Economic Theory Commons^™

Working Paper No. 62, Uses Of Abduction In Economic Science, Daniel Urban

Working Papers in Economics

This inquiry considers the meaning of abduction and its uses in Economic Science. Abductive logic is discussed at some length, in order to clarify how it is used in this inquiry. In addition, abduction is traced from its appearances in the writings of pragmatist philosopher Charles Sanders Peirce and how its meaning is later carried on in Thorstein Veblen’s Institutional Economics. Peirce’s influence proves foundational for Veblen’s contributions, as well as for the writings of John Roger Commons. My research suggests that after Commons, Peirce’s influence in economics wanes. Additionally, the use of retroduction in critical realism provides a contemporary …

Regulatory Theory, Matthew D. Adler

All Faculty Scholarship

This chapter reviews a range of topics connected to the justification of government regulation, including: the definition of “regulation”; welfarism, Kaldor-Hicks efficiency, and the Pareto principles; the fundamental theorems of welfare economics and the “market failure” framework for justifying regulation, which identifies different ways in which the conditions for those theorems may fail to hold true (such as externalities, public goods, monopoly power, and imperfect information); the Coase theorem; and the different forms of regulation.

A Pure Test Of Backward Induction, Kelly Padden Hall

Doctoral Dissertations

This dissertation proposes a simple computerized game to serve as a pure test of backward induction and then tests the game in the laboratory. One of the fundamental assumptions of neoclassical economic theory is that human beings function as fully rational agents who maximize their utility over multidimensional alternatives under economic constraints. However, numerous studies have shown systematic deviation from rational decision making in a laboratory setting. While no single explanation is obvious for this suboptimal behavior, the literature suggests other motivations (besides maximizing utility) may be at play, including reciprocity, trust, reputation, and welfare. The "Race to 21" game …

Hobbes: Caos De La Conepción Liberal, Alejandro Pérez Y Soto Dominguez

Alejandro Pérez y Soto Dominguez

Nos proponemos examinar los conceptos que configuran la organización social desde la perspectiva del caos en el contexto liberal. La metáfora del caos remite a la idea de la cooperación social en donde el reconocimiento de los deseos privados constituye la base del bien común. De esta manera se parte de suponer la condición del conocimiento que tienen los individuos de la situación caótica en la sociedad civil.

User-Generated Content (Ugc) In Tourism: Benefits And Concerns Of Online Consumers, Stephen Burgess, Carmine Sellitto, Carmen Cox, Jeremy Buultjens

Carmen Cox

This paper examines the views of travel consumers that search for information online in relation to the specific benefits and concerns identified with user-generated content (UGC). Real contrasts in relation to views about UGC content were identified in the literature. For instance, UGC is perceived as being ‘credible’ or ‘not credible’ as an information source depending upon the view of the user. The paper reports research that examined the use of UGC by online travel consumers, sourced from an Australian tourism organisation’s online subscriber database. The study highlighted a similar range of areas that were seen as benefits and concerns …

Competition-Based Environmental Policy: An Analysis Of Farmland Preservation In Maryland, John K. Horowitz, Lori Lynch, Andrew J. Stocking

Andrew J Stocking

Policy makers have turned to competition-based voluntary-enrollment programs as a cost-effective way to achieve preferred land uses. This paper studies bidder behavior in an innovative auction-based program in which farmers compete to sell and retire the right to develop their land. We derive a reduced-form bidding model that includes private and common values. This model allows us to estimate the role of bidder competition, winner’s curse correction, and the underlying distribution of private values. We estimate that the auction enrolled as many as 3,000 acres (12%) more than a take-it-or-leave-it offer would have enrolled for the same budgetary cost.

Should The Economic Crisis Change Our Assessment Of Markets And Government?, Clifford Winston

Brookings Scholar Lecture Series

Broad Objectives of the Study:
- Base policy debates on empirical counterfactual evidence.
- Begin accumulating evidence and identifying common themes so we don’t have to start from “square one.”
- Provide guidance for policymakers.

