Economic Theory Commons^™

Adam Smith: Homo Socialis, Yes; Social Preferences, No; Reciprocity Was To Be Explained, Vernon L. Smith

Economics Faculty Articles and Research

I argue that the authors accept too casually the neo-classical framework of thought that was incapable of predicting choices in 2-person and other experimental games in the 1980s and 1990ss. The ex post hoc hypothesis that social preference can describe homo socialis reduces inevitably to a rescue of neo-classical economics in which Max-U (own payoff, other payoff) substitutes mechanically for Max-U (own payoff) in our personal groupings. This static procedure unnecessarily and inappropriately robs human conduct of its sociality as a process relationship. The model I articulate was masterfully developed by Adam Smith, which back-predicts the results of these earlier …

Does Market Integration Buffer Risk, Erode Traditional Sharing Practices And Increase Inequality? A Test Among Bolivian Forager-Farmers, Michael Gurven, Adrian V. Jaeggi, Christopher Von Rueden, Paul L. Hooper, Hillard Kaplan

ESI Publications

Sharing and exchange are common practices for minimizing food insecurity in rural populations. The advent of markets and monetization in egalitarian indigenous populations presents an alternative means of managing risk, with the potential impact of eroding traditional networks. We test whether market involvement buffers several types of risk and reduces traditional sharing behavior among Tsimane Amerindians of the Bolivian Amazon. Results vary based on type of market integration and scale of analysis (household vs. village), consistent with the notion that local culture and ecology shape risk management strategies. Greater wealth and income were unassociated with the reliance on others for …

Information Propagation In Financial Markets, Garrett A. Mcbrayer

Graduate Theses and Dissertations

This dissertation consists of three essays which examine information flows through financial markets and across firms, and investigates the factors affecting the process of information dissemination. The first essay examines whether the announcement of a credit rating change for a given firm contains information pertinent to the valuations of intra-industry peer firms. I identify an information spillover effect on peer firms surrounding credit rating downgrades. Further, I find that the post-announcement spillover effects are indicative of an overreaction in the market’s response to the downgrade announcement. Peer firms exhibit predictability in their post-announcement returns as a function of their relative …

Mountain Monitor - 1st Quarter 2015, Kenan Fikri, Siddharth Kulkarni

Mountain Monitor Quarterly

This analysis of employment, output, unemployment, and house prices finds that the 10 major metropolitan areas of the Mountain West, despite significant economic headwinds, weathered the first quarter of 2015 with robust economic growth. Eight of the region’s 10 major metro areas advanced on all four metrics of economic performance, and the remaining two metro areas slipped only on a single front.

The national economic slowdown that arrived in early 2015 did not entirely bypass the Mountain West, but the region resisted the drag better than any other. As U.S. economic output contracted by 0.3 percent in the first quarter, …

Working Paper No. 07, Evsey Domar And The Keynesian Tradition, Cesar Maldonado

Working Papers in Economics

This inquiry seeks to establish that Evsey Domar extends Keynes’s thinking and in this manner helps to establish a post-Keynesian tradition. First, I shall consider Keynes’s ideas concerning problems facing market capitalism as appears in his book, The General Theory of Employment, Interest, and Money. Then I shall continue with this inquiry and consider Domar’s insights into expansion and employment and his concerns regarding capital accumulation, as well as his confronting a theory posited by Keynes concerning investment and employment, raising the issue of whether Keynes’s understanding is accurate. The last part of this inquiry deals with Domar’s concerns …

A Royal Problem: Planning Induced Supply Constraints In London, Elizabeth P. Armstrong

Lawrence University Honors Projects

We explore the impact of regulatory supply constraints on house price levels following boom and bust periods in London. We hypothesize that when regulatory restrictiveness increases during a boom period, house prices will be higher in the following year compared to house prices in less restricted areas. We also hypothesize that when regulatory restrictiveness increases during a bust period, house prices will be lower in the following year compared to house prices in less restricted areas. We empirically test our hypothesis using a multilevel mixed-effects model with a panel data set of 32 boroughs of London, ranging from 2001 to …

Depression As Sickness Behavior? A Test Of The Host Defense Hypothesis In A High Pathogen Population, Jonathan Stieglitz, Benjamin C. Trumble, Melissa Emery Thompson, Aaron D. Blackwell, Hillard Kaplan, Michael Gurven

