europe, studies auctions in which, in contrast to standard auction theory, losing bidders benefit from a high price paid by the winner(s). Under this assumption, the first-price sealed-bid auction and the second-price sealed-bid auction are no longer revenue equivalent. The third essay analyzes how well different kinds of auctions are able to raise money for charity. It turns out that standard winner-pay auctions are inept fund-raising mechanisms because of the positive externality bidders forgo if they top another’s high bid. As this problem does not occur in all-pay auctions, where bidders pay irrespective of whether they win or lose, all-pay auctions are more effective in raising money. The fourth essay studies a particular auction type, a so-called simultaneous pooled auction with multiple bids and preference lists, that has been used for example in the Netherlands and Ireland to auction available spectrum. The results in this essay show that this type of auction does not satisfy elementary desirable properties such as the existence of an efficient equilibrium. The fifth essay argues that inefficient auction outcomes due to strong negative (informational) externalities (created by post-auction interactions) can be avoided by asking bidders prior to the auction to submit any publicly observable payment they would like to make. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ner:tilbur:urn:nbn:nl:ui:12-5242208&r=hpe |
| By: | Eric Bahel |
| Abstract: | The present work characterizes the unique Nash equilibrium for games that are based on a cyclic preference relation. In the Nash equilibrium of these games, each player randomizes between three specific actions. In particular, an alternative way of deriving the unique Nash equilibrium of the Rock-Paper-Scissors game is proposed. |
| Keywords: | cycle, Nash equilibrium, prudent strategy |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:vpi:wpaper:e07-31&r=hpe |
| By: | P. Nijkamp; A. Reggiani |
| Abstract: | An avalanche of empirical studies has addressed the validity of the rank-size rule (or Zipf’s law) in a multi-city context in many countries. City size in most countries seems to obey Zipf’s law, but the question under which conditions (e.g. sample size, spatial scale) this ‘law’ holds remained largely underinvestigated. Another complementary question is whether socio-economic networks in space also show a similar hierarchical pattern. Against this background, the present paper investigates – from a methodological viewpoint – the relationship between network connectivity and the rank-size rule (or Zipf’s law) in an urban-economic network constellation. After a review of the literature, we address in particular the following methodological issues: (i) the (aggregate) behavioural foundation underlying the rank-size rule/Zipf’s law in the light of spatial-economic network theories (e.g. entropy maximization, spatial interaction theory, etc.); (ii) the nature of the analytical relationship between social-spatial network analysis and the rank-size rule/Zipf’s law. We argue that the rank size rule is compatible with conventional economic foundations of spatial network models. Consequently, a spatial-economic interpretation – as well as a network connectivity interpretation – of the rank-size rule coefficient is provided. Our methodological contribution forms the foundation for the subsequent empirical analysis applied to spatial networks in a socio-economic context. The aim here is to test the sensitivity of empirical findings for changes in scale, functional forms, time periods, and network structures. Our application is concerned with an extensive spatio-temporal panel database related to the evolution of urban population in Germany. We test the relevance of the rank-size rule/Zipf’s law, and its evolution over the years, and – in parallel – the related ‘socio-economic’ connectivity in these urban networks. In particular, we will show that Zipf’s law (i.e., with the rank-size coefficient equal to 1) is only valid under particular conditions of the sample size. The paper concludes with some retrospective and prospective remarks. |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp816&r=hpe |
| By: | Matthias Morys |
| Abstract: | This paper asks why the Classical Gold Standard (1870s - 1914) emerged: Why did the vastmajority of countries tie their currencies to gold in the late 19th century, while there was onlyone country – the UK – on gold in 1850? The literature distinguishes a number of theories toexplain why gold won over bimetallism and silver. We will show the pitfalls of these theories(macroeconomic theory, ideological theory, political economy of choice between gold andsilver) and show that neither the early English lead in following gold nor the German shift togold in 1873 were as decisive as conventional accounts have it. Similarly, we argue that thesilver supply shock materializing in the early 1870s was only the nail in the coffin of silverand bimetallic standards. Instead, we focus on the impact of the 1850s gold supply shock (dueto the immense gold discoveries in California and Australia) on the European monetarysystem. Studying monetary commissions in 13 European countries between 1861 and 1874,we show that the pan-European movement in favour of gold monometallism was motivatedby three key factors: gold being available in sufficient quantities to actually contemplate thetransition to gold monometallism for a larger number of countries (while silver had becomeextremely scarce in the bimetallic bloc, which was the single most important currency area interms of GDP), widespread misgivings over the working of bimetallism and the fact that goldcould encapsulate substantially more value in the same volume than silver (i.e. coinconvenience). In our view, then, the emergence of the Classical Gold Standard was imminentin the late 1860s; which European country would move first – which is often erroneouslyattributed to Germany – is of secondary importance. |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:yor:cherry:12/01&r=hpe |
| By: | Robert Amzallag |
| Abstract: | Once the 2009 financial meltdown was avoided through central banks’ decisive action and governments’ swift bailouts, the general consensus was that the usual recipes that took us back to prosperity and growth after each of the post war recessions should undoubtedly work again. The main tools selected by the authorities were fiscal stimulus, lowering of interest rates combined with monetary easing, politically motivated legislation and high profile chastising to keep the public satisfied that the authorities were extirpating the roots of the problem. These remedies were applied and, for a while, seemed to work: stock prices recovered, the US job market stabilized, bail out money started to be repaid and economic growth, although sluggish, appeared to be well into positive territory. <p> However, two years later, another serious financial crisis unexpectedly struck. There seemed to be no reason for it. Indeed, this had not been the first time we faced a real estate/financial crisis. For example, in 1990, real estate prices went down even more than they have had since 2008. The amounts dedicated to the stimulus packages and monetary easing were unprecedented and imposing pieces of legislation were quickly passed. So how could this have happened? The answer to this question requires a careful analysis of the nature of the 2008 crisis, the then prevailing economic conditions and the relevance of the measures taken. <P> |
| Date: | 2012–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirtra:2012dt-01&r=hpe |