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on History and Philosophy of Economics |
| By: | H Peyton Young; H.H. Nax; M.N. Burton-Chellew; S.A. West |
| Abstract: | Many interactive environments can be represented as games, but they are so large and complex that individual players are in the dark about what others are doing and how their own payoffs are affected. This paper analyzes learning behavior in such 'black box' environments, where players' only source of information is their own history of actions taken and payoffs received. Specifically we study repeated public goods games, where players must decide how much to contribute at each stage, but they do not know how much others have contributed or how others' contributions affect their own payoffs. We identify two key features of the players' learning dynamics. First, if a player's realized payoff increases he is less inclined to change his strategy, whereas if his realized payoff decreases he is more inclined to change his strategy. Second, if increasing his own contribution results in higher payoffs he will tend to increase his contribution still further, whereas the reverse holds if an increase in contribution leads to lower payoffs. These two effects are clearly present when players have no information about the game; moreover they are still present even when players have full information. Convergence to Nash equilibrium occurs at about the same rate in both situations. |
| Keywords: | Learning, information, public goods games |
| JEL: | C70 C73 C91 D83 H41 |
| Date: | 2013–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:653&r=hpe |
| By: | Holtfrerich, Carl-Ludwig |
| Abstract: | [Introduction] The first half of the long 19th century covers the publication of Adam Smiths 'Wealth of Nations' in 1776 through the work of subsequent representatives of classical political economy in Great Britain. The second half of that long century is marked by the contributions of German economists to public finance theory spanning the sixty years preceding the First World War. In this paper I will contrast the views of four classical British economists regarding the issue of public debt, namely those of Adam Smith, David Ricardo, Thomas Robert Malthus and John Stuart Mill, with those of three German economists, Carl Dietzel, Lorenz von Stein, and, with the internationally prominent (at least up to the First World War), Adolph Wagner. The position of British economists of the classical school that government debt was an impediment to economic progress is relatively familiar. Maybe due to their harsh judgment they treated the issue only in passing. In contrast, considerably less well-known today are the contributions of these three German economists who published entire books devoted to the issue of public debt with a subtly differentiated analysis and who were led to significantly more favorable assessments of the use of debt finance by governments. Before outlining the views of the classical economists in Great Britain, I begin with a brief discussion of the origins and magnitude of the British debt problem, the times when the main representatives of the British classical school shaped their views. Having the times and doctrines of English political economy before us, we move to consider each of the three German economists to see what led them to discover a more positive role for the use of debt in a system of public finance. The paper concludes by highlighting the main differences between the two traditions. -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:20134&r=hpe |
| By: | Giacomo Bonanno (Department of Economics, University of California Davis) |
| Abstract: | This is the first draft of a chapter in a planned book on the Prisoner’s Dilemma, edited by Martin Peterson, to be published by Cambridge University Press. It discusses the nature of the conditionals involved in deliberation, taking the Prisoner's Dilemma game as point of departure. |
| Keywords: | Prisoner's Dilemma, deliberation, belief, subjunctive conditional, indicative conditional, counterfactual, causal decision theory |
| JEL: | C7 |
| Date: | 2013–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:cda:wpaper:13-7&r=hpe |
| By: | Cavalieri, Duccio |
| Abstract: | This is a paper on the theory of capital. It deals with the role of capital in a cost-of-production theory of value in which both labour and capital are directly productive. The guidelines of an analytical method are proposed. Marx’s ‘monetary expression of abstract labour-value’ (MEV) is used as price-index. It is preferred to the ‘monetary expression of labour time’ (MELT), exclusively focused on living labour, suggested by some neo-Marxist scholars during the ’New Value Controversy’. The author, a critical Marxist, develops the trace provided by Marx in his Grundrisse ’Fragment on Machines’, where he pointed out the need to abandon the labour theory of value and to rely on a broader labour-and-capital monetary theoretical construction. Due attention is paid in this essay to the time and money dimensions of capital and to the roles of both real and financial capital. |
