Understanding Institutions proposes a new unified theory of social institutions that combines the best insights of philosophers and social scientists who have written on this topic. Francesco Guala presents a theory that combines the features of three influential views of institutions: as equilibria of strategic games, as regulative rules, and as constitutive rules. -/- Guala explains key institutions like money, private property, and marriage, and develops a much-needed unification of equilibrium- and rules-based approaches. Although he uses game (...) theory concepts, the theory is presented in a simple, clear style that is accessible to a wide audience of scholars working in different fields. Outlining and discussing various implications of the unified theory, Guala addresses venerable issues such as reflexivity, realism, Verstehen, and fallibilism in the social sciences. He also critically analyses the theory of “looping effects” and “interactive kinds” defended by Ian Hacking, and asks whether it is possible to draw a demarcation between social and natural science using the criteria of causal and ontological dependence. Focusing on current debates about the definition of marriage, Guala shows how these abstract philosophical issues have important practical and political consequences. -/- Moving beyond specific cases to general models and principles, Understanding Institutions offers new perspectives on what institutions are, how they work, and what they can do for us. (shrink)

The experimental approach in economics is a driving force behind some of the most exciting developments in the field. The 'experimental revolution' was based on a series of bold philosophical premises which have remained until now mostly unexplored. This book provides the first comprehensive analysis and critical discussion of the methodology of experimental economics, written by a philosopher of science with expertise in the field. It outlines the fundamental principles of experimental inference in order to investigate their power, scope and (...) limitations. The author demonstrates that experimental economists have a lot to gain by discussing openly the philosophical principles that guide their work, and that philosophers of science have a lot to learn from their ingenious techniques devised by experimenters in order to tackle difficult scientific problems. (shrink)

Institutions generate cooperative benefits that explain why they exist and persist. Therefore, their etiological function is to promote cooperation. The function of a particular institution, such as money or traffic regulations, is to solve one or more cooperation problems. We go on to argue that the teleological function of institutions is to secure values by means of norms. Values can also be used to redesign an institution and to promote social change. We argue, however, that an adequate theory of institutions (...) should not be ‘moralized’ in that they should not be defined in terms of the values they are supposed to promote. (shrink)

Current debates in social ontology are dominated by approaches that view institutions either as rules or as equilibria of strategic games. We argue that these two approaches can be unified within an encompassing theory based on the notion of correlated equilibrium. We show that in a correlated equilibrium each player follows a regulative rule of the form ‘if X then do Y’. We then criticize Searle's claim that constitutive rules of the form ‘X counts as Y in C’ are fundamental (...) building blocks for institutions, showing that such rules can be derived from regulative rules by introducing new institutional terms. Institutional terms are introduced for economy of thought, but are not necessary for the creation of social reality. (shrink)

Recent debates on the nature of preferences in economics have typically assumed that they are to be interpreted either as behavioural regularities or as mental states. In this paper I challenge this dichotomy and argue that neither interpretation is consistent with scientific practice in choice theory and behavioural economics. Preferences are belief-dependent dispositions with a multiply realizable causal basis, which explains why economists are reluctant to make a commitment about their interpretation.

Strong Reciprocity theorists claim that cooperation in social dilemma games can be sustained by costly punishment mechanisms that eliminate incentives to free ride, even in one-shot and finitely repeated games. There is little doubt that costly punishment raises cooperation in laboratory conditions. Its efficacy in the field however is controversial. I distinguish two interpretations of experimental results, and show that the wide interpretation endorsed by Strong Reciprocity theorists is unsupported by ethnographic evidence on decentralised punishment and by historical evidence on (...) common pool institutions. The institutions that spontaneously evolve to solve dilemmas of cooperation typically exploit low-cost mechanisms, turning finite games into indefinitely repeated ones and eliminating the cost of sanctioning. (shrink)

Experimental “localism” stresses the importance of context‐specific knowledge, and the limitations of universal theories in science. I illustrate Latour's radical approach to localism and show that it has some unpalatable consequences, in particular the suggestion that problems of external validity (or how to generalize experimental results to nonlaboratory circumstances) cannot be solved. In the last part of the paper I try to sketch a solution to the problem of external validity by extending Mayo's error‐probabilistic approach.

