We modify the payment rule of the standard divide the dollar (DD) game by introducing a second stage and thereby resolve the multiplicity problem and implement equal division of the dollar in equilibrium. In the standard DD game, if the sum of players’ demands is less than or equal to a dollar, each player receives what he demanded; if the sum of demands is greater than a dollar, all players receive zero. We modify this second part, which involves a harsh (...) punishment. In the modified game $(D\!D^{\prime })$ , if the demands are incompatible, then players have one more chance. In particular, they play an ultimatum game to avoid the excess. In the two-player version of this game, there is a unique subgame perfect Nash equilibrium in which players demand (and receive) an equal share of the dollar. We also provide an $n$ -player extension of our mechanism. Finally, the mechanism we propose eliminates not only all pure strategy equilibria involving unequal divisions of the dollar, but also all equilibria where players mix over different demands in the first stage. (shrink)

This paper summarizes a theory of fairness that replaces the metaphysical foundations of the egalitarian theory of John Rawls and the utilitarian theory of John Harsanyi with evolutionary arguments. As such, it represents an attempt to realize John Mackie’s call for a theory based on the data provided by anthroplogists and the propositions proved by game theorists. The basic claim is that fairness norms evolved as a device for selecting one of the infinity of efficient equilibria of the repeated game (...) of life played by our prehuman ancestors. (shrink)

This paper tries to answer the question why the epistemic value of so many social simulations is questionable. I consider the epistemic value of a social simulation as questionable if it contributes neither directly nor indirectly to the understanding of empirical reality. To examine this question, two classical social simulations are analyzed with respect to their possible epistemic justification: Schelling’s neighborhood segregation model and Axelrod’s reiterated Prisoner’s Dilemma simulations of the evolution of cooperation. It is argued that Schelling’s simulation is (...) useful because it can be related to empirical reality, while Axelrod’s simulations and those of his followers cannot and thus that their scientific value remains doubtful. I relate this findingto the background beliefs of modelers about the superiority of the modeling method as expressed in Joshua Epstein’s keynote address “Why model?”. (shrink)

In the Divide-the-Dollar (DD) game, two players simultaneously make demands to divide a dollar. Each player receives his demand if the sum of the demands does not exceed one, a payoff of zero otherwise. Note that, in the latter case, both parties are punished severely. A major setback of DD is that each division of the dollar is a Nash equilibrium outcome. Observe that, when the sum of the two demands x and y exceeds one, it is as if Player (...) 1's demand x (or his offer (1−x) to Player 2) suggests that Player 2 agrees to λx < 1 times his demand y so that Player 1's demand and Player 2's modified demand add up to exactly one; similarly, Player 2's demand y (or his offer (1−y) to Player 1) suggests that Player 1 agrees to λyx so that λyx+y = 1. Considering this fact, we change DD's payoff assignment rule when the sum of the demands exceeds one; here in this case, each player's payoff becomes his demand times his λ; i.e., each player has to make the sacrifice that he asks his opponent to make. We show that this modified version of DD has an iterated strict dominant strategy equilibrium in which each player makes the egalitarian demand 1/2. We also provide a natural N-person generalization of this procedure. (shrink)

Conditional cooperation of selfish and rational actors is feasible in repeated encounters. We stress an important alternative for conditional cooperation: credible commitments that can be incurred via voluntary hostage posting (in the sense of pledging a bond). Hostages may facilitate cooperation in different ways. First, they reduce incentives to behave uncooperatively. Second, by offering some compensation for losses, hostages reduce the costs of suffering from uncooperative behavior of the partner. Finally, hostages may serve as signals about characteristics of the partner (...) that are related to his opportunities and incentives to behave uncooperatively. We show that signalling hostages may have lasting effects in durable relations. (shrink)

Game theory is the systematic study of interdependent rational choice. It should be distinguished from decision theory, the systematic study of individual (practical and epistemic) choice in parametric contexts (i.e., where the agent is choosing or deliberating independently of other agents). Decision theory has several applications to ethics (see Dreier 2004; Mele and Rawlings 2004). Game theory may be used to explain, to predict, and to evaluate human behavior in contexts where the outcome of action depends on what several agents (...) choose to do and where their choices depend on what others choose to do. (See the entry on game theory) Game theory consequently is relevant to ethics, and it is used in moral and political philosophy in a variety of ways. We shall concentrate on the influence and use of game theory in ethics and those parts of political theory involving norms or principles of justice, ignoring questions about political and legal institutions on the one hand and questions about issues dealing with moral virtues on the other. (shrink)

This is my personal homepage. Find my philosophical papers under "Philosophy".

