This paper presents the 'rationality-of-ends/market-structure grid'. With this grid, the article contrasts, in economic terms, different approaches to business ethics and addresses the question how far and what type of business ethics is feasible. Four basic scenarios for business ethics are outlined that imply different conceptualizations of business ethics. The grid interrelates a rationality-of-ends dimension with a market-structure dimension. The rationality-of-ends dimension ranges from opportunism and self-interested egoism to self-interested altruism and ultimately to authentic altruism. (...) The market-structure dimension ranges from perfect competition/no information problems/perfectly dispersed market power to imperfect competition/high information problems/concentrated power. Rather than presenting economic, legal, ethical and discretionary issues in a hierarchical fashion, the grid interrelates these issues. Conclusions are spelled out regarding the empirical observance of business ethics and the programmatic, 'theoretical' positions that are behind empirical observations. Practical implications for managers and public policy makers are outlined. (shrink)

This paper presents the ‘rationality‐of‐ends/market‐structure grid’. With this grid, the article contrasts, in economic terms, different approaches to business ethics and addresses the question how far and what type of business ethics is feasible. Four basic scenarios for business ethics are outlined that imply different conceptualizations of business ethics. The grid interrelates a rationality‐of‐ends dimension with a market‐structure dimension. The rationality‐of‐ends dimension ranges from opportunism and self‐interested egoism to self‐interested altruism and ultimately to authentic altruism. (...) The market‐structure dimension ranges from perfect competition/no information problems/perfectly dispersed market power to imperfect competition/high information problems/concentrated power. Rather than presenting economic, legal, ethical and discretionary issues in a hierarchical fashion, the grid interrelates these issues. Conclusions are spelled out regarding the empirical observance of business ethics and the programmatic, ‘theoretical’ positions that are behind empirical observations. Practical implications for managers and public policy makers are outlined. (shrink)

This paper presents the ‘rationality‐of‐ends/market‐structure grid’. With this grid, the article contrasts, in economic terms, different approaches to business ethics and addresses the question how far and what type of business ethics is feasible. Four basic scenarios for business ethics are outlined that imply different conceptualizations of business ethics. The grid interrelates a rationality‐of‐ends dimension with a market‐structure dimension. The rationality‐of‐ends dimension ranges from opportunism and self‐interested egoism to self‐interested altruism and ultimately to authentic altruism. (...) The market‐structure dimension ranges from perfect competition/no information problems/perfectly dispersed market power to imperfect competition/high information problems/concentrated power. Rather than presenting economic, legal, ethical and discretionary issues in a hierarchical fashion, the grid interrelates these issues. Conclusions are spelled out regarding the empirical observance of business ethics and the programmatic, ‘theoretical’ positions that are behind empirical observations. Practical implications for managers and public policy makers are outlined. (shrink)

Current incentive structures are more favorably aligned with the world’s problems than with their solutions. We conceptualize this as the paradox of incentives to argue the need for new thinking and restructuring of incentives to break the paradox during the COVID-19 pandemic and beyond, and create new opportunities for societal transformation.

In this paper we question the hypothesis of bounded rationality against full rationality in the context of job changing behavior, via simple econometric explorations on microdata drawn from Worker Histories Italian Panel (WHIP) and Sample of Integrated Labor Market Biographies (SIAB). The identification strategy builds on a quasi-counterfactual experiment in which the performance of each voluntary mover is compared to the average performance of a peer-group of stayers of the same skill group, co-workers in the firm from (...) which the movers’ job switch originated. Voluntary movers are identifiable in the WHIP and SIAB datasets, while it is not possible to do the same among the stayers. Full rationality suggests that the performance of voluntary movers should be superior to the stayers’ (both voluntary and involuntary) as the involuntary stayers have a smaller decision set from which to choose. In this exploration we find a clear opposite result, which we take as evidence of bounded rationality of the movers. (shrink)

Drawing upon rational choice and investor attention theories, we examine how accusations of corporate bribery and subsequent investigations shape market reactions. Using event study methodology to measure loss in firm value for public firms facing bribery investigations from 1978 to 2010, we found that total market penalties amounted to $60.61 billion. We ran moderated multiple regression analysis to examine further the degree to which the unique characteristics of bribery explain variations in market penalties. Companies committing bribery in (...) less corrupt host countries and with the involvement of compromised executives experienced greater market penalties than did other companies. After partitioning share value losses into components for regulatory penalties, class action settlements, and loss to reputation, we found that reputational penalties account for 81.8¢ of every dollar of share value loss. Omission of reputational penalties in rational choice calculus underestimates bribery costs by 4.5 times. The results suggest that firms should not underestimate the importance of market-imposed reputational penalties by merely considering regulator-imposed fines and sanctions. (shrink)

