Category Archive

Do not forget to check out the special issue of Nature Neuroscience on decision making. Here is what you’ll get:

• “Introduction: Focus on decision making” by Hannah Bayer
• “Choice, uncertainty and value in prefrontal and cingulate cortex” by Matthew F S Rushworth & Timothy E J Behrens
• “Risky business: the neuroeconomics of decision making under uncertainty” by Michael L Platt & Scott A Huettel
• “Game theory and neural basis of social decision making” by Daeyeol Lee
• “Modulators of decision making” by Kenji Doya

This blog is turning into Homo Neuroeconomicus… at least untill the conference: “Neuroeconomics: Hype or Hope?”

“Neuroeconomics: Hype or Hope?” Conference is approaching. You may want to prepare yourself by reading Glenn W. Harrison’s recent paper “Neuroeconomics: A Critical Reconsideration” (forthcoming, Economics and Philosophy). He argues that “neuroeconomics can be a valuable field, but not the way it is being developed and “sold” now.” Download Glenn Harrison’s paper!

You may also be interested in the following papers (also forthcoming in Economics and Philosophy):

• “Neuroeconomics: A Rejoinder” by Glen W. Harrison: Download!
• “Neuroeconomics and the Economic Sciences” by Kevin A. McCabe: Download!
• “Prospecting Neuroeconomics” by Andreas Ortmann: Download!
• “Comments on Neuroeconomics” by Ariel Rubinstein: Download
• “Against Simplicity and Cognitive Individualism” by Nathaniel T. Wilcox: Download!
• “From Cognitive Science to Cognitive Neuroscience to Neuroeconomics” by Steven R. Quartz, (not on-line!)
• “Two Styles of Neuroeconomics,” by Don Ross, (not on-line!)

A conference on Neuroeconomics took place at Copenhagen Business School. You may also be interested in the papers presented at this conference. Click here to visit the conference web site.

Raj Nallari argues that:

“Neuroeonomics, while still regarded skeptically by many, it is a starting point to provide an alternative theoretical framework for mainstream economists and policy makers. It attempts to synthesize the complex dynamic interplay between rationality, behavioural characteristics and psychology of consumers to better understand the real foundations of consumer behavior and choice.”

I am not sure whether neuroeconomics provides an alternative theoretical framework, or not. It seems to me that it does not. Anyways, we’ll learn more about this in Rotterdam, at the Neuroeconomics: Hype or Hope? Conference.

To read Raj Nallari’s paper click here!

Here is an interesting paper. David Colander argues that

“Given my views on pluralism, it should come as no surprise that I am not moved by heterodox economist’s arguments that that mainstream economics is anti-pluralistic, closed-minded, and ideologically biased. Mainstream economics is all those things, but so too is heterodox economics. I see most heterodox calls for pluralism as calls to listen to their particular point of view, and not as calls for pluralism. My suspicion is that if heterodox economists had the power, they would be as nonpluralistic as the mainstream is now.”

I think that he may be right: If some heterodox economists had the power, they would be as nonpluralistic as the mainstream is now. See the rest of Colander’s argument here:

Colander, David (2007) “Pluralism and Heterodox Economics: Suggestions for an “Inside the Mainstream” Heterodoxy”, MIDDLEBURY COLLEGE ECONOMICS DISCUSSION PAPER NO. 07-24. [Download Paper]

I was at the HES Conference in Toronto. It was a very good conference with a lot of interesting papers. I have especially enjoyed the following papers:

• John Davis, “Psychology’s Recent Challenge to Economics: Rationality and the Individual” (download paper)
• Lawrence Boland, On The Economist’s View Of Inductive Reasoning (download paper)
• James Wible, How is Scientific Knowledge Possible?: Nicholas Rescher’s Contributions to an Economic Understanding of Science (download paper)
• Edward Nik-Khah, “George Stigler, the GSB, and the Pillars of the Chicago School” (download paper)
• Ross B. Emmett, “Sharpening Tools in the Workshop: The Workshop System and the Chicago School’s Success” (download paper)
• Steven G. Medema,  “Creating a Paradox: Self-Interest, Civic Duty, and the Evolution of the Theory of the Rational Voter” (download paper)

See the other papers at HES 2008 web site.

Jeremy Edwards and Sheilagh Ogilvie argue that

“Economists draw important lessons for modern development from the medieval Maghribi traders who, according to Greif, enforced contracts multilaterally through a closed, private-order ‘coalition’. We show that this view is untenable. The Maghribis used formal legal mechanisms and entered business associations with non-Maghribis. Not a single empirical example adduced by Greif shows that any ‘coalition’ actually existed. The Maghribis cannot be used to argue that the social capital of exclusive networks will facilitate exchange in developing economies. Nor do they provide any support for the cultural theories of economic development and institutional change for which they have been mobilised.”

