Transition from socialism

This paper discusses the changes that socialist countries, specially in Eastern Europe, are currently undergoing. It also comments on the decline all over the world of the institution of the nation-state, and, particularly, a decline in its importance in the economy.

General Economic Equilibrium: Purpose, Analytic Techniques, Collective Choice

Lecture to the memory of Alfred Nobel, December 12, 1972general equilibrium;

Reclaiming Virtue Ethics for Economics

Virtue ethics is an important strand of moral philosophy which normative economists have largely neglected. It underpins influential critiques of the market (as a domain in which instrumental motivation corrodes virtue) and of economics (as justifying such motivation). We explain and respond to this critique. Using the methods of virtue ethics and with reference to the writings of major economists, we propose an understanding of the ‘telos’ (purpose) of markets as cooperation for mutual benefit, and identify traits that thereby count as virtues for market participants. We conclude that the market need not be seen as a virtue-free zone

Why bayesian “evidence for H1” in one condition and bayesian “evidence for H0” in another condition does not mean good-enough bayesian evidence for a difference between the conditions

Psychologists are often interested in whether an independent variable has a different effect in condition A than in condition B. To test such a question, one needs to directly compare the effect of that variable in the two conditions (i.e., test the interaction). Yet many researchers tend to stop when they find a significant test in one condition and a nonsignificant test in the other condition, deeming this as sufficient evidence for a difference between the two conditions. In this Tutorial, we aim to raise awareness of this inferential mistake when Bayes factors are used with conventional cutoffs to draw conclusions. For instance, some researchers might falsely conclude that there must be good-enough evidence for the interaction if they find good-enough Bayesian evidence for the alternative hypothesis, H1, in condition A and good-enough Bayesian evidence for the null hypothesis, H0, in condition B. The case study we introduce highlights that ignoring the test of the interaction can lead to unjustified conclusions and demonstrates that the principle that any assertion about the existence of an interaction necessitates the direct comparison of the conditions is as true for Bayesian as it is for frequentist statistics. We provide an R script of the analyses of the case study and a Shiny app that can be used with a 2 × 2 design to develop intuitions on this issue, and we introduce a rule of thumb with which one can estimate the sample size one might need to have a well-powered design

Innovation in Large and Small Firms

This essay is intended to begin the elaboration of a theme: the interaction between the observed sizes of firms and their internal decision making procedures. This theme is a major one in the symphony of entrepreneurial activity. The entrepreneur, as the maker and changer of economic and productive life, is usually envisaged as an individual. In the neoclassical tradition, he (or, rarely, she) is the lightning calculator, the individual who rapidly scans the field of alternative productive processes and chooses the optimum any given set of prices

NEW EROTYLIDAE.

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The Genuine Savings Criterion and the Value of Population

Arrow, Dasgupta and Maler demonstrate thatin any dynamic model of the economy with changing population, population should properly be one of the state variables of the system. It enters both in the maxim and, at least under total utilitarianism, and into the production function in one way or another. If population growth is exponential and there are constant returns to scale, then a simple transformation to per capita variables can be used to eliminate one state variable. However, this simple transformation cannot be made if growth is not exponential, as it obviously is not and cannot be. If the growth of population is exogenous, then introducing it into the system does not affect the optimal policy. However, if one asks whether the system is sustainable, in the sense of at least maintaining total welfare (integral of discounted utilities), then the criterion is that the value of the rates of change of the state variables is non-negative, so that the shadow price of population becomes relevant. In this paper, we derive explicit formulas in a simple model, showing that the rate of growth of per capita capital is not the correct formula but must have other terms added to it. We also study the question under an alternative criterion of long-run average utilitarianism.

Statistical Curse of the Second Half Rank

In competitions involving many participants running many races the final rank is determined by the score of each participant, obtained by adding its ranks in each individual race. The "Statistical Curse of the Second Half Rank" is the observation that if the score of a participant is even modestly worse than the middle score, then its final rank will be much worse (that is, much further away from the middle rank) than might have been expected. We give an explanation of this effect for the case of a large number of races using the Central Limit Theorem. We present exact quantitative results in this limit and demonstrate that the score probability distribution will be gaussian with scores packing near the center. We also derive the final rank probability distribution for the case of two races and we present some exact formulae verified by numerical simulations for the case of three races. The variant in which the worst result of each boat is dropped from its final score is also analyzed and solved for the case of two races.Comment: 16 pages, 10 figure

Migration with local public goods and the gains from changing places

Without public goods and under fairly standard assumptions, in Hammond and Sempere (J Pub Econ Theory, 8: 145–170, 2006) we show that freeing migration enhances the potential Pareto gains from free trade. Here, we present a generalization allowing local public goods subject to congestion. Unlike the standard literature on fiscal externalities, our result relies on fixing both local public goods and congestion levels at their status quo values. This allows constrained efficient and potentially Pareto improving population exchanges regulated only through appropriate residence charges, which can be regarded as Pigouvian congestion taxes