|Markets||Smith||Surowiecki I 144
Markets/Prices/Information/Smith, Vernon L./Surowiecki: Problem: How do markets work without information being available to everyone? How does it turn out that goods go from the people who produce them cheapest to the people...
Surowiecki I 145
...that need them most urgently? Smith: investigated this question empirically in a laboratory in 1956 (which was unusual at the time). A group of 22 students were divided into buyers and sellers. Each seller received a card stating the lowest price at which he was selling, each buyer received a card with the highest price at which he should be willing to buy.
Surowiecki I 146
In the laboratory situation, this resulted in a "market" that followed the model of the so-called reciprocal auction, which is similar to the usual stock exchange. Offers and acceptances were announced by acclamation. Conclusions were noted on a blackboard. Smith wanted to find out whether there would be a price in line with the market in theory.
Surowiecki I 147
In fact, prices quickly converged to a price, even though none of the participants wanted such a result, as buyers wanted lower prices and sellers wanted higher prices. The participants did not have any more information than the prices noted on the cards. Further result: the Group's total profit was boosted by the market. The group could not have done better if it had had more information. (1)
Vernon L SmithVsArrow, Kenneth J./Surowiecki: Kenneth Arrow and Bernard Debreu had shown in the 1950s that markets are efficient and mistakes are impossible here: However, this so-called "balance weight hypothesis" was only shown with a theoretical model and not in a practical experiment.
Arrow/Surowiecki: in his theoretical model, buyers and sellers have extensive knowledge. (See Markets/Surowiecki)
Vernon L. Smith's study of his first classroom experiment is "An Experimental Study of Competitive Behavior", Journal of Political Economy 70/1962, pp. 111-137, and many of the articles he has published on this subject over the years are collected in two volumes: Smith, Papers in Experimental Economics (Cambridge University Press, Cambridge 1991); and Smith, Bargaining and Market Behavior (Cambridge University Press, Cambridge 2000).
The Theory of Moral Sentiments London 2010
Vernon L. Smith
Rationality in Economics: Constructivist and Ecological Forms Cambridge 2009
Die Weisheit der Vielen: Warum Gruppen klüger sind als Einzelne und wie wir das kollektive Wissen für unser wirtschaftliches, soziales und politisches Handeln nutzen können München 2005
|Political Economy||Rawls||I 259
Political economy/Rawls: by this I mean economic arrangements and political arrangements as well as the background institutions that are related to them. Welfare economics/K. J. Arrow/Rawls:
Defines welfare economics in a similar way(1)(2)(3).
Welfare/Rawls: I do not use this expression because it is reminiscent of utilitarianism. (RawlsVsUtilitarianism).
The theory of justice as fairness treats social forms as closed systems. An economic system is also shaped by existing needs and necessities. The current cooperation between people in meeting these needs affects the way in which the needs of the future will look. These things are known and shared by such diverse authors as Marx and Marshall(4).
Social order/Rawls: Problem: how does this reciprocal influence of needs, satisfaction and new needs in the initial situation of a society to be established, where people stand behind a veil of ignorance in relation to their future position, affect the possible shaping? Solution: only the most general assumptions about primary public goods (e. g. freedoms) are made. ---
Economy/disagreement/RawlsVsArrow, K. J/Rawls: different from what K. J. Arrow(5) assumes, disagreement between parties is not a particular feature of idealism. In contract theory, it is part of the initial situation of a society to be established. It forms the content of the theory of justice as fairness. It tries to combine Kant's concept of the realm of purposes with that of autonomy and the categorical imperative. In this way, we can avoid metaphysical assumptions.
(1) See K. J. Arrow and Tibor Scitovsky, Readings in Welfare, Homewood, 1969, p. 1.
(2) A. Bergson, essays in Normative Economics, Cambridge, MA, 1966, pp 35-39,60-63,68f.
(3) Amartya Sen, Collective Choice and Social Welfare, San Francisco, 1970, pp. 56-59.
(4) See Brian Barry, Political Argument, London, 1965.
(5) K. J. Arrow, Social Choice and Individual Values 2nd. Ed. New York, 1963, pp. 74f, 81-86.
A Theory of Justice: Original Edition Oxford 2005