Psychology, Rationality and Economic Behaviour.. Challenging Standard Assumptions PDF
Preview Psychology, Rationality and Economic Behaviour.. Challenging Standard Assumptions
Psychology, Rationality and Economic Behaviour Challenging Standard Assumptions Edited by Bina Agarwal and Alessandro Vercelli Psychology, Rationality and Economic Behaviour ThisisIEAconferencevolumeno.142 Agar: “preiv” — 2005/6/3 — 12:01 — page i — #1 This page intentionally left blank Psychology, Rationality and Economic Behaviour Challenging Standard Assumptions Editedby Bina Agarwal InstituteofEconomicGrowth,UniversityofDelhi,India and Alessandro Vercelli UniversityofSiena,Italy inassociationwiththe INTERNATIONALECONOMICASSOCIATION Agar: “preiv” — 2005/6/3 — 12:01 — page iii — #3 ©InternationalEconomicAssociation2005 Allrightsreserved.Noreproduction,copyortransmissionofthis publicationmaybemadewithoutwrittenpermission. Noparagraphofthispublicationmaybereproduced,copiedortransmitted savewithwrittenpermissionorinaccordancewiththeprovisionsofthe Copyright,DesignsandPatentsAct1988,orunderthetermsofanylicence permittinglimitedcopyingissuedbytheCopyrightLicensingAgency,90 TottenhamCourtRoad,LondonW1T4LP. Anypersonwhodoesanyunauthorizedactinrelationtothispublication maybeliabletocriminalprosecutionandcivilclaimsfordamages. Theauthorshaveassertedtheirrightstobeidentified astheauthorsofthisworkinaccordancewiththeCopyright, DesignsandPatentsAct1988. Firstpublishedin2005by PALGRAVEMACMILLAN Houndmills,Basingstoke,HampshireRG216XSand 175FifthAvenue,NewYork,N.Y.10010 Companiesandrepresentativesthroughouttheworld. PALGRAVEMACMILLANistheglobalacademicimprintofthePalgrave MacmillandivisionofSt.Martin’sPress,LLCandofPalgraveMacmillanLtd. ® Macmillan isaregisteredtrademarkintheUnitedStates,UnitedKingdom andothercountries.PalgraveisaregisteredtrademarkintheEuropean Unionandothercountries. ISBN-13:978–1–4039–4253–1 ISBN-10:1–4039–4253–6 Thisbookisprintedonpapersuitableforrecyclingandmadefromfully managedandsustainedforestsources. AcataloguerecordforthisbookisavailablefromtheBritishLibrary. LibraryofCongressCataloging-in-PublicationData InternationalEconomicAssociation.Congress.(13th:2002:Lisbon,Portugal) Psychology,rationality,andeconomicbehaviour:challengingstandard assumptions/editedbyBinaAgarwalandAlessandroVercelli. p.cm. RevisedversionsofpaperspresentedattheThirteenthWorldCongressofthe InternationalEconomicAssociation,heldinLisboninSeptember2002. Includesbibliographicalreferences. ISBN1–4039–4253–6(cloth) 1.Economics–Psychologicalaspects–Congresses.2.Choice (Psychology)–Congresses.3.Rationalchoicetheory–Congresses. 4.Altruism–Economicaspects–Congresses.5.Decision making–Congresses.I.Title:Psychology,rationality,andeconomic behavior.II.Agarwal,Bina.III.Vercelli,Alessandro.IV.Title. HB74.P8I582002 330(cid:1).01(cid:1)9—dc22 2005043139 10 9 8 7 6 5 4 3 2 1 14 13 12 11 10 09 08 07 06 05 PrintedandboundinGreatBritainby AntonyRoweLtd,ChippenhamandEastbourne Agar: “preiv” — 2005/6/3 — 12:01 — page iv — #4 Contents TheInternationalEconomicAssociation vii Acknowledgements ix ListofAbbreviationsandAcronyms xii ListofContributors xiii 1 Introduction 1 BinaAgarwalandAlessandroVercelli PartI AnalyticalModelsandMethodologicalIssues 