Economic Theory Commons^™

The Fair And Laissez-Faire Markets: From A Neoliberal Laissez-Faire Baseline To A Fair Market, Eric L. Dixon

Pursuit - The Journal of Undergraduate Research at The University of Tennessee

The essay begins with a brief overview of the role of the neoliberal conception of the laissez-faire market in modern political economy. The essay then goes on to defend three claims: 1) the laissez-faire version of a market should not be considered the economic ideal or baseline version of a market because often the fundamental conditions required to reach a genuine equilibrium are unfulfilled under a laissez-faire environment, 2) a distribution resultant from a laissez-faire market should not be considered the ultima facie just distributive baseline because an unregulated market may allocate commodities according to morally arbitrary factors and requires …

How Portable Is Level-0 Behavior? A Test Of Level-K Theory In Games With Non-Neutral Frames, Shaun Hargreaves Heap, David Rojo Arjona, Robert Sugden

Economics Faculty Articles and Research

We test the portability of level‐0 assumptions in level‐k theory in an experimental investigation of behavior in Coordination, Discoordination, and Hide and Seek games with common, non‐neutral frames. Assuming that level‐0 behavior depends only on the frame, we derive hypotheses that are independent of prior assumptions about salience. Those hypotheses are not confirmed. Our findings contrast with previous research which has fitted parameterized level‐k models to Hide and Seek data. We show that, as a criterion of successful explanation, the existence of a plausible model that replicates the main patterns in these data has a high probability of …

A New Economic Growth Theory: An Obstacle To Economic Growth, Paul Kim

Economics Papers and Presentations

This paper deals with the steps what a nation must be prepared to take in order to sustain its economic growth rate when it enters the advanced stage. It is expected that a nation’s growth rate will decline as it enters the advanced stage, according a theory which the author introduces in this paper. It would be effective to avoid the obstacles if they know the kind of obstacles they might face in the advanced stage. Once the obstacles that hinder economic growth are engraved in institutions, it would be difficult to change the nature of existing institutions to remove …

Mountain Monitor - 1st Quarter 2014, Kenan Fikri, Mark Muro

Mountain Monitor Quarterly

The quarter’s Mountain Monitor finds that the rate of economic recovery in the major metropolitan areas of the Mountain West is no longer impervious to national trends.

The previous edition of the Mountain Monitor observed that the regional rate of recovery seemed to be converging toward that of the nation. This edition of the Mountain Monitor suggests that the trend has progressed further.

The rate of economic recovery broadly slowed across the region from the fourth quarter of 2013 to the first quarter of 2014, just as it did nationally. The national headlines in the first three months of the …

Working Paper No. 36, The Rise Of Marginalism: The Philosophical Foundations Of Neoclassical Economic Thought, Emily Pitkin

Working Papers in Economics

This inquiry examines the works of the early thinkers in marginalist theory and seeks to establish that certain philosophical assumptions about the nature of man led to the development and ultimate ascendance of neoclassical thought in the field of economics. Jeremy Bentham’s key assumption, which he develops in his 1781 work, A Fragment on Government and an Introduction to the Principles of Morals and Legislation, that men are driven by the forces of pain and pleasure led directly to William Stanley Jevons and Carl Menger’s investigation and advancement of utility maximization theory one hundred years after Bentham, in 1871. …

The Effect Of Macroeconomic Conditions On Applications To Supplemental Security Income, Ke Xu

Renée Crown University Honors Thesis Projects - All

This study examines whether macroeconomic conditions affect applications to the Supplemental Security Income program. Specifically, we focus on the impact of unemployment rate on under age 18 applications. Using data from 2002 through 2012, we found that a higher unemployment rate is associated with an increased intention to apply for Supplemental Security Income benefits for both disabled adults and children. However, the effect is much higher for adults. These findings suggest that under age 18 applications of Supplemental Security Income is sensitive to the macroeconomic conditions.

