Stefanie Haeffele and Virgil Henry Storr
Over time, the fields of economics and ethics have become more distinct with economics focusing on the rationality of actors, the incentives they face, and the outcomes of interacting within an amoral market setting. However, in the real world, economics and ethics are more interconnected. Humans are social and ethical beings regardless of setting. Recent studies have shown that individuals reward trustworthiness, punish dishonesty, and can develop meaningful social bonds within markets. Economists, seeking to better understand the world, should incorporate ethics into their economics. We argue that Adam Smith is an exemplar of pursuing a fuller approach to social science, and utilize his arguments on both economics and ethics to advance a study of ethical markets.
Praveen K. Kopalle and Robert Hansen
There has been much interest in pricing strategies and tactics both in the research and practice domains. This chapter examines the recent literature on pricing with a focus on blending an economics approach with that of marketing. It begins with a brief discussion of the fundamental principles of optimal pricing, which serves as the foundation for the more advanced pricing methods. The chapter provides an in-depth discussion in the areas of second degree price discrimination, bundling strategies, revenue management, pricing using conjoint analysis, dynamic pricing, price psychology, personalized pricing, competitive considerations in pricing (Nash and Stackelberg games), dynamic structural models in pricing, and pricing in two-sided markets. The end of the chapter provides brief concluding remarks.
Susan Griffin and Karl Claxton
Cost-effectiveness analysis (CEA) is intended to help collective purchasers of health care to determine which interventions to prioritize, by ranking them according to the cost of each unit of “health benefit” they produce. The primary focus of this article is on the social decision-making approach where the decision-maker's objective is assumed to be the maximization of health gains subject to a given budget constraint. This article begins with the rationale for presenting a full characterization and analysis of uncertainty within any CEA. An overview of methods that can be used to conduct a CEA that accounts for uncertainty is provided, including the means to present and interpret the results. The benefits and limitations of the methods for analyzing uncertainty are considered in the context of providing information to decision-makers. The article concludes by discussing the additional questions that arise when the need for further research to support those decisions is considered.
Moses L. Pava
The essence of this article happens to be the art of moral criticism amidst the Jewish tradition. Moral criticism, or as the Torah puts it rebuke (tokhehah), is a necessary activity for social learning and improvement. Moral criticism is part of a give and take among individuals who must necessarily share, at least, a minimal set of core values, including most importantly respect for one another, a common ethical vocabulary, and a basic moral grammar. Each one of us, simply by virtue of being human, inherits a moral tradition. As we grow and mature we slowly become its spokespersons. Rebuke or moral criticism is one of the many moral responsibilities that come with advancing maturity and wisdom. It can take on many different forms. A series of discussions, mostly rhetorical in nature follows. Introspecting questions along such as what are my motives along with substantial analysis concludes this article.
Giorgio d'Agostino, J. Paul Dunne, and Luca Pieroni
The earlier literature regarding the effects of military expenditures on economic growth had initially shown a positive relationship between the two variables. This article examines this topic, taking account of more recent models of growth. The second section considers the alternative general economic theories that inform the development of models to undertake empirical analyses. The third section considers estimation issues. The fourth section considers the alternative formal models that are common in the literature: the Feder–Ram model, the modified Solow model, and the endogenous growth models. The fifth section presents some empirical results to illustrate the issues involved in estimating the models and to compare their performance. The estimation of more sophisticated models indicates, contrary to the early studies, that the effect of military expenditures on growth is negative.
Minglian Li and Justin Tobias
This article is of two-fold interest with the goal of providing an overview of the field and aims at discussing the most recent research in the relevant field. It shows how the computational methods and modelling ideas are being used by Bayesian econometricians. It also discusses linear models and presents a review of the normal linear regression model, deriving marginal, conditional, and predictive posterior densities of interest. This article proceeds further to discuss hierarchical linear models and review approaches to handle endogeneity problems. It presents applications and posterior simulation strategies for nonlinear latent variable models and considers the analysis of treatment effects models and multinomial and multivariate probit models. This article briefly reviews basic Bayesian approaches to the analysis of duration data.
