Arrow's Independence of Irrelevant Alternatives (IIA) has been under criticism for decades for not taking account of preference intensities. Computer-simulation results by Aki Lehtinen concerning strategic voting under various voting rules show that this intensity argument does not need to rest on mere intuition. Voters may express intensities by voting strategically, and that this has beneficial aggregate-level consequences: utilitarian efficiency is higher if voters engage in strategic behaviour than if they always vote sincerely. Strategic voting is thus unambiguously beneficial (...) under a utilitarian evaluation of outcomes. What has been considered the main argument for IIA turns out to be one against it. This paper assesses the implications of these results for interpretations of Arrow's theorem and the Gibbard-Satterthwaite theorem in a discussion on the methodological and philosophical arguments concerning preference intensities and IIA. (shrink)
N. Emrah Aydinonat's account of the invisible-hand is analysed. One of the conditions for unintended social consequences is it requires that individuals' intentions are exclusively directed at the individual level. This condition is weakened in order to accommodate cases in which individuals may also aim at consequences at the social level but the model clearly depicts the invisible hand. Lehtinen's model of counterbalancing strategic votes is proposed as an example that satisfies Aydinonat's conditions, if they are modified as suggested.
The most common argument against the use of rational choice models outside economics is that they make unrealistic assumptions about individual behavior. We argue that whether the falsity of assumptions matters in a given model depends on which factors are explanatorily relevant. Since the explanatory factors may vary from application to application, effective criticism of economic model building should be based on model-specific arguments showing how the result really depends on the false assumptions. However, some modeling results in imperialistic applications (...) are relatively robust with respect to unrealistic assumptions. Key Words: unrealistic assumptions • economics imperialism • rational choice • as if • robustness. (shrink)
Robert Sugden argues that robustness analysis cannot play an epistemic role in grounding model-world relationships because the procedure is only a matter of comparing models with each other. We posit that this argument is based on a view of models as being surrogate systems in too literal a sense. In contrast, the epistemic importance of robustness analysis is easy to explicate if modelling is viewed as extended cognition, as inference from assumptions to conclusions. Robustness analysis is about assessing the reliability (...) of our extended inferences, and when our confidence in these inferences changes, so does our confidence in the results. Furthermore, we argue that Sugden’s inductive account relies tacitly on robustness considerations. (shrink)
All economic models involve abstractions and idealisations. Economic theory itself does not tell which idealizations are truly fatal or harmful for the result and which are not. This is why much of what is seen as theoretical contribution in economics is constituted by deriving familiar results from different modelling assumptions. If a modelling result is robust with respect to particular modelling assumptions, the empirical falsity of these particular assumptions does not provide grounds for criticizing the result. In this paper we (...) demonstrate how derivational robustness analysis does carry epistemic weight and answer criticism concerning its non-empirical nature and the problematic form of the required independence of the ways of derivation. The epistemic rationale and importance of robustness analysis also challenge some common conceptions of the role of theory in economics. (shrink)
Like other mathematically intensive sciences, economics is becoming increasingly computerized. Despite the extent of the computation, however, there is very little true simulation. Simple computation is a form of theory articulation, whereas true simulation is analogous to an experimental procedure. Successful computation is faithful to an underlying mathematical model, whereas successful simulation directly mimics a process or a system. The computer is seen as a legitimate tool in economics only when traditional analytical solutions cannot be derived, i.e., only as a (...) purely computational aid. We argue that true simulation is seldom practiced because it does not fit the conception of understanding inherent in mainstream economics. According to this conception, understanding is constituted by analytical derivation from a set of fundamental economic axioms. We articulate this conception using the concept of economists' perfect model. Since the deductive links between the assumptions and the consequences are not transparent in ‘bottom‐up’ generative microsimulations, microsimulations cannot correspond to the perfect model and economists do not therefore consider them viable candidates for generating theories that enhance economic understanding. (shrink)
It is argued in this paper that amalgamating confirmation from various sources is relevantly different from social-choice contexts, and that proving an impossibility theorem for aggregating confirmation measures directs attention to irrelevant issues.
