To what use can causal claims established in good policy studies be put? We isolate two reasons inferences from study to target fail. First, policy variables do not produce results on their own; they need helping factors. The distribution of helping factors is likely to be unique or local for each study, so one cannot expect external validity to be all that common. Second, researchers often give too concrete a description of the cause in the study for it to carry (...) over to the target. Abstraction is necessary to get causes that travel. There is no sure-fire way to guard against these problems. But the unavailability of one perfect tool does not imply there are no second best contrivances. Two general pointers for Good Practice in policy advice follow from our diagnosis: focus on the concrete details in the target and use cross discipline heuristics that diversify background knowledge. (shrink)

In this paper, I shall defend two main claims. First, Friedman’s famous paper “On the methodology of positive economics” (“F53”) cannot be properly understood without taking into account the influence of three authors who are neither cited nor mentioned in the paper: Max Weber, Frank Knight, and Karl Popper. I shall trace both their substantive influence on F53 and the historical route by which this influence took place. Once one has understood these ingredients, especially Weber’s ideal types, many of F53’s (...) astonishing sentences like “the more significant the theory, the more unrealistic the assumptions”, make good sense. Second, I shall claim that the much-discussed question whether Friedman’s essay espouses an instrumentalist or a realist position, is the wrong question to be asked. I shall illustrate that by a comparison with examples from physics in which also unrealistic assumptions are made. Also there, the question whether these assumptions are indicators of instrumentalism or realism is not appropriate. Cleared from these misunderstandings, F53 presents itself as an interesting and reasonable but much less controversial contribution to the methodology of economics. (shrink)

From the mid-1960s until the late 1980s, the well-known general philosophies of science of the time were applied to economics. The result was disappointing: none seemed to fit. This paper argues that this is due to a special feature of economics: it possesses ‘orientational paradigms’ in high number. Orientational paradigms are similar to Kuhn’s paradigms in that they are shared across scientific communities, but dissimilar to Kuhn’s paradigms in that they are not generally accepted as valid guidelines for further research. (...) As will be shown by several examples, orientational paradigms provide economics with common points of reference that support its epistemic coherence and make scientific discourse more easily possible across school boundaries. With the help of systematicity theory, a newer general philosophy of science, one can further elucidate the role of orientational paradigms with regard to scientific progress. (shrink)

Given the endowment effect, the role of attention in decision-making, and the framing effect, most behavioral economists agree that it would be a mistake to accept the satisfaction of revealed preferences as the normative criterion of choice. Some have suggested that what makes agents better off is not the satisfaction of revealed preferences, but ‘true’ preferences, which may not always be observed through choice. While such preferences may appear to be an improvement over revealed preferences, some philosophers of economics have (...) argued that they face insurmountable epistemological, normative, and methodological challenges. This article introduces a new kind of true preference – values-based preferences – that blunts these challenges. Agents express values-based preferences when they choose in a manner that is compatible with a consumption plan grounded in a value commitment that is normative, affective, and stable for the agent who has one. Agents who choose according to their plans are resolute choosers. My claim is that while values-based preferences do not apply to every choice situation, this kind of preference provides a rigorous way for thinking about classic choice situations that have long interested behavioral economists and philosophers of economics, such as ‘Joe-in-the-cafeteria.’. (shrink)