Rationality And Humanity: A View From Feminist Economics, Julie A. Nelson

Economics Faculty Publication Series

DOES RATIONAL CHOICE THEORY (RCT) HAVE SOMETHING IMPORTANT to contribute to the humanities? Usually the arguments for answering “yes” to this question go something like the following: The application of RCT has proved to be a powerful tool in economics and the social sciences, leading to clear and rigorous insights unattainable from less precise methods. Therefore, by also harnessing this power, the disciplines in the humanities could advance toward becoming more elegant, rational, and forceful in their explorations of human behavior. As an economist, I’d like to address this argument on its home ground. Has the use of RCT advanced …

Uncertainty, Pay For Performance, And Asymmetric Information, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

This article develops a new rationale for the emergence of pay-for-performance contracts where the labor market is competitive, workers are risk averse, and firms are risk neutral and unaware of workers’ productivities. The article shows that the prevalence of pay for performance rises and the pay-for-performance sensitivity falls as environmental uncertainty increases. This empirical regularity is unaccounted for alternative models such as the standard agency model. (JEL D86, L2, M5, J3)

From Economic Crisis To Reform: Imf Programs In Latin America And Eastern Europe By Grigore Pop-Eleches (Book Review), Aleksandra Sznajder Lee

Political Science Faculty Publications

Grigore Pop-Eleches’s book on the interaction of international and domestic determinants of IMF-style reforms in developing countries makes a significant contribution to international and comparative political economy literature. His effort to capture the dynamics of the contentious and complex relationship between the IMF and developing countries/emerging markets inLatin AmericaandEastern Europerepresents mid-range theorizing at its best. The author combines insights from international and comparative political economy literatures to pursue complementary questions. From the international effect perspective: what role do economic crises play in the initiation and implementation of IMF-backed economic reform? Is the IMF impartial in its policy and financial support …

The Emerging Global Financial Architecture: Tracing And Evaluating New Patterns Of The Trilemma Configuration, Joshua Aizenman, Menzie David Chinn, Hiro Ito

Economics Faculty Publications and Presentations

This paper investigates how the trilemma policy mix affects economic performance in developing countries. We find that greater monetary independence can dampen output volatility, while greater exchange rate stability is associated with greater output volatility, which can be mitigated by reserve accumulation; greater monetary autonomy is associated with higher inflation, while greater exchange rate stability and greater financial openness is linked with lower inflation; pursuit of exchange rate stability can increase output volatility when financial development is at an intermediate stage. Greater financial openness, when accompanied by a high level of financial development, reduces output volatility.

Rationality And Humanity: A View From Feminist Economics, Julie A. Nelson

Julie A. Nelson

DOES RATIONAL CHOICE THEORY (RCT) HAVE SOMETHING IMPORTANT to contribute to the humanities? Usually the arguments for answering “yes” to this question go something like the following: The application of RCT has proved to be a powerful tool in economics and the social sciences, leading to clear and rigorous insights unattainable from less precise methods. Therefore, by also harnessing this power, the disciplines in the humanities could advance toward becoming more elegant, rational, and forceful in their explorations of human behavior. As an economist, I’d like to address this argument on its home ground. Has the use of RCT advanced …

Post-Structural Logic In Marx's Theory Of Value, David Kristjanson-Gural

Faculty Journal Articles

In this essay I use Louis Althusser’s observation concerning the synchrony and diachrony of Marx’s logic in Capital to detail changes in the meaning of value, defined as socially necessary abstract labor time, throughout the three volumes of Capital. I use this analysis to identify three common types of logical error in reading Marx that result from failing to recognize this aspect of his methodology, and I provide examples to illustrate each of these common errors. I then argue that, by recognizing the synchrony and diachrony of Marx’s method, it is possible to read value theory in a way that …

Inflammation And Infection Do Not Promote Arterial Aging And Cardiovascular Disease Risk Factors Among Lean Horticulturalists, Michael Gurven, Hillard Kaplan, Jeffrey Winking, Daniel Eid Rodriguez, Sarinnapha Vasunilashorn, Jung Ki Kim, Caleb Finch, Eileen M. Crimmins

ESI Publications

Background: Arterial aging is well characterized in industrial populations, but scantly described in populations with little access to modern medicine. Here we characterize health and aging among the Tsimane, Amazonian forager-horticulturalists with short life expectancy, high infectious loads and inflammation, but low adiposity and robust physical fitness. Inflammation has been implicated in all stages of arterial aging, atherogenesis and hypertension, and so we test whether greater inflammation associates with atherosclerosis and CVD risk. In contrast, moderate to vigorous daily activity, minimal obesity, and low fat intake predict minimal CVD risk among older Tsimane.

Methods and Findings: Peripheral arterial …

A Nation In Dilemma, Professor Issam A.W. Mohamed

Professor Issam A.W. Mohamed

following the Global financial Crisis there were economic collapses in all the world. Sudan officials claimed that the country was immune from that epidemic. Such declaration were truly weird as it has been deeply affected from the first instant. That article presented many questions about the economic and social conditions and the eminent southern Sudan, Darfur crises.

