Rationality in Economics

For over a decade now epistemologists have been thinking about the peer disagreement problem of whether a person is reasonable in not lowering her confidence in her belief P when she comes to accept that she has an epistemic peer on P who disbelieves P. However, epistemologists have overlooked a key realistic way how epistemic peers can, or even have to, differ epistemically—a way that reveals the inadequacy of both conformist and non-conformist views on peer disagreement by uncovering how the (...) causes of peer disagreement bear on the debate’s core philosophical issue. Part of our argument for this thesis will involve giving a thorough yet entirely informal presentation of mathematical theorems in economics by Robert Aumann :1236–1239,1976) and Polemarchakis and Geneakoplos which represent a formally precise description of how two rational agents must deal with disagreement under certain epistemically interesting circumstances. (shrink)

Business and Economic textbooks warn against committing the Sunk Cost Fallacy: you, rationally, shouldn't let unrecoverable costs influence your current decisions. In this paper, I argue that this isn't, in general, correct. Sometimes it's perfectly reasonable to wish to carry on with a project because of the resources you've already sunk into it. The reason? Given that we're social creatures, it's not unreasonable to care about wanting to act in such a way so that a plausible story can be told (...) about you according to which your diachronic behavior doesn't reveal that you've suffered, what I will call, diachronic misfortune. Acting so as to hide that you've suffered diachronic misfortune involves striving to make yourself easily understood while disguising any shortcomings that might damage your reputation as a desirable teammate. And making yourself easily understood to others while hiding your flaws will, sometimes, put pressure on you to honor sunk costs. (shrink)

In markets globalization and increasing competition context, governments of the world’s leading countries are forced to use complex organizational and economic instruments to support the countries’ economy. One of such instruments is creation of Free Economic Zones (FEZ) with favorable conditions for doing business. Over the last decade activation process of Free Economic Zones mechanism disposal for the economy of a particular country development has been possible to observe. If in 1995 there were approximately 500 zones in the world, now (...) there are more than 4,300 zones in more than 130 countries which employ more than 68 thousand workers. In addition, global practice has shown that FEZ activities effective organization is efficient not only in giving impetus to the country’s economy development, but in bringing it into the world leaders as well. (shrink)

The monograph reveals challenging issues of small and medium enterprises development in the European Union and East-Partnership countries. Special attention is paid to a new paradigm of financing investments and fostering innovations at all levels of legal entities including SMEs, enhancing innovative entrepreneurship in conditions of global social and technological challenges as well as determining priority sectors for small and medium enterprises as drivers of economic growth. The authors of the monograph emphasize on such European approaches to financing SMEs as (...) crowd-funding and SME-bonds, analyze experience of applying fiscal instruments to support investment and innovations. The researchers underline the role of social investment as an innovative strategy for European SMEs that could be applied in Ukraine and East-partnership countries, suggest new conceptual approach to the evaluation of innovative business development. They also analyse trends of Ukrainian IT enterprises development in the context of modern information services in a global market. Additional attention is paid to the analysis of SMEs’ entrepreneurial potential in conditions of global social and technological changes, estimation effects of applying electronic governance technologies to provide administrative services by public authorities of various levels of governance. Finally, the researchers disclose economic mentality of legal entities as an informal side of financial assets and substantiate the necessity of creation entrepreneurial universities as drivers of innovative development of economy. The materials of the monograph will be useful to scholars, financial managers of companies, financial analysts, representatives of state bodies who implement the state policy in the field of SMEs development in the East-partnership countries, as well as students of economic universities. (shrink)

Mostrando le analogie tra il modello di Homo oeconomicus e quello che chiameremo Animal oeconomicum, nonché la genealogia del ragionamento “economico” applicato al comportamento animale, vengono messi in risalto gli impliciti e le debolezze di alcuni ragionamenti etologici frequenti; revisioni e critiche che hanno ridimensionato il concetto di Homo oeconomicus sono applicabili anche all’interpretazione raziocinante e calcolatrice del comportamento animale.