While various strategic business issues related to product design have been explored by academicians and practitioners, one issue has largely been ignored: how do financial markets assess and evaluate companies’ product design? The purpose of this article is to examine this issue, especially when it comes to the assessments and evaluations made by the most essential actors of contemporary financial markets: investment analysts and institutional investors. I develop propositions concerning the product design-related evaluative schemes and heuristics used by the financial (...) market actors in evaluating companies as investment opportunities. I illustrate my propositions with examples from, e.g., the mobile phone industry as well as with interview excerpts from interviews with investment analysts and institutional investors. Propositions are provided both for assessments of companies’ individual end products (‘design as the end product’ perspective) and for assessments of companies’ design capabilities (‘design as a capability’ perspective). In essence, the propositions highlight that the evaluative schemes used by financial market actors are partly rational, yet involve biases and are likely to lead to overvaluation and undervaluation of certain kinds of product designs by certain kinds of companies. Thus, even from the perspective of profit-maximization, many of the evaluative schemes of the financial market actors are, at most, quasi-rational. Moreover, the evaluative schemes of the financial market actors may motivate company managers to pursue certain kinds of product design rather than others—and may even lead to self-reinforcing (vicious or virtuous) circles of certain kinds of product designs being advocated. (shrink)

Markets in Historical Contexts is the result of a dialogue between historians and social scientists thinking about markets in modern society. How should we approach markets after the collapse of Marxism? What alternative ways of thinking about markets can we recover from the past? The essays in this volume set out to challenge essentialist accounts of the market. Instead they suggest that markets are always embedded in distinctive traditions and practices that shape the ways in which they are conceived (...) and the manner of their working. The essays range widely over European and non-European societies from the eighteenth century to the present, from the great transformation to globalization. Rational peasants, republican economists, popular conservatives, guild theorists, early environmentalists, communitarians, progressives, consumers, Gandhi's descendants and others are all revived. The volume thus recovers alternative ways of thinking about markets, many of which are neglected or marginalized in contemporary debates. (shrink)

In general, the technical apparatus of decision theory is well developed. It has loads of theorems, and they can be proved from axioms. Many of the theorems are interesting, and useful both from a philosophical and a practical perspective. But decision theory does not have a well agreed upon interpretation. Its technical terms, in particular, ‘utility’ and ‘preference’ do not have a single clear and uncontroversial meaning. How to interpret these terms depends, of course, on what purposes in pursuit of (...) which one wants to put decision theory to use. One might want to use it as a model of economic decision-making, in order to predict the behavior of corporations or of the stock market. In that case, it might be useful to interpret the technical term ‘utility’ as meaning money profit. Decision theory would then be an empirical theory. I want to look into the question of what ‘utility’ could mean, if we want decision theory to function as a theory of practical rationality. I want to know whether it makes good sense to think of practical rationality as fully or even partly accounted for by decision theory. I shall lay my cards on the table: I hope it does make good sense to think of it that way. For, I think, if Humeans are right about practical rationality, then decision theory must play a very large part in their account. And I think Humeanism has very strong attractions. (shrink)

Politics, Philosophy & Economics, Volume 21, Issue 2, Page 165-189, May 2022. It is generally acknowledged that a certain amount of state intervention in health and health care is needed to address the significant market failures in these sectors; however, it is also thought that the primary rationale for state involvement in health must lie elsewhere, for example in an egalitarian commitment to equalizing access to health care for all citizens. This paper argues that a complete theory of justice (...) in health can be derived from a commitment to correcting market failure, or in other words promoting Pareto-efficiency, in the domain of health. This approach can address familiar problems around access to care, as well as problems related to resource allocation and rationing, the control of health care costs, and the foundations of public health. Egalitarian theories of justice in health cannot make sense of the depth and pervasiveness of state involvement in health and health care; only a theory rooted in the need to correct market failure can. (shrink)

The principal findings of experimental economics are that impersonal exchange in markets converges in repeated interaction to the equilibrium states implied by economic theory, under information conditions far weaker than specified in the theory. In personal, social, and economic exchange, as studied in two-person games, cooperation exceeds the prediction of traditional game theory. This book relates these two findings to field studies and applications and integrates them with the main themes of the Scottish Enlightenment and with the thoughts of F. (...) A. Hayek. (shrink)

The efficient markets hypothesis has been the central proposition in finance for nearly thirty years. It states that securities prices in financial markets must equal fundamental values, either because all investors are rational or because arbitrage eliminates pricing anomalies. This book describes an alternative approach to the study of financial markets: behavioral finance. This approach starts with an observation that the assumptions of investor rationality and perfect arbitrage are overwhelmingly contradicted by both psychological and institutional evidence. In actual financial (...) markets, less than fully rational investors trade against arbitrageurs whose resources are limited by risk aversion, short horizons, and agency problems. The book presents and empirically evaluates models of such inefficient markets. Behavioral finance models both explain the available financial data better than does the efficient markets hypothesis and generate new empirical predictions. These models can account for such anomalies as the superior performance of value stocks, the closed end fund puzzle, the high returns on stocks included in market indices, the persistence of stock price bubbles, and even the collapse of several well-known hedge funds in 1998. By summarizing and expanding the research in behavioral finance, the book builds a new theoretical and empirical foundation for the economic analysis of real-world markets. (shrink)

