Economics
If we can make ourselves do better, why aren't we doing it? The case of prohibitions against free-riding in the presence of a public good.
Abstract: There exists a multitude of cooperation-enhancing mechanisms which have been found to work, both theoretically and in practice. We investigate prohibitions against free-riding, social norms commonly used for the regulation of, e.g., travel-induced externalities. We show that a key condition for the effectiveness of such prohibitions is that individuals believe the norm to be followed and act on this belief. We then ask why, sometimes, some but not all activities relevant to the production of a public good are socially regulated. Against the transaction-cost theory of institutions, we highlight a path-dependence explanation. Activities relevant to the production of public goods often differ with regard to whether or not they are already embedded in normative descriptions. Prior embeddedness in normative frameworks, we suggest, influences mechanism selection.
Philosophy of science
The Axiom of Choice Determination: A Philosophy of Science Perspective
Abstract: The axiom of choice determination states that rational agents never act against their preferences. This axiom is fundamental to ordinal utility theory, yet conflicts starkly with ordinary psychology where agents regularly act against preferences for moral or social reasons. This paper investigates whether this conflict undermines economic practice, particularly the explanatory power of rational choice theory. We first articulate what we term the "conventional argument"—that most economic explanations remain valid because they rely on theoretical or behavioral interpretations rather than problematic psychological ones. We then argue that one form of economic explanation is indeed undermined by the use of the axiom: functionalist explanation of institutions. Because reliance on the axiom actually forbids an interpretation of preferences as a record of what individuals value or want, Pareto efficiency cannot be an argument why certain institutions exist.
Mediated Preference Revelation: An Argument for Amending the Revealed Preference Principle
Abstract: When it comes to discussing agents’ preferences, economists often appear like tightrope walkers. On the one hand, Samuelson’s methodological standards suggest models should stand on no more than his account of ‘as if preferences.’ On the other hand, some uses we make of economic models commit us to a more substantial account. In spite of numerous arguments against it, Samuelson’s program stands and the incongruity subsists. In this paper, I reconstruct a syllogism which, in the 40’s, could have been used to back up Samuelson’s research program. Though now known to be unsound, the argument reveals an appealing aspect of revealed preference theory. Namely, that, by excluding folk-psychology from scientific discourse, it (trivially) resolves a tension between folk-psychology and economists’ endeavors to meet certain scientific standards. Still today, similar grounds can be appealed to to undermine the use of folk-psychology in economics. I point out a distinction between normative and positive folk-psychology which, I suggest, provides us with an alternative way to resolve the tension. Economists, I argue, should expand their evidence base to include bits of normative folk-psychological discourse. The move would, furthermore, yield a side-benefit: economists’ technical concept of rationality would come closer to the ordinary one.