Implementation With Near Complete Information: The Case Of Subgame Perfection, Takashi Kunimoto, Olivier Tercieux

Research Collection School Of Economics

While monotonicity is a necessary and almost sufficient condition for Nash implementationand often a demanding one, almost any (non-monotonic, for instance) socialchoice rule can be implemented using undominated Nash or subgame perfect equilibrium.By requiring solution concepts to have closed graph in the limit of completeinformation, Chung and Ely (2003) show that only monotonic social choice rules canbe implemented in the closure of the undominated Nash equilibrium correspondence.In this paper, we show that only monotonic social choice rules can be implemented inthe closure of the subgame perfect equilibrium/sequential equilibrium correspondence.Our robustness result helps understand the limits of subgame pefect implementation,which is …

Identidade Cultural E Desenvolvimento Regional: Um Olhar Para Os Municípios Da Secretaria De Desenvolvimento Regional De Canoinhas/Sc., Jorge Amaro Bastos Alves, Sandro Perotti

Jorge Amaro Bastos Alves

RESUMO: Esse artigo aborda o entendimento sobre cultura e seu influxo no desenvolvimento da região de abrangência da Secretaria de Desenvolvimento Regional (SDR) de Canoinhas, situada no planalto norte do Estado de Santa Catarina, trabalhando-se a questão identitária e cultural sob vários aspectos do desenvolvimento, bem como, analisando alguns indicadores sócio-econômicos e de desenvolvimento humano. Para o desenvolvimento desse artigo, realizou-se pesquisa exploratória e bibliográfica com base em livros, teses e artigos versando sobre o tema, bem como, fez-se um levantamento estatístico disponível em órgãos governamentais, tais como, Instituto Brasileiro de Geografia e Estatística (IBGE) e Programa das Nações Unidas …

Teaching Ecological And Feminist Economics In The Principles Course, Julie A. Nelson, Neva Goodwin

Economics Faculty Publication Series

It can be difficult to incorporate ecological and feminist concerns into introductory courses, when one is also obliged to teach neoclassical analysis. In this essay we briefly describe how one might extend existing “multi-paradigmatic” approaches to feminist and ecological concerns, and then present an new alternative approach that may be more suitable for some students. This “broader questions and bigger toolbox” approach can be applied in both microeconomics and macroeconomics introductory classrooms.

Some Remarks On The Effects Of Active Labour Market Policies In Post-Transition, Joanna Tyrowicz, Piotr Wojcik

Joanna Tyrowicz

Social cohesion is the principal goal behind active labour market policies (ALMPs), including those financed at supra-national level, like the European Social Fund. In this paper we use NUTS4 level data on the local labour market dynamics in an attempt to verify direct and indirect effects of ALMPs. We use data for 2000-2007 for Poland, while this period comprised both stark increases and reductions in the unemployment rates. Over this time also the financing of ALMPs has been increased considerably, transforming both to higher intensity of ALMPs (wider coverage) and higher extensiveness of these activities (increase in per treatment cost). …

There Should Be Little Or No Liquidity Discounts For Controlling Interests In Closely Held Businesses, Michael Sack Elmaleh

Michael Sack Elmaleh

The application of liquidity discounts to the appraised values of controlling interests in closely held businesses reflects a failure of the valuation community to fully appreciate the fact that these equity interests belong to a fundamentally different investment class than publicly traded securities. Investors in publicly traded securities have dramatically different expectations about the benefits and sacrifices of such investments, compared to the expectations of benefits and sacrifices of investors in closely held companies. Investors in publicly traded securities expect their minority interest investments to be highly liquid, yield free cash flow, and require no participation in the management of …

Are Credit Unions In Ecuador Achieving Economies Of Scale?, Nick A. Marchio

Economics Honors Projects

This study tests the assertion that membership growth in credit unions is constrained by their unique structural features, such as their non-profit mission and member-based ownership. Although these features enhance inclusiveness, existing theory suggest that they work against efficiency when membership grows too diffuse. To address this issue, this study uses a model that takes into account existing theory on constrained-optimization in credit unions and theory on the adverse effects of diffuse ownership. Using data on 36 public credit unions in Ecuador, the empirical analysis finds evidence that credit unions can achieve economies of scale despite their problematic structural features. …

Teaching Ecological And Feminist Economics In The Principles Course, Julie A. Nelson

Julie A. Nelson

It can be difficult to incorporate ecological and feminist concerns into introductory courses, when one is also obliged to teach neoclassical analysis. In this essay we briefly describe how one might extend existing “multi-paradigmatic” approaches to feminist and ecological concerns, and then present an new alternative approach that may be more suitable for some students. This “broader questions and bigger toolbox” approach can be applied in both microeconomics and macroeconomics introductory classrooms.