| Keywords: | capital, value, labour, Marx, MEV, MELT, profit accounting |
| JEL: | B12 B13 B22 B5 B51 E2 E4 E41 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47197&r=hpe |
| By: | Rene van den Brink (VU University Amsterdam); Jean-Jacques Herings (Maastricht University); Gerard van der Laan (VU University Amsterdam); Dolf Talman (Tilburg University) |
| Abstract: | In the literature various models of games with restricted cooperation can be found. In those models, instead of allowing for all subsets of the set of players to form, it is assumed that the set of feasible coalitions is a proper subset of the power set of the set of players. In this paper we consider such sets of feasible coalitions that follow from a permission structure on the set of players, in which players need permission to cooperate with other players. We assume the permission structure to be an oriented tree. This means that there is one player at the top of the permission structure and for every other player there is a unique directed path from the top player to this player. We introduce a new solution for these games based on the idea of the Average Tree value for cycle-free communication graph games. We provide two axiomatizations for this new value and compare it with the conjunctive permission value. |
| Keywords: | TU game, restricted cooperation, permission structure, Shapley value, Average Tree value, axiomatization |
| JEL: | C71 |
| Date: | 2012–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2013023&r=hpe |
| By: | Richard N. Langlois (University of Connecticut) |
| Abstract: | This review essay discusses and appraises Douglas Allen’s The Institutional Revolution (2011) as a way of reflecting on the uses of the New Institutional Economics (NIE) in economic history. It praises and defends Allen’s method of asking “what economic problem were these institutions solving?” But it insists that such comparative-institutional analysis be imbedded within a deeper account of institutional change, one driven principally by changes – often endogenous changes – in the extent of the market and in relative scarcities. The essay supports its argument with a variety of examples of the NIE applied to economic history. |
| Keywords: | institutions, transaction costs, aristocracy, military history, factory system. |
| JEL: | C61 L25 D24 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2013-11&r=hpe |
| By: | Hyndman, Kyle; Terracol, Antoine; Vaksmann, Jonathan |
| Abstract: | In this paper, we use experimental data to study players' stability in normal-form games where subjects have to report beliefs and to choose actions. Subjects saw each of 12 games four times in a regular or isomorphic form spread over two days without feedback. We document a high degree of stability within the same (strategically equivalent) game, although time and changes in the presentation of the game do lead to less stability. To look at stability across different games, we adopt the level-k theory, and show that stability of both beliefs and actions is significantly lower. Finally, we estimate a structural model in which players either apply a consistent level of reasoning across strategically different games, or reasoning levels change from game to game. Our results show that approximately 30% of subjects apply a consistent level of reasoning across the 12 games, but that they assign a low level of sophistication to their opponent. The remaining 70% apply different levels of reasoning to different games. |
| Keywords: | Game theory, Beliefs, Stability, Level-$k$ thinking |
| JEL: | C72 C91 D83 |
| Date: | 2013–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47221&r=hpe |
| By: | Hannu Salonen (Department of Economics, University of Turku, Finland) |
| Abstract: | We study games with utilitarian preferences: the sum of individual utility functions is a generalized ordinal potential for the game. It turns out that generically, any finite game with a potential, ordinal potential, or generalized ordinal potential is better reply equivalent to a game with utilitarian preferences. It follows that generically, finite games with a generalized ordinal potential are better reply equivalent to potential games. For infinite games we show that a continuous game has a continuous ordinal potential, iff there is a better reply equivalent continuous game with utilitarian preferences. For such games we show that best reply improvement paths can be used to approximate equilibria arbitrarily closely. |
| Keywords: | potential games, best reply equivalence, utilitarian preferences |
| JEL: | C72 D43 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:tkk:dpaper:dp85&r=hpe |
| By: | Issing, Otmar; Wieland, Volker |