In this paper, I will argue that it is a moral obligation for companies, firstly, to accept their moral responsibility with respect to non-discrimination, and secondly, to address the issue with a full-fledged programme, including but not limited to the countering of microsocial discrimination processes through specific policies. On the basis of a broad sketch of how some discrimination mechanisms are actually influencing decisions, that is, causing intended as well as unintended bias in Human Resources Management (HRM), I will argue (...) that the well known tools of legislation and ethical codes are necessary although insufficient to cope with the problem. However, based on empirical evidence, we know which set of measures is likely to diminish discrimination. Taking non-discrimination seriously implies complex and longitudinal policies which include assigning responsibility for a non-discrimination policy within the firm, making managers conscious of implicit stereotypes and helping them to cope with prejudices that no one can totally overcome. Insofar as corporate responsibility with respect to non-discrimination is accepted and strategies that are not prohibitively expensive are known, companies are bound to implement them. Not implementing the best set of measures may be considered at least as a moral shortcoming or, depending on the size of the company, mere lip service to the non-discrimination principle. Although the paper refers to empirical material of diverse backgrounds, its intent is clearly normative. It wishes to spell out what companies ought to do if they are committed to responsible behaviour. The discussion of effective remedies against discrimination is based on a case study of a French company. The retailer Auchan was recently surprised to learn that it was discriminating against ethnic minorities despite strong ethical standards, an ethics committee and ethical leadership. The company dropped its naïve beliefs and set up an ambitious policy cope with the issue. The case illustrates what recent empirical research has revealed about the effectiveness of diversity policies: establishing responsibility for diversity results, firm ethical commitment and support from top management make diversity programs effective. (shrink)

In recent times, realism in economic methodology has increasingly gained importance. Uskali Mäki and Tony Lawson are the best-known realists within the discipline and even though their approaches are fundamentally different, both provide pragmatic defences of realism by claiming anti-realism to be the reason for the low quality of economic models. My paper will show that a pragmatic defence of realism is untenable and furthermore, I will show that for both Mäki's and Lawson's normative ideas there is no need for (...) realism. (shrink)

This paper discusses how Mark Blaug reversed his thinking about the historiography of economics, abandoning 'rational' for 'historical' reconstruction, and using an economics of scientific knowledge argument against Paul Samuelson and others that rational reconstructions of past ideas and theories in the "marketplace of ideas" were Pareto inefficient. Blaug's positive argument for historical reconstruction was built on the concept of "lost content" and his rejection of the end-state view of competition in favor of a process view. He used these ideas (...) to emphasize path dependency in the development of economic thinking, thereby advancing an evolutionary view of economics that has connections to a Lakatosian understanding of economic methodology. The paper argues that Blaug was essentially successful in criticizing the standard rational reconstructionist view of the history of economic thought in economics, and that this is borne out by the nature of the change in recent economics. (shrink)

Trygve Haavelmo's 1944 article ‘The Probability Approach in Econometrics’ is considered by most to have provided the foundations for present day econometrics (Morgan, 1990, Chapters 8 and 9). Since Haavelmo (1944), extraordinary advances have been made in econometrics. However, over the last two decades the efficacy and scientific status of econometrics has become questionable. Not surprisingly, the growing discontent with econometrics has been accompanied by a growing interest in econometric methodology.

In both theoretical and applied modeling in behavioral sciences, it is common to choose a mathematical specification of functional form and distribution of unobservables on grounds of analytic convenience without support from explicit theoretical postulates. This article discusses the issue of deriving particular qualitative hypotheses about functional form restrictions in structural models from intuitive theoretical axioms. In particular, we focus on a family of postulates known as dimensional invariance. Subsequently, we discuss how specific qualitative postulates can be reformulated so as (...) to allow for conventional statistical hypothesis testing, and we also derive details of a particular likelihood ratio test procedure. An empirical application of the testing procedure is carried out, based on data from a Stated Preference survey. (shrink)

We argue that neuroeconomics should be a mechanistic science. We defend this view as preferable both to a revolutionary perspective, according to which classical economics is eliminated in favour of neuroeconomics, and to a classical economic perspective, according to which economics is insulated from facts about psychology and neuroscience. We argue that, like other mechanistic sciences, neuroeconomics will earn its keep to the extent that it either reconfigures how economists think about decision-making or how neuroscientists think about brain mechanisms underlying (...) behaviour. We discuss some ways that the search for mechanisms can bring about such top-down and bottom-up revision, and we consider some examples from the recent neuroeconomics literature of how varieties of progress of this sort might be achieved. (shrink)

