A model of boundedly rational “neuro” agents

We consider a model in which each agent in a population chooses one of two options. Each agent does not know what the available options are and can choose an option only after observing another agent who has already chosen that option. In addition, the agents’ preferences over the two options are correlated. An agent can either imitate an observed agent or wait until he meets two agents who made different choices, in which case he can compare their choices and choose accordingly. A novel feature of the model is that agents observe not only the choices made by others, but also some information about the process that led them to those choices. We study two cases: In the first, an agent notes whether the observed agent imitated others or whether he actually compared the available alternatives. In the second, an agent notes whether the observed agent’s decision was hasty or not. It is shown that in equilibrium the probability of making a mistake is higher in the second case and that the existence of these nonstandard “neuro” observations systematically biases the equilibrium distribution of choices.     

Rural versus urban preferences for renewable energy developments

Development of renewable energy resources, such as wind farms and hydro-electric schemes, are being promoted as a new method of expanding and diversifying employment in rural areas. However, such energy projects are associated with a range of environmental impacts which might be detrimental to other economic activities, such as those based on nature tourism. The authors use a Choice Experiment to quantify peoples' preferences over environmental and employment impacts that may result from the deployment of renewable energy projects in rural areas of Scotland, focussing in particular on any differences between the preferences of urban and rural dwellers, and on heterogeneity within these groups. Rural and urban households are shown to have different welfare gains which are dependent on the type of renewable energy technology and on the scale of project under consideration.     

Debates and Decisions: On a Rationale of Argumentation Rules

We view a debate as a mechanism by which an uninformed decision maker (the listener) extracts information from two informed debaters, who hold contradicting positions regarding the right decision. During the debate, the debaters raise arguments and, based on these arguments, the listener reaches a conclusion. Using a simple example, we investigate the mechanism design problem of constructing rules of debate that maximize the probability that the listener reaches the right conclusion, subject to constraints on the form and length of the debate. It is shown that optimal debate rules have the property that the conclusion drawn by the listener is not necessarily the same as the conclusion he would have drawn, had he interpreted the information, revealed to him or her during the debate, literally. The optimal design of debate rules requires that the information elicited from a counterargument depends on the argument it counterargues. We also link our discussion with the pragmatics literature. Journal of Economic Literature Classification Numbers: C72, D78.     

Simple estimators for the parameters of discrete dynamic games (with entry/exit examples)

We estimate parameters from data on discrete dynamic games, using entry/exit games to illustrate. Semiparametric first‐stage estimates of entry and continuation values are computed from sample averages of the realized continuation values of entrants and incumbents. Under certain assumptions, these values are easy‐to‐compute analytic functions of the parameters of interest. The entry and continuation values are used to determine the model's predictions for entry and exit conditional on the parameter vector, and the estimates compare these predictions with the data on entry and exit rates. Small‐sample properties are discussed and lead to the simplest of estimators.     

The world economy,external debt and prospects for development financing

This paper provides an overview of the evolution of the industrial economies in the 1960s, with particular attention to the factors which gave rise to the economic crisis of recent years. The effects of this international economic instability on the developing economies is then considered, especially the weakening of their balance-of-payments position which has increased their dependence on external finance. The author indicates that the developing countries' growing reliance on credits from private international banks gives cause for concern and he proceeds to make some suggestions for other mechanisms of development financing.     

Recession, inflation and the international monetary system

The difficult circumstances being faced by the world economy and its uncertain prospects for the 1980s make it necessary to take a new look at the present financial mechanisms and international institutions for monetary cooperation, with a view to adapting them to current needs and to developments in the near future. The industrial countries will have more modest rates of growth than in earlier decades, and this will have significant consequences for the developing countries: (a) stagnation of official development aid flows; (b) possible intensification of protectionist trends; (c) slow growth of producers of raw materials whose export markets will be seriously limited; (d) gradual shift of world economic and political activity toward oil-producing developing countries and, to a lesser extent, toward the exporters of manufacturers; (e) industrial countries and raw materials producers will become increasingly interdependent; (f) oil-producing and other higher income developing countries will increase their participation in regional economic cooperation and official development aid efforts. Some of the more specific problems which require attention from the international community are inflation and recession; structural disequilibria, recycling and external debt; adjustment process; creation of liquidity and transfer of resources; and participation of the developing countries in the monetary system.     

Process and context in choice models

We develop a general framework that extends choice models by including an explicit representation of the process and context of decision making. Process refers to the steps involved in decision making. Context refers to factors affecting the process, focusing in this paper on social networks. The extended choice framework includes more behavioral richness through the explicit representation of the planning process preceding an action and its dynamics and the effects of context (family, friends, and market) on the process leading to a choice, as well as the inclusion of new types of subjective data in choice models. We discuss the key issues involved in applying the extended framework, focusing on richer data requirements, theories, and models, and present three partial demonstrations of the proposed framework. Future research challenges include the development of more comprehensive empirical tests of the extended modeling framework.     

New-structuralist exchange-rate policy and the pattern of specialization in Latin American countries

The present article critically examines the transmission channels from real exchange rate undervaluation to output growth adduced by New-Structuralism (NS). To this end, we slightly modify new-structuralist canonical model for small open peripheral economies, and make the underlying productive structure depend on income distribution. This allows us both to discuss: (a) the limits of the transmission channels adduced by NS in their own terms, that is, under the assumption that the tradable sector is the modern sector; and (b) the further limitations of these channels when the pattern of trade is more suitable to characterize Latin American countries, whose tradable sector mainly exports primary goods under conditions of differential rent. We conclude that the channels work under highly restrictive assumptions, and therefore the alleged positive relationship between real exchange rate and growth cannot be generally ascertained.