2 Self-ConfidenceandPersonalMotivation 19 RolandBénabouandJeanTirole 3 Rationality,LearningandComplexity 58 AlessandroVercelli 4 Altruism:EvolutionandaRepercussion 84 OdedStark,YouQiangWangandYongWang 5 HumanReproductionandUtilityFunctions: AnEvolutionaryApproach 106 AlexanderA.Vasin 6 MoralHazard,ContractsandSocialPreferences:ASurvey 125 FlorianEnglmaier 7 MutualConcern,WorkplaceRelationshipsandPayScales 140 OttorinoChillemi PartII LaboratoryandFieldExperiments 8 ExpectationsandtheEffectsofMoneyIllusion 155 ErnstFehrandJean-RobertTyran 9 Utility-BasedAltruism:EvidencefromExperiments 181 AlexanderKritikosandFriedelBolle v Agar: “prevxiv” — 2005/6/3 — 12:01 — page v — #1 vi Contents 10 EquityJudgementsElicitedThroughExperiments:An EconometricExamination 195 JochenJungeilgesandTheisTheisen 11 Groups,CommonsandRegulations:Experimentswith VillagersandStudentsinColombia 242 JuanCamiloCardenas Agar: “prevxiv” — 2005/6/3 — 12:01 — page vi — #2 The International Economic Association A non-profit organization with purely scientific aims, the International EconomicAssociation(IEA)wasfoundedin1950.Itisafederationofsome sixty national economic associations in all parts of the world. Its basic purposeisthedevelopmentofeconomicsasanintellectualdiscipline,recog- nizing a diversity of problems, systems and values in the world and taking noteofmethodologicaldiversities. The IEA has, since its creation, sought to fulfil that purpose by promot- ing mutual understanding among economists through the organization of scientific meetings and common research programmes, and by means of publicationsonproblemsoffundamentalaswellasofcurrentimportance. DerivingfromitslongconcerntoassureprofessionalcontactsbetweenEast andWestandNorthandSouth,theIEApaysspecialattentiontoissuesofeco- nomiesinsystemictransitionandinthecourseofdevelopment.Duringover fifty years of existence, it has organized more than a hundred round-table conferences for specialists on topics ranging from fundamental theories to methodsandtoolsofanalysisandmajorproblemsofthepresent-dayworld. Participation in round tables is at the invitation of a specialist programme committee, but thirteen (now triennial) World Congresses have regularly attractedtheparticipationofindividualeconomistsfromallovertheworld. The Association is governed by a Council, composed of representatives of all member associations, and by a fifteen-member Executive Committee whichiselectedbytheCouncil.TheExecutiveCommittee(2002–05)atthe timeoftheLisbonCongresscomprised: President: ProfessorJánosKornai,Hungary Vice-President: ProfessorBinaAgarwal,India Treasurer: ProfessorJacobFrenkel,Israel PastPresident: ProfessorRobertSolow,USA President-elect: ProfessorGuillermoCalvo,Argentina Othermembers: ProfessorMariaAugusztinovics,Hungary ProfessorElianaCardoso,WorldBank ProfessorDuardoEngel,Chile ProfessorHebaHandoussa,Egypt ProfessorMichaelHoel,Norway ProfessorJean-JacquesLaffont,France ProfessorAndreuMasColell,Spain ProfessorKotaroSuzumura,Japan ProfessorAlessandroVercelli,Italy vii Agar: “prevxiv” — 2005/6/3 — 12:01 — page vii — #3 viii TheInternationalEconomicAssociation Advisers: ProfessorFiorellaKostorisPadoaSchioppa,Italy ProfessorVitorConstâncio,Portugal