Rational choice theory enjoys unprecedented popularity and influence in the behavioral and social sciences, but it generates intractable problems when applied to socially interactive decisions. In individual decisions, instrumental rationality is defined in terms of expected utility maximization. This becomes problematic in interactive decisions, when individuals have only partial control over the outcomes, because expected utility maximization is undefined in the absence of assumptions about how the other participants will behave. Game theory therefore incorporates not only rationality but also common (...) knowledge assumptions, enabling players to anticipate their co-players' strategies. Under these assumptions, disparate anomalies emerge. Instrumental rationality, conventionally interpreted, fails to explain intuitively obvious features of human interaction, yields predictions starkly at variance with experimental findings, and breaks down completely in certain cases. In particular, focal point selection in pure coordination games is inexplicable, though it is easily achieved in practice; the intuitively compelling payoff-dominance principle lacks rational justification; rationality in social dilemmas is self-defeating; a key solution concept for cooperative coalition games is frequently inapplicable; and rational choice in certain sequential games generates contradictions. In experiments, human players behave more cooperatively and receive higher payoffs than strict rationality would permit. Orthodox conceptions of rationality are evidently internally deficient and inadequate for explaining human interaction. Psychological game theory, based on nonstandard assumptions, is required to solve these problems, and some suggestions along these lines have already been put forward. Key Words: backward induction; Centipede game; common knowledge; cooperation; epistemic reasoning; game theory; payoff dominance; pure coordination game; rational choice theory; social dilemma. (shrink)

. This article analyzes the epistemic contributions of models by distinguishing three roles that they might play: an evidential role, a revealing role and a stimulating role. By using an account of learning based on the philosophical understanding of propositional knowledge as true justified belief, the paper provides the conditions to be fulfilled by a model in order to play a determined role. A case study of an economic model of the labor market—the DMP model—illustrates the usefulness of these conditions (...) in articulating debates over the epistemic contributions of a given model. (shrink)

This article argues that the credibility of both theoretical and empirical models in economics is best understood through their connection with the empirical aspects of the real world. The discussion herein demonstrates that the similarity between the model and the real world is not enough to justify a theoretical model’s explanatory power. The best way to secure the model’s credibility is to prove the existence of representation theorems.

Some authors claim that minimal models have limited epistemic value (Fumagalli, 2016; Grüne-Yanoff, 2009a). Others defend the epistemic benefits of modelling by invoking the role of robustness analysis for hypothesis confirmation (see, e.g., Levins, 1966; Kuorikoski et al., 2010) but such arguments find much resistance (see, e.g., Odenbaugh & Alexandrova, 2011). In this paper, we offer a Bayesian rationalization and defence of the view that robustness analysis can play a confirmatory role, and thereby shed light on the potential of minimal (...) models for hypothesis confirmation. We illustrate our argument by reference to a case study from macroeconomics. At the same time, we also show that there are cases in which robustness analysis is detrimental to confirmation. We characterize these cases and link them to recent investigations on evidential variety (Landes, 2020b, 2021; Osimani and Landes, forthcoming). We conclude that robustness analysis over minimal models can confirm, but its confirmatory value depends on concrete circumstances. (shrink)

This paper argues that even when simple analogue models picture parallel worlds, they generally still serve as isolating tools. But there are serious obstacles that often stop them isolating in just the right way. These are obstacles that face any model that functions as a thought-experiment but they are especially pressing for economic models because of the paucity of economic principles. Because of the paucity of basic principles, economic models are rich in structural assumptions. Without these no interesting conclusions can (...) be drawn. This, however, makes trouble when it comes to exporting conclusions from the model to the world. One uncontroversial constraint on induction from special cases is to beware of extending conclusions to situations that we know are different in relevant respects. In the case of economic models it is clear by inspection that the unrealistic structural assumptions of the model are intensely relevant to the conclusion. Any inductive leap to a real situation seems a bad bet. (shrink)