ESI Publications

Sadness is an emotion universally recognized across cultures, suggesting it plays an important functional role in regulating human behavior. Numerous adaptive explanations of persistent sadness interfering with daily functioning (hereafter “depression”) have been proposed, but most do not explain frequent bidirectional associations between depression and greater immune activation. Here we test several predictions of the host defense hypothesis, which posits that depression is part of a broader coordinated evolved response to infection or tissue injury (i.e. “sickness behavior”) that promotes energy conservation and reallocation to facilitate immune activation. In a high pathogen population of lean and relatively egalitarian Bolivian foragerhorticulturalists, …

Public Goods With Punishment & Payment For Relative Rank, Terence C. Burnham

ESI Working Papers

A laboratory experiment designed to investigate the role of relative performance-based payoffs on cooperation in the context of punishment. Subjects play a repeated public goods game with high-powered punishment (50:1) and additional payoffs based on relative performance. Contributions to the public good are nearly maximal. Punishment levels are substantial, higher than the same game without relative rank payoffs, and sufficiently high that total payoffs are negative. The group would make much more money in the same setting without punishment. This study contributes to investigation of the role of altruism in human cooperation.

A Test Of The Household Separation Hypothesis In Rwanda, James E. Anderson

Master's Theses

How does a farm household in rural Africa react when the government decides crop selection? In developing countries, agricultural households strive to optimize a risk mitigating utility function rather than a traditional agricultural production function. These households are termed “non-separated” as their farming efforts are directed towards family food security rather than maximizing agricultural profits. The lack of integration with labor and commodity markets makes these non-separated households difficult to influence with policy initiatives. Various tests for household separation have been developed.

We use a unique dataset from Rwanda to evaluate these separation tests. The data include households forced into …

The Impact Of Offcial Development Assistance On Foreign Direct Investment: Evidence From Vietnam, Hang Pham

Master's Theses

The relationship between Foreign Direct Investment (FDI) and Official Development Assistance (ODA) has not been fully established, nor has its directionality, as evidenced the disagreement among economists. Using existing literature as starting point, I extend its base by examining key causal variables for ODA and FDI within 64 Vietnamese provinces, covering the span from 1998 to 2012. With the most extensive and newest dataset available, I find that ODA attracts more FDI inflows in intermediate term (5year average) and long term (all year average), but not in the short-term. An important policy implication of these results for developing countries, and …

The Impact Of Migration And Remittances On Children's Education In El Salvador, Philip H. Jakob

Master's Theses

The effect that migrant remittances have on school enrollment is a challenging relationship to empirically define, requiring both an analysis of the circumstances that lead a household member to emigrate from their home and equally, but not always independently, how the family makes investment decisions in the education of one or more of their children. This study presents a new strategy to determine the nature of this relationship for households in El Salvador, using a 2SLS estimation with a wealth-stratified panel constructed from household survey data over a nine-year period. Employing this methodology to estimate the combined effects of both …

The Effects Of Quantitative Easing In The United States: Implications For Future Central Bank Policy Makers, Matthew Q. Rubino

Senior Honors Projects, 2010-2019

The purpose of this thesis is to examine the effects of the Federal Reserve’s recent bond buying programs, specifically Quantitative Easing 1, Quantitative Easing 2, Operation Twist (or the Fed’s Maturity Extension Program), and Quantitative Easing 3. In this study, I provide a picture of the economic landscape leading up to the deployment of the programs, an overview of quantitative easing including each program’s respective objectives, and how and why the Fed decided to implement the programs. Using empirical analysis, I measure each program’s effectiveness by applying four models including a yield curve model, an inflation model, a money supply …

Firing Threats: Incentive Effects And Impression Management, Brice Corgnet, Roberto Hérnan-Gonzalez, Stephen J. Rassenti

Economics Faculty Articles and Research

We study the effect of firing threats in a virtual workplace that reproduces features of existing organizations. We show that organizations in which bosses can fire up to one third of their workforce produce twice as much as organizations for which firing is not possible. Firing threats sharply decrease on-the-job leisure. Nevertheless, organizations endowed with firing threats underperformed those using individual incentives. In the presence of firing threats, employees engage in impression management activities to be seen as hard-working individuals in line with our model. Finally, production levels dropped substantially when the threat of being fired was removed, whereas on-the-job …