Decision theorists have attempted to accommodate several violations of decision theory’s axiomatic requirements by modifying how agents’ choice options are individuated and formally represented. In recent years, prominent authors have worried that these modifications threaten to trivialize decision theory, make the theory unfalsifiable, impose overdemanding requirements on decision theorists and hamper decision theory’s internal coherence. In this paper, I draw on leading descriptive and normative works in contemporary decision theory to address these prominent concerns. In doing so, I articulate and (...) assess several different criteria for individuating and formally representing agents’ choice options. (shrink)

Economists and philosophers disagree about the concept of choice used in economics. Some behavioural economists argue that economic models of choice will improve as they become more and more psychologically realistic. Don Ross argues that this argument fails because its hidden assumption – that the economic concept of choice is the same as the psychological counterpart – is false. Ross conjectures that the economic concept of choice concerns a population-scale pattern of behavioural changes in response to incentives. We conduct a (...) survey experiment to test two predictions that Ross’s conjecture generates. The statistical analysis of our data confirms our predictions, although with some qualifications. In interpreting our results, we distinguish two versions of commonsensible realism, strong and weak, and propose the weak one as a plausible explanation of our results. Weak commonsensible realism also produces further testable hypotheses. Some methodological implications of our study are discussed. (shrink)

This paper generalizes rationalizability of a choice function by a single acyclic binary relation to rationalizability by a set of such relations. Rather than selecting those options in a menu that are maximal with respect to a single binary relation, a weakly pseudo-rationalizable choice function selects those options that are maximal with respect to at least one binary relation in a given set. I characterize the class of weakly pseudo-rationalizable choice functions in terms of simple functional properties. This result also (...) generalizes Aizerman and Malishevski's characterization of pseudo-rationalizable choice functions, that is, choice functions rationalizable by a set of total orders. (shrink)

Desde Gintis é um economista sênior e eu li alguns de seus livros anteriores com interesse, eu estava esperando um pouco mais insights sobre o comportamento. Infelizmente, ele faz as mãos mortas de seleção de grupo e fenomenologia para as peças centrais de suas teorias de comportamento, e isso em grande parte invalida o trabalho. Pior, uma vez que ele mostra um julgamento tão ruim aqui, ele chama a questão de todo o seu trabalho anterior. A tentativa de ressuscitar a (...) seleção de grupos por seus amigos em Harvard, Nowak e Wilson, há alguns anos foi um dos maiores escândalos em biologia na última década, e eu tenho narrado a triste história no meu artigo ' altruísmo, Jesus e do fim do mundo-como o Templeton Foundation comprou uma cátedra de Harvard e atacou evolução, racionalidade e civilização-uma revisão de E.O. Wilson 'A Conquista social da Terra' (The Social Conquest of Earth) (2012) e Nowak e Highfield ' SuperCooperators ' (2012). Ao contrário de Nowak, Gintis não parece ser motivado pelo fanatismo religioso, mas pelo forte desejo de gerar uma alternativa para as realidades sombrias da natureza humana, facilitada pela (perto Universal) falta de compreensão da biologia humana e Blank Slateism (tábua rasa) de cientistas comportamentais, outros acadêmicos e o público em geral. Gintis justamente ataca (como ele tem muitas vezes antes) economistas, sociólogos e outros cientistas comportamentais por não ter um quadro coerente para descrever o comportamento. Naturalmente, a estrutura necessária para entender o comportamento é um evolucionário. Infelizmente, ele não consegue fornecer um próprio (de acordo com seus muitos críticos e eu concordo), e a tentativa de transplantar o cadáver podre de seleção de grupo para qualquer teorias econômicas e psicológicas que ele gerou em suas décadas de trabalho, meramente invalida todo o seu projeto. Embora Gintis faz um esforço valente para entender e explicar a genética, como Wilson e Nowak, ele está longe de ser um perito, e como eles, a matemática apenas o cega para as impossibilidades biológicas e, claro, esta é a norma na ciência. Como Wittgenstein famosa observou na primeira página de cultura e valor "não há nenhuma denominação religiosa em que o uso indevido de expressões metafísicas tem sido responsável por tanto pecado como tem em matemática." Sempre foi evidente que um gene que provoca comportamento que diminui a sua própria frequência não pode persistir, mas este é o cerne da noção de seleção de grupo. Além disso, tem sido bem conhecido e muitas vezes demonstrado que a seleção de grupo apenas reduz a aptidão inclusiva (seleção de parentes), que, como observou Dawkins, é apenas um outro nome para a evolução pela seleção natural. Como Wilson, Gintis tem trabalhado nesta arena por cerca de 50 anos e ainda não entendeu, mas depois que o escândalo quebrou, levei apenas 3 dias para encontrar, ler e entender o trabalho profissional mais relevante, como detalhado no meu artigo. É incompreensível para perceber que Gintis e Wilson foram incapazes de realizar isso em quase meio século. Discuto os erros de seleção de grupo e fenomenologia que são a norma na Academia como casos especiais da falha universal perto de entender a natureza humana que estão destruindo a América e o mundo. Aqueles que desejam um quadro até à data detalhado para o comportamento humano da opinião moderna dos dois sistemas consultar meu livros Falando Macacos 3ª Ed (2019), A Estrutura Lógica da Filosofia, Psicologia, Mente e Linguagem em Ludwig Wittgenstein e John Searle 2a Ed (2019), Suicídio Pela Democracia,4aEd(2019), Entendendo as Conexões entre Ciência, Filosofia, Psicologia, Religião, Política e Economia Artigos e Análises 2006-2019 (2019), Ilusões Utópicas Suicidas no 21St século 5a Ed (2019), A Estrutura Lógica do Comportamento Humano (2019), e A Estrutura Lógica da Consciência (2019) e outras. (shrink)

