Economics Essays: A Festschrift for Werner Hildenbrand

363 Pages·2001·9.132 MB·English

by  Gérard Debreu (auth.), Prof. Dr. Gérard Debreu, Prof. Dr. Wilhelm Neuefeind, Prof. Dr. Walter Trockel (eds.)

Economics Essays
Springer-Verlag Berlin Heidelberg GmbH
Gerard Debreu ·Wilhelm Neuefeind
Walter Trockel
Editors
Economics Essays
A Festschrift for
WERNER HILDENBRAND
With 33 Figures
and 12 Tables
'Springer
Prof. Dr. Gerard Debreu
University of California
549 Evans Hall # 3880
Berkeley CA 94720-3880
USA
Prof. Dr. Wilhelm Neuefeind
Washington University in St. Louis
Department of Economics
Box 1208
St. Louis, MO 63130
USA
Prof. Dr. Walter Trockel
Universităt Bielefeld
Institut fur Mathematische Wirtschaftsforschung (IMW)
Postfach 100131
33501 Bielefeld
Germany
ISBN 978-3-642-07539-1
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Die Deutsche Bibliothek - CIP-Einheitsaufnahme
Economics Essays: A Festschrift for Werner Hildenbrand / Gerard Debreu ... ed.
ISBN 978-3-642-07539-1 ISBN 978-3-662-04623-4 (eBook)
DOI 10.1007/978-3-662-04623-4
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Preface
Back in the good old days on the fourth floor of the Altbau of Bonn's Ju
ridicum, Werner Hildenbrand put an end to a debate about a festschrift in
honor of an economist on the occasion of his turning 60 with a laconic: "Much
too early." Remembering his position five years ago, we did not dare to think
about one for him. But now he has turned 65. If consulted, he would most
likely still answer: "Much too early." However, he has to take his official re
tirement, and we believe that this is the right moment for such an endeavor.
No doubt Werner Hildenbrand will not really retire. As professor emeritus,
free from the constraints of a rigid teaching schedule and the burden of com
mittee meetings, he will be able to indulge his passions. We expect him to
pursue, with undiminished enthusiasm, his research, travel, golfing, the arts,
and culinary pleasures - escaping real retirement.
He will leave a tremendous void at the university even if he will stay on and
continue his scholarly pursuits in Bonn. He made the University of Bonn
Germany's leading institution for economic theory. Without him, the uni
versity would not have been able to keep two Sonderforschungsbereiche in
economics for so long. They provided the means to attract a large number
of distinguished researchers from around the world to work or give seminars
in and spread the word about Bonn. All contributors to this volume spent
time in Bonn. He loved to work in the department: he turned down several
prestigious offers from other institutions in Germany and abroad, preferring
to stay in Bonn.
Yet the influence of Werner Hildenbrand's work, scholarly and otherwise,
reaches far beyond Bonn. The depth and breadth of his scholarly work are
impressive, and his influence on Economics and economists through his activ·
ities at CORE, in Paris, Florence, Strasbourg, Berkeley, and Stanford, among
other places, had a significant impact on the profession. He was the found
ing editor of The Journal of Mathematical Economics, offering scholars the
opportunity to publish theoretical results which other journals might have
considered technically too demanding. Without his work, Mathematical Eco
nomics would not have become what it is today. He made it a regular and
respected topic at the famous Mathematical Research Institute in Oberwol
fach. He co-founded the enormously successful European Doctoral Program,
focussed on theoretical economics, and sponsored and organized the BOWOs,
the important Bonn Workshops on Economic Theory. In the Theoretische
Ausschuss of the Verein fiir Socialpolitik, whose staid members had long
focussed on topics no longer central to economics, he opened the door for
modern economic theory.
Not surprisingly, Werner Hildenbrand was often honored: He received the
prestigious Leibniz, Max Planck, and von Humboldt-Gay Lussac prizes and
presented the Walras-Bowley, Marshall, Schumpeter, and Thiinen Lectures.
VI Preface
An early Fellow of the Econometric Society, he was elected into its Council
several times. He was the Program Chairman for its 4th World Congress. He
is a member of several academies and an honorary member of the American
Economic Association. He was asked to serve on the editorial boards of highly
ranked journals.
