April 05, 2011, 05:00 AM to 06:00 AM
The first chapter ‘De Gustibus Est Disputandum’ theoretically examines the problem of infinite regress in the analysis of human action. An agent’s action is dependent on other people’s action, which in turn, is affected by a third set of actors, and so on. This irreducible complexity leads to a variety of approaches. It is argued that behavioral move in economics is needed in order to explain how agents evaluate the (humanly imposed) constraints. As individuals’ actions are influenced by their ideas, the web of institutional constraints will be affected if there is a shift in ideas. This requires a study of how the emergence of intersubjectively shared ideas can be brought about by human interaction.
The next chapter ‘Short Run Bias & Long Run Rationality’ contains the applied hypotheses that an absence of hierarchical constraints will lead to higher beliefs of internal Locus of Control, and lower preferences for state intervention. It is shown how different groups in east Germany subject to varying degrees of hierarchically imposed constraints display a different pace of belief and preference adjustment after the reunification of the country.
Finally, the chapter ‘Post-socialist Culture & Entrepreneurship’ shows empirically how cultural beliefs and preferences that emerged under a prolonged period of socialism can affect economic behavior. At least one third of the gap in self-employment between east and west Germany can be attributed to this effect, after competing explanations, such as credit constraints, education, and adverse selection are accounted for.