Abstract

I want to extend here a line of reasoning that I pursued in Rationality and Dynamic Choice . In that book I argued that the standard Bayesian model of expected-utility reasoning needs to be revised to accommodate a capacity, on the part of rational decision-makers, to effectively coordinate with their own future selves — to be guided by plans that they have deliberately adopted. I also suggested that an analogous line of reasoning might be employed to show that rational agents could engage in rule-governed coordination of their choices with one another to a greater extent than the standard theory would seem to admit. It is this suggestion that I now want to explore more fully in the present paper. It is not that the standard theory denies the possibility of such coordination. On that account, however, coordination can only be achieved by the adoption of an effective enforcement system. Since, however, any enforcement scheme requires the expenditure of scarce resources, the standard theory seems committed to the view that rational agents can achieve only a second best outcome. It is worth considering whether thoroughly rational persons who know each other to be such might not do better than this. It is also the case that the process whereby individuals come to agreement on the terms of their coordination schemes is conceived as driven essentially by non-cooperative considerations, specifically the relative bargaining power or threat advantage of the participants. Bargaining outcomes based on this principle, however, tend to generate mutually disadvantageous conflict, and thus there are greater costs yet to be borne by “rational” interacting agents. I shall have to leave the exploration of this second problem to another occasion, however.