DOCSLIB.ORG

Laboratory Experimentation in Economics

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Laboratory Experimentation in Economics Laboratory experimentation in economics Laboratory experimentation in economics Six points of view Edited by ALVIN E. ROTH University of Pittsburgh T/ie r/gA/ o/ the University of Cambridge to print and sell all manner of books was granted by Henry VIII in 1534. The University has printed and published continuously since 1584. CAMBRIDGE UNIVERSITY PRESS Cambridge New York New Rochelle Melbourne Sydney CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, Sao Paulo Cambridge University Press The Edinburgh Building, Cambridge CB2 2RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521333924 © Cambridge University Press 1987 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 1987 This digitally printed first paperback version 2005 A catalogue record for this publication is available from the British Library Library of Congress Cataloguing in Publication data Laboratory experimentation in economics. 1. Economics - Experiments. I. Roth, Alvin E., 1951- HB131.L32 1987 330'.0724 87-10343 ISBN-13 978-0-521-33392-4 hardback ISBN-10 0-521-33392-X hardback ISBN-13 978-0-521-02281-1 paperback ISBN-10 0-521-02281-9 paperback Contents Acknowledgments page vii List of contributors viii 1 Introduction and overview 1 Alvin E. Roth 2 Bargaining phenomena and bargaining theory 14 Alvin E. Roth 3 Equity and coalition bargaining in experimental three-person games 42 Reinhard Selten 4 The psychology of choice and the assumptions of economics 99 Richard Thaler 5 Hypothetical valuations and preference reversals in the context of asset trading 131 Marc Knez and Vernon L. Smith 6 Economics according to the rats (and pigeons too): what have we learned and what can we hope to learn? 155 John H. Kagel 7 Dimensions of parallelism: some policy applications of experimental methods 193 Charles R. Plott Acknowledgments The chapters in this volume were commissioned following a confer- ence entitled "Laboratory Experimentation in Economics" at the University of Pittsburgh on May 16-18, 1985. I particularly want to thank President Wesley Posvar, Dean Jerome Rosenberg, and my colleague Professor Jack Ochs, all of the University of Pittsburgh, whose support was invaluable. vn Contributors JOHN H. KAGEL is Professor of Economics and Director of the Center for Experimental Economics at the University of Houston. He re- ceived his Ph.D. from Purdue University in 1970. He has been a National Fellow at the Hoover Institution and an Earhart Foundation Fellow. MARC KNEZ is a graduate student at the University of Pennsylvania. He began his collaboration with Vernon Smith when he was at the University of Arizona. CHARLES R. PLOTT is Professor of Economics and Director of the Program for the Study of Enterprise at the California Institute of Technology. He received his Ph.D. from the University of Virginia in 1965. He has been a Guggenheim Fellow and a Fellow at the Center for Advanced Study in the Behavioral Sciences and is a Fellow of the A A AS and the Econometric Society. ALVIN E. ROTH is A. W. Mellon Professor of Economics at the University of Pittsburgh. He received his Ph.D. from Stanford Univer- sity in 1974. He received the 1980 Founders' Prize of the Texas Instruments Foundation, has been a Guggenheim Fellow and an Alfred P. Sloan Research Fellow, and is a Fellow of the Econometric Society. REINHARD SELTEN is Professor of Economics at the University of Bonn in the Federal Republic of Germany. He received his Ph.D. in mathematics from the University of Frankfurt in 1961 and his habilita- tion in economics, also from the University of Frankfurt, in 1968. He is a member of the Northrhine-Westfalian Academy of Sciences and a Fellow of the Econometric Society. VERNON L. SMITH is Professor of Economics and Research Director, Economic Science Laboratory at the University of Arizona. He received his B.S.E.E. from the California Institute of Technology in 1949 and his Ph.D. in economics from Harvard University in 1955. He has been a Ford Foundation Fellow, Fellow at the Center for Ad- viii Contributors ix vanced Studies in the Behavioral Sciences, and Sherman Fairchild Distinguished Fellow (California Institute of Technology). RICHARD THALER is Professor of Economics at Cornell University's Johnson Graduate School of Management. He received his Ph.D. from the University of Rochester in 1974. He has been a visiting scholar at the National Bureau of Economic Research in Stanford, California, and a visiting professor at the University of British Columbia. CHAPTER 1 Introduction and overview ALVIN E. ROTH Each of the chapters in this volume concerns some aspect of econo- mists' use of controlled experiments. Since the mid-1970s this kind of work has been transformed from a seldom encountered curiosity to a small but well-established and growing part of the economic literature. This transformation has been rapid. For example, when I began my own experimental