Comparative process tracing is the best analysis of extrapolation inferences in the philosophical and scientific literature so far. In this essay I examine some similarities and differences between comparative process tracing and former attempts to capture the logic of extrapolation, such as the analogical approach. I show that these accounts are not different in spirit, although comparative process tracing supersedes previous proposals in terms of analytical detail. I also examine some qualms about the possibility of drawing extrapolation inferences in the (...) social sciences and conclude by suggesting that there may be cases of extrapolation without process tracing. (shrink)

A series of recent debates in experimental economics have associated demand effects with the artificiality of the experimental setting and have linked it to the problem of external validity. In this paper, we argue that these associations can be misleading, partly because of the ambiguity with which “artificiality” has been defined, but also because demand effects and external validity are related in complex ways. We argue that artificiality may be directly as well as inversely correlated with demand effects. We also (...) distinguish between the demand effects of experimentation and the reactions that they may trigger and that might endanger experimental validity. We conclude that economists should pay more attention to the way in which subjects construe the experimental task and learn to exploit subjects’ reactivity to expectations in their experiments. (shrink)

Thaler and Sunstein justify nudge policies from welfaristic premises: nudges are acceptable because they benefit the individuals who are nudged. A tacit assumption behind this strategy is that we can identify the true preferences of decision-makers. We argue that this assumption is often unwarranted, and that as a consequence nudge policies must be justified in a different way. A possible strategy is to abandon welfarism and endorse genuine paternalism. Another one is to argue that the biases of decision that choice (...) architects attempt to eliminate create externalities. For example, in the case of intertemporal discounting, the costs of preference reversals are not always paid by the discounters, because they are transferred onto other individuals. But if this is the case, then nudges are best justified from a political rather than welfaristic standpoint. (shrink)

opinionated survey paper to be published in the Blackwell’s Philosophy Compass.

The answer in a nutshell is: Yes, five years ago, but nobody has noticed. Nobody noticed because the majority of social scientists subscribe to one of the following views: (1) the ‘anomalous’ behaviour observed in standard prisoner’s dilemma or ultimatum game experiments has refuted standard game theory a long time ago; (2) game theory is flexible enough to accommodate any observed choices by ‘refining’ players’ preferences; or (3) it is just a piece of pure mathematics (a tautology). None of these (...) views is correct. This paper defends the view that GT as commonly understood is not a tautology, that it suffers from important (albeit very recently discovered) empirical anomalies, and that it is not flexible enough to accommodate all the anomalies in its theoretical framework. It also discusses the experiments that finally refuted game theory, and concludes trying to explain why it took so long for experimental game theorists to design experiments that could adequately test the theory. (shrink)

The notion of multi-functional kind is introduced to explain how social scientists may be able to draw inferences across historically unrelated societies or cultures. Multi-functional kinds are neither eternal nor purely historical, support non-trivial inductive generalisations, and allow to overcome scepticism about the inductive potential of multiply realised (functional) properties. Two examples, from monetary economics and anthropology, provide support for a pluralistic ontology of the social world.

The auctions of the Federal Communication Commission, designed in 1994 to sell spectrum licences, are one of the few widely acclaimed and copied cases of economic engineering to date. This paper includes a detailed narrative of the process of designing, testing and implementing the FCC auctions, focusing in particular on the role played by game theoretical modelling and laboratory experimentation. Some general remarks about the scope, interpretation and use of rational choice models open and conclude the paper.

The Ultimatum Game is one of the most successful experimental designs in the history of the social sciences. In this article I try to explain this success—what makes it a “paradigmatic experiment”—stressing in particular its versatility. Despite the intentions of its inventors, the Ultimatum Game was never a good design to test economic theory, and it is now mostly used as a heuristic tool for the observation of nonstandard preferences or as a “social thermometer” for the observation of culture‐specific norms. (...) †To contact the author, please write to: Department of Sociology and Philosophy, University of Exeter, Amory Building, Exeter EX4 4DT, UK; e‐mail: f.guala@ex.ac.uk. (shrink)

David Lewis famously proposed to model conventions as solutions to coordination games, where equilibrium selection is driven by precedence, or the history of play. A characteristic feature of Lewis Conventions is that they are intrinsically non-normative. Some philosophers have argued that for this reason they miss a crucial aspect of our folk notion of convention. It is doubtful however that Lewis was merely analysing a folk concept. I illustrate how his theory can (and must) be assessed using empirical data, and (...) argue that it does indeed miss an important aspect of real-world conventions. (shrink)