Secretary-General: ProfessorJean-PaulFitoussi,France GeneralEditor: ProfessorMichaelKaser,UK Sir Austin Robinson was an active Adviser on the publication of IEA Conferenceproceedingsfrom1954untilhisfinalshortillnessin1993. TheAssociationhasalsobeenfortunateinhavingsecuredmanyoutstand- ingeconomiststoserveasPresident: Gottfried Haberler (1950–53), Howard S. Ellis (1953–56), Erik Lindahl (1956–59), E.A.G. Robinson (1959–62), Ugo Papi (1962–65), Paul A. Samuelson(1965–68),ErikLundberg(1968–71),FritzMachlup(1971–74), Edmund Malinvaud (1974–77), Shigeto Tsuru (1977–80), Victor L. Urquidi(1980–83),KennethJ.Arrow(1983–86),AmartyaSen(1986–89), AnthonyB.Atkinson(1989–92),MichaelBruno(1992–95),JacquesDrèze (1995–99)andRobertM.Solow(1999–2002). The activities of the Association are mainly funded from the subscrip- tionsofmembersandgrantsfromanumberoforganizations.Supportfrom UNESCOsincetheAssociationwasfounded,andfromitsInternationalSocial ScienceCouncil,isgratefullyacknowledged,particularlyforspecifichelpfor theLisbonCongress. Agar: “prevxiv” — 2005/6/3 — 12:01 — page viii — #4 Acknowledgements TheCongresswasheldfrom9to13September2002intheCentroCulturalde Belém,Lisbon,attheinvitationoftheOrdemdosEconomistasdePortugal, andwasattendedby1,100registeredparticipants. The Opening Session was addressed by the President of the Republic of Portugal, HE Senhor Jorge Sampaio, and by the newly-appointed Minister of Finance, HE Senhor Manuela Ferreira Leite; the IEA President, Professor RobertM.Solow,deliveredapaper,‘IsFiscalPolicyPossible?IsitDesirable?’ Theprogrammecomprisedtwentyinvitedlecturesandthreeinvitedpanels– on‘GrowthinDevelopingandTransitionEconomies’(arrangedbytheGlobal DevelopmentNetwork),on‘PovertyDynamicsandInsurance’(organizedby the European Development Research Network) and on ‘The Turkish Finan- cialCrisis’(preparedbytheTurkishEconomicAssociation).Therewere198 contributed papers, a selection of which have been included with Invited LecturesinthefourvolumesoftheCongressproceedings: Bina Agarwal and Alessandro Verceilli (eds), Psychology, Rationality and EconomicBehaviour:ChallengingStandardAssumptions AlanV.Deardorff(ed.),ThePast,PresentandFutureoftheEuropeanUnion Edward Graham (ed.), Multinationals and Foreign Investment in Economic Development RobertM.Solow(ed.),StructuralReformsandMacroeconomicPolicy. StudiesgeneratedbytheGlobalDevelopmentNetworkarepublishedinGary McMahonandLynSquire(eds),ExplainingGrowth:AGlobalResearchProject (IEAConferenceVolumeno.137). Thescientificresponsibilityfortheselectionofpaperswasinthehandsof an International Programme Committee chaired by Robert Solow, with the followingmembers: BinaAgarwal,India GeneGrossman,USA MariaAugusztinovics,Hungary SeppoHonkapohja,Finland VictorBecker,Argentina PeterHowitt,Canada MiguelBeleza,Portugal AndreaIchino,Italy EnriqueBour,Argentina FirellaKostorisPadoa-Schioppa,Italy JuanCamiloCardenas,Colombia ValeryMakarov,RussianFederation ElinanaCardoso,Brazil AndreuMas-Colell,Spain VitorConstâncio,Portugal MustaphaNabli,Tunisia VittorioCorbo,Chile AdemolaOyejide,Nigeria JacquesDrèze,Belgium AdrianPagan,Australia ix Agar: “prevxiv” — 2005/6/3 — 12:01 — page ix — #5
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