This paper's purpose is to set forth the conditions of explanation in the domain of formal modelling of social action. Explanation is defined as an adequate account of the underlying factors bringing about a phenomenon. The modelling of a social phenomenon can claim explanatory value in this sense if the following two conditions are fulfilled. (1) The generative mechanisms involved translate the effects of real factors abstracted from their phenomenal context, not those of purely ideal ones. (2) The explanatory hypotheses, (...) which account for the effects of explanatory factors, and the purely descriptive hypotheses, which introduce conceptual simplifications and summarise complex secondary mechanisms, are relatively independent from each other with regard to the phenomenon represented. This condition subjects the model to testing by alternatives through the development of purely descriptive hypotheses in the sense of explanatory or analytical realism. (shrink)

We have found that a sparse version of the claim that alienated labor is a bad thing can inform a political morality without turning that morality into one which makes more comment on people's ends than the liberal can accept. We have also seen that a modification of the ideas of alienation from our species being can play a limited role in a liberal political morality, but that the rational kernel of the critique from species alienation is already a familiar (...) part of the liberal tradition. However, the substantive view of the good life - as one which essentially involves engagement in communal ties and satisfying labor - cannot play the role which certainly many Marxists would like it to play in their critique of capitalism, at least if their critique is to be recognizably liberal. Why should it matter so much that Marxists be able to accommodate central liberal insights? It is not because a political morality has to be liberal in order to be successful in the real world: history and the contemporary world are full of examples of political views which command wide assent despite (or because of) their illiberality. But the foreseeable stages of a socialist society will be plagued by the circumstances of justice as they have been classically conceived. A socialism which is sufficiently better than capitalism to be worth the significant risk and sacrifice it is likely to require must be liberal in the sense that it can be regarded as defensible to each person who is actually subject to it. This does not require that it accommodate the greed of the greedy or the injustice of the unjust. But it does require that it not presume the unworthiness of the moral commitments of its reasonable citizens. 47. (shrink)

Contemporary developments in economicmethodology have produced a vibrant agenda ofcompeting positions. These include, amongothers, constructivism, critical realism andrhetoric, with each contributing to the Realistvs. Pragmatism debate in the philosophies of thesocial sciences. A major development in theneo-pragmatist contribution to economicmethodology has been Quine's pragmatic assaulton the dogmas of empiricism, which are nowclearly acknowledged within contemporaryeconomic methodology. This assault isencapsulated in the celebrated Duhem-Quinethesis, which according to a number ofcontemporary leading philosophers of economics,poses a particularly serious methodologicalproblem for economics. This problem, (...) asreflected in Hausman's analysis, consists ofthe inability of economics to learn fromexperience, thereby subverting the capacity totest economic theories. In this paper wedispute this position. Our argument is basedon a combination of Quine's holism with VanFraassen's constructive empiricism, especiallythe latter's analysis of empirical adequacy andhis pragmatic approach to explanation. Theresulting reorientation of economic methodologyrestores the capacity of economics to learnfrom experience and reinstates the imperativeof developing alternatives to orthodoxtheorizing in economics. (shrink)

In 1987, George Soros introduced his concepts of reflexivity and fallibility and has further developed and applied these concepts over subsequent decades. This paper attempts to build on Soros's framework, provide his concepts with a more precise definition, and put them in the context of recent thinking on complex adaptive systems. The paper proposes that systems can be classified along a ‘spectrum of complexity’ and that under specific conditions not only social systems but also natural and artificial systems can be (...) considered ‘complex reflexive.’ The epistemological challenges associated with scientifically understanding a phenomenon stem not from whether its domain is social, natural, or artificial, but where it falls along this spectrum. Reflexive systems present particular challenges; however, evolutionary model-dependent realism provides a bridge between Soros and Popper and a potential path forward for economics. (shrink)

