Hume is rightly credited with giving a brilliant, and perhaps the best, account of justice as convention. Hume's importance as a forerunner of modern economics has also long been recognized. However, most of Hume's readers have not fully appreciated how closely Hume's analysis of convention foreshadows a particular branch of economic theory, namely, game theory. Starting with the work of Barry, Runciman and Sen and Lewis, there has been a flowering of literature on the informal game-theoretic insights to be found (...) in classics of political philosophy such as Hobbes, Locke, Hume and Rousseau. A number of authors in this tradition, including Lewis, Gauthier, Mackie, and Postema, have identified passages in Hume which they interpret as giving informal examples of specific games. Yet, unlike his predecessors, Hobbes and Locke, Hume does much more than present examples which have a game-theoretic structure. In his account of convention, Hume gives general conditions which characterize the resolution of social interaction problems, and in the examples he uses to illustrate this account, Hume outlines several different methods by which agents can arrive at such a resolution. Hume's general account of convention and his explanations of the origins of particular conventions together constitute a theory of strategic interaction, which is precisely what game theory aspires to be. (shrink)

I present what I take to be the approach to property rights, in which property is basically a unitary concept: owners are the ones with the right to do, and prohibit others from doing, whatever there is to do with the thing owned, within the limits imposed by the rights of others to their things. I expound and defend the idea of in more or less Lockean mode. I also point to the many difficulties of application of the general idea, (...) leading to the need to negotiate at many points. For example, the vagueness of land ownership as we consider what goes on in the earth below or the sky above; to consideration of not just possible physical damages to others by virtue of ownership, but also aesthetic ones; and to the increasingly important area of intellectual property. I argue that the original idea continues to hold, though it underdetermines any number of specific issues. (shrink)

In recent years, a number of authors have used gametheoretic reasoning to explain why purely self-interested agentswould ever conform their economic activities with the requirements of justice, when by doing so they forego opportunities to reapunilateral net gains by exploiting others. In this paper, I argue that Hume's justification of honest economic exchanges between self-interested agents in the Treatise foreshadows this contemporary literature. Hume analyzes the problem of explaining justice in self-interested economic exchange as a problem of agents coordinating on (...) a pattern of reciprocal cooperation, as opposed to some other behavioral pattern such as reciprocal exploitation, in exchanges repeated over time. Hume's arguments anticipate informally thecontemporary interpretation of just economic practices as forming part of an equilibrium of a repeated game. I close the paper by arguing that Hume does not provide a satisfactory explanation of how the mutual expectations that support justice in economic exchange arise in a community of self-interested agents. The problem Hume leaves unsolved is one of equilibrium selection, that is: Why do agents follow an equilibrium corresponding to just economic exchanges rather than some other equilibrium corresponding to unjust exchanges? I also argue that contemporary game theory still lacks a satisfactory theory of equilibrium selection, but that such a theory would lead us closer to a satisfactory Humean reconciliation of justice and self-interest in economic exchange. (shrink)

Traditionally, epistemologists have distinguished between epistemic and pragmatic goals. In so doing, they presume that much of game theory is irrelevant to epistemic enterprises. I will show that this is a mistake. Even if we restrict attention to purely epistemic motivations, members of epistemic groups will face a multitude of strategic choices. I illustrate several contexts where individuals who are concerned solely with the discovery of truth will nonetheless face difficult game theoretic problems. Examples of purely epistemic coordination problems and (...) social dilemmas will be presented. These show that there is a far deeper connection between economics and epistemology than previous appreciated. (shrink)

This paper gives prescriptions for introducing ethical concerns into the economic theory of the firm. Topics include social responsibility, corporate governance, profit maximization, competition barriers, collusion, the market system, and welfare economics. The need for such prescriptions is based on a content analysis of 21 managerial economics texts for their coverage of ethics. My analysis finds that substantive discussions of ethics are conspicuous by their absence. As ethical breaches can involve significant monetary damages to a firm – particularly through adverse (...) market reactions – moral-reasoning abilities can complement analytical skills. Consequently, my analysis demonstrates how ethics figure into the opportunity costs of managerial decision making, which is central to the economic definition of profit. (shrink)

Chamberlin insists on its validity in contributing to our thinking about the place of ethics in international affairs and in clarifying both the dangers and potential areas of cooperation inherent in many international relationships.

It seems natural to think that compromises ought to be fair. But it is false. In this paper, I argue that it is never a moral desideratum to reach fair compromises and that we are sometimes even morally obligated to try to establish unfair compromises. The most plausible conception of the fairness of compromises is David Gauthier’s principle of minimax relative concession. According to that principle, a compromise is fair when all parties make equal concessions relative to how much they (...) can gain from an agreement and relative to how much they would lose without an agreement. To find out whether reaching a fair compromise sometimes is a moral desideratum, I discuss several paradigmatic cases in friendships, economics and politics, and I try to show that even when the parties have moral reasons to refrain from trying to maximize utility in the negotiations, they do not have moral reasons to aim at a fair compromise. My second claim is that we are sometimes morally obligated to try to establish unfair compromises, in particular when we are dealing with parties that try to establish morally very bad political arrangements. In such cases, we should try to concede as little as possible to achieve an outcome that is morally acceptable. Fair compromises, in other words, are morally much more dubious than is usually appreciated. (shrink)

