dunnettreader + rationality-economics   41

Pedro Bordalo, Nicola Gennaioli, Andrei Shleifer - Diagnostic Expectations and Credit Cycles | NBER - May 2016
NBER Working Paper No. 22266, Issued in May 2016 -- We present a model of credit cycles arising from diagnostic expectations – a belief formation mechanism based on Kahneman and Tversky’s (1972) representativeness heuristic. In this formulation, when forming their beliefs agents overweight future outcomes that have become more likely in light of incoming data. The model reconciles extrapolation and neglect of risk in a unified framework. Diagnostic expectations are forward looking, and as such are immune to the Lucas critique and nest rational expectations as a special case. In our model of credit cycles, credit spreads are excessively volatile, over-react to news, and are subject to predictable reversals. These dynamics can account for several features of credit cycles and macroeconomic volatility. - via DeLong
paper  paywall  business_cycles  Minsky  RBC  financial_system  capital_markets  credit  credit_booms  credit_crunch  rational_expectations  heuristics  rationality-economics  rational_choice  financial_stability  volatility  risk_assessment  interest_rates  spreads  Kindleberger 
may 2016 by dunnettreader
Stefan Linder, Nicolai J. Foss - Agency Theory :: SSRN April 23, 2013
Stefan Linder, ESSEC Business School -- Nicolai J. Foss, Copenhagen Business School - Department of Strategic Management and Globalization *--* Agency theory studies the problems and solutions linked to delegation of tasks from principals to agents in the context of conflicting interests between the parties. Beginning from clear assumptions about rationality, contracting and informational conditions, the theory addresses problems of ex ante (“hidden characteristics”) as well as ex post information asymmetry (“hidden action”), and examines conditions under which various kinds of incentive instruments and monitoring arrangements can be deployed to minimize the welfare loss. Its clear predictions and broad applicability have allowed agency theory to enjoy considerable scientific impact on social science; however, it has also attracted considerable criticism. -- PDF File: 35 -- Keywords: adverse selection, agency costs, compensation, conflict of interest, contracting, corporate governance, delegation, hidden action, hidden characteristics, incentive intensity, information asymmetry, informativeness, monitoring, moral hazard, motivation, nexus of contracts, pay-for-performance -- downloaded pdf to Note
paper  SSRN  economic_theory  social_sciences-post-WWII  microeconomics  microfoundations  behavioral_economics  incentives  incentives-distortions  agency  agents  game_theory  rational_choice  rationality-economics  rationality-bounded  information-asymmetric  adverse_selection  delegation  moral_psychology  moral_hazard  contracts  principal-agent  downloaded 
january 2016 by dunnettreader
Robert O. Keohane, review - Mancur Olson, The Rise and Decline of Nations (1983) | JSTOR
Reviewed Work: The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. -- Journal of Economic Literature
Vol. 21, No. 2 (Jun., 1983), pp. 558-560 -- quite positive, but useful on where Olson's theory has blind spots -- downloaded pdf to Note
books  bookshelf  reviews  political_economy  economic_history  economic_growth  interest_groups  collective_action  international_political_economy  institutional_economics  rational_choice  rationality-economics  rationality  stagnation  rent-seeking  politics-and-money  status  status_quo_bias  social_order  hierarchy  change-social  change-economic  castes  discrimination  inequality  mobility  post-WWII  downloaded 
september 2015 by dunnettreader
Florent Guénard & Hélène Landemore - Entretien avec Jon Elster - La Vie des idées - 2 juillet 2008.
Florent Guénard & Hélène Landemore , « Le tirage au sort, plus juste que le choix rationnel. Entretien avec Jon Elster », La Vie des idées, 2 juillet 2008. -- Video - transcript downloaded as pdf to Note
social_theory  social_sciences  social_sciences-post-WWII  French_moralists  17thC  Tocqueville  rational_choice  rationality-economics  justice  justice-retributive  fairness  Elster  downloaded 
july 2015 by dunnettreader
Paul Frijters - An Economic Theory of Greed, Love, Groups, and Networks | Cambridge University Press - March 2013
PaperbackISBN: 9781107678941 $63.95 inc GST --;Why are people loyal? How do groups form and how do they create incentives for their members to abide by group norms? Until now, economics has only been able to partially answer these questions. In this groundbreaking work, Paul Frijters presents a new unified theory of human behaviour. To do so, he incorporates comprehensive yet tractable definitions of love and power, and the dynamics of groups and networks, into the traditional mainstream economic view. The result is an enhanced view of human societies that nevertheless retains the pursuit of self-interest at its core. This book provides a digestible but comprehensive theory of our socioeconomic system, which condenses its immense complexity into simplified representations. The result both illuminates humanity's history and suggests ways forward for policies today, in areas as diverse as poverty reduction and tax compliance.