The Janjaweed And The Armed Movements Of Sudan, Professor Issam A.W. Mohamed

Professor Issam A.W. Mohamed

The emergence of the Janjaweed as an armed force working with the government to suppress rebellions in Darfur region outraged the international community. They were marked by brutality, destruction, burning, killings and mass rapes. They were also described as Arabs. However, that was not the whole picture, no one observed the living conditions of the Arabs or how were they victims also as the other inhabitants of Darfur. No one also observed that they were used by the Ingaz government to execute the dirty work and bear the consequences. The Arab tribes however, also had other thoughts as they realized …

Regulatory Harmonisation And Its Impact On Trade In Services, Henk Lm Kox

Henk LM Kox

* Impact of domestic regulation on volume of bilateral services trade * Impact domestic regulation on choice between FDI and exports (GATS modes 3 and 1)

Olavo De Carvalho Sobre Economia De Mercado E Tradição, Lucas Mendes

Lucas Mendes

O presente ensaio pretende discutir o argumento libertário de que a moral deve ser um elemento inerente, senão subjacente, à própria economia livre. Para tanto, traz-se à tona os argumentos de Gertrude Himmelfarb e Olavo de Carvalho para esclarecer o papel fundamental da ética e o porquê de sua prioridade absoluta sobre a ordem de mercado.

Why Economic Performance Has Differed Between Brazil And China? A Comparative Analysis Of Brazilian And Chinese Macroeconomic Policy, Fernando Ferrari-Filho, Anthony Petros Spanakos

Department of Political Science and Law Faculty Scholarship and Creative Works

This paper addresses a specific question: why has China grown so rapidly and Brazil not? To answer this question, it (i) establishes the basis for comparison between China and Brazil by contextualizing these countries within the BRICs concept, and (ii) presents a comparative analysis of Brazilian and Chinese reforms focusing only on the issue of macroeconomic policy, especially the monetary and exchange rate regimes, and its effect on growth.

Commentary, Dean D. Croushore

Economics Faculty Publications

It is a pleasure to discuss Richard Anderson and Charles Gascon’s (2009) article on their attempt to develop a state-space model to measure potential output growth in the face of data revisions. They use the methodology of Cunningham et al. (2007) applied to real output, to see if they can develop a better measure of potential output than other researchers. Such an approach seems promising, and they develop a unique method to study the data.

Adaptive Policymaking: Evolving And Applying Emergent Solutions For U.S. Communications Policy, Richard S. Whitt

Federal Communications Law Journal

This Article presents some specific ways that U.S. policymakers should use teachings from the latest thinking in economics to create a conceptual framework in order to grapple with current controversies in communications law and regulation. First, it provides a brief overview of Emergence Economics, with an emphasis on the "rough formula" of emergence and the unique role of technological change in creating and furthering innovation and economic growth. Second, this paper explicates the general concept of "Adaptive Policymaking" by governments and includes some proposed guiding principles, an outline of the public policy design space, and an adaptive toolkit to be …

A Critique Of Neoclassical Theory Of Health Care Consumption, Xiao Jiang

Electronic Theses and Dissertations

The purpose of this thesis is to display an internal critique of the neoclassical theory of health care consumption with the intention of understanding its true merits and limitations. To avoid arbitrariness, instead of criticizing it directly, this thesis first explores the existing scholarly critiques, as well as the developments of this theory in response to these criticisms. What is interestingly observed is that the neoclassical responses tend to systematically fall into two problematic categories – the trade-off between reality and theoretical determinacy, and free-market behavior resolution. Such observation suggests that there is something fundamentally problematic with this theory, which …

Technology, Unilateral Commitments And Cumulative Emissions Reduction, Shurojit Chatterji, Sayantan Ghosal

Research Collection School Of Economics

In this article, we argue that weak property rights over transnational pollution and the limited threat of retaliatory punishments blunts the effectiveness of a broad-based multilateral agreement to deliver the emission reductions required to mitigate climate change. Instead, we propose a policy framework that builds on unilateral commitments, endogenous innovation and technology transfer that could lead to cumulative emissions reduction by altering the participation constraints of nations over time.