work about a dozen years ago, it was most conve- nient to publish the results in journals of psychology and business. Today it is no longer unusual for controlled experiments to be reported in any of the major American economics journals. Experimental work has become well enough represented in the literature so that, in 1985, the Journal of Economic Literature established a separate bibli- ographic category, "Experimental Economic Methods." However, as might be expected of any newly developing field of scientific endeavor, there are at least as many points of view about the role of experiments in economics as there are economists who conduct them. One of the reasons for this is that "economics" encompasses quite a diversity of activities and methodologies, and controlled experimentation appears to have the potential to play at least a supporting role, and in some cases a far larger part, in many of these. At the time that I was organizing the conference that led to the publication of this volume, I was preparing a paper on experimental economics to present at one of the symposia of the Fifth World Congress of the Econometric Society, which was held in the summer of 1985. (World congresses are held every five years and are organized around a group of symposia on significant recent advances. A sign of the times, and of the distance experimental economics has come in so short a time, is the fact that this was the first such symposium to be devoted to experimentation.) In that paper (Roth, 1985) I tried to organize some of the experiments that have been conducted by classifying them according to the kinds of dialogues they were a part of, that is, according to how they were motivated and who they were 2 Alvin E. Roth trying to persuade. Although it became increasingly evident that no classification scheme would be adequate to the task of demonstrating the relationships as well as the differences between different bodies of work, I organized the paper around three principal kinds of dialogues, which I referred to as "Speaking to Theorists," "Searching for Facts," and "Whispering in the Ears of Princes." The category "Speaking to Theorists" was meant to include exper- iments motivated by well-articulated formal theories. These experi- ments are designed to test the predictions of those theories, as well as to reveal unpredicted regularities, in a controlled environment where observations can be unambiguously interpreted in relation to theory and incorporated if necessary into the construction of new theory. The requirement that the observations be interpretable in relation to a particular theory or group of theories imposes constraints on the experimental designs that are perhaps the chief characteristic of these experiments. Such experiments are typically motivated by the theoret- ical literature and are intended to feed back into that literature; that is, they are part of a dialogue between experimenters and theorists. The category "Searching for Facts" includes experiments on the effects of variables about which existing theory may have little to say. These experiments are consequently often designed without reference to a specific body of theory, but might be motivated instead by some interesting unexplained phenomenon. They tend to be part of the dialogue that experimenters carry on with one another, and indeed many experiments of this sort are designed to help us understand earlier experimental observations. The category "Whispering in the Ears of Princes" deals with the dialogue between experimenters and policymakers. These experiments might be motivated, for example, by questions raised by government regulatory agencies about the effect of changes in the organization of some market. Their characteristic feature is that the experimental environment is designed to resemble closely the natural environment that is the focus of the policy question at hand. In my symposium paper, I wrote, "These investigations offer the possibility of bringing scientific methods to bear on one of the traditional nonscientific vocations of economists, which is whispering in the ears of princes who require advice about pressing practical questions whose answers lie beyond the reliable scientific knowledge of the profession." Although these categories seem useful for distinguishing different kinds of work, most extended experimental studies cannot be confined to a single category. Experiments that test formal theories may identify unanticipated phenomena for which existing theory offers no explana- Introduction and overview 3 tion and suggest other experiments designed to reveal more about those phenomena. Experiments that are not motivated primarily by theoretical considerations may eventually lead to the construction of new theories and to further experiments that test them. And experi- ments that are motivated by questions of policy may nevertheless have some (perhaps informal) theoretical motivation and may uncover empirical regularities that require further experimentation.
