A Note on Islamic Economics

1. A Note on Islamic Economics defined as technologies for avoiding expropriation of property and the latter as technologies for enforcing contracts. See Economic Behavior and Institutions by Thranin Eggertsson, Cambridge University Press, Cambridge, 1990. The author utilizes the New Institutional Economics (NIE) to explain the workings of the economy and how institutions, specifically property rights and rules that deal with transaction costs, organize collective behavior. In recent interesting paper, B.F. Jones and B.A. Olken (―Do Leaders Matter?‖ NBER, July 2004) suggest that leaders can play a crucial role in economic growth through their influence on economic institutions. On bounded rationality, see Herbert A. Simon Models of Bounded Rationality , the MIT Press, 1982. See ‗Rationality‘ (pp. 405-407); ―Themes of Bounded Rationality,‖ (pp. 408-423); ―From Substantive To Procedural Rationality‖ (pp. 424-443); ―Rationality As Process and as Product of Thought‖ (pp. 444-459). Also see Debra Staz and John Ferejohn ―Rational Choice and Social Theory.‖ Journal of Philosophy, Vol. 91 (pp. 71-87). Simon proposed his concept of ‗bounded rationality‘ in 1957 along with his idea that because information is costly and not available, rather than optimizing, firms ‗satisfice‘ that is they do not go beyond a level of satisfaction. In Competition and Cooperation : James E. Alt, Margaret Levi, and Elinor Ostrom, published by Russell Sage Foundation, New York, difficulties with various assumption of neo-classical economies are discussed. On cognitive science, see also this volume. This is a useful book that discusses the ideas of Noble prize winners: Gary Becker, Kenneth Arrow, Herbert Simon, James Buchanan, Douglass North, Richard Selten; a series of papers summarizing the impact of each of these scholars on economic and political science. The responses of the Noble Prize winners are also insightful. On behavioral and experimental economics see Colin Camerer ―The Behavioral Challenge to Economics: Understanding Normal People,‖ paper presented at a conference on “How Humans Behave,‖ June 8 – 10, 2003, Federal Reserve of Boston. On behavioral economics, see the NBER Working paper 7948 ―Behavioral economics‖ by Sendhil Mullainathan and Richard H. Thaler, National Bureau of Economic Research, October 2000, for an overview of the subject. See also Advances in Behavioral Economics , edited by Colin Camerer, et. al., Princeton University Press, 2004. For an excellent book incorporating a number of recent developments in behavioral economics, see Microeconomics: Behavior, Institutions, and Evolution by Samuel Bowles, Princeton University Press, 2003. On game theory see Roger B. Myerson ―Nash Equilibrium and the History of Economic Theory,‖ Journal of Economic Literature, Vol. 37, No. 3, September 1999 (pp. 1067-1982), in which the author suggests that ―by accepting non-cooperative game theory as a core analytic methodology alongside price theory, economic analysis has returned to the breadth of vision that characterized the ancient Greek social philosophers who gave economics its name‖ (p. 1081). On evolutionary thinking in economics, see Richard R. Nelson and Sidney G. Winter, ―Evolutionary Theorizing in Economics,‖ Journal of Economic Perspectives, Vol. 16, 40