books  economic_theory  economic_models  economic_sociology  utility  rationality-economics  behavioral_economics  networks  action-theory  self-interest  altruism  power  loyalty 
july 2015 by dunnettreader
Lee Anne Fennell, Richard H. McAdams, eds. - Fairness in Law and Economics: Introduction :: SSRN - (Edward Elgar 2013)
Lee Anne Fennell and Richard H. McAdams, both University of Chicago Law School -- University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 704 -- This introduction, prepared for an edited volume, offers some observations on the importance — indeed, inescapability — of fairness concerns in law and economics. The relationship between fairness and the economic concept of efficiency is usually cast as an adversarial one. Rational choice economics typically describes human behavior as motivated by simple self-interest, rather than by concerns of morality, justice, or fairness. But we have found that the connections between concepts of fairness and the economic analysis of law are robust and diverse. After discussing some of these linkages, we describe the organization and content of the volume we have compiled. In it, economics engages with fairness, challenging the idea that the two concepts are alien to each other. -- PDF File: 18 -- Keywords: fairness, law and economics -- downloaded pdf to Note
chapter  books  SSRN  law-and-economics  behavioral_economics  game_theory  rational_choice  rationality-economics  fairness  efficiency  welfare_economics  self-interest  altruism  microeconomics  policymaking  legal_system  legal_theory  legal_reasoning  utility  status_quo_bias  downloaded 
july 2015 by dunnettreader
Garrett Hardin - The Tragedy of the Commons - Science Vol. 162 no. 3859 pp. 1243-1248, 13 December 1968 | From AAAS
DOI: 10.1126/science.162.3859.1243 -- The author is professor of biology, University of California, Santa Barbara. This article is based on a presidential address presented before the meeting of the Pacific Division of the American Association for the Advancement of Science at Utah State University, Logan, 25 June 1968. -- Abstract - The population problem has no technical solution; it requires a fundamental extension in morality. -- downloaded pdf to Note
article  economic_theory  rationality-economics  demography  commons  common_good  freedom  political_economy  political_culture  moral_philosophy  moral_economy  downloaded 
may 2015 by dunnettreader
Jag Bhalla - Is The 'Tragedy of The Commons' a Myth? | Big Think - May 2015
by Jag Bhalla We are ill-fated idiots. That’s what some “rationalists” believe. An ancient Greek origin myth can avert this modern tragedy of reason (a… -- lots of links
rationality  rationality-economics  public_choice  collective_action  tragedgy_of_the_commons  common_good  resource_allocation  environment  climate-adaptation  links  Instapaper  from instapaper
may 2015 by dunnettreader
Jag Bhalla - Reason Is Larger Than Science | Big Think - May 2015
by Jag Bhalla “Reason is larger than science.” So Leon Wieseltier reminds us (while defending the humanities against Steven Pinker’s science cheerleading). 1.… -- lots of links -- nice use of Wieseltier while noting where W goes off the rails
reason  rationality  rationality-economics  decision_theory  scientism  humanities  education-higher  disciplines  links  Instapaper  from instapaper
may 2015 by dunnettreader
Richard Thaler - Unless You Are Spock, Irrelevant Things Matter in Economic Behavior - NYTimes.com - May 2010
Early in my teaching career I managed to get most of the students in my class mad at me. A midterm exam caused the problem. I wanted the exam to sort out the… He's finding a larger audience for the themes of his new book, Misbehaving
behavioral_economics  rational_choice  rationality-economics  microeconomics  Instapaper  from instapaper
may 2015 by dunnettreader
Raymond Boudon - Utilité ou Rationalité (2002) | Scribd
21 page article -- Explains why "rational choice" fails as explanatory theory in lots of collective action, public opinion, game theory, etc. -- domains where decisions to act aren't based exclusively on instrumental, consequentialist, cost-benefit calculative, and egoistic (directly concerned with impact on self) forms of, and context for, reasoning. Boudon finds "rational choice" superior to hand-wavy explanations that are speculative "black boxes" -- e.g. (1) sociobiology or evo-devo that we're hardwired, (2) Kahneman and Tversky heuristics and biases -- fascinating observations but aren't explanatory, (3) social/cultural explanations such as "socialization" which are tautological or a black box that provide no mechanisms that can differentiate situations or variations in outcomes. E.g. in Roman Empire peasants were more likely to remain pagan and soldiers were more likely to be attracted to the new religion. "Socialization" doesn't explain why soldiers raised in the traditional religious milieu and belief system were more likely to change their beliefs. Great examples of how rationality includes cognitive processes dealing with (1) non-instrumental contexts - e.g. identification with communitarian concerns ranging from voting to immigration policies, (2) aligning actions with one's judgment of what's more likely "true" based on core beliefs and how one has learned to evaluate "evidence" [e.g. Swedes are even more likely to reject "lump of labor" than Americans!] (3) axiological reasoning, including norms of fairness that may be fairly universal (e.g. reaction to Antigone, ultimatum game) or specific to a culture (e.g. due process in political application of "rule of law") -- see article for his tripartite classification of rationality and types of cognition that "rational choice" rejects in its definition. He thinks Weber and Adam Smith got there before, and better than, Becker.