Humans are standouts in their propensity to trade. More specially, the kind of trading found in humans—featuring the exchange of many different goods and services with many different others, for the mutual benefit of all the involved parties—far exceeds anything that is found in any other creature. However, a number of important questions about this propensity remain open. First, it is not clear exactly what makes this propensity so different in the human case from that of other animals. Second, it (...) is not clear why other animals did not acquire this propensity to the extent that humans did. Third, it is not clear what explains the fact that the extent to which humans engage in trade is culturally highly variable. The paper argues that at the heart of the human-animal divergence in this propensity is the particular socio-cultural environment in which humans evolved. This has led them to sometimes, but not always, acquire the cognitive technology (writing, algebra, tallying devices, money, etc.) to support a sophisticated disposition and capacity for reciprocal cooperation, and deep and wide concepts of property and exchange value. (shrink)

I review the classic skeptical challenges of Foole in Leviathan and the Lydian Shepherd in Republic against the prudential rationality of justice. Attempts to meet these challenges contribute to the reconciliation project (Kavka in Hobbesian moral and political theory , 1986 ) that tries to establish that morality is compatible with rational prudence. I present a new Invisible Foole challenge against the prudential rationality of justice. Like the Lydian Shepherd, the Invisible Foole can violate justice offensively (Kavka, Hobbesian moral and (...) political theory , 1986 ; Law and Philosophy , 14:5–34, 1995 ) without harming his reputation for justice. And like the Foole, the Invisible Foole dismisses the possibility that being just preserves goods intrinsic to justice, and will be just only if he fears that others will punish his injustice by withholding the external goods like labor and material goods that he would otherwise receive for their performance in covenants. I argue that given a plausible folk-theorem interpretation , Hobbes’ response to the Foole’s challenge is inconclusive, and depends crucially upon common knowledge assumptions that may or may not obtain in actual societies. I present two analogous folk-theorem arguments in response to the Invisible Foole’s challenge, one using the idea that the Invisible Foole’s power of concealment might be transitory, and the other using the idea that members of society might stop performing in covenants with anyone, thus punishing the Invisible Foole indirectly, if the Invisible Foole commits sufficiently many injustices. (shrink)

I reply to commentaries by Justin Bruner, Robert Sugden and Gerald Gaus. My response to Bruner focuses on conventions of bargaining problems and arguments for characterizing the just conventions of these problems as monotone path solutions. My response to Sugden focuses on how the laws of humanity present in Hume’s discussion of vulnerable individuals might be incorporated into my own proposed account of justice as mutual advantage. My response to Gaus focuses on whether or not my account of justice as (...) mutual advantage can incorporate deep differences in values across subgroups of a larger society. (shrink)

In their classic analyses, Hobbes and Hume argue that offensively violating a covenant is irrational because the offense ruins one’s reputation. This paper explores conditions under which reputation alone can enforce covenants. The members of a community are modeled as interacting in a Covenant Game repeated over time. Folk theorems are presented that give conditions under which the Humean strategy of performing in covenants only with those who have never offensively violated or performed with an offensive violator characterizes an equilibrium (...) of the repeated Covenant Game. These folk theorems establish that for certain ideal settings Hobbes’ and Hume’s arguments against offensively violating covenants are compelling. However, these ideal settings presuppose that the community has certain mechanisms that generate common knowledge of the identities of those with whom one should perform. I analyze the results of computer simulations of the interactions in a community whose members must rely upon private communication alone. The computer simulation data show that in this community, reputation effects cannot effectively deter members from offensively violating covenants. I conclude that Hobbes’ and Hume’s warnings against offensive violation are compelling only on condition that the community is sufficiently structured to generate common knowledge among its members. I also conclude that even in such structured communities, the Humean strategy is not the uniquely “correct” policy. (shrink)