Here is the paper:

Ogilvie, Edwards, Jeremy and Ogilvie, Sheilagh, “Contract Enforcement, Institutions and Social Capital: The Maghribi Traders Reappraised” (March 2008). CESifo Working Paper Series No. 2254 Available at SSRN: http://ssrn.com/abstract=1107801

You could also be interested in my review of Greif:

Aydınonat, N. E., (2006) “Institutions: Theory, History and Context-Specific Analysis” History of Economic Ideas, 3: 143-156. [Download]

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Thanks to Tyler Cowen (at Marginal Revolution) for the pointer.

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Update:

Organizations and Markets Blog alerts us that Grief has responded to Edwards and Ogilvie’s remarks. Greif’s response is here (at SSRN).

Also see David Harbord’s interesting paper entitled “Enforcing cooperation among medieval merchants: The Maghribi traders revisited” (Download here) and Peter Klein’s post entitled “Did Avner Greif Misread the Geniza Documents?”

You’ll surely be interested in the papers presented at the LSE Conference entitled “The Relevance of Robbins”. Here is the link: papers on Robbins!

What Was “It” that Robbins Was Defining?

Experimental Economics: Contributions, Recent Developments, and New Challenges

A Brief History of Production Functions

Here is the program of the First Annual Conference on the History of Recent Economics (21-23 June 2007, University of Paris X - Nanterre, ‘K’ Building). If you are unable to attend, you may still download the papers. Just click on the links below! (You may also visit the official conference web site) Read the rest of this entry »

A very interesting collection of interviews on game theory: 

Game Theory: 5 Questions, edited by Vincent F. Hendricks & Pelle Guldborg Hansen, New York / London: Automatic Press / VIP, April 2007. ISBN 8799101343 (Buy from Amazon) 

Book Description: Game Theory: 5 Questions is a collection of short interviews based on 5 questions presented to some of the most influential and prominent scholars in the field. We hear their views on game theory, its aim, scope, use, the future direction of game theory and how their work fits in these respects.

Contributors: Robert Aumann, Johan van Benthem, Cristina Bicchieri, Ken Binmore, Adam Brandenburger, Colin F.  Camerer, Alan Grafen, Peter Hammerstein, Sergiu Hart, Ehud Kalai, David M. Kreps, Herve Moulin, Rohit Parikh, Ariel Rubinstein, Larry Samuelson, Thomas C. Schelling, Brian Skyrms, Robert Sugden, H. Peyton Young. Read snippets from the interviews at www.gametheorists.com.

Pham, Michel Tuan, “Emotion and Rationality: A Critical Review and Interpretation of Empirical Evidence” . Review of General Psychology, Forthcoming Available at SSRN: http://ssrn.com/abstract=939394  

Abstract: The relation between emotion and rationality is assessed by reviewing empirical findings from multiple disciplines. Two types of emotional phenomena are examined — incidental emotional states and integral emotional responses — and three conceptions of rationality are considered — logical, material, and ecological. Emotional states influence reasoning processes, are often misattributed to focal objects, distort beliefs in an assimilative fashion, disrupt self-control when intensely negative but do not necessarily increase risk-taking. Integral emotional responses are often used as proxies for values, and valuations based on these responses exhibit distinct properties: efficiency, consistency, polarization, myopia, scale- insensitivity, and reference-dependence. Emotions seem to promote social and moral behavior. Conjectures about the design features of the affective system that gives rise to these seeming sources of rationality or irrationality are proposed. Therefore, any categorical statement about the overall rationality or irrationality of emotion would be misleading.
 
 
Keywords: Emotion, affect, feelings, decision-making, judgment, reason, rationality, psychology 
 
JEL Classifications: A12, A13, C70, D11, D81, D83, D71 

Deirdre McCloskey, Arjo Klamer and Stephen Ziliak are writing a textbook on economics with a completely new approach. You can join the conversation at their web site and contribute to this interesting project. To do so visit: http://www.theeconomicconversation.com/

HOLLER, MANFRED J. (2007) ”Adam Smith’s Model of Man and Some of its Consequences”, Beiträge zur Wirtschaftsforschung Working Paper No. 150, Full Text:  http://ssrn.com/abstract=964433

ABSTRACT: This papers discusses the relationship of the model of man presented by Adam Smith in The Theory of Moral Sentiments (1759) and the assumptions about human behavior which are quintessential for his An Inquiry into the Nature and Causes of the Wealth of Nations (1776/77). It is argued that Smith’s observation of a propensity to truck, barter and exchange one thing for another does not in general hold for human behavior. Moreover, there appears to be an inherent conflict with sympathy, the key concept proposed in The Theory of Moral Sentiments, if we interpret it as the source of social evaluation, self-evaluation and individual action. Following Karl Polanyi’s critical comments in The Great Transformation (1944), we will discuss some of the consequences of this incongruence for the philosophical foundations of modern economics and economic policy.

