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on History and Philosophy of Economics |
| By: | Krieger-Boden, Christiane |
| Abstract: | [Introduction] In autumn and winter 2011, more or less out of a sudden, the movement 'Occupy Wall Street' arose and almost immediately attracted an amazing amount of public attention. Young people in New York, Baltimore, California, Madrid, Frankfurt and Zurich started bristling at a loss of decency and morals in economic processes, at growing inequality, at lacking justice regarding gains and merits, and at the destabilization of the globalized economy by unleashed financial markets. Meanwhile, the excitement surrounding the 'Occupy' movement has abated largely. Still, certain renewed resentment against capitalism, in general, and against the rules assumed to guide our economic system, in particular, has risen in the public, and has echoed into the mainstream of economic science. Within the economic discipline, a hot debate on the paradigm of economic theory has unfolded. While this debate is not free of unspoken allegations and silent misunderstandings, e.g., as to what actually is the paradigm that should be debated, still it seems fair to state that the discipline is on the move, perhaps more fundamentally than ever within at least the last twenty years. (...) -- |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkpb:60&r=hpe |
| By: | Thorsten Chmura (Centre for Decision Research and Experimental Economics, University of Nottigham); Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Markus Englerth |
| Abstract: | For a rational choice theorist, the absence of crime is more difficult to explain than its presence. Arguably, the expected value of criminal sanctions, i.e. the product of severity times certainty, is often below the expected benefit. We rely on a standard theory from behavioral economics, inequity aversion, to offer an explanation. This theory could also explain how imperfect criminal sanctions deter crime. The critical component of the theory is aversion against outperforming others. To test this theory, we exploit that it posits inequity aversion to be a personality trait. We can therefore test it in a very simple standard game. Inequity averse individuals give a fraction of their endowment to another anonymous, unendowed participant. We have prisoners play this game, and compare results to findings from a meta-study of more than 100 dictator games with non-prisoners. Surprisingly, results do not differ, not even if we only compare with other dictator games among close-knit groups. To exclude social proximity as an explanation, we retest prisoners on a second dictator game where the recipient is a charity. Prisoners give more, not less. |
| Keywords: | crime, imperfect sanctions, selfishness, inequity aversion, dictator game, social proximity, charity |
| JEL: | A12 C91 C93 D03 D63 K14 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2013_05&r=hpe |
| By: | Markus Schaffner |
| Abstract: | The field of experimental economics is past its 50th anniversary and is celebrating its 2nd Nobel prize winner. By far the largest number of economic experiments are now conducted in computer labs, although there is a wide array of settings, ranging from pen-and-paper to elaborate field settings. The controlled environment of the computer lab remains a strong foothold for experimental research. On top of the high level of control, including the standardisation of recruitment protocol and software used, the ease of data collection singles out the lab environment as a key instrument for the testing of economic theory and market mechanics. A number of tools and procedures have developed over the recent decades shaping how experiments are conducted. Z-tree (Fischbacher, 2007) has been established as the quasi-standard tool to conduct experiments. This paper introduces a novel view on how to approach programming for experiments, specically it introduces a number of innovations from professional software development into the programming of economic experiments. Finally the lightweight experimental software framework CORAL will be introduced. |
| Keywords: | Experimental Economics, Programming, CORAL |
| Date: | 2013–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:qut:qubewp:wp015&r=hpe |
| By: | Jun, Byoung Heon; Wolfstetter, Elmar G. |
| Abstract: | If bidders are uncertain whether the auctioneer sticks to the announced reserve, some bidders respond by not bidding, speculating that the auctioneer may revoke the reserve. However, the reserve inadvertently signals the auctioneer's type, which drives a unique separating and a multitude of pooling equilibria. If one eliminates belief systems that violate the "intuitive criterion", one obtains a unique equilibrium reserve price equal to the seller's own valuation. Paradoxically, even if bidders initially believe that the auctioneer is bound by his reserve almost with certainty, commitment has no value. |
| Keywords: | Auctions; signalling; mechanism design |
| JEL: | D21 D43 D44 D45 |
| Date: | 2013–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:403&r=hpe |
| By: | Mongin, Philippe (HEC Paris) |
| Abstract: | Author's abstract. <p>L'article compare philosophiquement la théorie mathématique de la décision individuelle, d'une part, et la conception psychologique ordinaire de l'action, du désir et de la croyance, d'autre part.Il délimite plus strictement son objet en étudiant, sous cet angle comparatif, le système de Savage et son concept technique de probabilité subjective, rapporté,comme chez Ramsey, au modèle élémentaire du pari. L'examen est scandé par trois thèses philosophiques: (i) la théorie de la décision n'est que la psychologie commune mise en langage formel (Lewis), (ii) la première améliore substantiellement la seconde, mais ne s'affranchit pas des limites caractéristiques de celle-ci, en particulier de son inaptitude à séparer empiriquement le désir et la croyance (Davidson), (iii)la première améliore substantiellement la seconde, et par les innovations qu'elle comporte, s'affranchit de certaines de ses limitations. On s'est donné pour but d'établir la thèse (iii)à la fois contre la thèse trop simple(i)et contre la thèse subtile(ii). |
| Keywords: | théorie de la décision; savage; ramsey; probabilité subjective; utilité dépendante des états; psychologie du sens commun; désir; croyance; lewis; davidson |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:0943&r=hpe |
| By: | Salvador Barberà; Danilo Coelho |