Como Gintis es economista senior y he leído algunos de sus libros anteriores con interés, esperaba más información sobre el comportamiento. Tristemente, hace las manos muertas de selección de grupos y fenomenología en los centros de sus teorías de comportamiento, y esto invalida en gran medida la obra. Peor aún, ya que muestra tan mal juicio aquí, cuestiona todo su trabajo anterior. El intento de resucitar la selección grupal por sus amigos en Harvard, Nowak y Wilson, hace unos años fue (...) uno de los mayores escándalos en biología en la última década, y he contado la triste historia en mi artículo ' altruismo, Jesús y el fin del mundo-cómo el Templeton Foundation compró una Cátedra de Harvard y atacó la evolución, la racionalidad y la civilización--una revisión de E.O. Wilson ' la conquista social de la tierra ' (2012) y Nowak y Highfield ' SuperCooperators ' (2012). ' A diferencia de Nowak, Gintis no parece estar motivada por el fanatismo religioso, sino por el fuerte deseo de generar una alternativa a las realidades sombrías de la naturaleza humana, fácil por la falta de comprensión (casi universal) de la biología humana básica y el pizeísmo en blanco de científicos del comportamiento, otros académicos y el público en general. Gintis ataca con razón (como ha tenido muchas veces antes) a economistas, sociólogos y otros científicos del comportamiento por no tener un marco coherente para describir el comportamiento. Claro, el marco necesario para comprender el comportamiento es un uno evolutivo. Desafortunadamente él no proporciona uno mismo (de acuerdo con sus muchos críticos y Yo coincido), y el intento de injertar el cadáver podrido de selección de grupo en cualquier teoría económica y psicológica que ha generado en sus décadas de trabajo, simplemente invalida todo su proyecto . Aunque Gintis hace un valiente esfuerzo para entender y explicar la genética, como Wilson y Nowak, él está lejos de ser un experto, y como ellos, las matemáticas sólo lo ciega a las imposibilidades biológicas y, por supuesto, esta es la norma en la ciencia. Como señaló Wittgenstein en la primera página de la cultura y el valor "no hay denominación religiosa en la que el mal uso de las expresiones metafísicas ha sido responsable de tanto pecado como lo ha sido en matemáticas." Siempre ha sido cristalino que un gen que causa comportamiento que disminuye su propia frecuencia no puede persistir, pero este es el núcleo de la noción de selección de grupo. Además, ha sido bien sabido y a menudo demostró que la selección de grupos sólo se reduce a la aptitud inclusiva (selección de los parientes), que, como Dawkins ha señalado, es sólo otro nombre para la evolución por la selección natural. Al igual que Wilson, Gintis ha trabajado en esta arena durante unos 50 años y todavía no lo ha entendido, pero después de que el escándalo se rompió, me tomó sólo 3 días para encontrar, leer y entender el trabajo profesional más relevante, como se detalla en mi artículo. Es alucinante darse cuenta de que Gintis y Wilson fueron incapaces de lograr esto en casi medio siglo. Discuto los errores de selección de grupo y fenomenología que son la norma en el mundo académico como casos especiales de la falta casi universal de entender la naturaleza humana que están destruyendo América y el mundo. Aquellos que deseen un marco completo hasta la fecha para el comportamiento humano de la moderna dos sistemas punto de vista puede consultar mi libros Talking Monkeys 3ª ed (2019), Estructura Logica de Filosofia, Psicología, Mente y Lenguaje en Ludwig Wittgenstein y John Searle 2a ed (2019), Suicidio pela Democracia 4ª ed (2019), La Estructura Logica del Comportamiento Humano (2019), The Logical Structure de la Conciencia (2019, Entender las Conexiones entre Ciencia, Filosofía, Psicología, Religión, Política y Economía y Delirios Utópicos Suicidas en el siglo 21 5ª ed (2019), Observaciones sobre Imposibilidad, Incompletitud, Paraconsistencia, Indecidibilidad, Aleatoriedad, Computabilidad, Paradoja e Incertidumbre en Chaitin, Wittgenstein, Hofstadter, Wolpert, Doria, da Costa, Godel, Searle, Rodych Berto, Floyd, Moyal-Sharrock y Yanofsky y otras. (shrink)