Dubra, J. (2005) “Interview with Kenneth Arrow” MPRA Paper No. 967, Online at http:// mpra.ub.uni-muenchen.de/ 967/

In one of his recent articles, Elias Khalil critically examines Douglass North’s last book Understanding the Process of Economic Change (2005). If you have read the book check out Elias Khalil’s paper:

Khalil, E. (2006) “The Roadblock of Culturalist Economics: Economic Change ´a la Douglass North”, MPRA Paper No. 1045, Online at http:// mpra.ub.uni-muenchen.de/ 1045/

For those who are interested in North’s book, here are some review articles:

Will Wilkonson’s review

Stefan Voigt’s review

Stanley L. Engerman’s review

Alexander J. Field’s review

Richard N. Cooper’s review

Seabright’s The Compnay of Strangers is an interesting book and some parts of it may be considered as a supplementary reading for undergraduate courses concerning philosophy of economics and history of economic thought. But before that it may be useful to read  Haim Ofek’s review of the book which was published by EH.NET: Read the rest of this entry »

Volume 2 of The Adam Smith Review is available. See http://www.adamsmithreview.org/

Anthony Brewer (University of Bristol) has a fresh discussion paper on the invisible hand(s) of Adam Smith.

Brewer, A. (2006) “On the other (invisible) hand…” University of Bristol, Department of Economics Discussion Paper No: 06/594. Download the paper

Hands, D. Wade, “Philosophy and Economics” (2006). Available at SSRN: http://ssrn.com/abstract=927860

Abstract:     
The literature on philosophy and economics has traditionally been divided into two areas: economic methodology, which connects economics and epistemology/philosophy of science, and the literature on economics and moral philosophy/ethics. Recent developments in both of these areas are discussed in detail.

New paper by Wade Hands on Philosophy and Economics. Download from SSRN

Erasmus Institute for Philosophy and Economics has a working paper series which is availabel on-line at http://www.eur.nl/fw/english/eipe/workingpapers (scroll to the bottom of the page!). At the moment the following papers are available for downloading: 

• Jack Vromen, Depicting social contracts as robust equilibria, January 2006, download (pdf)

• Jack Vromen, Organizational routines and individual skills, January 2006, download (pdf)

• Mark Blaug, The Fundamental Theorems of Modern Welfare Economics, February 2006, download (pdf)

Aydinonat, N. Emrah, (2006) “Is the Invisible Hand un−Smithian? A Comment on Rothschild,” Economics Bulletin, Vol. 2 no. 2 pp. 1-9.

Abstract:
Rothschild (2001) argues that the invisible hand refers to blind individuals and presume privileged knowledge on the part of the social scientist. For this reason, she takes it that the invisible hand is, in fact, an un−Smithian concept and that Smith was making an ironical joke. In this brief comment, I argue that the invisible hand does not imply blind and futile individuals or privileged knowledge and it cannot be argued that it is an un−Smithian concept on these grounds. Briefly, it is argued here that although it may be true that Smith used the invisible hand somewhat ironically, this does not imply that it is un−Smithian.

Download: http://economicsbulletin.vanderbilt.edu/2006/volume2/EB-06B00002A.pdf

Ariel Rubinstein has an interesting paper on the dilemmas of economic theorists, which is available online:

Rubinstein, A. (2004) “Dilemmas of An Economic Theorist“, Econometric Society Presidential Address.

Although many experiments suggest that individuals behave irrationally and that the basic axioms of economics concerning rationality do not hold, many economists argue that while the basic axioms may not hold for individuals they are still valid for the market as a whole. This is to say that although some of the individuals at the market may be irrational, market would behave as if the individuals were rational (e.g. see Becker 1962) A recent study by John A. List (University of Maryland and NBER) and Daniel L. Millimet (Southern Methodist University) suggest that economists may be right. Their experiment suggests that markets could filter irrational behaviour and that “even when markets are populated solely by irrational buyers, aggregate market outcomes quickly converge to neoclassical predictions.” (List and Millimet 2004)

References:
Becker, G.S. (1962) “Irrational Behavior and Economic Theory,” Journal of Political Economy,
70: 1-13.
List, J. A. and Millimet, D.L. (2004) The Market: Catalyst for Rationality and Filter of Irrationality, ftp://ftp1.economics.smu.edu/WorkingPapers/2005/millimet/rats.pdf