Do Footprint-Based Cafe Standards Make Car Models Bigger?, Brianna Marie Jean

Economics

Corporate Average Fuel Economy (CAFE) standards have historically been set equal across all manufacturer fleets of the same type. Concerns about varying costs across firms and safety implications of standards that are set homogeneously across firms and models resulted in a policy shift towards footprint-based standards. Under this type of standard, individual car models face targets based on the size of the area between the wheelbase and wheel track, so that larger models face less stringent standards, and manufacturers who make, on average, larger cars will face a lighter fleet standard. Theoretical models have shown that this type of policy …

Robust Determinants Of Bilateral Trade, Marianne Baxter, Jonathan Hersh

Economics Faculty Articles and Research

What are the policies and country-level conditions which best explain bilateral trade flows between countries? As databases expand, an increasing number of possible explanatory variables are proposed that influence bilateral trade without a clear indication of which variables are robustly important across contexts, time periods, and which are not sensitive to inclusion of other control variables. To shed light on this problem, we apply three model selection methods – Lasso reguarlized regression, Bayesian Model Averaging, and Extreme Bound Analysis -- to candidate variables in a gravity models of trade. Using a panel of 198 countries covering the years 1970 to …

A New Approach To Measuring Poverty In The United States: A Household's Ability To Consume, David Ashelman

Applied Economics Theses

The definition of poverty is a social construct. As such, quantitatively measuring poverty is problematic, and creates ineffective poverty-alleviation policy. This thesis examines the historical measure of poverty in the United States, compares U.S. poverty measurements to Great Britain and Canada, and then proposes a new way to measure poverty. Instead of measuring income as the defining factor of poverty, the new poverty measurement suggested eliminates income factors and focuses on a household’s ability to consume in a non-comparative manner. When quantifying a household’s ability to consume, implications arise in economic policy for anti-poverty programs, defining the middle class, minimum …

Economic Impacts Of The Fifa World Cup In Developing Countries, Mirele Matsuoka De Aragao

Honors Theses

Hosting mega events, which have traditionally been a privilege of developed nations, became an attainable goal for developing countries starting in 2008. This might seem to be a positive step, but there are speculations concerning the real benefits and expenses those games generate. The aim of this thesis is to investigate if it is recommendable for a developing country to host a World Cup. This question is answered through an analysis of the two previous World Cups in South Africa (2010) and Brazil (2014). The research involves comparing before and after data for both countries on government expenditure, labor market, …

Better Lucky Than Good: The Role Of Information In Other-Regarding Preferences, Matthew J. Mcmahon

Economics & Finance Faculty Publications

There is anecdotal evidence that people often treat income earned by effort differently than that gained by luck, yet economists often overlook this distinction. Furthermore, others’ income sources may often be (at least partially) obfuscated. I adapt a common inequality aversion model to allow for income distinction by source, both for own income and others’, and for uncertainty over others’ sources. I empirically test resulting hypotheses in a dictator game experiment wherein subjects gain income via both effort and luck. Dictators know recipients’ income by source in control, but only total income in treatment. I find that partially informed dictators …

Benefits Of Eu Membership For The Transition Countries: The Case Of Latvia, Marko Martinovic

Economics Honors Projects

This paper estimates the benefits of EU membership for Latvia, a former communist country and a member of the former USSR. It is widely believed that the EU membership significantly contributes to raising living standards and growth of the economies of new members. Using counterfactual analysis with the official date of accession of 2003 I find that Latvia demonstrates stronger economic growth from the EU membership, but only up to 2009. After the 2009 financial crisis Latvia’s economic growth is severally compromised as a consequence of joining the EU. When 1999 is treated as the treatment year, the year when …

Inefficiency In The Shadow Of Unobservable Reservation Payoffs, Madhav S. Aney

Research Collection School Of Economics

This paper considers the problem of allocating an object between two players in an environment with one sided asymmetric information when their reservation payoffs depend on the type of the informed player, causing the reservation payoff of the uninformed player to be unobservable to her. Inefficiency arises naturally in this setting and can be characterized by a simple condition on the reservation payoffs that is necessary and sufficient. I derive the necessary and sufficient condition for the existence of an implementable allocation that at least weakly dominates the reservation payoffs. Under a mild assumption on the distribution of types, I …