The fail-safe makes sure the fee is high enough to meet carbon emission reduction targets. The safeguard keeps the fee from getting any higher than needed. -/- One of the ways that we could account for the unpredictability of the price elasticity of demand for carbon would be to provide a fail-safe mechanism to ensure that we definitely stay on the carbon reduction schedule. If we keep Energy Innovation Act (HR 763) essentially as it is and scale up the annual (...) carbon fee increase by Number-of-Years-Behind-Schedule * 0.15. (shrink)

This book provides a systematic defense of moral contractarianism as a distinct approach to the social contract. It elucidates, in comparison to moral conventionalism and moral contractualism, the distinct features of moral contractarianism, its scope, and conceptual and practical challenges that concern the relationship between morality and self-interest, the problems of assurance and compliance, rule-following, counterfactualism, and the nexus between morals and politics. It argues that, if appropriately conceived, moral contractarianism is conceptually coherent, empirically sound, and practically relevant, and has (...) much to offer to contemporary moral philosophy. (shrink)

Exponential discounted utility theory provides the normative standard for future discounting as it is employed throughout the social sciences. Tracing the justification for this standard through economics, philosophy and psychology, I’ll make what I believe is the best case one can for it, showing how a non-arbitrariness assumption and a dominance argument together imply that discounting ought to be exponential. Ultimately, however, I don’t find the case compelling, as I believe it is deeply flawed. Non-exponential temporal discounting is often rational–indeed, (...) the paragon of rationality. If this is correct, it’s an important point when considering policy interventions. Instead of trying to “fix” non-exponetial discounting because it is irrational and associated with negative life outcomes, we might instead focus attention on why the conditions obtain that make such discounting rational. (shrink)

Egoism and altruism are unequal contenders in the explanation of human behaviour. While egoism tends to be viewed as natural and unproblematic, altruism has always been treated with suspicion, and it has often been argued that apparent cases of altruistic behaviour might really just be some special form of egoism. The reason for this is that egoism fits into our usual theoretical views of human behaviour in a way that altruism does not. This is true on the biological level, where (...) an evolutionary account seems to favour egoism, as well as on the psychological level, where an account of self-interested motivation is deeply rooted in folk psychology and in the economic model of human behaviour. While altruism has started to receive increasing support in both biological and psychological debates over the last decades, this paper focuses on yet another level, where egoism is still widely taken for granted. Philosophical egoism is the view that, on the ultimate level of intentional explanation, all action is motivated by one of the agent's desires. This view is supported by the standard notion that for a complex of behaviour to be an action, there has to be a way to account for that behaviour in terms of the agent's own pro-attitudes. Psychological altruists, it is claimed, are philosophical egoists in that they are motivated by desires that have the other's benefit rather than the agent's own for its ultimate object. This paper casts doubt on this thesis, arguing that empathetic agents act on other people's pro-attitudes in very much the same way as agents usually act on their own, and that while other-directed desires do play an important role in many cases of psychologically altruistic action, they are not necessary in explanations of some of the most basic and most pervasive types of human altruistic behaviour. The paper concludes with the claim that philosophical egoism is really a cultural value rather than a conceptual feature of action. (shrink)