Rationing health care is not new. As governments world wide struggle to contain the costs of health care, health policy analysts debate how rationing should be done. However, they too often neglect how the mechanisms for funding and allocating health care resources are themselves vehicles for rationing treatment. In the UK, where health care rationing debates currently abound, there has been no formal evaluation of the role of the market in allocating scarce health care resources.The market in health (...) care has increased administration, fragmented services, eroded local accountability, and decreased choice.This fragmentation, and the associated competition between purchasers and providers, means that resource allocation can no longer be monitored and evaluated in a national context. The loss of a population focus has left a vacuum in planning. Services cannot be planned rationally, and so are not able consistently to avoid duplication or to respond cogently to estimates of need.The loss of accountability means that decisions about the allocation of health care resources are no longer open to scrutiny by local people. Increasingly, especially in social and long term care the cost of care is being transferred to the individual. The new mechanisms for resource allocation are distributing resources unfairly: away from the poor, the sick and the elderly.The great myth of the market is that it has enabled decision-making to become explicit. This is not the case. To make health care resource allocation appear rational and acceptable to the public, health authorities have resorted to exercises in consumer consultation, and value laden guidelines where clinical cloaks are used to disguise political decisions on funding. In the UK, until the true role of the internal market is acknowledged, myths and subterfuge will conceal the winners and losers in the new system of rationing health care. (shrink)

Commercial genetic testing offered over the internet, known as direct-to-consumer genetic testing (DTC GT), currently is under ethical attack. A common critique aims at the limited validation of the tests as well as the risk of psycho-social stress or adaption of incorrect behavior by users triggered by misleading health information. Here, we examine in detail the specific role of advertising communication of DTC GT companies from a medical ethical perspective. Our argumentative analysis departs from the starting point that DTC GT (...) operates at the intersection of two different contexts: medicine on the one hand and the market on the other. Both fields differ strongly with regard to their standards of communication practices and the underlying normative assumptions regarding autonomy and responsibility. Following a short review of the ethical contexts of medical and commercial communication, we provide case examples for persuasive messages of DTC GT websites and briefly analyze their design with a multi-modal approach to illustrate some of their problematic implications. We observe three main aspects in DTC GT advertising communication: (1) the use of material suggesting medical professional legitimacy as a trust-establishing tool, (2) the suggestion of empowerment as a benefit of using DTC GT services and (3) the narrative of responsibility as a persuasive appeal to a moral self-conception. While strengthening and respecting the autonomy of a patient is the focus in medical communication, specifically genetic counselling, persuasive communication is the normal mode in marketing of consumer goods, presuming an autonomous, rational, independent consumer. This creates tension in the context of DTC GT regarding the expectation and normative assessment of communication strategies. Our analysis can even the ground for a better understanding of ethical problems associated with intersections of medical and commercial communication and point to perspectives of analysis of DTC GT advertising. (shrink)

The efficient markets hypothesis has been the central proposition in finance for nearly thirty years. It states that securities prices in financial markets must equal fundamental values, either because all investors are rational or because arbitrage eliminates pricing anomalies. This book describes an alternative approach to the study of financial markets: behavioral finance. This approach starts with an observation that the assumptions of investor rationality and perfect arbitrage are overwhelmingly contradicted by both psychological and institutional evidence. In actual financial (...) markets, less than fully rational investors trade against arbitrageurs whose resources are limited by risk aversion, short horizons, and agency problems. The book presents and empirically evaluates models of such inefficient markets. Behavioral finance models both explain the available financial data better than does the efficient markets hypothesis and generate new empirical predictions. These models can account for such anomalies as the superior performance of value stocks, the closed end fund puzzle, the high returns on stocks included in market indices, the persistence of stock price bubbles, and even the collapse of several well-known hedge funds in 1998. By summarizing and expanding the research in behavioral finance, the book builds a new theoretical and empirical foundation for the economic analysis of real-world markets. (shrink)

Belief polarization is said to occur when two people respond to the same evidence by updating their beliefs in opposite directions. This response is considered to be “irrational” because it involves contrary updating, a form of belief updating that appears to violate normatively optimal responding, as for example dictated by Bayes' theorem. In light of much evidence that people are capable of normatively optimal behavior, belief polarization presents a puzzling exception. We show that Bayesian networks, or Bayes nets, can simulate (...) rational belief updating. When fit to experimental data, Bayes nets can help identify the factors that contribute to polarization. We present a study into belief updating concerning the reality of climate change in response to information about the scientific consensus on anthropogenic global warming. The study used representative samples of Australian and U.S. participants. Among Australians, consensus information partially neutralized the influence of worldview, with free-market supporters showing a greater increase in acceptance of human-caused global warming relative to free-market opponents. In contrast, while consensus information overall had a positive effect on perceived consensus among U.S. participants, there was a reduction in perceived consensus and acceptance of human-caused global warming for strong supporters of unregulated free markets. Fitting a Bayes net model to the data indicated that under a Bayesian framework, free-market support is a significant driver of beliefs about climate change and trust in climate scientists. Further, active distrust of climate scientists among a small number of U.S. conservatives drives contrary updating in response to consensus information among this particular group. (shrink)

