Monthly Archives: October 2007

Mankiw on Oil Shocks

Mankiw asks:
Oil prices are near record highs, which raises a fascinating question. In recent years, the U.S. and world economies have typically shrugged off oil price increases. By contrast, oil price increases are a major part of the conventional story of the economic turmoil of the 1970s. Why the difference?

Read Mankiw’s view at Where have all the oil shocks gone?.
See also my previous post on the topic.

Trends and tensions in intellectual integration

The Trends and tensions in intellectual integration – TINT seminar continues. The program for Autumn 2007 can be found here.

See also the upcoming workshop Modeling, Simulation and Computational Science: Perspectives from different sciences, 2930 November 2007, Helsinki. Here’s the programme.

On Light Paternalism

George Loewenstein and Emily Celia Haisley examine the methodological issues related to the desing, implementation and evaluation of the efficacy of ‘light’ paternalistic policies in the paper The Economist as Therapist: Methodological Ramifications of ‘Light’ Paternalism.

Experimental Economics and Environmental Policy

In the weekly policy commentary by Resources for the Future October 15 John List discusses What Can Policymakers Learn from Experimental Economics?
Here is an excerpt:

“Experimental research now under way in the field demonstrates that there is much to be gained from designing economic experiments that span the bridge between the laboratory and the world outside, with important implications for economics. Examples include developing new auction formats to distribute pollution permits, exploring compensation mechanisms in social dilemmas, such as what is necessary for many endangered species cases, and examining efficient means to provide public goods. What has become clear in this process is that field experiments can play an important role in the discovery process by allowing us to make stronger inference than we could make from lab or uncontrolled data alone. Similar to the spirit in which astronomy draws on the insights from particle physics and classical mechanics to make sharper insights, field experiments can help to provide the necessary behavioral principles to permit sharper policy advice.

Ultimatum Game, Genes and Chimps

Greg Mankiw has an interesting post on the latest reseach on the ultimatum game, which he summarizes as follows: “The sense of fairness demonstrated by the ultimatum game is apparently genetic and intrinsically human.

Chimpanzees Are Rational Maximizers in an Ultimatum Game

by Keith Jensen, Josep Call, and Michael Tomasello published in Science 5 October 2007: 107-109.

In a game of fairness, chimpanzees act only to maximize their own benefits, whereas human toddlers also value social norms like cooperation and parity.

Abstract: Traditional models of economic decision-making assume that people are self-interested rational maximizers. Empirical research has demonstrated, however, that people will take into account the interests of others and are sensitive to norms of cooperation and fairness. In one of the most robust tests of this finding, the ultimatum game, individuals will reject a proposed division of a monetary windfall, at a cost to themselves, if they perceive it as unfair. Here we show that in an ultimatum game, humans’ closest living relatives, chimpanzees (Pan troglodytes), are rational maximizers and are not sensitive to fairness. These results support the hypothesis that other-regarding preferences and aversion to inequitable outcomes, which play key roles in human social organization, distinguish us from our closest living relatives.

Heritability of ultimatum game responder behavior

by Björn Wallace, David Cesarini, Paul Lichtenstein and Magnus Johannesson. Proceedings of the National Academy of Science in the United States. Published online before print October 1, 2007.

Experimental evidence suggests that many people are willing to deviate from materially maximizing strategies to punish unfair behavior. Even though little is known about the origins of such fairness preferences, it has been suggested that they have deep evolutionary roots and that they are crucial for maintaining and understanding cooperation among non-kin. Here we report the results of an ultimatum game, played for real monetary stakes, using twins recruited from the population-based Swedish Twin Registry as our subject pool. Employing standard structural equation modeling techniques, we estimate that >40% of the variation in subjects’ rejection behavior is explained by additive genetic effects. Our estimates also suggest a very modest role for common environment as a source of phenotypic variation. Based on these findings, we argue that any attempt to explain observed ultimatum bargaining game behavior that ignores this genetic influence is incomplete.

Full article (open access)