Mainstream climate economics takes global warming seriously, but perplexingly concludes that the optimal economic policy is to almost do nothing about it. This conclusion can be traced to just a few "normative" assumptions, over which there exists fundamental disagreement amongst economists. This paper explores two axes of this disagreement. The first axis ("market vs. regulation") measures fai...

A number of different models with behavioral economics have a reduced form representation where potentially boundedly rational decision-makers do not necessarily internalize all the consequences of their actions on payoff relevant features (which we label as psychological states) of the choice environment. This paper studies the restrictions that such behavioral models impose on choice data and...

In this paper, I shall defend two main claims. First, Friedman’s famous paper “On the methodology of positive economics” (“F53”) cannot be properly understood without taking into account influence three authors who are neither cited nor mentioned in paper: Max Weber, Frank Knight, and Karl Popper. trace both their substantive on F53 historical route by which took place. Once one has these ingre...

Behavioral economics and existentialism both present informative perspectives on human choice. We argue in this article that the dialogue between two approaches can enrich current debate about normative implications of behavioral economics. While suggests our capacity to choose is constrained by cognitive biases environmental influences, emphasizes we (and should) treat ourselves as free ‘becom...

vs Descriptive Artificial vs Realistic Positive vs Normative

The current economics and psychology are developed within the Newtonian tradition in physics from both conceptual and instrumental perspectives. This paper aims to integrate economics and cognitive science by applying gauge field theory of modern theoretical physics. Many controversies between normative theories and behavioral theories are characterized by the " man vs. men " dilemma. Gauge pot...

Books focused on in this review: Easterly, William. 2001. The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics. Cambridge MA: MIT Press. Pogge, Thomas. 2002. World Poverty and Human Rights. Cambridge UK: Polity. Stiglitz, Joseph E. 2002. Globalization and Its Discontents. NY NY: Norton. Stone, Randall. 2002. Lending Credibility: The IMF and the Post-Communist Tr...

What is the rationale for benefit-cost analysis (BCA)? The answer is critical for determining how BCA results should be interpreted, their implications for policy, and how BCA should be conducted. There are at least two possible bases for justifying BCA, positive and normative. The positive basis is that BCA identifies policy changes that satisfy the Kaldor-Hicks compensation test, so that thos...

This paper puts forward two major sets of institutional and systems arguments against implementing the 'big bang' experiment in the transformation of centrally planned economies: (1) problems arising from the difficulties of establishing criteria for asset valuation in the transition and the large backlog of the 'implicit contracts of socialism'; and (2) the danger of unleashing uncoordinated c...