The Inexact and Separate Science of Economics represents the most ambitious attempt to provide a systematic account of economic methodology since the first edition of Blaug's The Methodology of Economics. As such, it has been the subject of extensive critical commentary. For all the attention it has received, however, some important aspects of the book's thesis have not been developed properly. Two important ones are what might be called, following the terminology used in the experimental economics literature, the ‘framing effect’ (...) of Hausman's definition of economics, and the significance of Hausman's claim that economists are committed to developing economics as a ‘separate’ science. To understand these points it is important to make explicit the position from which Hausman approaches the philosophy of science. (shrink)

From its early origins to the present, the development of mainstream economic theory has taken a direction which has excluded the analysis of human needs as a basis for social policy. The problems associated with this orientation are increasingly recognized both by economists and non-economists. As Sen points out, it is indeed strange for a discipline concerned with the well-being of people to neglect the question of needs. Currently, some writers such as Doyal and Gough, post-Keynesian economists such as Lavoie, (...) and those such as Davis and O'Boyle who work in the newly emerging school of social economics have begun to address the question of human needs, especially in relation to problems of policy assessment and evaluation. The approaches of some development economists who have dealt with similar issues were also instrumental in drawing attention to the significance of the long-neglected concept of needs. (shrink)

Consumers and producers aim to maximize their welfare through economic transactions. Their welfare is determined by choices and preferences. Therefore, understanding social and economic welfare projected by conventional and Islamic economics requires exploring their underlying paradigms and axioms for preference formation, choices, and welfare maximization. Even though conventional economics assumes that preferences are given, it actually considers that they are driven by self-interest. It does not discuss preference formation along determining moral axioms. Rather, it starts from revealed preferences to understand (...) choices of consumers and producers. Thus, preference formation is like a black box. This paper is an attempt to unlock this black box by exploring preference formation along its underlying moral axioms for good life. The paper discusses Islamic moral ideals within the Islamic worldview along the implications of those axioms for consumers, employees, and employers. The paper also explores the gap between those ideals and Muslim reality. It suggests how to empirically test the relationship between moral axioms and ethical behaviors of consumers, employers, and employees. It concludes that internalizing moral axioms would serve as an ethical compass necessary to establish formal and informal institutions for efficient and ethical business organizations. (shrink)

The paper explores Islamic morality within labor market realities. It presents Islamic moral axioms that are expected to guide employer–employee relationships. It provides an extensive review of Islamic moral ideals related to fairness in the labor market. Based on survey data from 319 individuals in the Saudi labor market, it tests three hypotheses related to religiosity, secular aspirations, and perception and practice of fairness in the labor market. Using multinomial logistic regression, the findings from several models clearly support all three (...) hypotheses. They show that employers, owners and senior managers were more likely to consider market reality as their reference for describing fairness. Ideally speaking, the regression results confirm that being religious contributes positively to the sense of fairness even in a secular context. However, they also reveal that secular aspirations override religious ideals when it comes to market realities. In other words, when people place great importance on worldly outcomes, religious ideals have almost no impact on their labor market practices even if they ideally support fair practices. The study concludes that religious morality does matter with regard to fairness in employer–employee relationships only if it is not superseded by secular aspirations. Those who have a high-level of religiosity consider themselves to be fairer. However, if they embrace secular aspirations, they are less likely to practice their moral ideals in the labor market. (shrink)

In recent years, the emergence of a new trend in contemporary philosophy has been observed in the increasing usage of empirical research methods to conduct philosophical inquiries. Although philosophers primarily use secondary data from other disciplines or apply quantitative methods (experiments, surveys, etc.), the rise of qualitative methods (e.g., in-depth interviews, participant observations and qualitative text analysis) can also be observed. In this paper, I focus on how qualitative research methods can be applied within philosophy of science, namely within the (...) philosophical debate on modeling. Specifically, I review my empirical investigations into the issues of model de-idealization, model justification and performativity. (shrink)

