ABSTRACT: The sub-optimal "meliorating" behavior studied by Herrnstein shows that all known animal species match average and not marginal payoffs. When information processing is costly, Herrnstein's matching and a similar simplifying 'paradox' discovered by Allais may be efficient for agents averse to the risk of making errors. Such simplification is likely to be an evolutionarily stable strategy. Differential aversion to errors can lead to different estimates, even without differences in estimating ability.

ABSTRACT: A formal proof shows the necessary and sufficient conditions for a naming system that meets certain desirable attributes of gender-equality and feasibility. The Spanish tradition of surnames, while falling well short of perfect gender equality, is perhaps the closest real approximation. It is argued that for such a system, Spain may show some interesting cultural correlates.

ABSTRACT: In this paper, the relation between inequality and welfare index "reversals" is characterized. By the identification of these reversals, upper and lower bounds are established for Atkinson's parameter of inequality aversion. This exercise shows that a level of inequality aversion high enough to show welfare improving over the "egalitarian decline" of 1978-81 in Poland is too high to show improvement over the "elitist growth" of 1981-86 in the Soviet Union. However, even if the lower bound of inequality aversion is assumed, plausible projections of Soviet growth and distribution still show social welfare declining.

ABSTRACT (for "Theory" article): Complex economies require monetary or real inventories to ensure bilateral trade at clearing prices. Trade in simpler economies is rationed by debt-status and is neither bilateral nor clearing. Each type of exchange minimizes transaction costs for characteristic levels of population, division of labor, and supply variability. Transactions costs are accounted for as the time and the number of computational steps needed for trade. Kinship alliances are shown to mitigate the cooperative problem of each exchange system. In systems without clearing prices, kinship supports the repayment of debt among households of the same generation. In price-clearing systems that need long-term inventories, on the other hand, kinship is focused on intergenerational bequests.

ABSTRACT: Coase argued that externality rights should sometimes be flexible, but warned that ambiguity can also hinder market transactions. Flexible liability is not uncommon, and can be shown to provide useful information under non-convexity. At a global optimum, each side must be able to compensate the other. For public externalities, however, such ambiguity encourages claims to be exaggerated when agents are risk-seeking, and understated when they are risk-averse. In such cases, efficient specifications of right cannot evolve from self-interested litigation alone.

ABSTRACT: Most of us teach a model of economic rationality that not only abstracts from morality, but can actually undermine it unless we are careful. This article illustrates some pitfalls in using classroom experiments. The use of grades as incentives is often inappropriate for reasons of morality, pedagogy, and experimental design.

Jim Stodder - Homepage