His influence is perpetuated through his former doctoral students, who now
work in a wide array of areas, including Economic Theory, Game Theory,
Industrial Organization, Public Finance, Financial Economics, Experimental
Economics, and Applied Econometrics - many as professors throughout the
world. As an advisor and friend he shaped both their scholarly views and
their professional careers.
Many other people have reason to honor Werner Hildenbrand, reason to be
grateful to him. Those of us who contributed to the creation of this festschrift,
want to take this occasion to thank him. Some have benefited as his students,
some influenced his scholarly interests and development and were influenced
in turn, and some have collaborated with him or do so still.
The editors would like to thank the authors, Ms. Adelheid Baker in Bielefeld,
Ms. Karen Rensing in St. Louis, the Zentrum fiir interdiszipliniire Forschung
(ZiF) at the University of Bielefeld for its hospitality to W.N. during the
project Making Choices in 1999/2000, and, in particular, Washington Uni
versity in St. Louis, where the lion's share of the editorial work was done.
Werner, as described by Gerard in his Introduction, there has been
a radical change in your scholarly work. You have been innovative
and thought provoking while remaining consistent - a feat few ever
achieve. We hope you carry on just that way.
Ad multos annos, Werner!
January 2001
Wilhelm N euefeind Saint Louis, Missouri
Walter Trockel Bielefeld
Contents
Preface.. ........ .. .. ..... .... .... ........ .................... V
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Gerard Debreu
The Rationale for Measurability ... ..... .. ....... .... ........ . 5
Robert J. Aumann
Inferior Goods, Giffen Goods, and Shochu . . . . . . . . . . . . . . . . . . . . 9
Shmuel Baruch, Yakar Kannai
Information and Efficiency in Coordination Games:
Recent Experimental Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Siegfried K. Beminghaus, Karl-Martin Ehrhart
Market Innovation and Entrepreneurship:
A Knightian View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Truman F. Bewley
Objectives of an Imperfectly Competitive Firm:
A Surplus Approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Egbert Dierker, Hildegard Dierker, Birgit Grodal
Monetary Equilibria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Jacques H. Dreze, Heracles M. Polemarchakis
Strategic Multilateral Exchange and Taxes ... .. ... ... ..... ... 109
Jean J. Gabszewicz, Lisa Grazzini
Walras Equilibrium with Coordination ... ...... ... ... ... .. ... 127
Birgit Grodal, Karl Vind
On the Robustness of the Analysis of Expectational
Coordination: From 3 to n+ 2 goods .. ..... .. .. ... ....... .. ... 141
Roger Guesnerie
Nonp arametric Estimation of Additive Models with
Homogeneous Components ..... .. .. .... ....... ...... ...... ... 159
Wolfgang Hiirdle, Woocheol Kim, Gautam Tripathi
A Reinforcement Procedure Leading to Correlated
Equilibrium. . . . . . . . ............. .. ...... .. ..... ... .. 181
Sergiu Hart, Andreu Mas-Colell
VIII Contents
A Theoretical Analysis of the Mean Slutsky-lncome Effect
in the CAPM .. .. .. .. ... ........ ..... .. ....... ... .. .. ... ..... . 201
Thorsten Hens
Demand Dispersion, Metonymy and Ideal Panel Data ....... . 213
Michael Jerison
Some Problems and Perspectives in Economic Theory .. .. .... 231
Alan Kirman
Time Trends in the Joint Distributions of Income and Age ... 253
Alois Kneip, Klaus J. Utikal
The Economics of Network Industries .. .... .... .. ......... ... 275
Gunter Knieps
On Price Competition with Heterogeneous Consumers .... ... 295
Martin Peitz
On the Core of a Cartel ... ... ... .. .. ... ... ... ..... ...... .... . 315
Roy Radner
Blame A voidance as Motivating Force in the
First Price Sealed Bid Private Value Auction .......... .... ... 333
Reinhard Selten
Evasion of Tax on Interest Income in a Two-Country Model .. 345
Georg Tillmann
Introduction
Gerard Debreu
University of California
Werner Hildenbrand is two economists.
The first was one of the more sophisticated mathematical economists of
1974, the time when his book, Core and Equilibria of a Large Economy,
appeared. In this role, in the context of General Equilibrium Analysis, he
published, sometimes with co-authors, altogether more than thirty theoretical
articles on measure spaces of economic agents, or on mathematical questions
directly related to them.
