Globalization, Poverty and Inequality: What Is the Relationship? What Can Be Done?

globalization, inequality, international organization, poverty

Consumer Cognition and Pricing in the 9's in Oligopolistic Markets

The paper fully characterizes the Bertrand equilibria of oligopolistic markets where consumers may ignore the last (i. e. the right-most) digits of prices. Consumers, in this model, do not do this reflexively or out of irrationality, but only when they expect the time cost of acquiring full cognizance of the exact price to exceed the expected loss caused by the slightly erroneous amounts that is likely to be purchased or the slightly higher price that may be paid by virtue of ignoring the information concerning the last digits of prices. It is shown that in this setting there will always exist firms that set prices that end in nine though there may also be some (non-strict) equilibria where a non-nine price ending occurs. It is shown that all firms earn positive profits even in Bertrand equilibria. The model helps us understand in what kinds of markets we are most likely to encounter pricing in the 9’s.

The Mechanics of Central Bank Intervention in Foreign Exchange Markets

Central banks in developing countries, wanting to devalue the domestic currency, usually intervene in the foreign exchange market by buying up foreign currency using domestic money--often backing this up with sterilization to counter inflationary pressures. Such interventions are usually effective in devaluing the currency but lead to a build up of foreign exchange reserves beyond what the central bank may need. The present paper analyzes the 'mechanics' of such central bank interventions and, using techniques of industrial organization theory, proposes new kinds of interventions which have the same desired effect on the exchange rate, without causing a build up of reserves.

Identity and altruism: The Moral basis of prosperity and oppression

Much of economics is built on the assumption of individuals being driven by self-interest and economic development as an outcome of the free play of such individuals. On the few occasions that economics recognizes the role of altruism and trust, the tendency is to build these from the axiom of individually selfishness. The aim of this paper is to break away from this individualistic tradition and to treat as a primitive that individuals have hard-wired in them the `cooperative spirit', which allows them often to work in their collective interest, even when that may not be in their self-interest. The main objective of the paper is to track the interface between altruism and group identity. By using the basic structure of a Prisoner's Dilemma game among randomly picked individuals and building into it assumptions of general or in-group altruism, the paper demonstrates how our selfish rationality interacts with our innate sense of cooperation. The model is used to outline circumstances under which cooperation will occur and circumstances where it will break down. The paper also studies how sub-groups of a society can form cooperative blocks, whether to simply do better for themselves or exploit others.cooperative spirit, altruism, identity, development, Prisoner's Dilemma

Racial Conflict and the Malignancy of Identity

This paper demonstrates how our sense of identity can emerge out of mere markers of social distinction that may have no innate significance, but, nevertheless, spread to various aspects of our lives and be the root of conflict. The basis of such conflicts could arise from the use of race to form conditional judgments about people's behavior. Moreover, there are contexts where racial conflict is inevitable even though, if individuals had common knowledge of one another's preferences, there would be no conflict. It is argued that this kind of conflict, where many individuals have no innate aggressive preference, is widespread and understanding the process that gives rise to such conflict is the key to crafting effective policy that contains it.

Identity, Trust and Altruism: Sociological Clues to Economic Development

Much of economics is built on the assumption of individuals being driven by nothing but

Altruism, Other-Regarding Behavior and Identity: The Moral Basis of Prosperity and Oppression

Much of economics is built on the assumption that individuals are driven by self-interest and economic development is an outcome of the free play of such individuals. On the few occasions that the existence of altruism is recognized in economics, the tendency is to build this from the axiom of individual selfishness. The aim of this paper is to break from this tradition and to treat as a primitive that individuals are endowed with the 'cooperative spirit', which allows them to work in their collective interest, even when that may not be in their self-interest. The paper tracks the interface between altruism and group identity. By using the basic structure of a Prisoner's Dilemma game among randomly picked individuals and building into it assumptions of general or in-group altruism, the paper demonstrates how our selfish rationality interacts with our innate sense of cooperation. The model is used to outline circumstances under which cooperation will occur and circumstances where it will break down. The paper also studies how sub-groups of a society can form cooperative blocks, whether to simply do better for themselves or exploit others.