The adequacy of currently popular accounts of the genetic basis for psychological altruism, including inclusive fitness, reciprocal altruism, sociality, and group selection, is questioned. Problems exist both with the evidence cited as supporting these accounts and with the relevance of the accounts to what is being explained. Based on the empathy-altruism hypothesis, a more plausible account is proposed: generalized parental nurturance. It is suggested that four evolutionary developments combined to provide a genetic basis for psychological altruism. First is the evolution (...) in mammals of parental nurturance. Second is the evolution in humans of the ability to see others as sentient, intentional agents and, thereby, to recognize other's needs, even subtle ones. Third is the evolution in humans of tender, empathic emotions as an important component of parental nurturance. Fourth is the evolution in humans of cognitive capacities that make it possible to generalize tender, empathic feelings and, thereby, altruism beyond offspring. (shrink)

Al-Najjar and Weinstein argue that the extant literature on ambiguity aversion is not successful in accounting for Ellsberg choices as rational responses to ambiguity. We concur, and propose that rational choice under ambiguity aims at robustness rather than avoidance of ambiguity. A central argument explains why robust choice is intrinsically context-dependent and legitimately violates standard choice consistency conditions. If choice consistency is forced, however, ambiguity-aversion emerges as a semi-rational response to ambiguity.

According to Mark Rubinstein ‘In 1952, anticipating Kenneth Arrow and John Pratt by over a decade, he [de Finetti] formulated the notion of absolute risk aversion, used it in connection with risk premia for small bets, and discussed the special case of constant absolute risk aversion.’ The purpose of this note is to ascertain the extent to which this is true, and at the same time, to correct certain minor errors that appear in de Finetti's work.

Neuroeconomics illustrates our deepening descent into the details of individual cognition. This descent is guided by the implicit assumption that “individual human” is the important “agent” of neoclassical economics. I argue here that this assumption is neither obviously correct, nor of primary importance to human economies. In particular I suggest that the main genius of the human species lies with its ability to distribute cognition across individuals, and to incrementally accumulate physical and social cognitive artifacts that largely obviate the innate (...) biological limitations of individuals. If this is largely why our economies grow, then we should be much more interested in distributed cognition in human groups, and correspondingly less interested in individual cognition. We should also be much more interested in the cultural accumulation of cognitive artefacts: computational devices and media, social structures and economic institutions. (shrink)

The goal of neuroeconomics is a mathematical theory of how the brain implements decisions, that is tied to behaviour. This theory is likely to show some decisions for which rational-choice theory is a good approximation, to provide a deeper level of distinction among competing behavioural alternatives, and to provide empirical inspiration for economics to incorporate more nuanced ideas about endogeneity of preferences, individual difference, emotions, endogeneous regulation of states, and so forth. I also address some concerns about rhetoric and practical (...) epistemology. Neuroscience articles are necessarily speculative and the science has proceeded rapidly because of that rhetorical convention. Single-study papers are encouraged and are necessarily limited in what can be inferred, so the sturdiest cumulation of results, and the best guide forward, comes in review journals which compile results and suggest themes. The potential of neuroeconomics is in combining the clearest experimental paradigms and statistical methods in economics, with the unprecedented capacity to measure a range of neural and cognitive activity that economists like Edgeworth, Fisher and Ramsey daydreamed about but did not have. (shrink)

This paper extends the sensibilities of the Gilligan-Kohlberg debate into classical political economy and makes links with modern psychotherapeutics and the psychological development of individuals. The model of moral maturity represented in contemporary psychological theories is posited as the direct descendant, not only of Immanuel Kant, as is generally argued, but also of the universal, homogenous agent of classical economics; the ‘rational economic man’ representedin the writings of Adam Smith and J. S. Mill. Both thinkers lent their support to the (...) creation of an order which produces actors who are ’rational’ self-governing, separative, competitive, self-asserting, self-interested, acquisitive, pecuniary and driven to success by a desire for the social recognition afforded by consumerism; the same order which typically designates women moral failures and which renders them largely invisible. Liberalism generates conditions which enable it to sustain and reproduce itself at the psychic level. The assumption of the market as the paradigmatic social interaction and its status as the analytical and moral starting point in liberal capitalism infects the putatively private domain of ‘self-governance’ and contemporary psychotherapeutics; the development and management of the self in contemporary culture is a direct reflection of the imperatives and assumptions of market society. The separative self is the ‘healthy’ self, hence the parallel emphasis in modern therapy on ‘individuation’ as the highest level of psychological evolvement. Gilligan’s ‘care ethic’ is approached with some scepticism, nevertheless, her critique of Kohlberg guides us towards a more comprehensive critique of the ‘pneumatic’ and political assumptions of liberalism. (shrink)

