Psychology, Rationality and Economic Behaviour: Challenging Standard Assumptions

285 Pages·2005·1.17 MB·English

by  Bina Agarwal

Psychology, Rationality and
Economic Behaviour
Challenging Standard Assumptions
Edited by
Bina Agarwal and
Alessandro Vercelli
Psychology, Rationality and Economic Behaviour
ThisisIEAconferencevolumeno.142
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Psychology, Rationality and
Economic Behaviour
Challenging Standard Assumptions
Editedby
Bina Agarwal
InstituteofEconomicGrowth,UniversityofDelhi,India
and
Alessandro Vercelli
UniversityofSiena,Italy
inassociationwiththe
INTERNATIONALECONOMICASSOCIATION
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©InternationalEconomicAssociation2005
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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
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14 13 12 11 10 09 08 07 06 05
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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
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vi Contents
10 EquityJudgementsElicitedThroughExperiments:An
EconometricExamination 195
JochenJungeilgesandTheisTheisen
11 Groups,CommonsandRegulations:Experimentswith
VillagersandStudentsinColombia 242
JuanCamiloCardenas
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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
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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.
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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
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