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Instructors: Prof. Dr. Salvatore Barbaro
Event type:
online: Lecture
Displayed in timetable as:
03.184.4170
Hours per week:
2
Language of instruction:
Englisch
Min. | Max. participants:
- | -
Requirements / organisational issues:
Introductory Microeconomics
Contents:
The most trite yet crucial question in the field of economic growth and development is: why are some countries much poorer than others? Traditional neoclassical growth models explain differences in income per capita in terms of different paths of factor accumulation. In these models there are institutions, for example, agents have well-defined property rights and exchange goods and services in markets,but differences in income and growth are not explained by variation in institutions. The so-called “new institutional economics” shed light on the role of institution. As the Nobel laureate Douglas North and Thomas (1973, p. 2) put it in a influential paper: “the factors we have listed (innovation, economies of scale, education, capital accumulation, etc.) are not causes of growth; they are growth”. Factor accumulation and innovation are only proximate causes of growth. In North and Thomas’s view, the fundamental explanation of comparative growth is differences in institutions.
So, what are institutions exactly? North offers the following definition, which I put on the first slight: “Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction”.
Thus, we can state the institutions are collective decisions. As mentioned before, the role of institutions in explaining economic outcomes are examined in the field of institutional economics. In this lecture, we shed light on a discipline which focus on how collective decisions are made. This is the social-choice theory, an interdisciplinary framework covering philosophy, mathematics, economics and political science. The most-known researcher in this area is Amartya Sen, who is often regarded as one of the most important economists. The social-choice theory focus on the process of collective decision-making. It asks, how individual opinions and preferences can be transformed into collective decisions by respecting sound conditions of liberty and democracy. An example for such a collective-decision making are elections.
Outline:
1. Introduction
Introduction to Institutional Economics [williamson (2000)]
Perfekt property rights versus anarchy [skaperdas (1992)]
Social-choice theory as an approach [sen, 2009, p. 91ff]
2. Preference Relations and Social Preference [sen, 2017; ch. 1*, ch. a1*]
3. Welfare Economics (Bergson-Samuelson) [sen, 2017; ch. 3*, ch. a3*]
4. Arrow‘s impossibility theorem and Arrovian social-welfare functions [sen, 1995aer, maskin and sen 2014]
5. The Liberal Paradox [sen (1970), sen, 2017; ch. 6*, ch. a5 - a6]
6. May‘s theorem: Anonymity, Neutrality and Responsiveness [may (1952), sen, 2017; ch. 5*]
7. The principle of majority decision: introduction to voting theory [sen (1995jep), sen, 2017; ch. 5*, a4 – a6]
Transcendental voting schemes
Positional voting schemes
Polarizing candidates and autocrats
What if there is no majority winner: run-off elections
8. Theory of Justice [(sen, 2009, ch. 1 - 3, part 4)]
• Utiliarism
• Liberalism
• Contractualism
• Sen’s Capability Approach
9. Economics and Democracy [(sen, 2009, part iv), habermas (2019)]
Recommended reading list:
Sen, A.: Collective Choice and Social Welfare (2017)
Sen, A.: The Idea of Justice (2009)
Sen, A.: How to judge voting schemes. Journal of Economic Perspectives 9 (1995), p. 91–98.
Sen, A.: Rationality and social choice. American Economic Review 85 (1995), p. 1–24.
Sen A.: (1970) The impossibility of a Paretian liberal. J Political Economy 72 (1970), p. 152-157
Maskin, Sen: The Arrow Impossibility Theorem (2014)
May, K.O. 1952. A set of independent necessary and sufficient conditions for simple majority decision.
Econometrica 20:680–684.
Habermas, J.: Faktizität und Geltung (2019).
Skaperdas, S.: Cooperation, Conflict, and Power in the Absence of Property Rights. American Economic Review 82 (1992), p. 720-239
Williamson, O.: The New Institutional Economics: Taking Stock, Looking Ahead. JeconPersp 38 (2000), p. 595-613
Digital teaching:
The course will be held on BBB platform in case that the pandemic does not allow lectures on campus.
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