Derrida made the case that the ‘pure gift’ is impossible. Because of the element of obligation and reciprocity involved, gift relationships are inevitably reduced to relationships of economic exchange. This position echoes the exchange theory of the social behaviourists, the cost-benefit analyses of evolutionary psychology, and other reductionist conjectures. In this paper, 18 written accounts of gifting are analysed using established phenomenological tools of reflection. It is shown that the dynamics of the gift relationship are complex and, specifically, reciprocation in (...) gifting is not akin to ‘repaying’ the gift, but should rather be seen as a response to the gift as an expression of affective affirmation, rendering this mutual. Gift giving is in the expressive realm rather than the practical . This was, intriguingly, known explicitly by Adam Smith. (shrink)

This paper argues that Isaac Levi's account of preference reversals is only a limited success. Levi succeeds in showing that an agent acting in accord with his theory may exhibit reversals. Nevertheless, the specific account that Levi presents in order to accommodate the behavior of experimental subjects appears to be disconfirmed by available evidence.

What sort of claims do scientific models make and how do these claims then underwrite empirical successes such as explanations and reliable policy interventions? In this paper I propose answers to these questions for the class of models used throughout the social and biological sciences, namely idealized deductive ones with a causal interpretation. I argue that the two main existing accounts misrepresent how these models are actually used, and propose a new account. *Received July 2006; revised August 2008. †To contact (...) the author, please write to: Department of Philosophy, University of Missouri, St. Louis, 599 Lucas Hall (MC 73), One University Blvd., St. Louis, MO 63121-4400; e-mail: [email protected]. (shrink)

Can social phenomena be understood by analyzing their parts? Contemporary economic theory often assumes that they can. The methodology of constructing models which trace the behavior of perfectly rational agents in idealized environments rests on the premise that such models, while restricted, help us isolate tendencies, that is, the stable separate effects of economic causes that can be used to explain and predict economic phenomena. In this paper, I question both the claim that models in economics supply claims about tendencies (...) and also the view that economics, when successful, necessarily follows this method. When economics licenses successful policy interventions, as it did in the case of the Federal Communications Commission spectrum auctions, its method is not to study tendencies but rather to study the phenomenon as a whole. Key Words: economic models • tendencies • economic experiments • policy making • John Stuart Mill. (shrink)

We distinguish between two different strategies in methodology of economics. The big picture strategy, dominant in the twentieth century, ascribed to economics a unified method and evaluated this m...

Models of idealistic societies pervade the history of political thought from ancient times to the present. How can these models contribute to our thinking about political life in our non-ideal world? Not, as many political theorists have hoped, by performing a normative function -- by giving us reasons to accept particular political principles for the purpose of regulating our thought and behavior. Even still, idealistic models can sharpen our thinking about politics by performing a conceptual function -- by helping us (...) clarify and interpret the concepts we use to describe and evaluate political behavior and institutions. These insights point to a more incisive and judicious approach to political inquiry, in which explanatory and normative modes of thought are tightly intertwined. (The manuscript is under review. I have uploaded the table of contents, chapters 1 and 2, and the bibliography. Chapter summaries are available from my website.). (shrink)

There are, broadly speaking, two ways to think about rationality, as defined in the following passage: ‘Reason’ for a long time meant the activity of understanding and assimilating the eternal ideas which were to function as goals for men. Today, on the contrary, it is not only the business but the essential work of reason to find means for the goals one adopts at any given time. To use what Horkheimer called objective reason, and what others have called expressive or (...) non–instrumental reason, is to reflect on one's goals, to attempt to determine what preferences one ought to hold. On the other hand, to use what Horkheimer called subjective reason is to ‘be concerned with means and ends, with the adequacy of procedures for purposes more or less taken for granted’, that is, to be instrumentally rational. This contrast between non-instrumental and instrumental reason is at the heart of many contemporary social and philosophical disputes. 1. (shrink)