Too Hot To Handle: Managing America’S Ecosystems In A Changing Climate, Riley Morin

Renée Crown University Honors Thesis Projects - All

For over 140 years, Americans and have enjoyed their national parks. In the national parks, nature and history come together to form uniquely public as well as enormously valuable landscapes. Today, America’s national parks are in danger of undergoing serious changes. Climate change is going to alter the physical characteristics of the national parks. Many of the parks have changed before, but this change will be the most dramatic. In this report I examine the historical and current mission of the National Park Service. I also examine the past and current valuation of the national parks by the American people. …

Have Sentence Enhancements Had A Deterrent Effect On Crime And What Are The Social Welfare Implications Of These Laws?, David May

All Theses

In the early 1990s many states adopted some form of sentence enhancement law for repeat offenders. A three-strike law in many states, most notably California's, was a common form of these laws. Using a difference-in-difference methodology, this thesis demonstrates that sentence enhancement laws reduce property crime rates by 10 percent or more. A basic cost-benefit analysis, however, leaves open the question of whether social welfare is enhanced by sentence enhancements.

Historical Health Conditions In Major Us Cities: The Hue Data Set, Carlos Villareal, Brian Bettenhausen, Eric Hanss, Jonathan Hersh

Economics Faculty Articles and Research

The Historical Urban Ecological data set is a new resource detailing health and environmental conditions within seven major U.S. cities during the study period from 1830 to 1930. Researchers collected and digitized ward-level data from annual reports of municipal departments that detail the epidemiological, economic, and demographic conditions within each city. They then drafted new geographic information system data to link the tabular records to ward geographies. These data provide a new foundation to revisit questions surrounding the urban mortality transition and the growth of U.S. cities.

Why Real Leisure Really Matters: Incentive Effects On Real Effort In The Laboratory, Brice Corgnet, Roberto Hérnan-Gonzalez, Eric Schniter

ESI Publications

On-the-job leisure is a pervasive feature of the modern workplace. We studied its impact on work performance in a laboratory experiment by either allowing or restricting Internet access. We used a 2x2 experimental design in which subjects completing real-effort work tasks could earn cash according to either individual- or team-production incentive schemes. Under team pay, production levels were significantly lower when Internet browsing was available than when it was not. Under individual pay, however, no differences in production levels were observed between the treatment in which Internet was available and the treatment in which it was not. In line with …

Game-Theoretic Foundations Of Monetary Equilibrium, Gabriele Camera, Alessandro Gioffré

Economics Faculty Articles and Research

According to theory, money supports trade in a world without enforcement and, in particular, in large societies, where gift-exchange is unsustainable. It is demonstrated that, in fact, monetary equilibrium breaks down in the absence of adequate enforcement institutions and it collapses as societies that lack external enforcement grow large. This unique result is derived by unveiling the existence of a tacit enforcement assumption in the literature that explains the advantages from monetary exchange, and by integrating monetary theory with the theory of repeated games and social norms.

Economic Voting, Sociotropic Vs. Checkbook: Cases From Greece And Germany, Matthew Coen-Tuff

Political Science Theses and Capstones

Economic voting, the theory that when the economy is good the party in control gains support and when the economy is bad the party in power suffers. This is a simplistic definition and economic voting is so much more. In this paper I seek to prove how economic voting can be broken down into two categories, sociotropic and checkbook. I do this by looking at two countries in very different situation. Greece is a country going through economic turmoil and is constantly changing which party is in control of the government. It has been suffering especially hard from a debt …

A Theory Of Aggregate Consumption, Yun K. Kim, Mark Setterfield, Yuan Mei

Research Collection School Of Economics

We develop a Keynesian model of aggregate consumption. Our theory emphasizes the importance of the relative income hypothesis and debt finance for understanding household consumption behavior. It is shown that particular importance attaches to how net debtor households service their debts, and that the treatment of debt-servicing commitments as a substitute for savings by these households creates the potential for 'sudden stops' in consumption spending (and hence aggregate demand).

An Analysis Of Risk-Taking Behavior For Public Defined Benefit Pension Plans, Nancy Mohan, Ting Zhang

Economics and Finance Faculty Publications

This paper presents the first comprehensive study on the determinants of public pension fund investment risk and reports several new important findings. Unlike private pension plans, public funds undertake more risk if they are underfunded and have lower investment returns in the previous years, consistent with the risk transfer hypothesis. Furthermore, pension funds in states facing fiscal constraints allocate more assets to equity and have higher betas. There also appears to be a herding effect in that CalPERS equity allocation or beta is mimicked by other pension funds. Finally, our results suggest that government accounting standards strongly affect pension fund …

Interim Equilibrium Implementation, Takashi Kunimoto

Research Collection School Of Economics

A social choice rule is said to be implementable if one can design a mechanism(or institution) in which the set of outcomes prescribed by a given solutionconcept coincides with that specified by the social choice rule. I adoptinterim equilibrium (i.e., Bayesian Nash equilibrium where each agent’s interimbeliefs do not necessarily admit a prior) as the solution concept andinvestigate the corresponding implementation problem in general incompleteinformation environments. I identify arguably the weakest set of conditionsunder which implementation in interim equilibrium is possible. By doingso, I also unify the literature of the so-called Bayesian implementation andNash implementation.