Load more

Recommended publications
  • Artificial Intelligence, Automation, and Work
    Artificial Intelligence, Automation, and Work The Economics of Artifi cial Intelligence National Bureau of Economic Research Conference Report The Economics of Artifi cial Intelligence: An Agenda Edited by Ajay Agrawal, Joshua Gans, and Avi Goldfarb The University of Chicago Press Chicago and London The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London © 2019 by the National Bureau of Economic Research, Inc. All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission, except in the case of brief quotations in critical articles and reviews. For more information, contact the University of Chicago Press, 1427 E. 60th St., Chicago, IL 60637. Published 2019 Printed in the United States of America 28 27 26 25 24 23 22 21 20 19 1 2 3 4 5 ISBN-13: 978-0-226-61333-8 (cloth) ISBN-13: 978-0-226-61347-5 (e-book) DOI: https:// doi .org / 10 .7208 / chicago / 9780226613475 .001 .0001 Library of Congress Cataloging-in-Publication Data Names: Agrawal, Ajay, editor. | Gans, Joshua, 1968– editor. | Goldfarb, Avi, editor. Title: The economics of artifi cial intelligence : an agenda / Ajay Agrawal, Joshua Gans, and Avi Goldfarb, editors. Other titles: National Bureau of Economic Research conference report. Description: Chicago ; London : The University of Chicago Press, 2019. | Series: National Bureau of Economic Research conference report | Includes bibliographical references and index. Identifi ers: LCCN 2018037552 | ISBN 9780226613338 (cloth : alk. paper) | ISBN 9780226613475 (ebook) Subjects: LCSH: Artifi cial intelligence—Economic aspects. Classifi cation: LCC TA347.A78 E365 2019 | DDC 338.4/ 70063—dc23 LC record available at https:// lccn .loc .gov / 2018037552 ♾ This paper meets the requirements of ANSI/ NISO Z39.48-1992 (Permanence of Paper).
    [Show full text]
  • Uncertainty and Hyperbolic Discounting
    Uncertainty and Hyperbolic Discounting By PARTHA DASGUPTA AND ERIC MASKIN* Empirical studies in economics and behav- they have become more impatient than they ioral ecology suggest that, ceteris paribus, ani- were in January. mals and humans appear to place less weight on Both the O’Donoghue-Rabin and Strotz ex- the future than on the present, i.e., they act as amples accord with “hyperbolic discounting,”2 though they discount future payoffs. Further- which has attracted considerable interest among more (and more interestingly), they do so with economists because it appears to shed light on discount rates that increase as the time before important economic phenomena such as house- those payoffs are realized grows shorter.1 In hold saving behavior (see David Laibson, 1997; other words, subjects act as though they become B. Douglas Bernheim et al., 2001; Christopher less patient when payoffs are more imminent. Harris and Laibson, 2003). An anecdotal (human) example is offered by One might ask whether there is some reason Ted O’Donoghue and Matthew Rabin (1999): for such behavior. The point of view that we when offered the choice in February between a take is that, to a considerable extent, animal and painful seven-hour task (e.g., preparing a tax human behavior is shaped by preferences that return) on April 1 and a painful eight-hour task are the outcome of evolutionary forces. That is, on April 15, most of us, they suggest, will opt cravings, urges, or instincts—the operational for the earlier date. But as April 1 approaches, manifestations of preferences—induce the ani- we are apt to change our minds, if we can, and mal or human to make the right choice in the postpone the pain to April 15, even though it “average” situation that it, he, or she is likely to will then be greater.