article  Scribd  social_theory  mechanisms-social_theory  evolutionary_biology  evo_psych  rational_choice  rationality-economics  rationality-bounded  rationality  reasons  Weber  Smith  Becker_Gary  Simon_Herbert  fairness  community  identity  norms  epistemology-social  game_theory  altruism  cognitive_bias  cognition  cognition-social  democracy  citizens  voting  political_participation  collective_action  political_culture  public_choice  public_opinion  common_good  socialization  social_psychology  cost-benefit  self-interest  self-interest-cultural_basis  self-and-other  EF-add 
april 2015 by dunnettreader
Herbert A. Simon - Altruism and Economics (May, 1993) | JSTOR - The American Economic Review
Herbert A. Simon,The American Economic Review, Vol. 83, No. 2, Papers and Proceedings of the Hundred and Fifth Annual Meeting of the American Economic Association (May, 1993), pp. 156-161 -- overview of how he models "utility" to handle bounded rationality, and how groups need to be included in utility behavior models to get at "altruism" or preferences for other-regarding behavior -- basic message is public choice and rational choice have such an impoverished concept of "rationality" they will never be able to get their axiomatic models to work with what requires rich empirical observations -- doesn't say it, but their limited concept of rationality is less an empirically verified theory re how the world works, but rather a bundle of normative assumptions -- and when they try to extend what's really prescriptive to areas like the family, they've gotten way outside their lane -- downloaded pdf to Note
paper  jstor  economic_theory  economic_sociology  microeconomics  behavioral_economics  rational_choice  rationality-economics  rationality-bounded  rationality-adaptive  Darwinism  evolution-as-model  evolution-social  evolution-group_selection  self-interest  altruism  utility  public_choice  Simon_Herbert  downloaded 
april 2015 by dunnettreader
Andrew W. Lo - Reconciling Efficient Markets with Behavioral Finance: The Adaptive Markets Hypothesis - 2005 :: SSRN - Journal of Investment Consulting, Forthcoming
Massachusetts Institute of Technology (MIT) - Sloan School of Management; Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL); National Bureau of Economic Research (NBER) -- The battle between proponents of the Efficient Markets Hypothesis and champions of behavioral finance has never been more pitched, and there is little consensus as to which side is winning or what the implications are for investment management and consulting. In this article, I review the case for and against the Efficient Markets Hypothesis, and describe a new framework - the Adaptive Markets Hypothesis - in which the traditional models of modern financial economics can co-exist alongside behavioral models in an intellectually consistent manner. Based on evolutionary principles, the Adaptive Markets Hypothesis implies that the degree of market efficiency is related to environmental factors characterizing market ecology such as the number of competitors in the market, the magnitude of profit opportunities available, and the adaptability of the market participants. Many of the examples that behavioralists cite as violations of rationality that are inconsistent with market efficiency - loss aversion, overconfidence, overreaction, mental accounting, and other behavioral biases - are, in fact, consistent with an evolutionary model of individuals adapting to a changing environment via simple heuristics. Despite the qualitative nature of this new paradigm, I show that the Adaptive Markets Hypothesis yields a number of surprisingly concrete applications for both investment managers and consultants. -- Pages in PDF File: 44 Keywords: Efficient markets, behavioral finance, adaptive markets
paper  SSRN  financial_economics  EMH  behavioral_economics  markets-structure  markets-psychology  rationality-economics  rationality-adaptive  efficiency  heuristics  methodology-qualitative  methodology-quantitative  complex_adaptive_systems  downloaded 
april 2015 by dunnettreader
Isabelle Kalinowski, review essay - Max Weber and Capitalism’s Strange Rationality - Books & ideas - November 2014
translated by Michael C. Behrent -- Reviewed: (1) Michael Löwy, La Cage d’acier. Max Weber et le marxisme wébérien [The Iron Cage: Max Weber and Weberian Marxism], Stock, coll. "Un ordre d’idées", 2013, 200 p., 18€ -- (2) Michel Lallement, Tensions majeures. Max Weber, l’économie, l’érotisme [Major Tensions: Max Weber, Economics, Eroticism], Gallimard, 2013, 288 p., 19.90€. -- interesting discussion of his use of dichotomies that don't resolve into a dialectical synthesis -- also nice re how he uses the forces pushing toward rationalization of two interacting types, formal and substantive, that allows him to deploy it in many different cultures and eras, not just modernity -- Useful references to various pieces of his oeuvre in the footnotes -- downloaded pdf to Note
books  reviews  social_theory  Weber  modernity  modernity-emergence  capitalism  Marx  economic_history  economic_sociology  sociology_of_religion  sociology  dialectic-historical  19thC  20thC  Germany  rationalization-institutions  rationality-economics  rationality  downloaded 
march 2015 by dunnettreader
Rajiv Sethi: The Agent-Based Method - August 2014
It's nice to see some attention being paid to agent-based computational models on economics blogs, but Chris House has managed to misrepresent the methodology so completely that his post is likely to do more harm than good. -- Useful discussion of both DSGE and agent-based modeling approaches plus links. Chris House, for a highly touted "expert", keeps exposing his combination of ignorance and bias ("facts have a conservative bias"!!) Apparently since he already knows what the facts are going to tell him, he doesn't actually have to learn something about which he is ignorant but feels free to spout what "must" be the case. Extraordinary indictment of the upper levels of the economics professoriate. Seth's post is a fine description of what agent-based models are about, and the dilemmas of coming up with criteria for evaluating robustness of research results -- a problem which DSGE papers don't seem to have, apparently because of the agreed upon math and that most of the variables are exogenous chosen by the modeler, and theoretical papers which can be judged on the coherence of their mathematical logic. Links to some agent-based work - Seth himself working on market structure and trading practices (e.g. GFT) within a "market ecology" framework
