Revealed Intentions: Comments on Realism and Rationality in Economics (Job Market Paper)

When it comes to concepts of rationality, game theorists often appear like tightrope walkers. On the one hand, behaviorist methodological standards entice them to develop models standing on no more than Samuelson’s account of rationality as consistency of choice. On the other hand, many applications commit them to an identification of rationality with the fulfillment of actual preferences, seemingly forcing a mentalist ontology onto them. In this paper, I unfold an alternative paradigm, called contextualism, within which the epistemic demands of behaviorism can be reconciled with the ontological demands of economists. At the center of my argument stands the claim that foundationalism, the epistemology commonly held by behaviorists and to which mentalism invites, plays a crucial role in the incompatibility between the two schools. Substituting a Sellarian epistemology for the foundationalist one and substituting Anscombe’s account of intention for the mentalist one yields contextualism, a view with two wide ranging implications. First, by dissolving several dilemmas of the mentalist standpoint, contextualism significantly flattens the hurdle faced by realism in economics. Second, contextualism establishes revealed preference as an empirical, as opposed to a priori, principle and, thereby, provides a ground for forms of rationality other than individual rationality.

A Collective Rationality Approach to Public Good Provision

Economists face difficulties explaining observed choices in repeated public good games. One reason is the high sensibility of these choices to parameters of the game, such as the number of players, the marginal per capita return of the public good, or individuals’ information. In this paper, I show that deviating from the revealed preference paradigm can help bring about a parsimonious and empirically adequate model of public good provision. More precisely, I introduce a formal distinction between the physical situation induced by the presence of a public good and the game, by which I mean the individuals’ perception of the situation. I then assume that a fraction of the players perceive the situation as a cooperation game while the other fraction does not. The latter players behave along individually rational lines, as conventionally assumed in Nash equilibrium. The former players agree to do their bit for the contributing team. My approach contrasts with, and is complementary to the current literature, which takes all players to be individually rational but assumes a population with mixed preferences.