Controversies in economics often fizzle out unresolved. One reason is that, despite their professed empiricism, economists find it hard to agree on the interpretation of the relevant empirical evidence. In this paper I will present an example of a controversial issue first raised and then solved by recourse to laboratory experimentation. A major theme of this paper, then, concerns the methodological advantages of controlled experiments. The second theme is the nature of experimental artefacts and of the methods devised to detect (...) them. Recent studies of experimental science have stressed that experimenters are often merely concerned about determining whether a certain phenomeonon exists or not, or whether, when, and where it can be produced, without necessarily engaging in proving or disproving any theoretical explanation of the phenomenon itself. In this paper I shall be concerned mainly with such a case, and focus on the example of preference reversals, a phenomenon whose existence was until quite recently denied by the majority of economists. Their favourite strategy consisted in trying to explain the phenomenon away as an artefact of the experimental techniques used to observe it. By controlled experimentation, as we shall see, such an interpretation has been discredited, and now preference reversals are generally accepted as real. The problem of distinguishing an artefact from a real phenomenon is related to methodological issues traditionally discussed by philosophers of science, such as the theory-ladenness of observation and Duhem's problem. Part of this paper is devoted to clarifying these two philosophical problems, and to arguing that only the latter is relevant to the case in hand. The solutions to Duhem's problem devised by economic experimentalists will be presented and discussed. I shall show that they belong in two broad categories: independent tests of new predictions derived from the competing hypotheses at stake, and ‘no- miracle arguments’ from different experimental techniques delivering converging results despite their being theoretically independent. (shrink)

The folk conception of money as an object is not a promising starting point to develop general, explanatory metaphysical accounts of the social world. A theory of institutions as rules in equilibrium is more consistent with scientific theories of money, is able to shed light on the folk view, and side-steps some unnecessary puzzles.

Naturalism is still facing a strong opposition in the philosophy of social science from influential scholars who argue that philosophical analysis must be autonomous from scientific investigation. The opposition exploits philosophers’ traditional diffidence toward social science and fuels the ambition to provide new foundations for social research. A classic anti-naturalist strategy is to identify a feature of social reality that prevents scientific explanation and prediction. An all-time favorite is the dependence of social phenomena on human representation. This article examines two (...) prominent versions of the dependence thesis and concludes that they both fail. Contemporary social science is capable of accounting for the causal dependence of social reality on representation, and there is no reason to believe that social entities are ontologically dependent on the collective acceptance of a constitutive rule. (shrink)

The title of this book is rather misleading. “Birth of neoliberal governmentality,” or something like that, would have been more faithful to its contents. In Foucault's vocabulary, “biopolitics” is the “rationalisation” of “governmentality” : it's the theory, in other words, as opposed to the art of managing people. The mismatch between title and content is easily explained: the general theme of the courses at the Collège de France had to be announced at the beginning of each academic year. It is (...) part of the mandate of every professor at the Collège, however, that his lectures should follow closely his current research. As a consequence it wasn't unusual for Foucault to take new directions while he was lecturing. In 1979, for the first and only time in his career, he took a diversion into contemporary political philosophy. His principal object of investigation became “neoliberal” political economy. More precisely, he got increasingly interested in those strands of contemporary liberalism that use economic science both as a principle of limitation and of inspiration for the management of people. (shrink)

We propose a bridge-builder perspective on social ontology. Our point of departure is that an important task of philosophy is to provide the bigger picture. To this end, it should investigate folk views and determine whether and how they can be preserved once scrutinized from the perspective of the sciences. However, the sciences typically present us with a fragmented picture of reality. Thus, an important intermediate step is to integrate the most promising social scientific theories with one another. In addition (...) to this, social ontology can provide input to and benefit from other philosophical disciplines that engage in normative theorizing. Thus, we propose that social ontology connects not only with folk ontology and scientific ontology but also with fields such as ethics and political philosophy. Building bridges between them serves to formulate a credible and encompassing worldview that is of theoretical and practical significance. (shrink)

Hindriks’ paper raises two issues: one is formal and concerns the notion of ‘cost’ in rational choice accounts of norms; the other is substantial and concerns the role of expectations in the modification of payoffs. In this commentary I express some doubts and worries especially about the latter: What’s so special with shared expectations? Why do they induce compliance with norms, if transgression is not associated with sanctions?

3.1 Experiments and causal analysis 3.2 The severity approach 3.3 Objectivist vs. Subjectivist approaches 3.4 “Low” vs. “high-level” hypothesis testing 3.5 Novelty and construct independence 4. External validity..