Mountain Monitor - 4th Quarter 2013, Kenan Fikri, Mark Muro

Mountain Monitor Quarterly

The quarter’s Mountain Monitor finds that the pace of economic recovery in the Mountain West region’s major metropolitan areas converged toward that of the rest of the nation in the last quarter of 2013.

While quarterly performance on the Monitor’s four indicators of economic recovery—employment, output, the unemployment rate, and house prices—varied considerably across the 10 major metro areas of the region, their combined performance broadly slowed to track with the rate of national economic recovery. The quarter’s average job growth remained unchanged in the region at 0.4 percent as the national economy caught up. The gap between the national …

Innovation And Optimal Punishment, With Antitrust Applications, Keith N. Hylton, Haizhen Lin

Faculty Scholarship

This article modifies the optimal punishment analysis by incorporating investment incentives with external benefits. In the models examined, the recommendation that the optimal penalty should internalize the marginal social harm is no longer valid. We focus on antitrust applications. In light of the benefits from innovation, the optimal policy will punish monopolizing firms more leniently than suggested in the standard static model. It may be optimal not to punish the monopolizing firm at all, or to reward the firm rather than punish it. We examine the precise balance between penalty and reward in the optimal punishment scheme.

Contingent Valuation Methodology: Evaluation Of Benefits Of Improving Water Quality In The Lake Tai Region, Zongda Tu

Undergraduate Economic Review

Environmental economics is a relatively new field in the subject of economics. While the developing countries are growing and developing rapidly, the conflict between economic development and environmental preservation is becoming more and more irreconcilable. This methodology paper addresses the relationship between the water quality in the Lake Tai Region in China and economic benefits, and presents the contingent valuation methdology (CVM) to evaluate benefits.

An Analysis Of The Appreciation Of The Chinese Currency And Influences On China's Economy, Lina Ma

Electronic Theses and Dissertations

In recent years, China's economy development has had more and more impact on the global economy. The Chinese currency continued to appreciate since 2005, which has had both positive and negative results on Chinese's economy. The Chinese government uses the monetary policy to control the inflation pressure, which could work counter to Chinese exchange rate policy. RMB appreciation also has some effects on the Chinese banking system. Through the Global Trade Analysis Project (GTAP), a global computable general equilibrium model, we analyze how, when there is RMB appreciation, the Chinese exports and imports, and Chinese employment and income inequality react. …

Horizontal Product Differentiation In Auctions And Multilateral Negotiations, Charles J. Thomas, Bart J. Wilson

Economics Faculty Articles and Research

We experimentally compare first-price auctions and multilateral negotiations after introducing horizontal product differentiation into a standard procurement setting. Both institutions yield identical surplus for the buyer, a difference from prior findings with homogeneous products that results from differentiation's influence on sellers' pricing behaviour. The data are consistent with this finding being driven by concessions from low-cost sellers in response to differentiation reducing their likelihood of being the buyer's surplus-maximizing trading partner. Further analysis shows that introducing product differentiation increases the intensity of price competition among sellers, which contrasts with the conventional wisdom that product differentiation softens competition.

Understanding The Distributional Impact Of Long-Run Inflation, Gabriele Camera, Yili Chen

Economics Faculty Articles and Research

The impact of fully anticipated inflation is systematically studied in heterogeneous agent economies with an endogenous labor supply and portfolio choices. In stationary equilibrium, inflation nonlinearly alters the endogenous distributions of income, wealth, and consumption. Small departures from zero inflation have the strongest impact. Three features determine how inflation impacts distributions and welfare: financial structure, shock persistence, and labor supply elasticity. When agents can self-insure only with money, inflation reduces wealth inequality but may raise consumption inequality. Otherwise, inflation reduces consumption inequality but may raise wealth inequality. Given persistent shocks and an inelastic labor supply, inflation may raise average welfare. …

Fair And Impartial Spectators In Experimental Economic Behavior, Vernon L. Smith, Bart J. Wilson

Economics Faculty Articles and Research

Our primary purpose in this article is to draw upon the literature of classical liberal economy to show how it informs and is informed by the results from experimental economics. Adam Smith's first great book, The Theory of Moral Sentiments, serves as our chief source of insights for understanding and interpreting modern laboratory research in terms of the conventions that govern human conduct in personal exchange.~ At the same time, we wish to demonstrate how today's economic experiments elucidate a reading of Adam Smith.