Economic man seeks to maximize utility. The rationality of economic man is assumed, and is identified with the aim of utility-maximization. But may rational activity correctly be identified with maximizing activity? The object of this essay is to explore, and in part to answer, this question.This is not an issue solely, or perhaps even primarily, about the presuppositions of economics. The two great modern schools of moral and political thought in the English-speaking world, the contractarian and the utilitarian, identify rationality (...) with maximization, and bring morality into their equations as well. To the contractarian, rational man enters civil society to maximize his expectation of well-being, and morality is that system of principles of action which rational men collectively adopt to maximize their well-being. To the utilitarian, the rational and moral individual seeks the maximum happiness of mankind, with which he identifies his own maximum happiness. (shrink)

It is argued that the Nash bargaining solution cannot serve as a principle of distributive justice because (i) it cannot secure stable cooperation in repeated interactions and (ii) it cannot capture our moral intuitions concerning distributive questions. In this article, I propose a solution to the first problem by amending the Nash bargaining solution so that it can maintain stable cooperation among rational bargainers. I call the resulting principle the stabilized Nash bargaining solution. The principle defends justice in the form (...) 'each according to her basic needs and above this level according to her relative bargaining power'. In response to the second problem, I argue that the stabilized Nash bargaining solution can serve as a principle of distributive justice in certain situations where moral reasoning is reduced to instrumental reasoning. In particular, I argue that rational individuals would choose the stabilized Nash bargaining solution in Rawls' original position. (shrink)

Recently, philosophers have investigated the emergence and evolution of the social contract. Yet extant work is limited as it focuses on the use of simple behavioral norms in rather rigid strategic settings. Drawing on axiomatic bargaining theory, we explore the dynamics of more sophisticated norms capable of guiding behavior in a wide range of scenarios. Overall, our investigation suggests the utilitarian bargaining solution has a privileged status as it has certain stability properties other social arrangements lack.

The question of what a group of rational agents would agree on were they to deliberate on how to organise society is central to all hypothetical social contract theories. If morality is to be based on a social contract, we need to know the terms of this contract. One type of social contract theory, contractarianism, aims to derive morality from rationality alone. Contractarians need to show, amongst other things, that rational and self-interested individuals would agree on an impartial division of (...) a cooperative surplus. But it is often claimed that contractarians cannot show this without introducing moral assumptions. This paper argues that on the right understanding of the question contractarians are asking, these worries can be answered. Without relying on moral assumptions, the paper offers a novel derivation of symmetry, which is the axiom responsible for the impartiality of the most famous economic bargaining solutions appealed to by contractarians. (shrink)

Game theory is the mathematical study of strategy and conflict. It has wide applications in economics, political science, sociology, and, to some extent, in philosophy. Where rational choice theory or decision theory is concerned with individual agents facing games against nature, game theory deals with games in which all players have preference orderings over the possible outcomes of the game. This paper gives an informal introduction to the theory and a survey of applications in diverse branches of philosophy. No criticism (...) is reviewed. Game theory is shown at work in discussions about epistemological dependence, liberalism and efficiency, Hume’s concept of convention, morality and rationality, and distributive justice and egalitarianism. A guide to the literature provides hints at applications in collective intentionality, epistemology, ethics, history of philosophy, logic, philosophy of language, and political philosophy. (shrink)

The question of an action's rationality has two aspects: 1) the ‘appropriateness’ of the action given the beliefs held and 2) the ‘reasonableness’ of the beliefs themselves or of holding those beliefs. The former involves questions of motivation, the latter epistemology. This paper will concentrate on the former aspect of the question.One way of understanding rational motivation is so widely accepted as to seem incontrovertible to many of its proponents. This is the sense of rationality as maximization of utility. Although (...) individual action is motivated by many things, the claim is that when behavior is rational it can be understood as an attempt to maximize utility. Rationality in this view has solely to do with means, not ends. The only restriction on an agent's ends is that they form a coherent set and whatever the content of the utility at which the agent aims, it is presumed to be open-ended. The theory is descriptive in that it says that people act this way most of the time and also normative in that behavior which does not fit the model is Judged irrational. (shrink)

Abstract:I examine from a conventionalist perspective the Nash bargaining problem that philosophers use as a tool for analyzing fair division. From this perspective, the solutions to bargaining problems are conventions that can emerge from inductive learning and focal point effects. I contrast the conventionalist approach to analyzing the bargaining problem with the better-known rational choice approach, which I criticize for having overly demanding epistemic presuppositions and for producing disappointing results. I apply a simple model of inductive learning to specific bargaining (...) problems to show that agents can learn from repeated experience to follow a variety of bargaining conventions in a given problem. I conclude that such agents can come to regard two such conventions as focal for the bargaining problem, one that assigns claimants equal shares of a good and another egalitarian solution of equal payoff gains, and that the egalitarian solution tends to prevail when these two solutions differ. I conclude further that the above analysis lends support for admitting interpersonal utility comparisons into the analysis of fair division problems, and also suggests a focal point explanation of the wide acceptance of the Aristotelian proportionality principle of distributive justice. (shrink)