A number of scholars have recently defended the claim that there is a close connection between the evolutionary biological notion of fitness and the economic notion of utility: both are said to refer to an organism’s success in dealing with its environment, and both are said to play the same theoretical roles in their respective sciences. However, an analysis of two seemingly disparate but in fact structurally related phenomena—‘niche construction’ (the case where organisms change their environment to make it fit (...) to their needs) and ‘adaptive preferences’ (the case where agents change their wants to make them fit to what the world has given them)—shows that one needs to be very careful about the postulation of this sort of fitness–utility connection. Specifically, I here use the analysis of these two phenomena to establish when connecting fitness and utility is and is not possible. (shrink)

In distributive bargaining, bargainers may have an impulse to bluff and thereby risk an impasse. The current paper does not explain bargaining impasses. For our purposes, it suffices to recognize that bargaining impasses may occur without assuming irrationality. The design problem is to ensure that impasses are avoided as often as possible. One possible solution is to allow for the formation of an agreement by “conduct”. The ‘agreement by conduct’ outcome as a commercial norm may coordinate bargainers’ expectations so as (...) to enable them to perform the same contract, even if they made written demands above ½ (as a bluff). The idea that the “deal-is-on” philosophy as expressed in the “agreement-by-conduct” rule affects and promotes economic exchange is probed in the context of a modified Divide-the-Dollar game. (shrink)

Contractualism is one of the most promising ‘centers of gravity’ in business ethics. In this guest editorial we provide a concise roadmap to the field, sketching contractualism’s historic and disciplinary antecedents, the basic argumentative structure of the contract model, and its boundary conditions. We also sketch two main dimensions along which contributions to the contractualist tradition can be positioned. The first dimension entails positive versus normative theorizing – does a given contribution analyze the world as it is or how it (...) ought to be? The second dimension involves four different levels of analysis that are commonly employed in contractualist business ethics: the nano, micro, meso, and macro levels. We then proceed to position the articles comprising this special issue along these two dimensions. (shrink)

This is a series of lectures on formal decision theory held at the University of Bayreuth during the summer terms 2008 and 2009. It largely follows the book from Michael D. Resnik: Choices. An Introduction to Decision Theory, 5th ed. Minneapolis London 2000 and covers the topics: -/- Decisions under ignorance and risk Probability calculus (Kolmogoroff Axioms, Bayes' Theorem) Philosophical interpretations of probability (R. v. Mises, Ramsey-De Finetti) Neuman-Morgenstern Utility Theory Introductory Game Theory Social Choice Theory (Sen's Paradox of Liberalism, (...) Arrow's Theorem) . (shrink)

Simulation models of the Reiterated Prisoner's Dilemma (in the following: RPD-models) are since 30 years considered as one of the standard tools to study the evolution of cooperation (Rangoni 2013; Hoffmann 2000). A considerable number of such simulation models has been produced by scientists. Unfortunately, though, none of these models has empirically been verified and there exists no example of empirical research where any of the RPD-models has successfully been employed to a particular instance of cooperation. Surprisingly, this has not (...) kept scientists from continuing to produce simulation models in the same tradition and from writing their own history as a history of success. In a recent simulation study -- which does not make use of the RPD but otherwise follows the same pattern of research -- Robert Axelrod's (1984) original role model for this kind of simulation studies is praised as ``an extremely effective means for investigating the evolution of cooperation'' and considered as ``widely credited with invigorating that field'' (Rendell et al. 2010). (shrink)

Mathematical models are a well established tool in most natural sciences. Although models have been neglected by the philosophy of science for a long time, their epistemological status as a link between theory and reality is now fairly well understood. However, regarding the epistemological status of mathematical models in the social sciences, there still exists a considerable unclarity. In my paper I argue that this results from specific challenges that mathematical models and especially computer simulations face in the social sciences. (...) The most important difference between the social sciences and the natural sciences with respect to modeling is that in the social sciences powerful and well confirmed background theories (like Newtonian mechanics, quantum mechanics or the theory of relativity in physics) do not exist in the social sciences. Therefore, an epistemology of models that is formed on the role model of physics may not be appropriate for the social sciences. I discuss the challenges that modeling faces in the social sciences and point out their epistemological consequences. The most important consequences are that greater emphasis must be placed on empirical validation than on theoretical validation and that the relevance of purely theoretical simulations is strongly limited. (shrink)