At lunch one day a colleague and I had a friendly argument over occupational licensing. I attacked it for being anticompetitive, arguing that licensing boards raise occupational incomes by restricting entry, advertising, and commercialization. My colleague, while acknowledging anticompetitive aspects, affirmed the need for licensing on the grounds of protecting the consumer from frauds and quacks. In many areas of infrequent and specialized dealing, consumers are not able, ex ante or even ex post, to evaluate competence. I countered by suggesting (...) voluntary means by which reputational problems might be handled and by returning to the offensive. I said that in fact the impetus for licensing usually comes from the practitioners, not their customers, and that licensing boards seldom devote their time to ferreting out incompetence but rather simply to prosecuting unlicensed practitioners. I mentioned cross-sectional findings, such as those on state licensure, prices, and occupational incomes. Overall, I characterized the professional establishment as a group of dastardly operators, who set the standards, write the codes, and enforce behavior to enhance their own material wellbeing - in brief, as venal rent-seekers. (shrink)

In this paper, I address two connected issues that arise when one considers a rational agent facing a decision problem. One is whether or not the agent may find that the dictates of rationality are such that they cannot all be followed. For example, one may ask whether or not the requirements on the agent's actions imposed by rationality can conflict in an irreconcilable way, making it impossible to satisfy all of them. Put differently, one may ask whether or not (...) any apparent conflict of this type must in fact be capable of rational resolution. I shall say that an agent who is in a position in which the requirements of rationality cannot all be satisfied faces a feasibility dilemma, and I shall characterize certain conceptions of rationality that differ according to whether or not they admit such a possibility. A second issue concerns the number of options that may be deemed rational in a decision problem. Is rationality sufficiently determinate that it always dictates precisely one choice, or may there be more than one rationally permissible option? Is there anything about rationality itself that guarantees that any of the possible options could rationally be chosen? I shall call this issue – whether the concept of rationality itself places any limits on the number of options that may be deemed rational in a given problem – the numbers problem. (shrink)

A recent paper by David Levy focuses on “utility enhancing consumption constraints.” Levy concludes by noting that his analysis stays within standard utility maximizing theory, in contrast to my analysis of rule-governed behavior which allows imperfect decisions that don't always maximize utility. I wish to show how our two theories can be integrated, thereby representing complementary, rather than conflicting, explanations. In the process, I argue that imperfect decisions are an essential factor in the stability of any rule that constrains freedom (...) of choice. I also briefly discuss certain intrinsic problems with achieving “self-stabilizing” rules applied to moral teachings. (shrink)

In a recent article in this journal, D. Wade Hands reviewed Charles Taylor's two-volume work, Philosophical Papers. Hands predicts that Taylor's work will have no impact on the philosophy of economics. This may indeed turn out to be the case; but if so, it will only be because the profession is not listening. Of course, it is typical of the profession to be more interested in exporting its product than in learning from other disciplines. This is exemplified in Hands's use (...) of the term “philosophy of economics” – philosophy is the handmaiden of the highly successful enterprise of economics. But this journal is called Economics and Philosophy, which means that a conversation requiring an openness and attentiveness is called for between economics and philosophy. (shrink)

This is the second part of a two-part paper. It can be read independently of the first part provided that the reader is prepared to go along with the unorthodox views on game theory which were advanced in Part I and are summarized below. The body of the paper is an attempt to study some of the positive implications of such a viewpoint. This requires an exploration of what is involved in modeling “rational players” as computing machines.