The objective of this chapter is to review and extend an emerging body of research that tests theories, models, and general predictions of human behavior—most of which are rooted in psychology—while using the point spread wagering market as the setting. The bridge between behavioral psychology and sports betting is provided by the growing field of behavioral finance, a relatively new subdiscipline of behavioral economics.
This chapter is concerned with exploring individuals’ motivations for betting and other aspects of their behavior as bettors. These topics have generated a substantial literature over the past four decades. While the study of betting behavior has been dominated by the lens of economic analysis, it has also garnered the attention of psychologists, sociologists, and those interested in designing the legal and regulatory regimes within which betting takes place or those tasked with addressing and treating the negative effects of excessive exposure to betting from a medical or social care perspective.
George Wu, Richard P. Larrick, and Raegan Tennant
Samuel A. Swift and Don Moore
This chapter examines the interrelationships between democracy on the one hand and capitalism (or what I prefer to call “the liberal economy”) on the other. Liberal thinkers tend to maintain that the two are allies, at least as long as democracy is (constitutionally or otherwise) limited. Socialists regard them as rivals, as “true” democracy can be realized only under socialism or communism. Joseph Schumpeter stands out as the commentator who argued that there is no strong relationship at all between the two: any economic arrangement can be combined successfully with any political arrangement. I survey both the classical views on this topic and a number of more recent contributions.
Parents treat sons and daughters differently, but the causes and manifestations of the discrimination depend on context. This chapter reviews the literature on child gender in developing and developed countries and discusses methodological issues that arise when studying child gender effects. In many Asian countries, girls receive less adequate nutrition and health care, and sex-selective abortion is common. In the United States, parents of sons are more likely to be married than parents of daughters, and paternal labor supply and household expenditure patterns vary by child gender. In both cases, the patterns can be explained by differences in returns to children by gender or preferences for sons, and the responses to child gender are shaped by parents’ relative bargaining power. The particular mechanisms depend on culture and constraints faced by parents. Methodological issues include endogenous fertility and child mortality in developing countries and endogenous family structure in the United States.
Why are there civil rights laws? What should their scope and coverage be? What are their weaknesses? How can they be improved? In answering these questions, I concentrate on employment and on race in the United States. Following Sophia Moreau, I argue that civil rights laws are ways of assigning rights that are needed when groups are victims of pervasive discrimination. Empirical economic work shows that blacks and Hispanics probably meet the relevant conditions for coverage under these laws, but whites (at least white males) do not. Civil rights laws are hard to enforce, and should cover as many different domains of life as possible because coverage in each domain is complementary with coverage in others. Existing laws do not seem sufficient to assure blacks and Hispanics of the deliberative freedoms that Moreau enunciates, and so I speculate on alternative approaches.
This article considers another cause of conflict, one that has received much less attention than informational problem: commitment problems. Such problems essentially derive from the inability of parties to write binding long-term contracts on arming or anything else. Commitment problems can lead to conflict primarily because negotiated outcomes and conflict often imply different future strengths for the adversaries. Added “benefits” of war can induce adversaries to fight instead of negotiate. The discussion looks on cases in which commitment problems come about as power shifts against one of the adversaries in favor of the other over time. The side that is expected to lose power might then decide to fight, rather than negotiate, as a way of forestalling its decline. The article also discusses how similar commitment problems extend to cases of domestic politics.
Zoe I. Barsness
Kathleen L. McGinn and Markus Nöth
Joan Esteban and Debraj Ray
This article reviews and compares different measures of polarization within a unifying framework. A country can be highly unequal in income and wealth, but it might not be highly polarized in economic terms. Conversely, a country can be considered economically equal, but nonetheless highly polarized, if there are two distinct, though not too distant, income groups facing one another. Similar comments apply to other ethnic or religious measures of fragmentation. The discussion focuses on unidimensional polarization, the leading example being income polarization.