| Abstract: | In this paper, we provide some reflections on the development of monetary theory and monetary policy over the last 150 years. Rather than presenting an encompassing overview, which would be overambitious, we simply concentrate on a few selected aspects that we view as milestones in the development of this subject. We also try to illustrate some of the interactions with the political and financial system, academic discussion and the views and actions of central banks. -- |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:201220&r=hpe |
| By: | Olivier Compte (Paris School of Economics); Andrew Postlewaite (Department of Economics, University of Pennsylvania) |
| Abstract: | Much of the repeated game literature is concerned with proving Folk Theorems. The logic of the exercise is to specify a particular game, and to explore for that game specification whether any given feasible (and individually rational) value vector can be an equilibrium outcome for some strategies when agents are sufficiently patient. A game specification includes a description of what agents observe at each stage. This is done by defining a monitoring structure, that is, a collection of probability distributions over the signals players receive (one distribution for each action profile players may play). Although this is simply meant to capture the fact that players don’t directly observe the actions chosen by others, constructed equilibria often depend on players precisely knowing these distributions, somewhat unrealistic in most problems of interest. We revisit the classic Folk Theorem for games with imperfect public monitoring, asking that incentive conditions hold not only for a precisely defined monitoring structure, but also for a ball of monitoring structures containing it. We show that efficiency and incentives are no longer compatible. |
| Keywords: | Repeated games, folk theorem, robustness |
| JEL: | C72 C73 |
| Date: | 2013–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:13-022&r=hpe |
| By: | Ronen Gradwohl; Eran Shmaya |
| Abstract: | We propose to strengthen Popper's notion of falsifiability by adding the requirement that when an observation is inconsistent with a theory, there must be a "short proof" of this inconsistency. We model the concept of a short proof using tools from computational complexity, and provide some examples of economic theories that are falsifiable in the usual sense but not with this additional requirement. We consider several variants of the denition of "short proof" and several assumptions about the difficulty of computation, and study their different implications on the falsifiability of theories. JEL Classification: B400 |
| Keywords: | falsifiability, complexity, empirical content, rationalization |
| Date: | 2013–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:nwu:cmsems:1564&r=hpe |
| By: | Hanappi, Hardy |
| Abstract: | Traditional macroeconomics and agent-based simulation (ABS) seem to be two disjunctive worlds, two different sprachspiele in the sense of Wittgenstein. It is not just the fact that macroeconomics has a long and distinguished history that on top of more than 200 years of discourse has recently adopted a sophisticated dynamic mathematical framework, while ABS is still in its infancy and for outsiders looks more like an intellectual toy than a serious research tool. Both languages are tools and eventually both are aiming at the same object of investigation: political economy. Why they let their object appear differently certainly is due to the intrinsic properties of the two languages. As is the case with every tool, the properties of the tool are to some extent transferred to the results that can be achieved with the respective tool. What aggravates this split of work styles is the fact that two different large research communities are linked to the use of the two languages; and each member of such a community has built already a considerable human capital stock, which consists mainly of elements that belong to exactly one of the two languages. Any expedition into the use of the foreign language runs into danger to make a part of the own toolset look obsolete, and thus to lose hard earned human capital. The incentives for cooperation disappear. To ease the pains of disaggregated research, the aim of this paper is to improve mutual understanding, and to show how far evolutionary macroeconomic simulation can advance political economy by explaining traditional macroeconomics as a (sometimes implausible) special case of its own more general approach. On the other hand ABS researchers often are unaware of the rich interpretative and empirically oriented treasures that classical macroeconomics has in store. What at first sight looks to be easily transferred into an algorithm turns out to be a highly refined argument, which in turn challenges the skills of ABS modelers. The most promising route to follow in the future certainly will be to be versatile in both languages, to walk on both feet. This short paper should provide a modest first step towards this goal. |
| Keywords: | Macroeconomics, simulation, evolutionary economics |
| JEL: | E10 E11 E12 |
| Date: | 2013–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47181&r=hpe |