economic_theory  macroeconomics  economic_models  rationality-economics  markets  markets-structure  ecology  ecology-economic  agent-based_models  evolution-as-model  evolution-social  links 
february 2015 by dunnettreader
Paul A. Lewis - An Analytical Core for Sociolgy: A Complex, Hayekian Analysis (2014, Review of Behavioral Economics, Forthcoming) :: SSRN
Lewis, Paul A., An Analytical Core for Sociolgy: A Complex, Hayekian Analysis (November 11, 2014). Review of Behavioral Economics, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2522810 -- King's College London - Department of Political Economy -- This paper develops a Hayekian perspective on Herbert Gintis, and Dirk Helbing's, attempts to develop a unified analytical approach to the social sciences. Like Hayek, Gintis and Helbing view both the economy, and also the human mind, as a complex adaptive system. Their emphasis on emergence, on group selection, on the social relations that structure people’s interactions, and on the importance of motivations stemming from so-called 'social preferences', sees them develop themes present in Hayek's own work, often in ways that build on and strengthen Hayek's own analysis. However, Gintis and Helbing's continued commitment to a model of people as maximising their expected utility, and to general equilibrium theory, arguably leaves them less able than Hayek to do justice to the importance of innovation, novelty and radical uncertainty in the economic process. -- Number of Pages in PDF File: 24 -- Keywords: Gintis, complexity, evolution, emergence, Hayek, reductionism, behavioral economics, equilibrium, order, uncertainty. -- downloaded pdf to Note
paper  SSRN  social_theory  Hayek  Gintis  complexity  complex_adaptive_systems  evolution-as-model  evolution-social  evolutionary_biology  evolution  emergence  behavioral_economics  behavioralism  evolution-group_seledtion  rationality-economics  rational_choice  rationality-bounded  utility  social_order  uncertainty  reductionism  equilibrium  Innovation  economic_theory  economic_sociology  downloaded  EF-add 
february 2015 by dunnettreader
Sven Ove Hansson -Risk (updated 2011) | Stanford Encyclopedia of Philosophy
Since the 1970s, studies of risk have grown into a major interdisciplinary field of research. Although relatively few philosophers have focused their work on risk, there are important connections between risk studies and several philosophical subdisciplines. This entry summarizes the most well-developed of these connections and introduces some of the major topics in the philosophy of risk. It consists of six sections dealing with the definition of risk and with treatments of risk related to epistemology, the philosophy of science, the philosophy of technology, ethics, and the philosophy of economics.
1. Defining risk [including objective vs subjective and risk vs uncertainty - the latter comparison mostly formalized in decision tgeory]
2. Epistemology
3. Philosophy of science
4. Philosophy of technology
5. Ethics
6. Risk in economic analysis
Related Entries -- causation: in the law | causation: probabilistic | consequentialism | contractarianism | economics, philosophy of | game theory | luck: justice and bad luck | scientific knowledge: social dimensions of | technology, philosophy of
philosophy  epistemology  epistemology-social  epistemology-moral  causation  causation-social  probability  Bayesian  moral_philosophy  utilitarianism  utility  rights-legal  game_theory  philosophy_of_science  philosophy_of_social_science  economic_theory  behavioral_economics  financial_economics  sociology_of_knowledge  philosophy_of_law  risk  risk-mitigation  risk_management  uncertainty  rational_choice  rationality-economics 
february 2015 by dunnettreader
Seamus Bradley Imprecise Probabilities (Dec 2014) | Stanford Encyclopedia of Philosophy
It has been argued that imprecise probabilities are a natural and intuitive way of overcoming some of the issues with orthodox precise probabilities. Models of this type have a long pedigree, and interest in such models has been growing in recent years. This article introduces the theory of imprecise probabilities, discusses the motivations for their use and their possible advantages over the standard precise model. It then discusses some philosophical issues raised by this model. There is also a historical appendix which provides an overview of some important thinkers who appear sympathetic to imprecise probabilities. *-* Related Entries -- belief, formal representations of | epistemic utility arguments for probabilism | epistemology: Bayesian | probability, interpretations of | rational choice, normative: expected utility | statistics, philosophy of | vagueness
epistemology  philosophy_of_science  technology  probability  risk  uncertainty  rational_choice  rationality-economics  rationality  rationality-bounded  statistics  Bayesian  linguistics  causation  causation-social  causation-evolutionary  complexity  complex_adaptive_systems  utility  behavioral_economics  behavioralism  neuroscience  vagueness 
february 2015 by dunnettreader
ECONOMICS AS SOCIAL THEORY - Routledge Series edited by Tony Lawson - Titles List
Social theory is experiencing something of a revival within economics. Critical analyses of the particular nature of the subject matter of social studies and of the types of method, categories and modes of explanation that can legitimately be endorsed for the scientific study of social objects, are re-emerging. Economists are again addressing such issues as the relationship between agency and structure, between the economy and the rest of society, and between inquirer and the object of inquiry. There is renewed interest in elaborating basic categories such as causation, competition, culture, discrimination,evolution, money, need, order, organisation, power, probability, process, rationality, technology, time, truth, uncertainty and value, etc. The objective for this series is to facilitate this revival further. In contemporary economics the label `theory' has been appropriated by a group that confines itself to largely a-social, a-historical, mathematical `modelling'. Economics as Social Theory thus reclaims the `theory' label, offering a platform for alternative, rigorous, but broader and more critical conceptions of theorising.