In this paper I argue that resource allocation in publicly funded medical systems cannot be done using a purely substantive theory of justice, but must also involve procedural justice. I argue further that procedural justice requires institutions and that these must be “local” in a specific sense which I define. The argument rests on the informational constraints on any non-market method for allocating scarce resources among competing claims of need. However, I resist the identification of this normative account of (...) local justice with the actual approach to local decision-making taken within the UK National Health Service. I illustrate my argument with reference to the case of provision of In Vitro Fertilisation within the UK NHS. (shrink)

This book examines transaction cost economics, the influential theoretical perspective on organizations and industry that was the subject of Oliver Williamson's seminal book,Markets and Hierarchies. Written by leading economists, sociologists, and political scientists, the essays collected here reflect the fruitful intellectual exchange that is occurring across the major social science disciplines. They examine transaction cost economics' general conceptual orientation, its specific theoretical propositions, its applications to policy, and its use in systematic empirical research. The chapters include classic texts, broad review (...) essays, reflective commentaries, and several new contributions to a wide range of topics, including organizations, regulations and law, institutions, strategic management, game theory, entrepreneurship, innovation, finance, and technical information. The book begins with an overview of theory and research on transaction cost economics, highlighting the specific accomplishments of scholars working within the perspective and emphasizing the enormous influence that transaction cost reasoning exerts on the social sciences. The following section covers conceptual uses for the transaction cost framework and major theoretical or methodological elements within it, such as bounded rationality. While advancing some interesting theoretical propositions, these chapters are in fact more ambitious: each examines a specific field, area, or research program and attempts to fashion a new way of thinking about research questions. In the section on industrial applications, contributors study the application of transaction cost theory to a range of problems in utilities, telecommunications, laser printing, and early international trade. The book closes with four microanalytical chapters that delve into the structures and behaviors of specific aspects of firms and organizations: boards of directors, equity structures, employment models, human resource policies and practices, technology strategies, and innovation events. Firms, Markets, and Hierarchies collects excellent social science work on transaction cost economics, taking stock of its status, charting its future development, and fostering its renewal and evolution. (shrink)

Markets have led a shadowy existence in economics. The ruling paradigm, neoclassical economics, for which markets are a central institution, has mainly been concerned with the determination of market prices. Until recently, sociological investigations of modern markets focused on production, as did anthropological work that ascertained how each culture made a living. The major debate among anthropologists to date has been about whether the economic rationality of the maximizing individual is to be found in all societies or whether (...) substantive economies are always embedded in a cultural matrix that determines its logics and forms of transaction. A new feature of financial markets is that they are based upon scopic systems – electronic and informational mechanisms of observing and contextualizing market reality and of back-projecting this reality onto the computer screens of globally operating traders. When such a mechanism is in place, coordination and activities respond to the reflected, represented reality rather than to pre-reflexive occurrences. This form of coordination contrasts with network forms of coordination that are pre-reflexive in character. In network markets, participants rely on their relationships to determine ‘where the market is’. In a market based on scopic systems, the market is fully visible on screen – as a set of tradable, comprehensively contextualized, quickly moving prices for various trading instruments. In this situation, a level of global inter-subjectivity emerges that derives from the character of these markets as reflexively observed by participants on their computer screens in temporal continuity, synchronicity, and immediacy. As a consequence, these markets are communities of time. As temporalized systems, financial markets project a form of coordination adapted to a global world that leaves behind the patterns of traditional producer and exchange markets. (shrink)

In the Marxist tradition, capitalism is understood as a commodified society based on markets. The article argues that the ultimate justification of this position does not lie in any ‘materialistic’ approach, but in the disembedding of markets that was the result of the historical ‘Great Transformation’ analysed by Karl Polanyi. Disembedded markets are not an economic subsystem within society but take the place of the most encompassing social system, which Durkheim had reserved for religion. The article distinguishes between spatial, social, (...) material and temporal dimensions of disembedding, thereby elaborating and correcting the analysis of Karl Polanyi. As a genuine form of society, disembedded markets give rise to the epistemological dilemma, which, as Luhmann had shown, is fundamental to any encompassing social theory: Society as a whole cannot be viewed by any observer. According to this viewpoint, economic theories take on ‘theological’ functions, as they provide rationality and legitimacy to a reality that is unknowable. (shrink)

This essay is part of a larger project exploring the extent to which the market paradigm might be usefully employed to explain and in some instances justify nonmarket institutions. The focus of the market paradigm in this essay is the relationship between the idea of a perfectly competitive market and aspects of both the rationality of political association and the theory of collective choice. In particular, this essay seeks to identify what connections, if any, exist between (...) one kind of market account of the rationality of political association and one kind of market-based social choice rule. The market theory of political association I intend to discuss I call “market contractarianism,” and the collective choice rule whose relation to it I intend to explore is the unanimity rule. What, if anything, is the relationship between market contractarianism and the unanimity rule? (shrink)