Understanding Institutions offers a theory that is able to unify the two dominant approaches in the scientific and philosophical literature on institutions. Moreover, using the ‘rules-in-equilibrium’ theory, it tackles several ancient puzzles in the philosophy of social science.

I answer the questions raised by commentators, and clarify what Understanding Institutions tried to achieve.

I argue in my target article that field evidence does not support the costly punishment hypothesis. Some commentators object to my reading of the evidence, while others agree that evidence in favour of costly punishment is scant. Most importantly, no rigorous measurement of cost-benefit ratios in the field has been attempted so far. This lack of evidence does not rule out costly punishment as a cause of human cooperation, but it does pre-empt some overconfident claims made in the past. Other (...) commentators have interpreted my article as an anti-experimental pamphlet or as a flat denial of the existence of pro-social motives – which it was not intended to be. While we have enough data to establish the existence (and theoretical relevance) of strong reciprocity motives, I argue in this response that their efficacy (and policy relevance) has not been demonstrated. (shrink)

_The Philosophy of Social Science Reader_ is an outstanding, comprehensive and up-to-date collection of key readings in the philosophy of social science, covering the essential issues, problems and debates in this important interdisciplinary area. Each section is carefully introduced by the editors, and the readings placed in context. The anthology is organized into seven clear parts: Values and Social Science Causal Inference and Explanation Interpretation Rationality and Choice Individualism Norms Cultural Evolution. Featuring the work of influential philosophers and social scientists (...) such as Ernest Nagel, Ian Hacking, John Searle, Clifford Geertz, Daniel Kahneman, Steven Lukes and Richard Dawkins, _The Philosophy of Social Science Reader_ is the ideal text for philosophy of social science courses, and for students in related disciplines interested in the differences between the social and natural sciences. (shrink)

Standard defenses of ontological individualism are challenged by arguments that exploit the dependence of social facts on material facts—that is, facts that are not about human individuals. In this article, I discuss Brian Epstein’s “materialism” in The Ant Trap: granting Epstein’s strict definition of individualism, I show that his arguments depend crucially on a generous conception of social properties and social facts. Individualists, however, are only committed to the claim that projectible properties are individualistically realized, and materialists have not undermined (...) this claim. (shrink)

Guala does not go far enough in his critique of the assumption that human decisions about sharing made in the context of experimental game conditions accurately reflect decision-making under real conditions. Sharing of hunted animals is constrained by cultural rules and is not as assumed in models of weak and strong reciprocity. Missing in these models is the cultural basis of sharing that makes it a group property rather than an individual one.

Ontology is one of today’s buzzwords. It is back in fashion in analytical philosophy and Artificial Intelligence, and major projects and research centres get funding around the world (cf. e.g. the Buffalo Centre for Ontological Research, the Laboratory for Ontology in Turin, the Institute for Formal Ontology and Medical Information Science in Saarland). In the philosophy of science ontology has arguably always been a key area of research, under the guise of ‘The foundations of __’ (physics, biology, chemistry, etc.). Economics (...) however is an exception. Because of economics’ hybrid status, philosophers’ interest in its foundations has traditionally focused on normative issues – typically the theory of rationality that lies at the core of the neoclassical paradigm. What is relatively new, then, 1 is the current growth of interest for the metaphysics of economics as a descriptive scientific discipline (see e.g. Mäki, ed. 2001). (shrink)

David Lewis famously proposed to model conventions as solutions to coordination games, where equilibrium selection is driven by precedence, or the history of play. A characteristic feature of Lewis Conventions is that they are intrinsically nonnormative. Some philosophers have argued that for this reason they miss a crucial aspect of our folk notion of convention. It is doubtful however that Lewis was merely analysing a folk concept. I illustrate how his theory can (and must) be assessed using empirical data, and (...) argue that it does indeed miss some important aspects of real-world conventions. I conclude that whether Lewis Conventions exist or not depends on how closely they approximate real-world behaviour, and whether we have any alternative theory that does a better job at explaining the phenomena. (shrink)

Mutualistic theory explains convincingly the prevalence of fairness norms in small societies of foragers and in large contemporary democratic societies. However, it cannot explain the U-shaped curve of egalitarianism in human history. A theory based on bargaining power is able to provide a more general account and to explain mutualism as a special case. According to this approach, social norms may be more variable and malleable than Baumard et al. suggest.