    [Show full text]
  • Ten Nobel Laureates Say the Bush
    Hundreds of economists across the nation agree. Henry Aaron, The Brookings Institution; Katharine Abraham, University of Maryland; Frank Ackerman, Global Development and Environment Institute; William James Adams, University of Michigan; Earl W. Adams, Allegheny College; Irma Adelman, University of California – Berkeley; Moshe Adler, Fiscal Policy Institute; Behrooz Afraslabi, Allegheny College; Randy Albelda, University of Massachusetts – Boston; Polly R. Allen, University of Connecticut; Gar Alperovitz, University of Maryland; Alice H. Amsden, Massachusetts Institute of Technology; Robert M. Anderson, University of California; Ralph Andreano, University of Wisconsin; Laura M. Argys, University of Colorado – Denver; Robert K. Arnold, Center for Continuing Study of the California Economy; David Arsen, Michigan State University; Michael Ash, University of Massachusetts – Amherst; Alice Audie-Figueroa, International Union, UAW; Robert L. Axtell, The Brookings Institution; M.V. Lee Badgett, University of Massachusetts – Amherst; Ron Baiman, University of Illinois – Chicago; Dean Baker, Center for Economic and Policy Research; Drucilla K. Barker, Hollins University; David Barkin, Universidad Autonoma Metropolitana – Unidad Xochimilco; William A. Barnett, University of Kansas and Washington University; Timothy J. Bartik, Upjohn Institute; Bradley W. Bateman, Grinnell College; Francis M. Bator, Harvard University Kennedy School of Government; Sandy Baum, Skidmore College; William J. Baumol, New York University; Randolph T. Beard, Auburn University; Michael Behr; Michael H. Belzer, Wayne State University; Arthur Benavie, University of North Carolina – Chapel Hill; Peter Berg, Michigan State University; Alexandra Bernasek, Colorado State University; Michael A. Bernstein, University of California – San Diego; Jared Bernstein, Economic Policy Institute; Rari Bhandari, University of California – Berkeley; Melissa Binder, University of New Mexico; Peter Birckmayer, SUNY – Empire State College; L.
    [Show full text]
  • Principles of Behavioral Economics for Personal Development 30 Giugno 2018 Rodica Ianole-Calin
    Tribunale Bologna 24.07.2007, n.7770 - ISSN 2239-7752 Direttore responsabile: Antonio Zama Principles of Behavioral Economics for Personal Development 30 Giugno 2018 Rodica Ianole-Calin Contributo selezionato da Filodiritto tra quelli pubblicati nei Proceedings “International Conference on Economics and Administration 2017” Per acquistare i Proceedings clicca qui: http://www.filodirittoeditore.com/index.php?route=product/product&path=78&product_id=143 Contribution selected by Filodiritto among those published in the Proceedings “International Conference on Economics and Administration 2017” To buy the Proceedings click here: http://www.filodirittoeditore.com/index.php?route=product/product&path=78&product_id=143 IANOLE-C?LIN Rodica [1], BRATU Anca [2] [1] Faculty of Business and Administration, University of Bucharest (ROMANIA) [2] Faculty of Business and Administration, University of Bucharest (ROMANIA) Emails: [email protected], [email protected] Abstract The paper aims to illustrate how becoming aware of our own behavioral patterns, by exposure to the experiments brought forward by behavioral economics, can trigger a significant transformation of our personal habits, in the direction of a better congruence with our true self and finally of better decision- making. The argumentation highlights three main focal points: the tensioned choice between maximizing and satisficing approaches, the inter-temporal conundrum between now and later, and the gap between planning and action. Introduction Understanding standard economic thinking – how a market works, how prices are formed, how economic agents interact – is without any doubt a first premise for achieving economic development. The following step, that of becoming acquainted with behavioral economic thinking, can further refine this development, but in a reverse order: creating initially a favorable space for personal development, that may gradually be led to wellbeing, also from a financial perspective.