books  social_theory  economic_theory  social_sciences  intellectual_history  political_economy  causation-social  economic_sociology  economic_culture  rationality-economics  rational_choice  rationality-bounded  rational_expectations  critical_realism  evolution-social  history_of_science  historical_sociology  agency-structure  power  power-asymmetric  business-and-politics  capitalism  capital_as_power  Marxist  Post-Keynesian  epistemology  epistemology-social  conventions  social_order  civil_society  public_policy  public_goods  anarchism  competition  financialization  development  economic_growth 
october 2014 by dunnettreader
Asad Zaman - Normative Foundations of Scarcity | WEA Pedagogy Blog - September 2014
In my paper of this name (Real-World Economics Review, no. 61, September 2012) I show that the apparently objective concept of scarcity is built on THREE normative assumptions - contra the conventional assertion that economics is a POSITIVE study of facts of our economic existence, and does not involve value judgement. The three normative pillars on which scarcity stands as the fundamental principle of economics are: ONE: Private Property - If there is a cultural norm of sharing public resources, then the issue of scarcity would not arise (or at least, would be much less frequent). In conventional economics, the Pareto principle embodies the normative idea that the right to property takes precedence over the right to life. If a poor man is starving, the rich man is NOT obligated to provide for him. -- TWO: Consumer Sovereignty - Economists argue the we SHOULD not question consumer preferences as to where they come from and whether they are legitimate. Also, economists argue that we SHOULD design an economic system which fulfills ALL preferences (to the extent possible). The noxious NORMATIVE idea that the right of the super-rich to private jets trumps the right of the poor hungry child to bread is what leads to scarcity becoming the foundation of economics. -- THREE: WELFARE Lies in fulfillment of desires - Again this is a normative judgment about the purpose of life, which is taken to be fulfillment of desires. The normative preference of the economists for the homo economicus model creates an unhappy and lonely society, for those who buy into these assumptions. Abandoning these hidden normative commitments of economics, by allowing for more public spaces and common property, creating norms of social responsiblity, and encouraging simple lifestyles would remove scarcity as the central economic problem. QUOTE FROM FDR: “But while they prate of economic laws, men and women are starving. We must lay hold of the fact that economic laws are not made by nature. They are made by human beings. “
paper  philosophy_of_social_science  values  positivism  economic_theory  scarcity  economic_culture  property  Pareto_principle  utility  rationality-economics  normativity 
september 2014 by dunnettreader
Lance Taylor - Maynard's Revenge: The Collapse of Free Market Macroeconomics (2011) | Harvard University Press
Taylor argues that the ideas of J.M. Keynes and others provide a more useful framework both for understanding the crisis and for dealing with it effectively. Keynes’s basic points were fundamental uncertainty and the absence of Say’s Law. He set up machinery to analyze the macro economy under such circumstances, including the principle of effective demand, liquidity preference, different rules for determining commodity and asset prices, distinct behavioral patterns of different collective actors, and the importance of thinking in terms of complete macro accounting schemes. Economists working in this tradition also worked out growth and cycle models. Employing these ideas throughout Maynard’s Revenge, Taylor provides an analytical narrative about the causes of the crisis, and suggestions for dealing with it. 1. Macroeconomics. 2. Macroeconomic Thought during the Long 19thC. 3. Gold Standard, Reparations, Mania, Crash, and Depression. 4. Maynard Ascendant. 5. Keynesian Growth, Cycles, and Crisis. 6. The Counterrevolution. 7. Finance. 8. The International Dimension. 9. Keynesianism and the
books  intellectual_history  economic_theory  economic_history  economic_models  18thC  19thC  20thC  social_sciences-post-WWII  entre_deux_guerres  political_economy  macroeconomics  classical_economics  neoclassical_economics  Keynes  Keynesianism  Post-Keynesian  finance_capital  financial_economics  microfoundations  EMH  rational_expectations  rationality-economics  rationality-bounded  behavioral_economics  business_cycles  Great_Depression  Great_Recession  financial_crisis  gold_standard  economic_growth  international_monetary_system  balance_of_payments  FX  uncertainty  liquidity  savings  Labor_markets  wages 
september 2014 by dunnettreader
James Heckman — the ultimate take down of teflon-coated defenders of rational expectations | LARS P. SYLL - July 2014
Excerpts of interview of Heckman by John Cassidy re Chicago School and how zealot acolytes got away from the data on both rational expectations and EMH -- also "For even more on the issue, permit me to self-indulgently recommend reading my article Rational expectations — a fallacious foundation for macroeconomics in a non-ergodic world in real-world economics review no. 62." -- downloaded pdf to Note
intellectual_history  social_sciences-post-WWII  economic_theory  rationality-economics  rational_expectations  EMH  downloaded  EF-add 
september 2014 by dunnettreader
Paolo Ramazzotti - Policymaking and Learning Actors, or Is a 'Double Movement' in Cognition Possible? | JSTOR: Journal of Economic Issues, Vol. 41, No. 3 (Sep., 2007), pp. 765-781
Focus is on Polanyi's theory of implications of widening split between economic and societal goals - posits market efficiency and prices etc functions as coordination mechanisms require broadly shared images of the political economy. Uses Simon's bounded rationality to examine how learning happens, why business is likely to have oversized influence on shared images, and that policy changes may require a commitment to influencing the learning process so alternatives to business images can be shared basis of action -- interesting bibliography of classic political economy and social theory. -- didn't download
