Tag Archives: Economics

The “prisoner’s dilemma” is a familiar concept to just about everyone who took Econ 101 … Yet no one’s ever actually run the experiment on real prisoners before, until two University of Hamburg economists tried it out in a recent study comparing the behavior of inmates and students. Surprisingly, for the classic version of the game, prisoners were far more cooperative than expected. Menusch Khadjavi and Andreas Lange put the famous game to the test for the first time ever,...

.                                                                                                                                                                                           [embedded content]

Leontief and the sorry state of economics Page after page of professional economic journals are filled with mathematical formulas leading the reader from sets of more or less plausible but entirely arbitrary assumptions to precisely stated but irrelevant theoretical conclusions … Year after year economic theorists continue to produce scores of mathematical models and to explore in great detail their formal properties; and the econometricians fit algebraic...

With any phenomenon of interest, understanding its nature or essential properties allows us to relate to, or interact with, it in more knowledgeable and competent ways than would otherwise be the case … A surprising number of social theorists, when embarking on substantive analyses, pay almost no attention at all to insights bearing on the nature of these (or any other) factors. Instead, the preferred option is to select the types of methods, procedures or tools to be...

Maradona was more than just an extraordinary footballer. He was also a complicated social icon. That further distinguishes him from other footballers, though Pele also has some of that… He was both rewarded by and terribly exploited by the system. The system treated him like a “race horse”. They wanted him to play at all cost and pumped him with drugs. They did not care about the physical and psychological costs to him. That contributed to his addiction … He came from great...

Logic and truth in economics To be ‘analytical’ and ‘logical’ is something most people find recommendable. These words have a positive connotation. Scientists think deeper than most other people because they use ‘logical’ and ‘analytical’ methods. In dictionaries, logic is often defined as “reasoning conducted or assessed according to strict principles of validity” and ‘analysis’ as having to do with “breaking something down.” But that’s not the whole...

 In practice, what math does is let macro-economists locate the FWUTVs [facts with unknown truth values] farther away from the discussion of identification … Relying on a micro-foundation lets an author say, “Assume A, assume B, …  blah blah blah … And so we have proven that P is true. Then the model is identified.” … Distributional assumptions about error terms are a good place to bury things because hardly anyone pays attention to them. Moreover, if a critic does see that...

Has mainstream economics — really — gone through a pluralist and empirical revolution? In an issue of the journal Fronesis yours truly and a couple of other academics (e.g. Julie Nelson, Tony Lawson, and Phil Mirowski) made an effort at introducing its readers to heterodox economics and its critique of mainstream economics. Rather unsurprisingly this hasn’t pleased the Swedish economics establishment. On the mainstream economics blog Ekonomistas, professor...

Paul Samuelson and the ergodic hypothesis Paul Samuelson claimed that the “ergodic hypothesis” is essential for advancing economics from the realm of history to the realm of science. But is it really tenable to assume that ergodicity is essential to economics? The answer can only be – as I have argued here here here here and here – NO WAY! Obviously yours truly is far from the only scientist being critical of Paul Samuelson. This is what Ole Peters writes...

Using ‘small-world’ models in a large world Radical uncertainty arises when we know something, but not enough to enable us to act with confidence. And that is a situation we all too frequently encounter … The language and mathematics of probability is a compelling way of analysing games of chance. And similar models have proved useful in some branches of physics. Probabilities can also be used to describe overall mortality risk just as they also form the...