Game theory has proved a useful tool in the study of simple economic models. However, numerous foundational issues remain unresolved. The situation is particularly confusing in respect of the non-cooperative analysis of games with some dynamic structure in which the choice of one move or another during the play of the game may convey valuable information to the other players. Without pausing for breath, it is easy to name at least 10 rival equilibrium notions for which a serious case can (...) be made that here is the “right” solution concept for such games. (shrink)

Economics as a science of human behavior has been grounded in a remarkably parsimonious postulate: that of the self-interested, isolated individual who chooses freely and rationally between alternative courses of action after computing their prospective costs and benefits. In recent decades, a group of economists has shown considerable industry and ingenuity in applying this way of interpreting the social world to a series of ostensibly noneconomic phenomena, from crime to the family, and from collective action to democracy. The “economic” or (...) “rational-actor” approach has yielded some important insights, but its onward sweep has also revealed some of its intrinsic weaknesses. As a result, it has become possible to mount a critique which, ironically, can be carried all the way back to the heartland of the would-be conquering discipline. That the economic approach presents us with too simpleminded an account of even such fundamental economic processes as consumption and production is the basic thesis of the present paper. (shrink)

Martin Hollis, in the introduction to the collection of Rationality and Relativism he edited recently with Steven Lukes, describes himself as the most arch of arch rationalists, “by which we mean, merely, that [we] reject the forthright relativization of truth and reason.” You might suppose that his self-description would place him unambiguously in the army of traditionalists arrayed against what Richard Rorty fondly calls the New Fuzzies. You might suppose, then, that Hollis would indulge in furious letter writing to, say, (...) Harper's, telling us that “we need to stand shoulder to shoulder against the growing army of enemies of rationality. By that I mean the followers of the fashionable cult of absolute relativism, emerging from philosophy, linguistics, semiotics, and deconstructionism.” You might suppose that he would go on in this way equivocating between “rationality” and “rationalism,” identifying the people he dislikes with the enemies of civilization: fascists, Stalinists, bikers, bomb throwing nihilists — Richard Rorty and Wayne Booth and Stephen Toulmin riding into town on their Harley- Davidsons, spurning warrants for belief and good reasons, reading pornographic comic books, and snarling at the townsfolk huddled behind the local syllogism. (shrink)

John Dewey and Ludwig Wittgenstein offer devastating critiques of the dominant model of human action that each inherited in their own time. Dewey, very early in his philosophical career, ostensibly put the stimulus–response mechanical understanding of action to rest with his “reflex-arc” concept article. Wittgenstein famously redescribed action as moves within language games that interconnect to constitute an interpretively open-ended form of life. In each case, these fundamental insights serve as heuristics, guiding our intellectual activity with regard to understanding our (...) practices, and as reminders in approaching problems. Several scholars have interpreted Dewey and Wittgenstein as allies in a grand project of... (shrink)

This paper takes up David Gauthier's most recent defense of the rationality of cooperation in prisoner's dilemmas. In that defense, Gauthier argues for a Pareto-optimizing theory of rational choice. According to Gauthier, rational action should sometimes aim at Pareto-optimization, and cooperation in prisoner's dilemmas is rational because it is Pareto-optimizing. I argue that Pareto-optimization cannot justify cooperation in the prisoner's dilemma in a manner that is also consistent with Gauthier's other desiderata. Either: the rationality of cooperation must derive from what (...) is beneficial for the group rather than what is beneficial for the individual, leaving the individual qua individual without any reason to cooperate, or Gauthier cannot explain why defecting in prisoner's dilemmas is not also rational. (shrink)

The impossibility results in judgement aggregation show a clash between fair aggregation procedures and rational collective outcomes. In this paper, we are interested in analysing the notion of rational outcome by proposing a proof-theoretical understanding of collective rationality. In particular, we use the analysis of proofs and inferences provided by linear logic in order to define a fine-grained notion of group reasoning that allows for studying collective rationality with respect to a number of logics. We analyse the well-known paradoxes in (...) judgement aggregation and we pinpoint the reasoning steps that trigger the inconsistencies. Moreover, we extend the map of possibility and impossibility results in judgement aggregation by discussing the case of substructural logics. In particular, we show that there exist fragments of linear logic for which general possibility results can be obtained. (shrink)

In this paper, I investigate the relationship between preference and judgment aggregation, using the notion of ranking judgment introduced in List and Pettit. Ranking judgments were introduced in order to state the logical connections between the impossibility theorem of aggregating sets of judgments and Arrow’s theorem. I present a proof of the theorem concerning ranking judgments as a corollary of Arrow’s theorem, extending the translation between preferences and judgments defined in List and Pettit to the conditions on the aggregation procedure.