article  jstor  political_economy  social_theory  rationality-economics  economic_culture  moral_economy  capitalism  political_culture  common_good  reform-economic  efficiency  public_policy  public_sphere  public_opinion  Polanyi_Karl 
june 2014 by dunnettreader
Issue devoted to 50th Anniversary of Robert Heilbroner's "The Worldly Philosophers" | JSTOR: Social Research, Vol. 71, No. 2, SUMMER 2004
Quite a roundup of contributors -- From Solow on methodology to Haack on philosophy of science and epistemology, Warren Samuels, Jamie Galbraith, and several papers on intellectual_history, including parallels with Polanyi
journal  jstor  intellectual_history  20thC  economic_history  economic_theory  economic_culture  capitalism  macroeconomics  social_sciences  epistemology  rationality-economics  institutional_economics  social_contract  markets  post-WWII  post-Cold_War  bibliography  EF-add 
june 2014 by dunnettreader
Chris Dillow - Stumbling and Mumbling: What can economics explain? - May 2014
The death of Gary Becker, the father of the "economics of everything" set me wondering: could it be that basic neoclassical economics does a better job of explaining "non-economic" behaviour than it does of economic phenomena? Take three examples where basic neoclassical is, at best, questionable: - A theory of distribution. The idea that wages are equal to workers' marginal product is deeply questionable. .. And the idea of a marginal product of capital is just close to meaningless, which gives neoclassical economics little idea of where profits come from. - The Solow-Swan growth model found that most economic growth was due to exogenous technical progress, which is pretty much no explanation of growth at all... - The neoclassical explanation of unemployment stresses wage inflexibility and "rigidities". But this fails to account for why unemployment was high in the 19th century. By contrast, Beckerian economics has given us some useful insights into crime, family life (pdf) and racial discrimination. There might be good reasons for this difference. Matters of individual choice are often more tractable in the "non-economic" than economic arena. -- as usual Chris provides gobs of links
economic_theory  economic_growth  economic_models  neoclassical_economics  behavioral_economics  rational_choice  rationality-economics  social_theory  links  EF-add 
may 2014 by dunnettreader
Joseph M. Whitmeyer - Interest-Network Structures in Exchange Networks | JSTOR: Sociological Perspectives, Vol. 42, No. 1 (Spring, 1999), pp. 23-47
Studies of power in exchange networks have concentrated overwhelmingly on how the power distribution in the network is affected by the network structure. In this article I look at how one type of interest-network structure--the distribution of interest coincidence among network members--affects the power distribution in exchange networks. All exclusionary networks--networks in which power differences stem from differential ability to exclude exchange partners from exchange--have assumed an interest-network structure of homogeneous interests among network members. All connected actors have opposing interests within exchange; when one partner does better the other does worse. Here I allow connected pairs of actors to vary in the degree to which their interests are opposing or coincident. This creates the possibility of a wide variety of structures of interest coincidence in exchange networks. Using two different methods--an analytic method derived from power-dependence principles and a modification of a widely used computer program simulating exchange in networks--I show that, given the assumptions embodied in those methods, the interest-network structure of interest coincidence can have substantial effects on the power rankings of network members. -- limits of narrowly conceived rationality in game theory -- didn't download
article  jstor  social_theory  networks  networks-exchange  game_theory  rationality-economics  power  structure  EF-add 
may 2014 by dunnettreader
Dieter Bögenhold - Social Network Analysis and the Sociology of Economics: Filling a Blind Spot with the Idea of Social Embeddedness | JSTOR: The American Journal of Economics and Sociology, Vol. 72, No. 2 (APRIL, 2013), pp. 293-318
Today, social networks analysis has become a cross-disciplinary subject with applications in diverse fields of social and economic life. Different network designs provide different opportunities to communicate, to receive information, and to create different structures of cultural capital. Network analysis explores modes and contents of exchanges between different agents when symbols, emotions, or goods and services are exchanged. The message of the article is that social network analysis provides a tool to foster the understanding of social dynamics, which enhances recent debate on a micro-macro gap and on limitations of the cognitive and explanatory potential of economics. -- paywall -- large references list quite interesting
article  jstor  social_theory  economic_theory  economic_sociology  networks-social  structure  social_order  social_capital  cultural_capital  symbolic_interaction  markets  microfoundations  rationality-economics  bibliography  EF-add 
may 2014 by dunnettreader
Eduardo Fernández-Huerga - The Economic Behavior of Human Beings: The Institutional/Post-Keynesian Model | JSTOR: Journal of Economic Issues, Vol. 42, No. 3 (Sep., 2008), pp. 709-726
This paper attempts to present the basic features that would define a model of behavior suited to an institutional and post-Keynesian approach. To facilitate explanation, human behavior is divided into three phases: motivation, cognition and reasoning and decision-making. Motivation appears as a process directed toward the satisfaction of a complex structure of various needs and wants. The role of emotions and the social and cognitive aspects of motivation are recognized. Moreover, it is also recognized that human beings have limited cognitive and rational capacities, and it is accepted that they are potentially creative. Partly as a consequence of that, cognition becomes a social act and knowledge of reality is subject to fundamental uncertainty. Finally, human rationality (or intelligence) is associated with a search for good solutions, and it includes elements of procedural rationality, creativity and emotional rationality. The role of habits and institutions in all these phases is stressed. -- good references -- didn't download