    [Show full text]
  • CURRICULUM VITAE August, 2015
    CURRICULUM VITAE August, 2015 Robert James Shiller Current Position Sterling Professor of Economics Yale University Cowles Foundation for Research in Economics P.O. Box 208281 New Haven, Connecticut 06520-8281 Delivery Address Cowles Foundation for Research in Economics 30 Hillhouse Avenue, Room 11a New Haven, CT 06520 Home Address 201 Everit Street New Haven, CT 06511 Telephone 203-432-3708 Office 203-432-6167 Fax 203-787-2182 Home [email protected] E-mail http://www.econ.yale.edu/~shiller Home Page Date of Birth March 29, 1946, Detroit, Michigan Marital Status Married, two grown children Education 1967 B.A. University of Michigan 1968 S.M. Massachusetts Institute of Technology 1972 Ph.D. Massachusetts Institute of Technology Employment Sterling Professor of Economics, Yale University, 2013- Arthur M. Okun Professor of Economics, Yale University 2008-13 Stanley B. Resor Professor of Economics Yale University 1989-2008 Professor of Economics, Yale University, 1982-, with joint appointment with Yale School of Management 2006-, Professor Adjunct of Law in semesters starting 2006 Visiting Professor, Department of Economics, Massachusetts Institute of Technology, 1981-82. Professor of Economics, University of Pennsylvania, and Professor of Finance, The Wharton School, 1981-82. Visitor, National Bureau of Economic Research, Cambridge, Massachusetts, and Visiting Scholar, Department of Economics, Harvard University, 1980-81. Associate Professor, Department of Economics, University of Pennsylvania, 1974-81. 1 Research Fellow, National Bureau of Economic Research, Research Center for Economics and Management Science, Cambridge; and Visiting Scholar, Department of Economics, Massachusetts Institute of Technology, 1974-75. Assistant Professor, Department of Economics, University of Minnesota, 1972-74.
    [Show full text]
  • A Tribute to George Perry and William Brainard
    10922-01_Gordon_REV.qxd 1/25/08 11:05 AM Page 1 ROBERT J. GORDON Northwestern University A Tribute to George Perry and William Brainard YOUNGER READERS OF THIS volume may not appreciate how creative was the invention of the Brookings Papers on Economic Activity, how much it changed the way applied economics is communicated, and how magic has been its appeal to economists young and old, the novices and the famous, over its many years of operation. Within ten years of its creation, it had become one of the four most circulated academic journals in economics. The Brookings Papers started at 1:30 p.m. on Thursday, April 16, 1970, with my first paper on the Phillips curve,1 which was discussed by none other than George Perry and Robert Solow. Right from the start, the Brookings Papers was the place to go to for up-to-date analysis of the macroeconomic puzzles of the day. A scorecard of frequent contributors to the Brookings Papers over the years would include many of the great and famous economists of our day: not just Alan Greenspan and Ben Bernanke, but other luminaries including Olivier Blanchard, Rudiger Dornbusch, Stanley Fischer, Paul Krugman, Jeffrey Sachs, and Lawrence Summers, not to mention the Nobel Prize contingent of George Akerlof, Franco Modigliani, Edmund Phelps, Robert Solow, and James Tobin. It is a supreme tribute to Perry and Brainard— and to Arthur Okun, the journal’s cofounder with Perry—that, when they asked, these people came, whether they were famous then or would become so only later.
    [Show full text]
  • Market Failure in Context: Introduction Alain Marciano and Steven G
    Market Failure in Context: Introduction Alain Marciano and Steven G. Medema Market failure, conceived of as the failure of the market to bring about results that are in the best interests of society as a whole, has a long lin- eage in the history of writings on matters economic. As Steven G. Medema has shown in The Hesitant Hand, much of the history of economics can be read as a discussion of whether, and the extent to which, the self- interested actions of private agents, channeled through the market, will redound to the larger social interest. For much of this history, the answers given were negative, and it was assumed that the corrective hand of the state was needed as a constant and consistent regulating force. Thus we find Plato and Aristotle arguing for a wide range of legal restrictions to guard against macroeconomic (to use the modern term) instability; Aqui- nas making the case for rules that promote a measure of Christian justice in economic affairs; mercantilist writers lobbying for restrictions on vari- ous forms of trade (and support for others), as well as for regulations on Correspondence may be addressed to Alain Marciano, University of Montpellier, Department of Economics, Rue Raymond Dugrand, CS 79606, F-34960 Montpellier, France (e-mail: alain [email protected]); and to Steven G. Medema, Department of Economics, University of Colorado Denver, CB 181, PO Box 173364, Denver, CO 80217-3364 (e-mail: steven.medema @ucdenver.edu). The editors wish to thank Paul Dudenhefer for his diligent shepherding of this project from conference to published volume.