In this paper, I review the literature on rational choice theory to scrutinize a number of criticisms that philosophers have voiced against its usefulness in economics. The paper has three goals: first, I argue that the debates about RCT have been characterized by disunity and confusion about the object under scrutiny, which calls into question the effectiveness of those criticisms. Second, I argue that RCT is not a single and unified choice theory—let alone an empirical theory of human behavior—as some (...) critics seem to suppose. Rather, there are several variants of RCT used in economics. Third, I propose that we think of RCT as a set of distinct research strategies to appreciate its diversity. This account implies that the effectiveness of any criticism depends on the variant of RCT we are considering. (shrink)

In the methodology of scientific research programs (MSRP) there are important features on the problem of prediction, especially regarding novel facts. In his approach, Imre Lakatos proposed three different levels on prediction: aim, process, and assessment. Chapter 5 pays attention to the characterization of prediction in the methodology of research programs. Thus, it takes into account several features: (1) its pragmatic characterization, (2) the logical perspective as a proposition, (3) the epistemological component, (4) its role in the appraisal of research (...) programs, and (5) its place as a value for scientific research. -/- The notion of “novel facts” is highly relevant in his conception, where several aspects are involved: the directions of novel facts, the different kinds of novelty, and the transition from six possible options of “novel facts” to four choices. Thereafter, the prediction of novel facts as the criterion of appraisal is considered. On the one hand, this requires analyzing the theoretical, empirical, and heuristic possibilities of appraisal; and, on the other, whether there is an overemphasis on the role of prediction in methodology of scientific research programs. As a consequence, there is an analysis of Lakatos’ criterion of appraisal in MSRP and economics. (shrink)

Unlike any other field, the science of morality has drawn attention from an extraordinarily diverse set of disciplines. An interdisciplinary research program has formed in which economists, biologists, neuroscientists, psychologists, and even philosophers have been eager to provide answers to puzzling questions raised by the existence of human morality. Models and simulations, for a variety of reasons, have played various important roles in this endeavor. Their use, however, has sometimes been deemed as useless, trivial and inadequate. The role of models (...) in the science of morality has been vastly underappreciated. This omission shall be remedied here, offering a much more positive picture on the contributions modelers made to our understanding of morality. (shrink)

In this paper I challenge the pernicious aspects of Milton Friedman's methodological outlook that continues to hold sway over mainstream neoclassical economists. I do this by showing how Friedman's own methodological dicta could have been used against him when he famously advanced the expectations critique of the Phillips curve at his presidential address to the American Economic Association. I use this case study to further suggest that psychological and neurophysiological data should not be deemed irrelevant to economic science.

Orthodox Bayesian decision theory requires an agent’s beliefs representable by a real-valued function, ideally a probability function. Many theorists have argued this is too restrictive; it can be perfectly reasonable to have indeterminate degrees of belief. So doxastic states are ideally representable by a set of probability functions. One consequence of this is that the expected value of a gamble will be imprecise. This paper looks at the attempts to extend Bayesian decision theory to deal with such cases, and concludes (...) that all proposals advanced thus far have been incoherent. A more modest, but coherent, alternative is proposed. Keywords: Imprecise probabilities, Arrow’s theorem. (shrink)