The article deals with a role of mass culture in term of the theory of the culture industry by M. Horkheimer and T. Adorno and the theory of communicative action by J. Habermas, who continues research of the Frankfurt school. It is known that Habermas says about two types of rationality — communicative and structural. The lifeworld and the system correspond them. Usually, culture correspond to lifeworld because it helps people`s socialization. Also it is a place for communication and (...) finding new meanings. However, a place of mass culture is very controver- sial. In particular, it is necessary to distinguish between popular and mass culture, because these definitions have been used as interchangeable for a long time. Popular culture is still an area of meanings. Moreover, it has the potential for protest. From this point of view, it is clearly part of the life world. But mass culture as a «cultural industry» is not so unambiguous. It is worth considering its characteristics and role in people’s life more detail. Above all, one cannot help paying attention to masses. Already in the last century, H. Arendt characterized them as an atomized and isolated group of people, and they are not united by any common ideas. After all, even in the modern world it is possible to see that they do not have and do not want to search for any ideas or meanings. Masses are a direct consumers of mass culture. It is consumerism that the characteristic feature of modernity. Therefore, mass culture is inseparably connected with the market. On the one hand, it sells entertainments, and on the other hand, it generates new consumers, because it is related to advertising. In the same way, mass culture is connected with agitation and propaganda. Thus, it is possible to speak about its connection with politics. The market and politics correspond to the system and are guided by strategic rationality. This fact gives reason to talk about mass culture as a strategic tool. Such culture with no meanings leads to a crisis in society. (shrink)

The financial crisis of 2008–2009 presents us with the opportunity to not only understand what has happened in the markets but also to reflect on the purpose of the marketplace. Drawing from expert economic analyses, we first assess the central lesson of the crisis—the failure of self-regulation by rational self-interest to moderate externalized risk in financial markets. Second, we ask the philosophical question occasioned by the crisis concerning the moral meaning of economic activity: Is market exchange solely for the (...) sake of self-interest? Reflecting on the poetry of Kahlil Gibran and engaging with the recent encyclical of Pope Benedict XVI, we turn our attention from political economy to moral economy: the relationships among market exchange, self-interest, and the common good—and, in particular, the prior conditions of market exchange and their moral significance for the present crisis. (shrink)

Using panel data from three Canadian provinces, this article examines the relationship between the de-marketing of tobacco products through provincial-level price increases and consumers’ attempts to quit smoking as measured by the uptake of tobacco replacement therapies. We ground our hypotheses in the rational addiction model and the theory of planned behavior. Our analyses suggest a positive, one-month lagged effect of a price increase of tobacco products on the uptake of tobacco replacement therapies. This effect dissipates 3 months later, suggesting (...) that there is a critical period for aggressive de-marketing of tobacco products. We discuss the implications of these results for theory and future research into de-marketing harmful consumer products. (shrink)

The thesis of this book is that people enter into social contracts because they are different from one another and have incentives to cooperate. In economic life, people have identical interests—namely, their own se- interests—so they have an incentive to compete. The social worlds that we create, or map, and those that are already mapped for us are increasingly complex, and thus the tracking of rationality is not so straightforward, although it is everywhere evident. In a sense, this book (...) grew out of two questions: Why hasn't the United States had a second revolution? Or is the revolution yet to come? Many have discussed the current crises that confront contemporary society, such as great economic inequalities, poverty, the declining quality of jobs, the growing power of corporate elites, and racial antago nisms. I attempt to understand these problems in terms of the radical restructuring of social life by economic and spatial forces. My specula tive thesis is that social organizations must reinforce social contracts and nurture the opportunities for them to be forged. However, contemporary organizations, particularly economic ones, have internalized the princi ples of economic markets, thereby inducing competition and easing out cooperation. In defining social contracts, I draw from Rousseau and also from Marx and his analysis of use value. One hopes that new organiza tional forms based on principles of democracy and community will evolve. In a diverse, multicultural society, this requires great mutual understanding and cooperation and the recognition of differences. (shrink)

This book offers a rigorous, concise, and nontechnical introduction to some of the fundamental insights of rational choice theory. It draws on formal theories of microeconomics, decision making, games, and social choice, and on ideas developed in philosophy, psychology, and sociology. Itzhak Gilboa argues that economic theory has provided a set of powerful models and broad insights that have changed the way we think about everyday life. He focuses on basic insights of the rational choice paradigm--the general conceptualization rather than (...) a particular theory--that survive recent critiques of economic theory's various failures. Gilboa explains the main concepts in language accessible to the nonspecialist, offering a nonmathematical guide to some of the main ideas developed in economic theory in the second half of the twentieth century. Chapters cover feasibility and desirability, utility maximization, constrained optimization, expected utility, probability and statistics, aggregation of preferences, games and equilibria, free markets, and rationality and emotions. Online appendixes offer additional material, including a survey of relevant mathematical concepts. (shrink)

In public political deliberation, people will err and lie in accordance with definite patterns. Such discourse failure results from behavior that is both instrumentally and epistemically rational. The deliberative practices of a liberal democracy cannot be improved so as to overcome the tendency for rational citizens to believe and say things at odds with reliable propositions of social science. The theory has several corollaries. One is that much contemporary political philosophy can be seen as an unsuccessful attempt to vindicate, on (...) symbolic and moral grounds, the forms that discourse failure take on in public political deliberation. Another is that deliberative practices cannot be rescued even on non-epistemic grounds, such as social peace, impartiality, participation, and equality. To alleviate discourse failure, this book proposes to reduce the scope of majoritarian politics and enlarge markets. (shrink)

