NEP-HPE 2010-07-03, 11 papers

NEP: New Economics Papers
History and Philosophy of Economics

Edited by:	Erik Thomson
University of Manitoba
Issue date:	2010-07-03
Papers:	11

Note: Access to full contents may be restricted.
NEP is sponsored by SUNY Oswego.

In this issue we have:

1. Unraveling Fairness in Simple Games? The Role of Empathy and Theory of Mind Florian Artinger; Fillipos Exadaktylos; Lauri Sääksvuori; Hannes Koppel
2. Recent Advances in the Economics of Individual Subjective Well-Being Bruno S. Frey; Alois Stutzer
3. Fairness Is an Emergent Self-Organized Property of the Free Market for Labor Venkat Venkatasubramanian
4. Strong Subjectivism in the Marxian Theory of Exploitation: A Critique Veneziani, Roberto; Yoshihara, Naoki
5. Moody Choice Manzini, Paola; Mariotti, Marco
6. Is the psychology of high profits favorable to industrial renewal? Experimental evidence for the theory of transformation pressure and Schumpeterian economics Erixon, Lennart; Johannesson, Louise
7. Individual Subsistence: On a Principle of Economy and Society Thieme, Sebastian
8. An Experiment on Intercultural Tacit Coordination – Preliminary Report Abitbol, Pablo
9. Qu’attend-on de la finance mondiale après la crise ? Les quatre commandements oubliés BRACK, Estelle; SAIDANE, Dhafer
10. Econophysics: A new discipline Sonia R. Bentes
11. L’émergence de la fonction comptable. Labardin, Pierre

Contents.

1. Unraveling Fairness in Simple Games? The Role of Empathy and Theory of Mind
   

   Date:	2010-06-23
   By:	Florian Artinger (Max Planck Institute for Human Development, Berlin) Fillipos Exadaktylos (University of Granada) Lauri Sääksvuori (Max Planck Institute of Economics, Jena) Hannes Koppel (Max Planck Institute of Economics, Jena)
   URL:	http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2010-037&r=hpe
   Economists have been theorizing that other-regarding preferences influence decision making. Yet, what are the corresponding psychological mechanisms that inform these preferences in laboratory games? Empathy and Theory of Mind (ToM) are dispositions considered to be essential in social interaction. We investigate the connection between an individual’s preference type and her disposition to engage in empathy and ToM in neutrally framed Dictator and Ultimatum Game. For that purpose, cognitive and emotional psychometric scales are applied to infer the dispositions of each subject. We find that a disposition for empathy does not influence the behavior in the games. ToM positively correlates with offers in the Dictator Game. Integral to ToM are beliefs about others. Both, other-regarding and selfish types, show a strong correlation between what they belief others do and their own action. These results indicate that expectations about the prevalent social norm might be central in informing behavior in one-shot games.
   Keywords:	Altruism, Inequality, Empathy, Theory of Mind, Behavioral Economics
   JEL:	C91

2. Recent Advances in the Economics of Individual Subjective Well-Being
   

   Date:	2010
   By:	Bruno S. Frey Alois Stutzer (University of Basel)
   URL:	http://d.repec.org/n?u=RePEc:bsl:wpaper:1424&r=hpe
   Over the last decades, empirical research on subjective well-being in the social<br />sciences has provided a major new stimulus to the discourse on individual happiness.<br />Recently this research has also been linked to economics where reported subjective wellbeing<br />is often taken as a proxy measure for individual welfare. In our review, we intend to<br />provide an evaluation of where the economic research on happiness stands and of three<br />directions it might develop. First, it offers new ways for testing the basic assumptions of the<br />economic approach and for going about a new understanding of utility. Second, it provides a<br />new possibility for the complementary testing of theories across fields in economics. Third,<br />we inquire how the insights gained from the study of individual happiness in economics affect<br />public policy.<br />Keywords: Economics, happiness, life satisfaction, survey data, income, public goods,<br />unemployment<br />JEL Classifications: A10, D60, H41, I31