John Rawls’s difference principle says that we should change our economy if doing so is better for the worst-off group, on the condition that certain basic rights are secured. This paper presents a kind of case that challenges the principle. If we modify the principle to cope with the challenge, we open the way to a Sorites paradox.

Social science employs teleological explanations which depend upon the rationality principle, according to which people exhibit instrumental rationality. Popper points out that people also exhibit critical rationality, the tendency to stand back from, and to question or criticise, their views. I explain how our critical rationality impugns the explanatory value of the rationality principle and thereby threatens the very possibility of social science. I discuss the relationship between instrumental and critical rationality and show how we can reconcile our critical rationality (...) with the possibility of social science if we invoke Popper’s conception of limited rationality and his indeterminism. (shrink)

This paper focuses on tacit versus explicit uses of plural performance metrics as a primary methodological characteristic. This characteristic usefully distinguishes two schools of normative analysis and their approaches to normative interpretations of bounded rationality. Both schools of thought make normative claims about bounded rationality by comparing the performance of decision procedures using more than one performance metric. The consistency school makes tacit reference to performance metrics outside its primary axiomatic framework, but lexicographically promotes internal axiomatic consistency as the primary, (...) and in most cases sufficient, normative outcome with which to undertake welfare comparisons. The consistency school's axiomatization program, in both neoclassical and behavioral forms, pre-commits to welfare interpretations that follow a hierarchy of rationalities based on the stringency of restrictions that different axiomatizations impose on choice data. In contrast, the ecological rational.. (shrink)

No evangelistic erroneous network of ideas can guarantee the satisfaction of these two demands : (1) propagate the network without revision and (2) completely insulate itself against losses in credibility and adherents through criticism. If a network of ideas is false, or inconsistent or fails to solve its intended problem, or unfeasible, or is too costly in terms of necessarily forsaken goals, its acceptability may be undermined given only true assumptions and valid arguments. People prefer to adopt ideologies that (i) (...) are logically consistent, (ii) are more truth-like and of higher information content than their rivals, (iii) are systematically organised, (iv) solve their problems better than their rivals, (v) do not contain unfeasible demands, and (vi) do not contain uneconomic demands. Truth and validity therefore act as Darwinian-like filters on ideologies. Using Popper's notion of situational analysis and with reference to Darwinian evolution, considered as a special case of the former, and Bartley's theory of comprehensively critical rationalism I argue that a propagandist cannot guarantee his message or his movement from sound criticism. All positions are in a methodological sense open to argument. Moreover, the logic of a propagandist's situation constrains him into making his message and himself open to criticism in order to maximize its chances of being propagated through the population. But he then loses control of the message in two respects. Firstly, his audience are disposed to select from the competing ideas they encounter those that satisfy (i) to (vi) because of man's evolutionary history. Secondly, he cannot guarantee protection from criticism even a privileged section of his message because he cannot predict in a systematic way what logical repercussions each protective reformulation of the ideology will have on other sections of the ideology and what criticism the ideology will encounter. He cannot do the latter because of certain logical properties of theories that endow them with unfathomable depths. Marxism and Freudianism serve as case studies, especially for the analysis of Popper's notion of the immunizing stratagem, a methodological/logical device that is supposed to save theories from criticism. "Immunizing stratagems" either abandon the ideology they are meant to protect or seriously lower its chances of being reproduced. (shrink)

From April 8th to 10th 2013, the Herbert Simon Society held its first General Conference in New York. About fifty researchers from different countries and working in different areas attended the event. The conference focused on three topics which were identified as particularly relevant in the development of Simonian thought: duality of mind, creativity and alternative theories to rational expectations. A first Herbert Simon Honorary Lecture by Gerd Gigerenzer opened the conference. Gerg Gigerenzer was later elected as Chairman of the (...) Herbert Simon Society. Joseph Stiglitz closed the conference with the second Herbert Simon Honorary Lecture.The Herbert A. Simon Society brings together economists, social and cognitive scientists engaged in critical issues such as bounded rationality, problem solving, simulation of human thought and creativity. In particular, it gathers some of the most important economists who try to reformulate economic theory by starting from some of the non-neoclassi. (shrink)