    [Show full text]
  • Download File 05092017-WP-Lucas
    Washington Center 1500 K Street NW, Suite 850 for Equitable Growth Washington, DC 20005 Working paper series Macroeconomic revolution on shaky grounds: Lucas/Sargent critique’s inherent contradictions Ronald Schettkat Sonja Jovicic May 2017 http://equitablegrowth.org/working-papers/lucas-sargent-critique-contradictions/ © 2017 by Ronald Schettkat and Sonja Jovicic. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Macroeconomic revolution on shaky grounds: Lucas/Sargent critique’s inherent contradictions Ronald Schettkat, Sonja Jovicic May 2017 Abstract Expansionary macroeconomic policy is ineffective because, according to the policy ineffectiveness hypothesis (PIH), which is based on the rational expectations hypothesis (REH), it does not affect the real economy. This conclusion is false for several reasons. In their critique on Keynes’ theory, Lucas and Sargent (1978) argue that economic agents erroneously react with positive output and labor supply responses to expansionary macroeconomic policy. But they learn the long-run solution of the Lucas/Sargent model, which involves price reactions only, and do not repeat their mistakes when again confronted with expansionary macroeconomic policy. Thus, learning makes expansionary macroeconomic policy in the Lucas/Sargent model ineffective. The PIH is derived from models based on neoclassical micro-foundations where economic agents optimize in a stationary environment in ‘logical time.’ Experiencing and learning in ‘logical time’? In this paper, we take historical time seriously; that is, we investigate what economic agents actually experience regarding the effectiveness of expansionary macroeconomic policy in ‘historical time.’ We conclude that even if neoclassical micro-foundations are rigorously applied, if economic agents behave as assumed in the Lucas/Sargent model but that they move through time, the economy will not settle at the predicted long run equilibrium.
    [Show full text]
  • 1 University of California, Berkeley Fall Semester 2007 Department of Economics Professor George A. Akerlof Professor Maurice O
    University of California, Berkeley Fall Semester 2007 Department of Economics Professor George A. Akerlof Professor Maurice Obstfeld ECONOMICS 202A READING LIST Textbook: David Romer, Advanced Macroeconomics, Third Edition. McGraw-Hill, 2005. I. A. Introduction/Overview of Course *George Akerlof, "The Missing Motivation in Macroeconomics," American Economic Review, March 2007, pp. 5-36. B. Introduction/Mathematical Review *Andrew C. Harvey, Time Series Models, Chapter 1, pp. 1-9; Ch. 2, pp. 21-53. David Romer, Third Edition, Chapter 5, "Traditional Keynesian Theories of Fluctuations," Sections 5.1 and 5.3-5.6, pp. 222-231, and 242-270. Maurice Obstfeld, “Dynamic Optimization in Continuous-Time Models (A Guide for the Perplexed),” manuscript, UC Berkeley, April 1992. Available at: http://www.econ.berkeley.edu/~obstfeld/ftp/perplexed/cts4a.pdf II. Equilibrium Concepts *David Romer, Third Edition, Chapter 6, "Microeconomic Foundations of Incomplete Nominal Adjustment," Sections 6.1-6.3, and 6.9-6.10, pp. 271-285, pp. 316-326. *Robert Lucas and Thomas Sargent, "After Keynesian Macroeconomics," from Federal Reserve Bank of Boston, After the Phillips Curve: Persistence of High Inflation and High Unemployment, Conference Series No. 19. *Thomas Sargent, "Rational Expectations, the Real Rate of Interest, and the Natural Rate of Unemployment," Brookings Papers on Economic Activity 1973:2, pp. 429-472. *John Taylor, "Staggered Wage Setting in a Macro Model," American Economic Review Papers and Proceedings, May 1979, pp. 108-113. Stanley Fischer, "Long-Term Contracts, Rational Expectations and the Optimal Money Supply Rate," Journal of Political Economy, February 1977, pp. 191-205. Laurence Ball, "Credible Disinflation with Staggered Price Setting," American Economic Review, March, 1994, pp.
