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REVISTA DE ECONOMÍA
INSTITUCIONAL No. 10, FIRST SEMESTER 2004
Can Experiments Falsify Expected
Utility Theory?
Geoffrey M. Hodgson  [pdf] [html]
[Key words: rationality, experimental economics,
falsification, evolutionary psychology; JEL: B41, C90, D00]
Some recent articles debate the implications of the
results of experimental economics. It is claimed by some
that these results challenge the assumptions of expected
utility theory. Others deny this. Both sides presume that
the assumptions of rationality or expected utility-maximization
are potentially falsifiable by empirical tests. This article
contests this assumption. Building on previous work in
economic methodology, it is argued that non-falsifiable
assumptions, such as the standard rationality postulates,
are potentially universal. Hence they can embrace any
empirical phenomenon. That is both their strength and their
weakness. The article concludes that the debate among
experimental economists can only proceed if both sides
accept the non-falsifiability of key propositions under
dispute. That done, the protagonists can turn to the more
pertinent questions such as the criteria for choosing
theories. In particular, experimental economics may have a
role in suggesting more narrow and context-specific
behavioural assumptions for economic theory.
Moral Risk and Contracts:
Certain Experimental Evidence
Julián Arévalo B. y Jair Ojeda J. [pdf] [html]
[Key words: moral risk, contracts, experimental evidence,
asymmetric information; JEL: B41, C90, D89]
This paper shows one type of asymmetric information
problems, their theoretical implications, the design of
contracts that mitigate them, as well as some experimental
evidence. Furthermore, by extrapolating the results, the
paper tries to illustrate certain macroeconomic implications
obtained under a controlled environment.
Nash and Von Neumann:
Possible Worlds and Language Games
Boris Salazar [pdf] [html]
[Key words: modal logic, possible worlds, rationality,
language games, cooperative games, non-cooperative games; JEL:
C70, C71, C72, C79]
Using language game notions and the equivalence between
games, this document studies John Nash's decision of not
playing the coalitional game proposed by John von Neumann.
The key point is that Nash suggested hypothetical worlds
that are incompatible with the kind proposed by von Neumann.
And, at the root of this difference, lies their different
notions of rationality.
Democracy not only Lives
on Markets. The non Compliance of the Law and its Relation
with Development, Justice and Democracy
Mauricio García Villegas [pdf] [html]
[Palabras clave: non compliance of the law, law and
economics, legitimacy, development, justice, democracy,
institutions, new institutionalism; JEL: K00, K42, K49]
This article analyzes the non compliance of the law in
Latin America, particularly in Colombia. The core of the
paper is the contrast between two different approaches: the
strategic vision which argues that this failure is a
consequence of the lack of institutional capacity to impose
effective penalties; and the rebellion vision, which
explains the failure as an expression of values or
ideologies. The article examines the doctrinal roots related
with the strategic vision - the social capital theories,
studies in Law and economics and the new institutionalism -
their reception in our environment and their application in
the context of the judicial reform. This critical
examination highlights the analytical differences between
these two visions and their implications in the justice
system and the social law: even though both visions are
partial, each one of them is partly true. Compliance of law
can not be achieved only by imposing sanctions and
incentives, or by promoting a unilateral favorer attitude
for compliance of the law. Rational behavior must also be
complemented by the perception of the legitimacy of the
institutions. Market and the democracy are both equally
essential for the existence of a Rule of law.
Institutions and Economic
History: Approaches and Institutional Theories
Gonzalo Caballero [pdf] [html]
[Key words: institutions, economic history, New
Institutional Economics, Historical and Comparative
Institutional Analysis; JEL: N00, B40, D23]
Recently, some papers have been published that examine
the relation between economic history and institutional
economics, and propose a closer relation between these two
disciplines. This article shows how the theoretical and
methodological foundations of the different institutionalist
programs are enriching research in economic history, giving
it more rigor. Furthermore, using papers from Hodgson, North
and Greif, this article reviews the contributions of
traditional institutionalism, New Institutional Economics
and Historical and Comparative Institutional Analysis. It
ends by proposing a research program that emphasizes the
historical studies of institutions and enriches economic
analysis. Economic history should not be seen as a subaltern
discipline; it should be treated at the same level as
economics, as Schumpeter wanted it.
Homicides in South
America: Are the Poor Dangerous?
Mamadou Camara y Pierre Salama [pdf] [html]
[Key Words: violence, homicides, poverty, South America;
JEL: I39, O10]
This paper studies the evolution of violence in South
America. It analyzes and discusses the influence of
different economic variables on homicide rates, using an
econometric test based on data of some South American
countries during the period 1995-2000. It shows that this
economic approach can be usefull but can also be dangerous
when it leads to the wrong policies of social exclusion.
Furthermore, it also shows how variables such rapid
urbanization, low education, and inefficient regulations,
together with corruption, play an important role in the
generation of violence in South America. Finally, the paper
recommends changing the way of perceiving economics and its
social implications, by examining the interaction of this
discipline with other social sciences.
Determinants of
Household Income and Expenditures
Manuel Muñoz C. [pdf] [html]
[Key Words: household behavior, household income,
household expenditure, uncertainty; JEL: D10, D12, D19]
This empirical research analyzes the determinants of
Colombian household revenues and expenditures. Using a life
cycle model with data from the national household survey
1994-1995, the paper shows how the behavior of household
income is mainly affected by demographic characteristics and
by the social-occupational characteristics of its members.
Expenditure behavior is determined principally by income and
secondly by the social characteristics of the household and
by the expenditure of other households with similar
characteristics. The paper also analyzes the influence of
income uncertainty on households expenditure, to see if the
effect is due to a motive of precaution.
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