Agreeing to disagree in a countable space of equiprobable states of nature

An example is given in which agents agree to disagree in a countable space of equiprobable states of nature. Even in this unorthodox setting, if the sets of the information partitions are intervals, an agreement theorem holds. A result that describes the margin for disagreement is also obtained.     

Darwinism in economics: from analogy to continuity

Currently there is an ongoing discussion about how Darwinian concepts should be harnessed to further develop economic theory. Two approaches to this question, Universal Darwinism and the continuity hypothesis, are presented in this paper. It is shown whether abstract principles can be derived from Darwin’s explanatory model of biological evolution that can be applied to cultural evolution. Furthermore, the relation of the ontological basis of biological and cultural evolution is clarified. Some examples illustrate the respective potential of the two approaches to serve as a starting-point for theory development.

Darwinism in economics: from analogy to ontology

Several social scientists, including ‘evolutionary economists’, have expressed scepticism of ‘biological analogies’ and rejected the application of ‘Darwinism’ to socio-economic evolution. Among this group, some have argued that self-organisation is an alternative to biological analogies or Darwinism. Others have seen ‘artificial selection’ as an alternative to natural selection in the socio-economic sphere. Another objection is that Darwinism excludes human intentionality. It is shown that all these objections to ‘biological analogies’ and ‘Darwinism’ are ungrounded. Furthermore, Darwinism includes a broad theoretical framework for the analysis of the evolution of all open, complex systems, including socio-economic systems. Finally and crucially, Darwinism also involves a basic philosophical commitment to detailed, cumulative, causal explanations. For these reasons, Darwinism is fully relevant for economics and an adequate evolutionary economics must be Darwinian, at least in these fundamental senses. However, this does not undermine the need for auxiliary theories and explanations in the economic domain.     

Evolutionary developmental economics: how to generalize Darwinism fruitfully to help comprehend economic change

Darwinism is shown possible to generalize fruitfully to help comprehend economic change by drawing on evolutionary developmental biology (“evo–devo”)—its recent version, less concerned with replication of genes than with genomic instructing of development of organisms. The result is a conceptual model with multilevel applications, generalizing development as instructed self-organizing with inputs from environments, and evolution as experimental search for instructions making the development successful. Its economic interpretation suggests to unite several existing fields into evolutionary developmental economics, where economic change can be studied comprehensively as development instructed by actual institutional rules, intertwined with the evolution of these rules.     

Gaids: a generalised version of the almost ideal demand system

AIDS is a popular model in empirical demand literature. In this paper a generalised version of AIDS (GAIDS) is presented, estimated and statistically tested. Evidence from Italian household data suggests rejection of AIDS, also when demographic effects are considered.     

In search of general evolutionary principles: Why Darwinism is too important to be left to the biologists

Bioeconomics emphasizes the common ontological ground between economics and biology. However, this does not necessarily mean that both disciplines collapse into one. Instead it is proposed here that Darwinism provides a general, meta-theoretical framework for dealing with complex evolving systems, consisting of populations of varied and replicating entities, which are found in both nature and human society. There is no alternative to the core Darwinian principles of variation, selection and inheritance to explain the evolution of such systems. Neither the actual existence of human intentionality, nor the hypothetical existence of Lamarckian processes of acquired character inheritance, offer a barrier to the use of Darwinian explanations. However, while Darwinian principles are always necessary to explain complex evolving population systems, they are never sufficient on their own. Such a generalized Darwinism can accommodate several different stances found in the literature on bioeconomics and elsewhere.      

Agreeing to pay under value disagreement: Reconceptualizing preference transformation in terms of pluralism with evidence from small-group deliberations on climate change

Plural values contribute to multiple arrays of expressed preferences. Conventionally, preference convergence toward consensus among initially disagreeing decision makers is understood in terms of diminishing value differences. A cogent account of consensual decision that respects non-diminishing value plurality is lacking. Instead there is a theoretic expectation for categorical consistency between subjective values and expressed preferences. Valuing agents in social interaction are expected to indicate identical preference orderings only if they hold correspondingly identical categories of values. This expectation precludes meaningful conceptualization of preference convergence under divisive normative dispositions. An alternative framework is proposed and illustrated by results from a designed deliberative forum on Australia's climate change policy. Data were analyzed based on Q methodology. Results show that small-group deliberations enabled effective communication between distinctive subjective positions and broadened understandings between individuals. While a consensual decision gained progress, no identified value discourse diminished below a significant degree. Observed changes in values did not run parallel to the converging preferences, suggesting a decline in value-preference consistency. These changes nonetheless are amenable to the principle of value pluralism. An alternative rationality concept is needed to account for this moral ideal within economics.     