| Abstract: | Rules of k names are frequently used methods to appoint individuals to office. They are two-stage procedures where a first set of agents, the proposers, select k individuals from an initial set of candidates, and then another agent, the chooser, appoints one among those k in the list. In practice, the list of k names is often arrived at by letting each of the proposers screen the proposed candidates by voting for v of them and then choose those k with the highest support. We then speak of v-rules of k names. Our main purpose in this paper is to study how different choices of the parameters v and k affect the balance of power between the proposers and the choosers. From a positive point of view, we analyze a strategic game where the proposers interact to determine what list of candidates to submit. From a normative point of view, we study the performance of different rules in expected terms, under different informational assumptions. The choice of v and k is then analyzed from the perspectives of efficiency, fairness and compromise. |
| Keywords: | voting rules, constitutional design, Strong Nash equilibrium, rule of k names |
| JEL: | D02 D71 D72 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:696&r=hpe |
| By: | Antonio M. Espín (GLOBE, Departamento de Teoría e Historia Económica, Universidad de Granada); Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies, Istanbul Bilgi University); Benedikt Herrmann (Institute for Health and Consumer Protection, Joint Research Centre, European Commission); Pablo Brañas-Garza (Economic Science Institute, and Department of Economics and International Development, Middlesex University Business School) |
| Abstract: | The ultimatum game (UG) is widely used to study human bargaining behavior and fairness norms. In this game, two players have to agree on how to split a sum of money. The proposer makes an offer, which the responder can accept or reject. If the responder rejects, neither player gets anything. The prevailing view is that, beyond self-interest, the desire to equalize both players’ payoffs (i.e., fairness) is the crucial motivation in the UG. Based on this view, previous research suggests that responders follow short-run psychological incentives when imposing fairness through the rejection of low offers. However, competitive spite, which reflects the desire to reduce others’ payoffs, can also account for the behavior observed in the UG, and has been linked to short-run, present-oriented aspirations as well. In this paper, we explore the relationship between individuals’ inter-temporal preferences and their behavior in a large-scale dual-role UG experiment. We find that impatience (present orientation) predicts the rejection of low, “unfair” offers as responders and the proposal of low, “unfair” offers as proposers, which is consistent with spite but inconsistent with fairness motivations. This behavior systematically reduces the payoffs of those who interact with impatient individuals. Thus, impatient individuals appear to be keen on reducing their partners’ share of the pie, even at the risk of destroying it. These findings indicate that competitive spite, rather than fairness, is the short-run motivation in ultimatum bargaining. |
| Keywords: | ultimatum game, costly punishment, delay discounting, impatience, fairness, spite, cooperation, competition |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-17&r=hpe |
| By: | Florian Lindner; Matthias Sutter |
| Abstract: | Arad and Rubinstein (2012a) have designed a novel game to study level-k reasoning experimentally. Just like them, we find that the depth of reasoning is very limited and clearly different from equilibrium play. We show that such behavior is even robust to repetitions, hence there is, at best, little learning. However, under time pressure, behavior is, perhaps coincidentally, closer to equilibrium play. We argue that time pressure evokes intuitive reasoning and reduces the focal attraction of choosing higher (and per se more profitable) numbers in the game. |
| Keywords: | Level-k reasoning, Time pressure, Repetition, Experiment |
| JEL: | C91 C72 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-13&r=hpe |
| By: | Anat Bracha (Federal Reserve Bank of Boston); Donald J. Brown (Dept. of Economics, Yale University) |
| Abstract: | The equilibrium prices in asset markets, as stated by Keynes (1930): "...will be fixed at the point at which the sales of the bears and the purchases of the bulls are balanced." We propose a descriptive theory of finance explicating Keynes' claim that the prices of assets today equilibrate the optimism and pessimism of bulls and bears regarding the payoffs of assets tomorrow. This equilibration of optimistic and pessimistic beliefs of investors is a consequence of investors maximizing Keynesian utilities subject to budget constraints defined by market prices and investor's income. The set of Keynesian utilities is a new class of non-expected utility functions representing the preferences of investors for optimism or pessimism, defined as the composition of the investor's preferences for risk and her preferences for ambiguity. Bulls and bears are defined respectively as optimistic and pessimistic investors. (Ir)rational exuberance is an intrinsic property of asset markets where bulls and bears are endowed with Keynesian utilities. |
| Keywords: | Keynes, Bulls and bears, Expectations, Asset markets |
| JEL: | D81 G11 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1898&r=hpe |
| By: | Brams, Steven J.; Kilgour, D. Marc; Klamler, Christian |
| Abstract: | Many procedures have been suggested for the venerable problem of dividing a set of indivisible items between two players. We propose a new algorithm (AL), related to one proposed by Brams and Taylor (BT), which requires only that the players strictly rank items from best to worst. Unlike BT, in which any item named by both players in the same round goes into a “contested pile,” AL may reduce, or even eliminate, the contested pile, allocating additional or more preferred items to the players. The allocation(s) that AL yields are Pareto-optimal, envy-free, and maximal; as the number of items (assumed even) increases, the probability that AL allocates all the items appears to approach infinity if all possible rankings are equiprobable. Although AL is potentially manipulable, strategizing under it would be difficult in practice. |
| Keywords: | Two-person fair division, indivisible items, envy-freeness, efficiency, algorithm |
| JEL: | C7 C78 D6 D61 D63 D7 D74 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47400&r=hpe |