Fake Sales: A Dynamic Pricing Perspective

Some sellers display high “regular” prices, but mark down these prices the vast majority of the time, advertising the good as “on sale” or “discounted”. This note suggests a framework for understanding the practice, emphasising the role of buyer uncertainty about their future valuations for the good. We argue that so‐called “regular” prices set buyers’ expectations regarding future prices, expectations that need not be tethered to the prices actually set. By manipulating upwards buyers’ expectations of future prices, the seller can increase demand for the good at the current “sale” price, increasing profits.     

Specialists and citizens all: A reply to Boettke,Koppl, and Holcombe

Peter Boettke (2007) argues that economists need not act pluralistically in order for pluralism to thrive in the marketplace of economic ideas. From a market process perspective, Boettke sees intellectual diversity and openness as catallactic outputs, not inputs—emergent by-products of academic specialization and trade. To expect individual scholars to behave in a pluralistic manner is unnecessary and “completely inappropriate” since it detracts from their central task: “to commit themselves to an approach and pursue it doggedly, even in the face of great doubt and resistance by one’s peers” (Boettke 2007). This paper proposes a Smithian revision of Boettke’s position. The author argues that scholarly pluralism is best understood as a constitutional rule of academic life—a virtue ethic that promotes learning and intellectual freedom by mitigating tyranny and autarky in the republic of science. Drawing from the writings of Adam Smith, Friedrich Hayek, Deirdre McCloskey, Bruce Caldwell, James Buchanan, Don Lavoie, and Boettke himself, the author argues that scholarly pluralism has been, and continues to be, a necessary condition for the flourishing of Austrian economists as free, responsible, efficacious thinkers.     

Einzelbesprechungen

Ohne ZusammenfassungÜbersetzt von Gerhard Tintner, WienÜbersetzt von Ragnar Nurkse, z. Zt. Wienaus dem Italienischen übersetzt von Dr. Hans Fried, WienÜbersetzt von Paul Brüll, Wien.Aus dem Italienischen übersetzt von Dr. Hans Fried.     

Environmental Valuation with Imperfect Information The Case of the Random Utility Model

This paper considers welfare analysis with therandom utility model (RUM) when perceptions ofenvironmental quality differ from objectivemeasures of environmental quality. Environmental quality is assumed to be anexperience good, so that while perceptions ofquality determine choices, ex postutility is determined by objective quality. Given this assumption, I derive a measure ofthe welfare impact of changes in environmentalquality, and I show how this new welfaremeasure differs from the traditional welfaremeasure developed by Hanemann (1982). This newwelfare measure provides an approach tomeasuring the value of information aboutenvironmental quality within the framework ofthe random utility model.     

Back to Buchanan? Explorations of welfare and subjectivism in behavioral economics

In light of behavioral findings regarding inconsistent individual decision-making, economists have begun to re-conceptualize the notion of welfare. One prominent account is the preference purification approach (PP), which attempts to reconstruct preferences from choice data based on a normative understanding of neoclassical rationality. Using Buchanan’s notion of creative choice, this paper criticizes PP’s epistemic, ontological, and psychological assumptions. It identifies PP as a static position that assumes the satisfaction of given ‘true preferences’ as the normative standard for welfare. However, following Buchanan, choice should be understood dynamically as a process whereby preferences constantly regenerate. Accordingly, the meaning of welfare emerges from an ongoing quest for individual self-constitution. If this holds true, then rationality axioms cannot serve as a priori normative standards. Instead, creative imagination and learning processes must remain central to any understanding of welfare in economics.     

A functional approach for studying technological progress: Extension to energy technology

This paper extends a broad functional category approach for the study of technological capability progress recently developed and applied to information technology to a second key case—that of energy based technologies. The approach is applied to the same three functional operations—storage, transportation and transformation—that were used for information technology by first building a 100 plus year database for each of the three energy-based functional categories. In agreement with the results for information technology in the first paper, the energy technology results indicate that the functional approach offers a stable methodology for assessing longer time technological progress trends. Moreover, similar to what was found with information technology in the first study, the functional capability for energy technology shows continual—if not continuous—improvement that is best quantitatively described as exponential with respect to time. The absence of capability discontinuities—even with large technology displacement—and the lack of clear saturation effects are found with energy as it was with information. However, some key differences between energy and information technology are seen and these include:

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Lower rates of progress for energy technology over the entire period: 19-37% annually for Information Technology and 3-13% for Energy Technology.

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Substantial variability of progress rates is found within given functional categories for energy compared to relatively small variation within any one category for information technology. The strongest variation is found among capability progress among different energy types.

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More challenging data recovery and metric definition for energy as compared to information technology.

These findings are interpreted in terms of fundamental differences between energy and information including the losses and efficiency constraints on energy. We apply Whitney's insight that these fundamental differences lead to naturally modular information technology artifacts. The higher progress rates of information-based as opposed to energy-based technologies follows since decomposable systems can progress more rapidly due to the greater ease of independent as opposed to simultaneous development. In addition, the broad implications of our findings to studies of the relationships between technical and social change are briefly discussed.     

The process of entrepreneurial action at the base of the pyramid in developing countries: a case of vegetable farmers in Benin

The assumption that entrepreneurship is a critical factor in expanding employment, creating wealth and contributing to poverty alleviation at the base of the pyramid (BoP) in developing countries has led to the development of many initiatives to strengthen the entrepreneurial activities of poor people. Despite the fact that entrepreneurship is seen as a strategy in combatting poverty, the process that leads to entrepreneurial action in a BoP context is still unclear. In this paper, we illustrate the possibilities a multi-layered perspective offers to understand the complexity of entrepreneurship in poverty settings. Based on five focus group discussions and 36 in-depth interviews with vegetable farmers in Benin, we examined the entrepreneurship of poor people. We learned that entrepreneurial action is the nexus of individual and exogenous factors in complex relationships. Based on this, we elaborate on the characteristics of the process model of entrepreneurial action. We provide a process-based view of entrepreneurship at the BoP, suggesting a need for consistency between individual, behavioural strategies and contextual elements. We discuss the implications of our findings for BoP practice and provide a framing perspective that we hope will encourage a greater focus on the complexity of entrepreneurship phenomenon.     

The architecture of R&D joint projects: the social network analysis approach

This paper examines the effect of network properties on the performance R&D joint projects. In particular, we examine the impact of network cohesion, diversity and shape on the performance of these of exploration and exploitation R&D projects. We test these measures using data on projects from European R&D networks developed under the framework of Eureka projects. The empirical results indicated some network properties enhance the project’s performance and these differ depending on the kind of technological project developed. Our results suggest a lower heterogeneity, greater cohesion and network centralisation in exploitation than in exploration projects. Our findings show different types of structures depending on the aim of the joint project and that there exist different degrees of cohesion between the partners that comprise the core and the peripheral nodes.