Roger Hewett, Charles A. Holt, Georgia Kosmopoulou, Christine Kymn, Cheryl X. Long, Shabnam Mousavi, Sudipta Sarangi[show abstract] [hide abstract]
ABSTRACT: This classroom experiment illustrates the efficiency-enhancing property of a Tiebout system in which local public goods decisions are determined by a political process. Students are given playing cards that induce diverse preferences for expenditures on alternative public goods and are initially assigned to specific communities. Then those in each community vote on the type and level of public goods provision, which determine the tax cost. After the provision and tax results are announced, students are free to move to a location where the prior results are more consistent with their preferences. This process continues for several rounds, with a new vote taken at each location after moves have been made. The exercise demonstrates that the combination of voting with feet and ballots tends to increase the total net benefit for all communities. The voting on provision levels is structured to facilitate a discussion of the median voter theorem.Southern Economic Journal 01/2005; 72(1):253-263. · 0.63 Impact Factor
Article: Toward a transactional theory of decision making: creative rationality as functional coordination in contextShabnam Mousavi, Jim Garrison[show abstract] [hide abstract]
ABSTRACT: This paper poses a Deweyan challenge to both the neoclassical framework of rational choice and models of bounded rationality and deliberation, especially the procedural theory of rationality advanced by Herbert Simon. We demonstrate how modern theories on procedural or instrumental rationality trace their origin to the tradition of British empiricism, especially the philosophy of David Hume. Most theories of action such as Simon's assume actors may control their bodies 'at will.' For Dewey, habits are will; we control them when we identify them and condition them through reflective deliberation. To clarify our Deweyan critique, we use empirical research on consumer's use of mathematical calculation in supermarkets, by Jean Lave, which rejects calculative Turing machine rationality. We argue that a theory that can deal with deliberation regarding incommensurable values better explains economic behavior in the everyday marketplace. Thus, economists would do better to concentrate on social practices in specific contexts and the neurophysiological basis of need and desire.Journal of Economic Methodology 01/2003; 10(2):131-156.
Shabnam Mousavi, Sudipta Sarangi[show abstract] [hide abstract]
ABSTRACT: Introduction When there is freedom in choosing where to live among jurisdictions competing for residents, individuals will shop for jurisdictions that most closely match their demands for local public goods and this process is efficiency-enhancing. Tiebout (1956) first made this argument to challenge the Musgrave-Samuelson analysis, in which the market falls short of providing the efficient amount of public goods due to the free rider problem resultant from individuals failure to truthfully report their preferences. In the ideal world envisioned by Tiebout, individuals sort themselves into groups with similar preferences by freely moving to their desired community, and thus reveal their true preferences for public goods in the process. The Tiebout hypothesis has spurred a fruitful research agenda in public finance and urban economics, and the efficiency-enhancing property of the Tiebout solution has been corroborated and supported by both theoretical and empirical work. With the leve08/2002;
Article: Monitoring Markov dependent binary observations with a log-likelihood ratio based CUSUM control chart [electronic resource] /Shabnam. Modarres-Mousavi[show abstract] [hide abstract]
ABSTRACT: Our objective is to monitor the changes in a proportion with correlated binary observations. All of the published work on this subject used the first-order Markov chain model for the data. Increasing the order of dependence above one by extending a standard Markov chain model entails an exponential increase of both the number of parameters and the dimension of the transition probability matrix. In this dissertation, we develop a particular Markov chain structure, the Multilevel Model (MLM), to model the correlation between binary data. The basic idea is to assign a lower probability to observing a 1 when all previous correlated observations are 0's, and a higher probability to observing a 1 as the last observed 1 gets closer to the current observation. We refer to each of the distinct situations of observing a 1 as a "level". For a given order of dependence, , at most different values of conditional probabilities of observing a 1 can be assigned. So the number of levels is always less than or equal to . Compared to a direct extension of the first-order Markov model to higher orders, our model is considerably parsimonious. The number of parameters for the MLM is only one plus the number of levels, and the transition probability matrix is . We construct a CUSUM control chart for monitoring a proportion with correlated binary observations. First, we use the probability structure of a first-order Markov chain to derive a log-likelihood ratio based CUSUM control statistic. Then, we model this CUSUM statistic itself as a Markov chain, which in turn allows for designing a control chart with specified statistical properties: the Markov Binary CUSUM (MBCUSUM) chart. We generalize the MBCUSUM to account for any order of dependence between binary observations through implying MLM to the data and to our CUSUM control statistic. We verify that the MBCUSUM has a better performance than a curtailed Shewhart chart. Also, we show that except for extremely large changes in the proportion (of interest) the MBCUSUM control chart detects the changes faster than the Bernoulli CUSUM control chart, which is designed for independent observations. System requirements: PC, World Wide Web browser, and PDF reader. Available electronically via the Internet. Title from electronic submission form. Thesis (Ph. D.)--Virginia Polytechnic Institute and State University, 2006. Vita. Abstract. Includes bibliographical references.
Article: Methodological foundations for bounded rationality as a primary framework [electronic resource] /Shabnam. Modarres-Mousavi[show abstract] [hide abstract]
ABSTRACT: Experimental observations have shown that economic agents behave in ways different from the maximization of any utility function. Herbert Simon sought to deal with this by positing that individuals do not maximize, but rather "satisfice." This was a radical departure from the traditional economic framework, and one that still has not been adequately formalized. But Simon's suggestion is only the smallest part of what is needed for a theory that reflects the actual behavior. For instance, Simon's framework cannot deal with the observation that the act of choice changes the chooser. This dissertation is further developing Simon's original ideas through embracing John Dewey's transactional thinking to attain an adequate theory of economic choice that accounts for boundedly rational agents. I clarify that substantive rationality and bounded (procedural) rationality share the same basic utilitarian assumption of predetermined goals. In terms of a Deweyan (transactional) analysis, the idea of utilitarian "optimization" ultimately guides and constrains both theories. But empirical study of choice behavior and the behavior of subjects in experimental laboratories, both indicate that neither substantive nor procedural rationality can effectively account for actual economic choices. I emphasize the importance of treating bounded rationality without reference to the rational framework. System requirements: PC, World Wide Web browser and PDF reader. Available electronically via Internet. Title from electronic submission form. Thesis (Ph. D.)--Virginia Polytechnic Institute and State University, 2003. Vita. Abstract. Includes bibliographical references.