Speculative Tech: The Bitcoin Legal Quagmire & The Need For Legal Innovation, Paul H. Farmer Jr.

Journal of Business & Technology Law

No abstract provided.

Essays In Fiscal Policy, Edmund Lawrence Matecki

Wayne State University Dissertations

Fiscal policy is investigated in two settings. First, a fully identified neoclassical growth model with rich fiscal policy rules is augmented with non-Ricardian consumers and fit to post-war U.S. data using Bayesian techniques. Allowing transfer payments to directly affect the consumption choices of rule-of-thumb agents permits a new interpretation of time series evidence regarding which fiscal instruments have historically financed government debt. The economic impact of fiscal adjustments is studied for two labor supply specifications. The first specification restricts labor supply by equalizing hours worked across household types. The second relaxes this assumption, allowing for intratemporal optimization by non-Ricardian households. …

Effort And Performance: What Distinguishes Interacting And Noninteracting Groups From Individuals?, Tibor Besedeš, Cary Deck, Sarah Quintanar, Sudipta Sarangi

Economics Faculty Articles and Research

We study how group membership affects behavior both when group members can and cannot interact with each other. Our goal is to isolate the contrasting forces that spring from group membership: a free-riding incentive leading to reduced effort and a sense of social responsibility that increases effort. In an environment with varying task difficulty and individual decision making as the benchmark, we show that the free-riding effect is stronger. Group members significantly reduce their effort in situations where they share the outcome but are unable to communicate. When group members share outcomes and can interact, they outperform groups without conmmnication …

The Coordination Value Of Monetary Exchange: Experimental Evidence, Gabriele Camera, Marco Casari

Economics Faculty Articles and Research

What institutions can sustain cooperation in groups of strangers? Here we study the role of monetary systems. In an experiment, subjects sometimes needed help and sometimes could incur a cost to help an anonymous counterpart. In the absence of money, the intertemporal exchange of help, which could be supported by a norm of community punishment of defectors, did not emerge. Introducing intrinsically worthless tokens substantially altered patterns of behavior. Monetary trade emerged, which increased predictability of play and promoted cooperation when strangers could trade help for a token.

A Tractable Analysis Of Contagious Equilibria, Gabriele Camera, Alessandro Gioffré

Economics Faculty Articles and Research

This paper studies contagious equilibrium in infinitely repeated matching games. The innovation is to identify a key statistic of contagious punishment that, used together with a recursive formulation, generates tractable closed-form expressions for continuation payoffs, off equilibrium. This allows a transparent characterization of the dynamic incentives created by contagious punishment schemes.

Uniqueness Of Equilibrium In Directed Search Models, Jaehong Kim, Gabriele Camera

Economics Faculty Articles and Research

We study a decentralized trading model as in [7], where a finite number of heterogeneous capacity-constrained sellers compete for a finite number of homogeneous buyers, by posting prices. This "directed search" model is known to admit symmetric equilibria; yet, uniqueness has proved elusive. This study makes two contributions: a substantive contribution is to establish uniqueness of symmetric equilibrium; a methodological contribution is to develop a tool based on directional derivatives to characterize equilibrium.

Short-Run Price Dynamics In Guatemala, Miguel R. Martinez

Open Access Theses & Dissertations

An equation is estimated to model short-run price dynamics for Guatemala using ordinary least squares. The data range from 1960 to 2012. Due to the lack of complete data for interest rates, fitted values for the deposit rate are calculated using the discount rate. The aim is to measure how the consumer price index responds to changes in monetary base, real output, interest rates and exchange rates. All coefficients have their expected signs. With the exception of real output, the coefficients are found to be statistically significant at a 5% confidence level.

Words Worth Price And Value, Tom Dunne

Articles

TOM DUNNE explains the terms used in relation to the valuation of property, and the need for common understanding among all parties using those terms. -