In the midst of the ultra modernity of stock exchanges and financial markets, certain practitioners are increasingly using forecasting models of changes in rates whose scientific rationality is particularly contested. We refer to ‘technical analysis’, or, in the jargon of finance, of ‘chartism’. The adherents of this practice affirm that their models offer the possibility of detecting and of reading, by means of stereotyped graphical configurations, rising or falling market trends. Now, for a large number of people who (...) hold scientific economic and financial theories to describe the ‘nature’ of changes in rates as so many random and unpredictable phenomena, these models arise above all from the sphere of ‘superstition’ and ‘beliefs’, in the worst sense of the term. To listen to them, one would think there was hardly any difference between sorcery, prophecy, and chartism, since in short: “it works because people believe in it”. These are remarks that can only arouse the curiosity of the anthropologist, because they actually serve merely to recall epistemologica! controversies that depend on the rationality and the irrationality of observed practices and debates in various cultures. At the heart of these contradictory debates, it is precisely prophecy as a cultural mode of managing unforeseen events that has been the subject of multiple anthropological, historical, and epistemological studies which can, in a comparative perspective, clarify the structure and functioning of forecasting tools employed by the chartists in the context of financial speculation. (shrink)

The traditional command and control approach and the more recent free market have proven inadequate for promoting ecological agricultural development in China. Organic certification represents a regulated market mechanism with the potential to stimulate ecologically based agricultural research, extension, and investment. Recent linkages between the global organic food industry and local agricultural development in China provide an opportunity to test this potential. The article examines China’s two largest organic certification systems for their potential to promote the adoption of (...) integrated pest management (IPM) as a key component of ecological agriculture. Organic certification is providing a format for research, extension, and implementation of IPM principles and practices, and has the potential to do much more. However, possible contradictions between ecological and market rationality, inherent in organic certification and marketing systems, may be exacerbated by the authoritarian political economy of rural China. (shrink)

Behaviorism is consistent with the assumptions of perfect competition, with the homo economicus model, and with a form of ethics that enshrines market-based notions of utility, justice, and rights and encourages rational maximizing. Economics and business courses foster this deficient form of ethics, assuming an overriding desire for money, which, according to MacIntyre and Aristotle, crowds out the associative virtues. These beliefs, often associated with Taylor and Friedman, lead to such practices as incentive compensation, which would be effective only (...) if employees were homines economici and thus rational in the sense of knowing how to satisfy whatever desires they have. Against Davidson’s view that psychology cannot be a natural science, Aristotle believes that there can be a teleological, if not exact, science of behavior. Aristotle believes that emotions and objectives may be rational or irrational. But rationality—phronesis, practical wisdom—is not a matter of applying algorithms. Doris questions whether character generates the first premises of an agent’s practical syllogisms, while Haidt has argued that we often act on emotions rather than on the basis of the reasons that we claim motivate us. Aristotle agrees that many people are not virtuous and that weakness of the will is a common occurrence, and he agrees that emotion drives actions. But if you are virtuous, your emotions and desires support your rationality. Aristotle gives us reason to reject the notion that people are homines economici and to treat them as rational deliberators, in part by creating an appropriate culture. The claim that it is in the nature of human beings to deliberate rationally is in part aspirational, but also in part scientific—in Aristotle’s modest sense. (shrink)

Although the governmentality literature has occasionally acknowledged the importance of the concept of a liberal truth-regime, there has never been a thorough investi-gation of the role it plays in Foucault’s governmentality lectures. Therefore, this paper begins with an examination of the lectures’ “archaeological dimension” that leads to two claims: First, it shows that the crucial conceptual tool in the lectures is the question about the relation to truth that a particular political rationality possesses. Only by looking at the changing (...) truth-regimes of the liberal governmentalities will their differences and continuities come into full contrast. The article’s second claim is that this conceptually sharpened understanding of the political rationalities is required for a diagnosis of the present, which reveals that today’s dominant governmentality is no longer neo-liberalism but a new liberal rationality: neosocial market economy. (shrink)

Free marketeers claim that theirs is the only economic mechanism which respects and furthers human freedom. Socialism, they say, has been thoroughly discredited. Most libertarians treat the state in anything other than its minimal, 'nightwatchman' form as a repressive embodiment of evil. Some reject the state altogether. But is the 'free market idea' a rationally defensible belief? Or do its proponents fail to examine the philosophical roots of their so-called freedom? Anti-libertarianism takes a sceptical look at the conceptual tenets (...) of free market politics. Alan Haworth argues that libertarianism is little more than an unfounded, quasi-religious statement of faith: a market romance. Moreover, libertarianism is exposed as profoundly antithetical to the very freedom which it purports to advance. This controversial book is for anyone interested in the cultural and political impact of free market policies on the modern world. It will be invaluable to students and specialists of political and economic theory, social science and philosophy. (shrink)