We claim that the process of theoretical model refinement in economics is best characterised as robustness analysis: the systematic examination of the robustness of modelling results with respect to particular modelling assumptions. We argue that this practise has epistemic value by extending William Wimsatt’s account of robustness analysis as triangulation via independent means of determination. For economists robustness analysis is a crucial methodological strategy because their models are often based on idealisations and abstractions, and it is usually difficult to tell (...) which idealisations are truly harmful. (shrink)
Political science and economic science . . . make use of the same language, the same mode of abstraction, the same instruments of thought and the same method of reasoning. (Black 1998, 354) Proponents as well as opponents of economics imperialism agree that imperialism is a matter of unification; providing a unified framework for social scientific analysis. Uskali Mäki distinguishes between derivational and ontological unification and argues that the latter should serve as a constraint for the former. We explore whether, (...) in the case of rational-choice political science, self-interested behavior can be seen as a common causal element and solution concepts as the common derivational element, and whether the former constraints the use of the latter. We find that this is not the case. Instead, what is common to economics and rational-choice political science is a set of research heuristics and a focus on institutions with similar structures and forms of organization. (shrink)
This article presents an ethnomethodological respecification of the philosophical problem of the hermeneutics of ancient texts. I analyze an interactional practice, namely, noticing an aspect of the Bible text in Seventh-day Adventist Bible study. I show how noticings are used to make the text “speak” to the participants of the Bible study and discuss how the participants show their orientation to this action in the next turn and how they rely on various cultural resources to make sense of the text. (...) The article shows how the actions of the participants are contextual, cultural and moral in nature. Cultural resources and morality are embedded in the locally produced hermeneutical achievement. I discuss how this analysis can be instructive for philosophical hermeneutics. (shrink)
Consumer driven and globally competitive financial markets are crucial for the future prosperity of the Finnish society (Laitamäki, Lehti and Paasio 1996). The largest transfer of wealth in history is currently taking place as Baby Boomers (born 1946-1964) prepare for their retirement and inherit the assets of the previous generation. Due to cognitive limitations and emotional biases these consumers don’t always make rational decisions with financial services. This conceptual study addresses irrational financial consumer behavior and its impact on the Finnish (...) business and society. The study focuses on two research questions: 1) What type of behavioral finance concepts explain irrational consumer behavior? 2) What are the implications of these behaviors for the Finnish business and society? The purpose of this study is to assist individual consumers, business leaders and policy makers in making better financial services related decisions in Finland. The need for better decisions has been illustrated during Finnish and international financial crises including the US sub-prime loan turmoil in 2008. (shrink)
This article examines the belief among the cultural elites that 'people' should be protected from dangerous knowledge, 'dangerous' in the sense that there are factual statements which may have negative moral and political consequences to society. Such a belief in the negative consequences of dangerous - that is, politically suspicious - knowledge represents an intellectual tradition that goes back to Plato and his famous state-utopian work Republic. This article analyses moral interpretations of statements regarding matters of fact (so-called moral reading), (...) and draws conclusions about the reasons why knowledge can be considered dangerous to 'the people' or to some specific groups in the population, such as children, mothers, students, the sick and dying and the working class. The so-called sociobiology debate, a controversy that started with the publication of the zoologist E.O. Wilson's Sociobiology in 1975, is discussed in this article as a 'case study' of dangerous knowledge. (shrink)
Philosophers of science studying scientific practice often consider it a methodological requirement that their conceptualization of "model" closely connects with the understanding and use of models by practicing scientists. Occasionally, this connection has been explicitly made (Hutten 1954, Suppes 1961, Morgan and Morrison 1999, Bailer-Jones 2002, Lehtinen and Kuorikoski 2007, Kuorikoski 2007, Morgan 2012a). These studies have been dominated by a focus on the—relatively similar forms of—mathematical models in physics and economics. Yet it has become increasingly evident that the (...) way models are conceptualized is very different in some other sciences, where philosophers' accounts of models' characteristics and .. (shrink)