article  jstor  social_theory  economic_theory  economic_sociology  institutional_economics  Post-Keynesian  behavioral_economics  cognition-social  rationality-economics  creativity  uncertainty  motivation  decision_theory  bibliography  EF-add 
may 2014 by dunnettreader
Eric D. Beinhocker : Reflexivity, complexity, and the nature of social science - Journal of Economic Methodology [Soros special issue] - Volume 20, Issue 4 - Taylor & Francis Online
pages 330-342 -- downloaded pdf to Note -- In 1987, George Soros introduced his concepts of reflexivity and fallibility and has further developed and applied these concepts over subsequent decades. This paper attempts to build on Soros's framework, provide his concepts with a more precise definition, and put them in the context of recent thinking on complex adaptive systems. The paper proposes that systems can be classified along a ‘spectrum of complexity’ and that under specific conditions not only social systems but also natural and artificial systems can be considered ‘complex reflexive.’ The epistemological challenges associated with scientifically understanding a phenomenon stem not from whether its domain is social, natural, or artificial, but where it falls along this spectrum. Reflexive systems present particular challenges; however, evolutionary model-dependent realism provides a bridge between Soros and Popper and a potential path forward for economics.
article  philosophy_of_science  philosophy_of_social_science  epistemology  methodology  complexity  Soros  reflexivity  intentionality  evolution-as-model  Popper  scientific_method  downloaded  EF-add  systems-complex_adaptive  systems-reflexive  systems_theory  economic_theory  economic_models  EMH  rationality-economics  rational_expectations  information-markets  cognition  cognition-social  falsification  neuroscience  uncertainty  laws_of_nature  covering_laws  causation  explanation  prediction 
january 2014 by dunnettreader
Anwar Shaikh : On the role of reflexivity in economic analysis - Journal of Economic Methodology [Soros special issue] - Volume 20, Issue 4 - Taylor & Francis Online
pages 439-445 -- downloaded pdf to Note -- Soros' theory of reflexivity is meant to apply to a variety of social processes. In economics, it implies that many processes will be subject to “boom-bust” patterns in which expected outcomes deviate for a considerable time from the actual path, and that the actual path in turn deviates from the underlying fundamentals. This is in sharp contrast to the reigning notions in orthodox economics. The hypothesis of Rational Expectations (RE) requires that the views of all participants will converge to a “single set correct of expectations” and the Efficient Market Hypothesis (EMH) posits that actual outcomes deviate from equilibrium in a random manner save for occasional exogenous shocks. In this paper I show that Soros' argument is similar to the classical and Keynesian notions of equilibration as a turbulent process in which actual and expected variables gravitate around some fundamental value. But Soros makes the important further contribution of emphasizing that the fundamental value itself will generally be affected, but not fully determined, by (diverse) expectations and actual outcomes. I demonstrate that Soros' theory of reflexivity can be formalized and that the resulting system is stable in in the sense that expected and actual variables will gravitate around a possibly moving fundamental value. The paper ends with a discussion of an alternate economic paradigm in which the principle of reflexivity would be central.
article  intellectual_history  19thC  20thC  economic_theory  macroeconomics  economic_models  classical_economics  Keynesianism  equilibrium  fundamentals  capital_markets  EMH  rationality-economics  rational_expectations  information-markets  reflexivity  uncertainty  financial_economics  financial_system  philosophy_of_social_science  methodology  downloaded  EF-add 
january 2014 by dunnettreader
George Soros - Fallibility, reflexivity, and the human uncertainty principle - Journal of Economic Methodology [Soros special issue] - Volume 20, Issue 4 - Taylor & Francis Online
Lead article for special issue devoted to Soros and epistemology in social sciences more broadly compared with natural sciences and Popper's version of falsibility in scientific method -- He's making progress in formalizing his theory and putting it in context of other theorists - sees his fallibility and reflexivity combination as major factor in "Knightian uncertainty" - Downloaded pdf to Note
article  philosophy_of_social_science  philosophy_of_science  epistemology  scientific_method  falsification  deduction  Popper  Soros  uncertainty  economic_theory  economic_models  financial_economics  capital_markets  FX  EMH  rationality-economics  rational_expectations  complexity  equilibrium  reflexivity  ontology-social  free_will  financial_crisis  financial_system  fallibility  downloaded  EF-add  fundamentals  methodology  cognition  agency  intentionality 
january 2014 by dunnettreader
Richard Ashcraft: Economic Metaphors, Behavioralism, and Political Theory: Some Observations on the Ideological Uses of Language | JSTOR: The Western Political Quarterly, Vol. 30, No. 3 (Sep., 1977), pp. 313-328
Downloaded pdf to Note -- In accordance with certain general principles relating to the study of ideology advanced by Marx and Mannheim, it is argued that a significant group of behavioral political scientists employee the terminology and concepts of neo-classical economics metaphorically as a means of establishing the nature and limits of political theory within the discipline of political science. The postwar development of behavioral political theory, the political reality to which it refers, and the purposes of theorizing are all described, metaphorically, in the language of economics. It is especially in their reliance upon "technical reason," which serves both as a characterization of the dynamics of capitalism as a socioeconomic system and as the framework for political theorizing, that behavioral political scientists have demonstrated the ideological limits of their metaphorical language. To paraphrase Marx, behavioral political science has sought, through its usage of economic metaphors, to transform the problematic features of the social order into "natural, self-understood forms of social life."
