European Economics at a Crossroads

European Economics at a Crossroads

J. Barkley Rosser Jr, Richard P.F. Holt and David Colander

As Europe moves toward an integrated academic system, European economics is changing. This book discusses that change, along with the changes that are happening simultaneously within the economic profession. The authors argue that modern economics can no longer usefully be described as ‘neoclassical’, but is much better described as complexity economics. The complexity approach embraces rather than assumes away the complexities of social interaction.

Chapter 4: Ernst Fehr

J. Barkley Rosser Jr, Richard P.F. Holt and David Colander

Subjects: economics and finance, economics of education, methodology of economics, education, economics of education

Extract

This interview took place on 21 September, 2007, at MIT You have been successful in the economics profession even though you started over in Europe and have remained there. Do you think you would have done better in the United States? Initially I stayed in Europe for personal reasons because I was always interested in topics that were not in the mainstream of economics. When I studied economics, I always read a lot of psychology and other related fields. Even before behavioral economics was on the table, I had the impression that economics was too narrow in capturing what was going on in human behavior. But I didn’t have a way to express it. So I learned all the standard economic tools – optimization, game theory – and got excited by game theory because it increased the opportunity to model things that could not have been modeled before. But still, I thought that economics could not capture important issues such as fairness or emotions. I think what really changed my whole career path was when I came into contact with experimental economics. I saw this as a tool to really show important, yet neglected things to economists, and not just talk about them. In some sense you could say that my work started with a rejection. In the late 1980s I wrote a paper about fairness that got rejected everywhere. It was a theoretical paper where I placed fairness into the utility function. One important implication of the model was that workers...

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