This dissertation looks at a set of interconnected questions concerning the foundations of probability, and gives a series of interconnected answers. At its core is a piece of old-fashioned philosophical analysis, working out what probability is. Or equivalently, investigating the semantic question of what is the meaning of ‘probability’? Like Keynes and Carnap, I say that probability is degree of reasonable belief. This immediately raises an epistemological question, which degrees count as reasonable? To solve that in its full generality would (...) mean the end of human inquiry, so that won’t be attempted here. Rather I will follow tradition and merely investigate which sets of partial beliefs are coherent. -/- The standard answer to this question, what is commonly called the Bayesian answer, says that degrees of belief are coherent iff they form a probability function. I disagree with the way this is usually justified, but subject to an important qualification I accept the answer. The important qualification is that degrees of belief may be imprecise, or vague. Part one of the dissertation, chapters 1 to 6, looks largely at the consequences of this qualification for the semantic and epistemological questions already mentioned. It turns out that when we allow degrees of belief to be imprecise, we can discharge potentially fatal objections to some philosophically attractive theses. Two of these, that probability is degree of reasonable belief and that the probability calculus provides coherence constraints on partial beliefs, have been mentioned. Others include the claim, defended in chapter 4, that chance is probability given total history. -/- As well as these semantic and epistemological questions, studies of the foundations of probability usually include a detailed discussion of decision theory. For reasons set out in chapter 2, I deny we can gain epistemological insights from decision theory. Nevertheless, it is an interesting field to study on its own, and it might be expected that there would be decision theoretic consequences of allowing imprecise degrees of belief. As I show in part two, this expectation seems to be mistaken. Chapter 9 shows that there aren’t interesting consequences of this theory for decision theory proper, and chapters 10 and 11 show that Keynes’s attempt to use imprecision in degrees of belief to derive a distinctive theory of interest rates is unsound. -/- Chapters 7 and 8 provide a link between these two parts. In chapter 7 I look at some previous philosophical investigations into the effects of imprecision. In chapter 8 I develop what I take to be the best competitor to the theory defended here – a constructivist theory of probability. On this view degrees of belief are precise, but the relevant coherence constraint is a constructivist probability calculus. This view is, I think, mistaken, but the calculus has some intrinsic interest, and there are at least enough arguments for it to warrant a chapter-length examination. (shrink)

The books’ goal is to answer the question: Do the weaknesses of value-free economics imply the need for a paradigm shift? The author synthesizes criticisms from different perspectives (descriptive and methodological). Special attention is paid to choices over time, because in this area value-free economics has the most problems. In that context, the enriched concept of multiple self is proposed and investigated. However, it is not enough to present the criticisms towards value-free economics. For scientists, a bad paradigm is better (...) than no paradigm. Therefore, the author considers whether value-based economics with normative approaches such as economics of happiness, capability approach, libertarian paternalism, and the concept of multiple self can be the alternative paradigm for value-free economics. This book is essential reading to everyone interested in the current state of economics as a discipline. (shrink)

This paper evaluates Nancy Cartwright’s critique of economic models. Cartwright argues that economics fails to build relevant “nomological machines” able to isolate capacities. In this paper, I contend that many economic models are not used as nomological machines. I give some evidence for this claim and build on an inferential and pragmatic approach to economic modeling. Modeling in economics responds to peculiar inferential norms where a “good” model is essentially a model that enhances our knowledge about possible worlds. As a (...) consequence, models and experiments are very different knowledge-producing devices, at least in economics. (shrink)

A collective volume in memoriam Mihail Radu Solcan.

This paper discusses the epistemic import of highly abstract and simplified theoretical models using Thomas Schelling’s checkerboard model as an example. We argue that the epistemic contribution of theoretical models can be better understood in the context of a cluster of models relevant to the explanatory task at hand. The central claim of the paper is that theoretical models make better sense in the context of a menu of possible explanations. In order to justify this claim, we introduce a distinction (...) between causal scenarios and causal mechanism schemes. These conceptual tools help us to articulate the basis for modelers’ intuitive confidence that their models make an important epistemic contribution. By focusing on the role of the menu of possible explanations in the evaluation of explanatory hypotheses, it is possible to understand how a causal mechanism scheme can improve our explanatory understanding even in cases where it does not describe the actual cause of a particular phenomenon. (shrink)

While the existence of human cognitive and behavioral diversity is now widely recognized, it is not yet well established how to explain this diversity. In particular, it is still unclear how to determine whether any given instance of human cognitive and behavioral diversity is due to a common psychology that is merely “triggered” differently in different bio-cultural environments, or whether it is due to deeply and fundamentally different psychologies. This paper suggests that, to answer this question, we need to employ (...) subtle theoretical considerations of theory choice—especially the consideration of the complexity-weighted differential predictive successes of the two accounts. To make this clearer, the paper develops a novel analysis of the observed differences in human sharing dispositions. (shrink)

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)