3. Fairness Is an Emergent Self-Organized Property of the Free Market for Labor
   

   Date:	2010-06
   By:	Venkat Venkatasubramanian
   URL:	http://d.repec.org/n?u=RePEc:arx:papers:1006.4382&r=hpe
   The excessive compensation packages of CEOs of U.S. corporations in recent years have brought to the foreground the issue of fairness in economics. The conventional wisdom is that the free market for labor, which determines the pay packages, cares only about efficiency and not fairness. We present an alternative theory that shows that an ideal free market environment also promotes fairness, as an emergent property resulting from the self-organizing market dynamics. Even though an individual employee may care only about his or her salary and no one else’s, the collective actions of all the employees, combined with the profit maximizing actions of all the companies, in a free market environment under budgetary constraints, lead towards a more fair allocation of wages, guided by Adam Smith’s invisible hand of self-organization. By exploring deep connections with statistical thermodynamics, we show that entropy is the appropriate measure of fairness in a free market environment which is maximized at equilibrium to yield the lognormal distribution of salaries as the fairest inequality of pay in an organization under ideal conditions.

4. Strong Subjectivism in the Marxian Theory of Exploitation: A Critique
   

   Date:	2009-11
   By:	Veneziani, Roberto Yoshihara, Naoki
   URL:	http://d.repec.org/n?u=RePEc:hit:hituec:a523&r=hpe
   This paper critically analyses the strongly subjectivist approach to exploitation theory recently proposed by Matsuo ([7]), in the context of general convex economies with heterogeneous agents. It is proved that the Fundamental Marxian Theorem is not preserved in his subjectivist approach, contrary to Matsuo’s claims, and that no meaningful subjectivist exploitation index can be constructed. It is argued that a minimal objectivism is necessary in exploitation theory, whereby subjective preferences do not play a direct, definitional role. An alternative objectivist approach is briefly analysed, which is related to the ‘New Interpretation’ ([1]; [3]). It is argued that it captures the core intuitions of exploitation theory and it provides appropriate indices of individual and aggregate exploitation. Further, it is shown that it preserves the FMT in general economies.
   Keywords:	Exploitation, subjective preferences, Fundamental Marxian Theorem, general convex cone economies
   JEL:	D31

5. Moody Choice
   

   Date:	2010-06
   By:	Manzini, Paola (University of St. Andrews) Mariotti, Marco (University of St. Andrews)
   URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp5005&r=hpe
   If choices depend on the decision maker’s mood, is the attempt to derive any consistency in choice doomed? In this paper we argue that, even with full unpredictability of mood, the way choices from a menu relate to choices from another menu exhibits some structure. We present two alternative models of ‘moody choice’ and show that, in either of them, not all choice patterns are possible. Indeed, we characterise both models in terms of consistency requirements of the observed choice data.
   Keywords:	bounded rationality, procedural rationality, utility maximization, choice behavior
   JEL:	D01

6. Is the psychology of high profits favorable to industrial renewal? Experimental evidence for the theory of transformation pressure and Schumpeterian economics
   

   Date:	2010-06-24
   By:	Erixon, Lennart (Dept. of Economics, Stockholm University) Johannesson, Louise (Dept. of Economics, Stockholm University)
   URL:	http://d.repec.org/n?u=RePEc:hhs:sunrpe:2010_0013&r=hpe
   The theory of transformation pressure sheds light on the importance of negative driving forces for economic growth and the countercyclical movement in innovations and productivity growth. The theory suggests that firms have a status-quo bias in periods of increasing profits leading to lower productivity growth. Firm agents are governed by changes in current profits through historical relativism, the peak-end rule and overconfidence. They will first abandon a status-quo bias after an actual decline in profits though both under- and overreaction is possible. On the other hand Schumpeterian economics stress that firm renewal is speeded up during recoveries, e.g. by psychological reasons. The two contradicting hypotheses were tested by a role play where a group of university students in economics completed a questionnaire acting as managers for an established company. The students had the opportunity to choose between different growth strategies and define the underlying psychological mechanism. The questionnaire also provided room for rational considerations. The role play confirmed the theory of transformation pressure more than Schumpeterian economics but primarily that the students expected that they would have reacted rationally as managers.
   Keywords:	Transformation pressure; Schumpeterian economics; peak-end rule; historical relativism; productivity growth; overconfidence; bounded rationality; the business cycle; heuristic decision rules; role play
   JEL:	C23