    [Show full text]
  • Narrative Economics: How Stories Go Viral & Drive Major Economic Events” by Robert J
    Review of “Narrative Economics: How Stories Go Viral & Drive Major Economic Events” by Robert J. Shiller Yann Giraud To cite this version: Yann Giraud. Review of “Narrative Economics: How Stories Go Viral & Drive Major Economic Events” by Robert J. Shiller. 2021. halshs-03162339 HAL Id: halshs-03162339 https://halshs.archives-ouvertes.fr/halshs-03162339 Preprint submitted on 8 Mar 2021 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. BOOK REVIEW: “NARRATIVE ECONOMICS: HOW STORIES GO VIRAL & DRIVE MAJOR ECONOMIC EVENTS” BY ROBERT J. SHILLER REVIEWED BY YANN GIRAUD* * CY Cergy Paris Université (AGORA). Contact: [email protected] This “preprint” is the accepted typescript of a book review that is forthcoming in revised form, after minor editorial changes, in the Journal of the History of Economic Thought (ISSN: 1053-8372), issue TBA. Copyright to the journal’s articles is held by the History of Economics Society (HES), whose exclusive licensee and publisher for the journal is Cambridge University Press (https://www.cambridge.org/core/journals/journal-of-the-history-of-economic-thought). This preprint may be used only for private research and study and is not to be distributed further.
    [Show full text]
  • New-Keynesian Economics Today: the Empire Strikes Back Author(S): Brian Snowdon and Howard Vane Source: the American Economist, Vol
    New-Keynesian Economics Today: The Empire Strikes Back Author(s): Brian Snowdon and Howard Vane Source: The American Economist, Vol. 39, No. 1 (Spring, 1995), pp. 48-65 Published by: Sage Publications, Inc. Stable URL: https://www.jstor.org/stable/25604023 Accessed: 16-06-2019 14:59 UTC JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at https://about.jstor.org/terms Sage Publications, Inc. is collaborating with JSTOR to digitize, preserve and extend access to The American Economist This content downloaded from 189.6.25.92 on Sun, 16 Jun 2019 14:59:19 UTC All use subject to https://about.jstor.org/terms NEW-KEYNESIAN ECONOMICS TODAY: THE EMPIRE STRIKES BACK by Brian Snowdon* and Howard Vane** "... there is no single doctrine taken to be a scientific truth without the diametrically opposed view being similarly upheld by authors of high repute ... in other fields of science these conflicts usually come to an end ... It is only in the field of economics that the state of war seems to persist and remain permanent."1 Knut Wicksell Introduction tion of Keynes's General Theory macroecono mists have been broadly split between those who In a recent 'Symposium on
    [Show full text]
  • Will As Intertemporal Bargaining: Implications for Rationality
    WILL AS INTERTEMPORAL BARGAINING: IMPLICATIONS FOR RATIONALITY GEORGE AINSLIEt &JOHN MONTEROSSOtt Rationality has been understood as conducting yourself according to reason rather than passion. In modern times this endeavor has become synonymous with maximizing your expected goods, with the value of expected but delayed goods dis- counted exponentially. However, behavioral research has found a robust tendency for delayed goods to be discounted hyperbolically, that is, for their value to be di- vided by their delay. This finding supplies a simple hypothesis about the origin of irrationality, but greatly complicates the problem of rationality, since it depicts a limited warfare relationship among interests within an individual. Recent re- search on the combining properties of hyperbolically discounted rewards supports the hypothesis that a person s will arisesfrom a prisoner's-dilemma-likerelationship among successive motivational states. This picoeconomic hypothesis provides a mechanism for both the strength and 'freedom" of the will, and predicts pathologies of overcontrol that make strength of will something very different from pure ration- ality. This approach offers insights into current puzzles about criminal responsi- bility and the disease model of addiction. INTRODUCTION Rationality is an ancient concept, one that Plato contrasted with passion to form a dichotomy of choice principles.' Through the ages rationality has meant the good way to make choices, the way that will maximize your satisfaction with the outcome. As such, it has been a norm rather than a description of actual behavior. However, since utility theory has postulated that people always maximize their ex- pected utility, rationality has acquired a descriptive implication: the rational is what anyone inevitably will do whenever she is aware of the true contingencies she faces.
    [Show full text]