Free marketeers claim that theirs is the only economic mechanism which respects and furthers human freedom. Socialism, they say, has been thoroughly discredited. Most libertarians treat the state in anything other than its minimal, 'nightwatchman' form as a repressive embodiment of evil. Some reject the state altogether. But is the 'free market idea' a rationally defensible belief? Or do its proponents fail to examine the philosophical roots of their so-called freedom? _Anti-libertarianism_ takes a sceptical look at the conceptual tenets (...) of free market politics. Alan Haworth argues that libertarianism is little more than an unfounded, quasi-religious statement of faith: a market romance. Moreover, libertarianism is exposed as profoundly antithetical to the very freedom which it purports to advance. This controversial book is for anyone interested in the cultural and political impact of free market policies on the modern world. It will be invaluable to students and specialists of political and economic theory, social science and philosophy. (shrink)

Companies that use online group-buying to get new business expansion opportunities at a price advantage are failing. Therefore, there is a need to develop new marketing strategies for group-buying companies to achieve market share and consumer favor. Given that consumers are society members, we used the social interaction theory to investigate the combination of factors that stimulate consumers’ purchase intentions. Fuzzy-set Qualitative Comparative Analysis was performed to evaluate different strategy configurations of social interaction elements, perceived quality, benefits and trust (...) to promote purchase decisions from 406 group-buying consumer questionnaires. We revealed four pathways with different configurations that can prompt consumers to make group-buying decisions: information strategy, Word-of-Mouth strategy, sense of community strategy, as well as combining Word-of-Mouth and sense of community strategy. These strategies provide viable approaches through which group-buying companies can rationally use marketing programs to promote consumers’ purchase intentions. (shrink)

Economists usually assume that rational actions are the ones motivated by a self-interested agent. However in our daily life we often see people doing altruistic actions which we praise and which we do not call irrational. How can we account for this paradox? This question and the tension underlying it, is at the heart of Philip Pettit’s classic essay, “The Virtual Reality of Homo Economicus” (1995). This dissertation constitutes a detailed analysis and evaluation of the claims that Pettit makes there, (...) in particular his original proposal of reconciliation between economic science and common sense, and the role that self-interest occupies in his model. Despite its importance, there are still few written commentaries or critiques of Pettit’s essay (1995). Among the few, most concentrate on the thesis of resilience explanation that Pettit presents at the end of the essay. What is lacking in the literature is a thorough examination of the central claim that Pettit makes there, and which gives the title to his essay: namely, the thesis of the "virtual self-interested control". In my view, this constitutes one of the most sophisticated defences of the assumption of self-interest in rational choice theory and economics. Therefore, it is surprising that it has not been subjected to more discussion, and published research. In section 1, present some of the central concepts of rational choice theory and economics, namely the homo economicus. In section 2, I introduce Pettit’s model, and then evaluate in which sense it is a plausible model to explain the behaviour in non-market contexts. Section 3 presents my criticism of the shortcomings of the model. (shrink)

First published in 1984, this book carefully dissects and convincingly demonstrates that conservative economics is incoherent in theory and disastrous in practice. The three main schools of thought supporting "free-market" policies – supply side economics, monetarism and rational expectations – are examined in turn and each is found defective. Three case studies of conservative policy in action follow: Reagan’s U.S., Thatcher’s U.K. and Pinochet’s Chile and their courses are charted in depth. In addition, Robert Heilbroner and Edward Nell analyse (...) economic conservatism’s ideology and social policy, and the book concludes with an assessment of the political reasons for the continuing appeal of free-market conservatism despite its theoretical incoherence and practical failure. This is a careful and comprehensive look at this subject which tackles both the theory and the practice head-on. It will make useful and stimulating reading for students of economics and political economy on courses of economic policy and macro-economics and in addition will be of keen interest to all those involved in the debate about one of the major policy issues of our time. (shrink)

This book deals with the basic question of what money can and cannot buy and offers an analysis of the limitations of the market mechanism. Few concepts are as controversial as religion and the market mechanism. Some consider religion to be in conflict with a modern rational scientific view of life, and thus as a contributory cause of harsh conflicts and a barrier to human happiness. Others consider religious beliefs as the foundation for ethics and decent behaviour. Similar, (...) a number of neoliberal writers acclaimed the market mechanism as one of the greatest triumphs of the human mind, and saw it as the main reason why rich countries became rich. Others are extremely skeptical and stress how this mechanism has result in big multinational firms with powerfully rich owners and masses of poor low-paid workers. Researchers from various fields - economists, social scientists, theologians and philosophers - handle these questions very differently, applying different methods and different ideals. This book offers a synthesis of the different viewpoints. It deals with economists’, theologians’ and philosophers’ differing thoughts about the market and its limitations. (shrink)

Rational choice theories have been falsified by experimental tests of economic behavior and have not been supported by analyses of behavior in the market. Politics is an even less fertile field of application for rational choice theories because politics deals with ends as well as means, thus preventing ends?means rationality; voters have partisan loyalties often ?fixed? in adolescence; political benefits have no common unit of measurement; ?rational ignorance? inhibits rational choices; and there is no market?like feedback to (...) facilitate learning. Research comparing public and private efficiency does not support rational choice. Ironically, while law and business schools are now employing better microeconomic theories, political scientists are taking up rational choice theory, regardless of the disconfirming evidence. (shrink)

Morality and economic rationality: integrative economic ethics as the rational ethics of economic activity; Part II. Reflections on the Foundations of Economic ...