article  jstor  20thC  political_philosophy  political_culture  political_science  rationality-economics  rational_choice  public_choice  public_policy  metaphor  social_sciences-post-WWII  behavioralism  ideology  neoclassical_economics  capitalism  political_economy  downloaded  EF-add 
december 2013 by dunnettreader
Gowdy et al - Economic cosmology and the evolutionary challenge | Journal of Economic Behavior and Organization Special Issue 2013
2nd lead articl5 -- downloaded pdf to Note -- The intellectual histories of economics and evolutionary biology are closely intertwined because both subjects deal with living, complex, evolving systems. Because the subject matter is similar, contemporary evolutionary thought has much to offer to economics. In recent decades theoretical biology has progressed faster than economics in understanding phenomena like hierarchical processes, cooperative behavior, and selection processes in evolutionary change. This paper discusses three very old “cosmologies” in Western thought, how these play out in economic theory, and how evolutionary biology can help evaluate their validity and policy relevance. These cosmologies are: (1) “natural man” as a rational, self-sufficient, egotistical individual, (2) competition among individuals can lead to a well-functioning society, and (3) there exists an ideal optimal state of nature. These correspond to Colander et al. (2004) “holy trinity of orthodox economics”, rationality, greed, and equilibrium. It is argued below that current breakthroughs in evolutionary biology and neuroscience can help economics go beyond these simple cosmologies.

They equate Pope’s Essay (self love and social are the same) with Mandeville Fable of the Bees
paper  journal  intellectual_history  ancient_philosophy  Western_civ  natural_law  cosmology  Providence  self-interest  competition  markets  economic_theory  economic_sociology  economic_culture  evolution-social  biocultural_evolution  evo_psych  evolution-as-model  reason  rationality-economics  rational_choice  downloaded  EF-add  equilibrium  complexity  Smith  Pope  Mandeville 
december 2013 by dunnettreader
John F. Tomer: Brain Physiology, Egoistic and Empathic Motivation, and Brain Plasticity: Toward a More Human Economics | World Economic Review: working papers 2012
Back to the Enlightenment and Adam Smith. -- comments section has interesting cites to other cognitive neuroscience models and connections to social theories that involve individual decision making. -- downloaded pdf to Note -- Brain plasticity refers to the ability of the brain to change structurally and functionally as a result of input from the environment. Some of this plasticity is no doubt genetically determined but some brain change is a product of individual effort and represents the individual’s investment in intangible capital (standard human capital, social capital, personal capital, and so on). In this revised view, the balance that individuals, groups, and societies strike between ego and empathy orientation is to a great extent determined by these intangible investments, not simply by brain physiology. In other words, it is the plastic aspect of the brain that determines how the capacity associated with brain physiology gets expressed.
paper  economic_models  economic_sociology  social_theory  cognition  neuroscience  self-interest  rationality-economics  empathy  social_capital  human_capital  education  work  rational_choice  feminist_economics  downloaded  EF-add 
september 2013 by dunnettreader
Samuel Bowles and Herbert Gintis - The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy (1993)
JSTOR: The Journal of Economic Perspectives, Vol. 7, No. 1 (Winter, 1993), pp. 83-102 -- an early Bowles and Gintis attack on neoclassical -- see jstor for bibliography and the huge number of papers citing this article
article  jstor  social_theory  economic_theory  neoclassical_economics  economic_sociology  institutional_economics  rationality-economics  bibliography  EF-add 
september 2013 by dunnettreader
Jürgen Kädtler: Financialisation of Capitalist Economies — Bargaining on Conventional Economic Rationalities (2011)
JSTOR: Historical Social Research / Historische Sozialforschung, Vol. 36, No. 4 (138) (2011), pp. 169-191 -- Special Issue: Conventions and Institutions from a Historical Perspective -- downloaded pdf to Note -- The paper deals with financialisation of capitalist economies since the 1990s drawing on a conventional concept of economic rationalities. It is argued that financial rationality is not the mere outcome of relations of power rooted elsewhere but a power resource on its own. It is analysed as one type of bounded rationality among others, the recent predominance of which traces back mainly to a paradigmatic shift in economics. However predominance does not mean unambiguousness. It is demonstrated that financial rationality on the level of companies or companies' strategies always has to be interpreted and specified in the perspective of other rationalities. And effective financialised strategies are always the outcome of bargaining between social actors bringing into play various interests, power resources, and rationalities. The financial and economic crisis since 2007 is perceived as symptomatic for a new kind of systemic instabilities caused by the predominance of financial rationality.
article  jstor  social_theory  economic_sociology  historical_sociology  institutional_economics  markets  financial_system  financialization  rationality-economics  power  financial_crisis  downloaded  EF-add 
september 2013 by dunnettreader

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