Reassessing welfare reform data: a response to cherry

Abstract

This is a response to Robert Cherry's comment on the article, “Welfare as We [Don't] Know It: A Review and Feminist Critique of Welfare Reform Research” that appeared in the 10(2) issue of Feminist Economics. This response argues that while some combination of welfare reform, the booming economy in the late 1990s, and changes in economic policy all worked together to decrease caseloads and increase employment rates among welfare leavers, these are incomplete measures of the impact of welfare reform on the lives of lone mothers. This paper also argues that the effects of welfare reform on lone mothers are more mixed than Cherry acknowledges. This paper concludes that when one holistically examines low-income lone mothers' lives, it is premature to declare welfare reform a success.     

In defense of a libertarian welfare state: response to Michael Shermer

Mr. Shermer worries that once we empower any organization to employ the force of law to mandate collective action of any kind, we will have embarked on a slippery slope to a totalitarian state that will destroy every liberty we cherish. This concern is overblown. Governments have been mandating collective action since the dawn of recorded history. And although history does, in fact, include a considerable number of brutally totalitarian states, people around the world clearly enjoy much greater liberty today, on balance, than they ever have.     

The response of household debt to income inequality shocks: a heterogeneous approach

This article explores the impact of changes in income inequality on household indebtedness using Pedroni's heterogeneous panel VAR. As a result, we find evidence in support of large cross-country heterogeneity in the responses of household leverage to income inequality shocks. We also find that such heterogeneity stems from differences in the strength of financial regulations and supervision.     

Household response to dynamic pricing of electricity: a survey of 15 experiments

Since the energy crisis of 2000–2001 in the western United States, much attention has been given to boosting demand response in electricity markets. One of the best ways to let that happen is to pass through wholesale energy costs to retail customers. This can be accomplished by letting retail prices vary dynamically, either entirely or partly. For the overwhelming majority of customers, that requires a change out of the metering infrastructure, which may cost as much as $40 billion for the US as a whole. While a good portion of this investment can be covered by savings in distribution system costs, about 40% may remain uncovered. This investment gap could be covered by reductions in power generation costs that could be brought about through demand response. Thus, state regulators in many states are investigating whether customers will respond to the higher prices by lowering demand and if so, by how much. To help inform this assessment, this paper surveys the evidence from the 15 most recent pilots, experiments and full-scale implementations of dynamic pricing of electricity. It finds conclusive evidence that households respond to higher prices by lowering usage. The magnitude of price response depends on several factors, such as the magnitude of the price increase, the presence of central air conditioning and the availability of enabling technologies such as two-way programmable communicating thermostats and always-on gateway systems that allow multiple end-uses to be controlled remotely. In addition, the design of the studies, the tools used to analyze the data and the geography of the assessment influence demand response. Across the range of experiments studied, time-of-use rates induce a drop in peak demand that ranges between 3 and 6% and critical-peak pricing (CPP) tariffs induce a drop in peak demand that ranges between 13 and 20%. When accompanied with enabling technologies, the latter set of tariffs lead to a reduction in peak demand in the 27–44% range.     

The response to incentives and contractual efficiency: Evidence from a field experiment

We use data from a field experiment to estimate worker reaction to incentives and the optimality of piece-rate contracts. Our estimate of the elasticity of output with respect to piece rates is 0.39. Regression methods cannot predict performance under hypothetical contracts. Therefore, we apply structural econometric methods (without imposing profit maximization) to evaluate observed-contract optimality. Using profit as a metric, we estimate the distance between observed and profit-maximizing contracts to be negligible. This suggests that observed contracts closely approximate optimal contracts under asymmetric information about worker ability. Under complete information, the firm could increase expected profits by 14 percent keeping workers indifferent to the observed piece-rate contract. Profits could increase between 44 and 49 percent if the firm exploited information about ability to reduce worker utility to the outside alternative.     

Lender deception as a response to moral hazard

The paper considers a principal–agent relationship between a borrower and lender based on a model from Bowles (Microeconomics: behavior, institutions, & evolution. Princeton University Press, Princeton, 2003). It expands the model by incorporating borrower collateral as an exogenous variable to partly assuage lender concerns about excessive risk, and a theory of lender deception is then developed. Deception is posited as a costly activity that effectively makes fraud undetectable and extracts the borrower’s economic rent arising from moral hazard despite the presence of third-party enforcement and borrower collateral. We identify under what conditions a lender may have sufficient incentives for employing deception and to what extent they would employ it. The likelihood of, and outcomes from, deception are compared between monopoly lenders those in competitive markets. The model suggests that competitive lenders have more incentive to deceive than a monopoly lender facing the same borrower.     

Entrepreneurial response to interstate regulatory competition: evidence from a behavioral discrete choice experiment

Journal of Regulatory Economics - Despite a developing literature exploring the relationship between regulation, taxation and business startups, few studies have utilized artefactual experimental...