Competitive markets are a well understood economic mechanism. The Economic Theory explains remarkably well, at least for a social science, its properties and success along economic history. We have lab experimentation (see here), and plenty of historical evidence that a market oriented society improves upon a non-market oriented one. It has happened in democracies like […]
Very often Economics is censured for using unrealistic assumptions, like that stating that people are selfish. According to some critics (e.g., the philosopher Mario Bunge, 2010 ), this fact is enough to show the invalidity of Economic models. After all, if we start with a falsehood, how can we hope to find useful theories? The […]
Game Theory studies mathematical models of strategic decision. Historically, the first approach was to study games as interactions of perfectly rational individuals, who have complete and transitive preferences and who are intelligent enough to analyze the game. This is a normative approach: it states what to do if you accept that you and the others […]
Online courses are rapidly expanding. They can reach more students and reduce drastically the costs of teaching. They are, thus, an attractive option for both students and schools. Being a recent development, there is still little research to assess their performance. A first group of studies used the method of randomly assigning students to an […]
The analysis of armed conflicts between countries has a tradition in Game Theory, starting with the classical models for the battle of the Bismark Sea by Haywood (1954) and for the nuclear conflict in the Cold War by Schelling (1960) . More recent analyses focus on the uncertainty of the specific destruction capacity of one […]
Gary Becker presented a first economic approach to criminal behavior. In a very standard neoclassical framework he studied this apparently non-economic problem. In particular, Becker assumed rational criminals responding to variables such as the probability of being caught, the severity of the punishment and the labor-market opportunity cost. After this seminal work, a large empirical […]
This post summarizes the article “Confirmation bias with motivated beliefs”, by Charness and Dave, published in Games and Economic Behavior in 2017. Confirmation bias (CB) can be defined as an agent’s tendency to seek, interpret and use evidence in a manner biased toward confirming her existing beliefs or hypotheses. This constitutes a misjudgment that limits […]
This article summarizes the Babcock et al . (2017) , recently published in the American Economic Review. Among the different reasons to explain the gender gap in the labor market one is the process by which men and women advance in the workplace, and among the variables that can affect this advance is the time […]
The last issue of the Journal of Economic Perspectives published the article Is China Socialist? by Barry Naughton , which I summarize here. In order to address the question, the first thing Naughton does is to provide a working definition of socialism. Under a broad conception, a plausible socialist system would be judged on four […]
This article summarizes the work by Baker, Bloom and Davis (2016) published in the last issue of the Quarterly Journal of Economics. The economy does not like uncertainty. Or so goes a common saying among economic agents. In fact, economic analysis has formalized this idea at least since the theoretical works of Friedman (1968) and […]