7. Individual Subsistence: On a Principle of Economy and Society
   

   Date:	2010-05-09
   By:	Thieme, Sebastian
   URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:23405&r=hpe
   With this paper the author tries to clarify the terms of “public“ and “private“ with reference to the ideas of Thomas Hobbes and Johann Heinrich von Thünen. Both scientists showed that the individual’s subsistence is very fundamental for a society and – therefore – the base of “public“. Additionally with reference to Polanyi’s “Great Transformation“, it will be shown that the mainstream economic idea of “modern“ market economies acts strictly against the individual’s subsistence. In contrast to his explanations, the protection of individual subsistence is an important part of solidarity. From that the question of shifting boundaries between “private“ and “public“ is reformulated against the background of the individual’s subsistence! This paper gives reasons to think about the individual’s subsistence as a neglected economic principle. Hereby it will also provide another and self-critical view from alternative economic perspective to the real question behind the shifting boundaries: Is a change in economic thinking to be expected? The insights into these problems will be especially useful in the prepartory work to discuss political activities in the light of the current economic crisis worldwide.
   Keywords:	History of Economic Thoughts; Thomas Hobbes; Johann Heinrich von Thünen; Karl Polanyi; Subsistence; Viablity; Right of Subsistence
   JEL:	B52

8. An Experiment on Intercultural Tacit Coordination – Preliminary Report
   

   Date:	2009-10
   By:	Abitbol, Pablo
   URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:23474&r=hpe
   This report presents the results of a replication, with 199 culturally-diverse subjects, of Thomas Schelling’s (1957) experiments on tacit coordination. Section 1 introduces the concept of focal point equilibrium selection in tacit one-shot symmetric pure coordination games, as presented by Schelling in his classic article; it then traces its subsequent exploration through experimental research, shows how it has been explained, particularly in terms of culture, and relates that kind of explanation to the experimental and null hypotheses of the present study and its associated predictions. Section 2 describes the design of the intercultural tacit coordination experiment, and section 3 the results. Finally, section 4 presents a very preliminary discussion of the implications of the experiment’s results in terms of the cultural explanation of focal point equilibrium selection.
   Keywords:	Culture; cultural diversity; coordination; game theory; Thomas Schelling
   JEL:	C72

9. Qu’attend-on de la finance mondiale après la crise ? Les quatre commandements oubliés
   

   Date:	2010-01
   By:	BRACK, Estelle SAIDANE, Dhafer
   URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:23472&r=hpe
   The recent crisis should not be used to prouve the failure of the entire financial system. Global banking systems are regulated by rules, that have not been applied correctly all over the place. And just one "hole" in the regulatory net is sufficient to make it useless.
   Keywords:	Financial crisis; core banking economics; banking model; transparency; state intervention; market discipline
   JEL:	L5

10. Econophysics: A new discipline
    

    Date:	2010-06
    By:	Sonia R. Bentes
    URL:	http://d.repec.org/n?u=RePEc:arx:papers:1006.3956&r=hpe
    This paper debates the contribution of Econophysics to the economic or financial domains. Since the traditional approach performed by Economics or Finance has revealed to be insufficient in fully characterizing and explaining the correspondingly phenomena, we discuss whether Econophysics can provide a new insight onto these matters. Thus, an assessment is presented in order to weight its potential opportunities and limitations. This is particularly relevant as it is widely recognized that during its yet short existence Econophysics has experienced a growing interest not only by physicists but also by economists in searching for new approaches that could help explaining existing questions. In fact, many papers have been submitted, some books have been released, new journals have been published, several conferences have been held, a site is maintained — http://www.unifr.ch/econophysics where news, events, book reviews, papers and a blog are exhibited; a 3-year licentiate studies (University of Silesia [1]) and a B.Sc. course (University of Wroclaw [2]) have been created and also some Ph.D. thesis have been written. Therefore, a fundamental question arises: Is this just a fad or is it something much more consistent that will prevail? This is what this paper addresses.

11. L’émergence de la fonction comptable.
    

    Date:	2010-05
    By:	Labardin, Pierre
    URL:	http://d.repec.org/n?u=RePEc:ner:dauphi:urn:hdl:123456789/4384&r=hpe
    A partir d’archives d’entreprises, de manuels comptables, de coupures de presse spécialisée, d’archives d’associations et de thèses de droit anciennes, cette monographie revient sur l’histoire des entreprises, qui s’organisent aux XVIIIe et XIXe siècles sans fonction comptable. Elle analyse ensuite comment les transformations du marché du travail rationalisent la comptabilité.
    Keywords:	Comptabilité de gestion; Organisation de l’entreprise; Services comptables;
    JEL:	M0

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