Procrastination, Obedince, and Public Policy: The Irrelevance of Salience

A bstract . Modern economics assumes that individuals are rational maximizers, who, in the presence of costly information , sometimes make mistakes. Recently, George Akerlof has challenged this presumption. He proposes that people sometimes fail to maximize their long-run utility , due to the phenomenon of "salience." This refers to the alleged systematic distortion in individual perception where events closer to a person (in time and in space) seem bigger and more important than they really are. The salience phenomenon is claimed to interfere with the process of rational maximization , rendering some individual choices, in effect, irrational. This paper subjects Akerlof's suggestion to critical scrutiny. It is argued that the examples Akerlof offers of the effect of salience are not the anomalies he claims but instead represent behaviors which can be readily explained within the framework of the standard economic model. All of his major examples are considered in this light and it is suggested that the work of Israel Kirzner holds more promise for improving the analytical power of the standard economic model than does the idea of salience.     

An alternative proof for the linear utility representation theorem

Summary The paper presents an alternative short proof for the linear utility representation theorem. In particular a generalization of the theorem of Blackwell and Girshick (1954) and a special case of the theorem of Herstein and Milnor (1953) are proved by exploiting the topological group structure of finite-dimensional Euclidean vector space.I thank two careful referees for their helpful remarks.     

IX. Geld und kapital

Ohne Zusammenfassung     

The Service Sector is Also Productive

Does growth come from manufacturing or services? Walter Eltis, Director General of NEDO, and Andrew Murfin, argue there is no evidence that manufacturing is more important as a source of economic growth than services.     

Incentive monotonicity and equilibrium selection in 2×2 matrix games

For the class of 2×2 matrix games with two strict Nash equilibria the paper introduces an equilibrium refinement called incentive monotonicity. It selects the risk-dominant equilibrium if interests are conflicting, while it remains silent in games with common interests. These results suggest that the equilibrium-selection problem might be more difficult in games with common interests, which is certainly the case if risk dominance and payoff dominance go in opposite directions.     

Lösung eines Maschinen-Reihenfolge-Problems von Thompson mit Hilfe eines lexikographischen Suchalgorithmus

Ohne Zusammenfassung