In China, investors generally make decisions depending on the intonation of executive announcements. A total of 20,328 observations are sampled from the Chinese equity market between 2005 and 2019. We perform principal component analysis to produce monthly sentiment indices and calculate the weighted average of the value over the fiscal year to measure the degree of investor sentiment. The results of the empirical analysis reveal that: there is a significant positive correlation between market-level investor sentiment and executive tone, (...) stock price and trading-volume pressures on executives, and firm-level investor expectation and gambling tendency positively moderate the relationship between investor sentiment and executive tone, executive optimism does not mediate the association between investor sentiment and executive tone, and manipulated and real intonations are non-homogeneous tactics adopted by rational managers to cater to changes in investor sentiment. These findings indicate that executives' intonations are both an extension of firms' current and past performances and managers' decision-making based on sentiments and behaviors of irrational investors, which are consistent with the Catering Theory. In addition, rational executives tend to adopt various intonation tactics to respond to investor sentiment to avoid declines in stock prices and trading volumes. (shrink)

Habermas has argued that many of the endemic socio- economic problems of Western society are either symptoms or prod ucts of a 'lopsided' process of cultural rationalization, one that has emphasized instrumental forms of rationality over communicative. But other than presenting a rather general typology of lifeworld pathologies, Habermas has not done much to specify what these problems might be, nor has he provided any 'middle-range' analysis of the mechanisms through which they might be generated. This paper discusses some (...) of the ways in which, consistent with Haber mas's general framework, rational choice theory can be used for pre cisely this task. In this analysis, rational choice theory is not presented as a comprehensive theory of action, but is employed as a critical- diagnostic tool that allows the theorist to identify undesirable social interaction patterns that arise from a broader instrumentalization of the lifeworld. Key Words: critical theory • Habermas • instrumental rationality • market failure • rational choice theory. (shrink)

I argue that capitalism presents a threat to “democratic contestation”: the egalitarian, socially distributed capacity to affect how, why, and whether power is used. Markets are not susceptible to mechanisms of accountability, nor are they bearers of intentions in the way that political power-holders are. This makes them resistant to the kind of rational, intentional oversight that constitutes one of democracy’s social virtues. I identify four social costs associated with this problem: the vulnerability of citizens to arbitrary interference, the insensitivity (...) of markets to relevant interests, failures of trust in the market system, and the inhibition of social deliberation about matters of public concern. I make general two suggestions about how we might ameliorate these problems: First, as a way of introducing some measure of intentionality to large-scale patterns of business activity, the reconceptualization of such activity as participation in larger group actions; second, the development of deliberative bodies that bring together business actors, policy experts, and diverse citizens in an effort to better characterize and transmit the public values that business should serve. (shrink)

Since publication of Hetzel's The Monetary Policy of the Federal Reserve, the intellectual consensus that had characterized macroeconomics has disappeared. That consensus emphasized efficient markets, rational expectations and the efficacy of the price system in assuring macroeconomic stability. The 2008–9 recession not only destroyed the professional consensus about the kinds of models required to understand cyclical fluctuations but also revived the credit-cycle or asset-bubble explanations of recession that dominated thinking in the nineteenth century and the first half of the twentieth (...) century. These 'market-disorder' views emphasize excessive risk taking in financial markets and the need for government regulation. The present book argues for the alternative 'monetary-disorder' view of recessions. A review of cyclical instability over the last two centuries places the 2008–9 recession in the monetary-disorder tradition, which focuses on the monetary instability created by central banks rather than on a boom-bust cycle in financial markets. (shrink)

Sir John Hicks was a leading economic theorist of the twentieth century, and along with Kenneth Arrow was awarded the Nobel Prize in 1972. His work addressed central topics in economic theory, such as value, money, capital and growth. An important unifying theme was the attention for economic rationality 'in time' and his acknowledgement that apparent rigidities and frictions might exert a positive role as a buffer against excessive fluctuations in output, prices and employment. This emphasis on the virtue (...) of imperfection significantly distances Hicksian economics from both the Keynesian and Monetarist approaches. Containing contributions from distinguished theorists in their own right, this volume examines Hicks's intellectual heritage and discusses how his ideas suggest a distinct approach to economic theory and policy making. It will be of great interest to scholars and students of economic theory and the history of economic thought. (shrink)

Recent work in economics has rediscovered the importance of belief-based utility for understanding human behaviour. Belief ‘choice’ is subject to an important constraint, however: people can only bring themselves to believe things for which they can find rationalizations. When preferences for similar beliefs are widespread, this constraint generates rationalization markets, social structures in which agents compete to produce rationalizations in exchange for money and social rewards. I explore the nature of such markets, I draw on political media to illustrate their (...) characteristics and behaviour, and I highlight their implications for understanding motivated cognition and misinformation. (shrink)