Clear-cut designs have a number of methodological virtues, with respect to internal and external validity, which I illustrate by means of informal causal analysis. In contrast, a more uniform experimental practice across disciplines may not lead to progress if causal relations in the human sciences are highly dependent on the details of the context.

Bermúdez's arguments in favour of the rationality of quasi-cyclical preferences conflate reasons, desires, emotions, and responses with genuine preferences. Rational preference formation requires that the decision-makers not only identify reasons, but also weigh them in a coherent way.

Laboratory experimentation was once considered impossible or irrelevant in economics. Recently, however, economic science has gone through a real ‘laboratory revolution’, and experimental economics is now a most lively subfield of the discipline. The methodological advantages and disadvantages of controlled experimentation constitute the main subject of this thesis. After a survey of the literature on experiments in philosophy and economics, the problem of testing normative theories of rationality is tackled. This philosophical issue was at the centre of a famous controversy (...) in decision theory, during which a methodology of normative falsification was first articulated and used to assess experimental results. In the third chapter, the methodological advantages of controlled experimentation are illustrated and discussed with examples taken from the experiments on the so-called ‘preference reversal’ phenomenon. Laboratory testing allows to establish with a high degree of certainty that certain phenomena lie behind the experimental data, by means of independent testing, elimination of alternative hypotheses, and the use of different instruments of observation. The fourth chapter is devoted to a conceptual analysis of the problem of ‘parallelism’. This is the problem of inferring from the occurrence of a phenomenon in the laboratory, to its instantiation also in non-laboratory environments. Experimental economists have discussed parallelism at length, and their views are presented and criticised. Eventually, it is argued that parallelism is a factual matter and as such can only be established on empirical grounds. The fifth chapter provides an example of how one can argue for parallelism, focusing on the case of experimentation on the ‘winner’s curse’ phenomenon. The role of experiments as ‘mediators’ between theoretical models and their target domain of application is illustrated, and the structure of parallelism arguments analysed in detail. Finally, in the last chapter, economic experiments are compared to simulations, in order to highlight their specific characteristics. (shrink)

This is a slightly longer version of an entry prepared for the 2nd edition of The New Palgrave Dictionary of Economics, edited by Steven Durlauf and Lawrence Blume (Palgrave-Macmillan, forthcoming). Since the New Palgrave does not include acknowledgments, I should use this chance to thank Roger Backhouse, Philippe Fontaine, Daniel Kahneman, Kyu Sang Lee, Ivan Moscati, and Vernon Smith for their help and suggestions in preparing this paper.

Sei seduto di fronte allo schermo di un computer. Utilizzando il mouse, puoi scegliere fra due bottoni di colore (da sinistra a destra) Rosso e Blu. Nel frattempo altri due giocatori stanno affrontando la stessa decisione. Se sceglierete lo stesso colore, guadagnerete ciascuno dieci gettoni sperimentali, che saranno convertiti in denaro alla fine dell’esperimento. Purtroppo dovrete decidere simultaneamente, senza la possibilità di comunicare con gli altri membri del gruppo. Sai anche che ripe...

The failure of models based on rational expectations to explain the ‘boom and bust’ of financial markets does not support Soros' critique of mainstream economics or his call for a theoretical revolution. Contrary to what Soros says, standard rational choice theory has the conceptual resources to analyse reflexivity. The dynamic of feedback loops for example can be described by simple models based on multiple equilibria and informational cascades. The problem is that agents and theorists sometimes lack the information required to (...) identify equilibria and tipping points. (shrink)

Gerald Allen Cohen was one of the most influential political philosophers of the latter half of the twentieth century. When he died in 2009 Cohen left behind not only a short book and various unpublished papers but an intellectual legacy that will remain alive for many years. Economics and Philosophy initially planned to organize a review symposium devoted to Cohen's posthumous publications. However, the reviews became articles and the original project turned into a larger symposium in memory of Cohen. The (...) editors would like to thank Ian Carter, Paula Casal, Serena Olsaretti and Andrew Williams for working with us on that project as it gradually took shape. We all believe that this is a fitting way to honour a remarkable philosophical career inspired by an unrelenting political passion. (shrink)

Martin Jones has criticized my account of the methodology of experimental economics on three points: the impossibility of testing external validity claims in the laboratory, my reconstruction of external validity inferences as analogical arguments, and the distinction between laboratory and non-laboratory sciences. I defend my account here and try to eliminate some misunderstandings that may have prompted Jones’s criticism.