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The Invisible HandThe Invisible Hand in Economics: How Economists Explain Unintended Social Consequences, INEM Advances in Economic Methodology, London: Routledge, 2008.

This is a book about one of the most controversial concepts in economics: the invisible hand. The author explores the unintended social consequences implied by the invisible hand and discusses the mechanisms that bring about these consequences.

The book questions, examines and explicates the strengths and weaknesses of invisible-hand type of explanations of emergence of institutions and macro-social structures, from a methodological and philosophical perspective. Aydinonat analyses paradigmatic examples of invisible-hand explanations such as Carl Menger’s ‘Origin of Money’ and Thomas Schelling’s famous checkerboard model of residential segregation in relation to contemporary models of emergence of money and segregation. Based on this analysis, he provides a fresh look at the philosophical literature on models and explanation and develops a philosophical framework for interpreting invisible-hand type of explanations in economics and elsewhere. Finally, the author applies this framework to recent game theoretic models of institutions and outlines the way in which they should be evaluated.

Covering areas such as History, Philosophy of Economics and Game Theory, this book will appeal to philosophers of social science and historians of economic thought as well as to practicing economists.

For more information (table of contents, reviews, where to buy etc.) click here and visit The Invisible Hand in Economics.

Cover

This book is in Turkish. It investigates the roots of modern international trade theory by way of examining the theoretical roots of the Heckscher-Ohlin theorem.

Modern Uluslararası İktisat Teorisinin Kökenleri: Karşılaştırmalı Üstünlükler, Neo-Klasik Fiyat Teorisi ve Heckscher-Ohlin Teoremi, Siyasal Yayınevi, Ankara, 2007, in Turkish

The title may be translated as follows: The Roots of Modern International Trade Theory: Comparative Advantages, Neoclassic Price Theory and the Heckscher-Ohlin Theorem.

I’ll be working on the methodology and empirics of the H-O theory in the coming months.

Models, conjectures and exploration: an analysis of Schelling’s checkerboard model of residential segregation, Journal of Economic Methodology, Volume 14 Issue 4, pp. 429 – 454.

Abstract: This paper analyses and explicates the explanatory characteristics of Schelling’s checkerboard model of segregation. It argues that the explanation of emergence of segregation which is based on the checkerboard model is a partial potential (theoretical) explanation. Yet it is also argued that despite its partiality, the checkerboard model is valuable because it improves our chances to provide better explanations of particular exemplifications of residential segregation. The paper establishes this argument by way of examining the several ways in which the checkerboard model has been explored in the literature. The examination of the checkerboard model also supports the view that the relation between the real world and models is complex, and models should be considered as mediators, or as instruments of investigation.

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Aydinonat, N. Emrah (2006) “Institutions: Theory, History and Context-Specific Analysis”, History of Economic Ideas, 14 (3): 145-158

This is a review essay on Avner Greif, Institutions and the Path to the Modern Economy: Lessons from Medieval Trade, Cambridge, Cambridge University Press, 2006, xx+503.

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*Thanks to History of Economic Ideas for allowing me post the fulltext of this review to EconPapers.

Game Theoretic Models as a Framework for Analysis: The Case of Coordination Conventions, in Aktan, C. C. (ed.) Advances in Economics: Theory and Applications, Vol 2, İzmir: Anıl Matbaacılık, 2006.

Abstract: This paper examines game theoretic models of coordination conventions. Firstly, the paper shows that static models of coordination cannot explain the emergence of coordination conventions. The best interpretation of these models is that they study the conditions under which coordination is possible. The examination of these conditions suggests that history and existing institutions are important in the process of emergence of institutions. Secondly, an examination of dynamic models of coordination conventions reveals that some of these models explicate some of the ways in which coordination may be brought about in the model world. Nevertheless, consideration of these models fortifies the point that history and existing institutions are crucial for explaining the emergence of conventions in the real world. Based on these observations, the paper suggests that game theory as a framework of analysis is the best possible interpretation of game theoretic models of coordination conventions.

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Aydinonat, N. Emrah, (2006) “Is the Invisible Hand un−Smithian? A Comment on Rothschild,” Economics Bulletin, Vol. 2 no. 2 pp. 1-9.

Rothschild (2001) argues that the invisible hand refers to blind individuals and presume privileged knowledge on the part of the social scientist. For this reason, she takes it that the invisible hand is, in fact, an un−Smithian concept and that Smith was making an ironical joke. In this brief comment, I argue that the invisible hand does not imply blind and futile individuals or privileged knowledge and it cannot be argued that it is an un−Smithian concept on these grounds. Briefly, it is argued here that although it may be true that Smith used the invisible hand somewhat ironically, this does not imply that it is un−Smithian.

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