The second is an econometrician of great originality who contributed to
raise the field in which he was working to its highest levels, shunning any
statement about the economy that cannot be supported, in the strictest man
ner, by empirical evidence. In this capacity he published about as many ar
ticles as in the first (according to a 1998 bibliography), several of them with
other authors.
The metamorphosis from one incarnation to the next was reported in the
first five paragraphs of the Preface of his Market Demand (1994). Some of
the circumstances in which this critical change occurred are the source of
vivid memories. On the eve of a few days vacation, I asked him to stay in
the house that was then my residence in Northern California. He was not
there when I returned, but he had left, in the living room, a piece of paper
that told, concisely, of the unexpected results he had obtained, and that
he published shortly in Econometrica, 1983. In this article, he proved the
following theorem, where the common demand function f(p, w) of all agents
is assumed to satisfy the weak axiom of revealed preference (for all pairs
(p1,w1) and (p2,w2), p2.f(p1,w1):::; w2 implies p1.f(p2,w2) 2: w1). If the
distribution of individual total expenditure w has a non-increasing density p,
then the market demand function F(p)( = J f(p, w)p(w)dw) is monotone, i.e.,
for any two price-vectors p and q, (q- p). (F(q)- F(p)) :::; 0. (In particular,
if all prices but one, the hth, remain fixed, (qh- ph) (F(qh)- F(ph)) :::; 0
and all partial demand curves are non-increasing.)
In this paper, on page 998 he also notes "that aggregating individual de
mand over a large group of individuals can lead to properties of the market
demand function F which, in general, individual demand functions do not
possess." This formulation prefigures the full research program that he car-
2 Gerard Debreu
ried out later, and that he describes as follows in the Preface of his book
Market Demand (1994) "to analyze which new properties are created by the
aggregation procedure. I want to defend in this book the thesis that "sufficient
heterogeneity" of a large population of households leads to useful properties
of the mean demand of the population."
His scientific career is divided, most naturally, in two main periods.
From his birth, on May 25, 1936, to the end of his formal studies in 1964 in
Heidelberg, Germany, under Professors Kothe and Krickeberg, twenty-eight
years elapsed. Of these he lived the last eight years (1956-64) in Heidelberg
(where he was, in succession, Teaching Assistant (1958-61), Research Assis
tant (1962-4), Lecturer (1964-6), Project Leader (1965-9)), with the excep
tion of one year (1961-2), when he was a Research Fellow at the University
of Bonn, Germany, where he later became a Professor in 1969.
After the first world congress of the Econometric Society in Rome, Italy,
in 1965, when we met for the first time, he spent a brief period (1965-6),
lecturing in Statistics in Karlsruhe, Germany, and then began, over the next
20 years, a long series of visits to Berkeley, California (Assistant Professor
in 1966-7; Associate Professor in 1967-8; Professor in 1969-70, in 1973-4,
and in 1985-6). In particular, in 1966-70, he was in Berkeley almost three
years out of four, as well as a visiting Professor of Economics at Stanford
University, California, for six months in 1970. He seemed to have become
a permanent resident of the San Francisco Bay Area. In the mean time, he
was Research Professor at the University of Louvain,Belgium (1968-76), and
Professor of Economics at the University of Bonn from 1969 to this day. He
was also a visitor at the European University Institute in Florence, Italy;
at the University of California in San Diego, California; at the University
Louis Pasteur in Strasbourg, France; at the Chaire Europeenne du College
de France, Paris, France, in 1993-4.
Among the honors that he received, only a small international minor
ity will be noted. He was the Walras-Bowley lecturer at the meeting of the
Econometric Society in Montreal, Canada, in 1979; the Marshall lecturer
at the meeting of the European Economic Association in Bologna, Italy, in
1988; an Honorary member of the American Economic Association in 1995;
the Schumpeter lecturer at the meeting of the European Economic Associ
ation in Toulouse, France, in 1997. In this second period, he published, in
addition to the two books already mentioned, Lineare okonomische Mad
elle, 1975 (with K. Hildenbrand), and Introduction to Equilibrium Analysis,
1976 (with A. Kirman), which became Equilibrium Analysis, 1988 (with A.
Kirman). When teaching a graduate introductory course in mathematical
economics, one is invited to prepare a list of books that auditors are advised
to read in connection with the instruction. For many years, the book by
Hildenbrand and Kirman headed that list. To the credit of his energy, and