For all the recent discoveries of behavioral psychology and experimental economics, the spirit of homo economicus still dominates the contemporary disciplines of economics, political science, and sociology. Turning back to the earliest chapters of political economy, however, reveals that pioneering figures such as Francis Bacon, Thomas Hobbes, and Adam Smith were hardly apostles of economic rationality as they are often portrayed in influential narratives of the development of the social sciences. As we will see, while all three of these thinkers (...) can plausibly be read as endorsing “rationality,” they were also well aware of the systematic irrationality of human conduct, including a remarkable number of the cognitive biases later “discovered” by contemporary behavioral economists. Building on these insights I offer modest suggestions for how these thinkers, properly understood, might carry the behavioral revolution in different directions than those heretofore suggested. (shrink)

F. A. Hayek's realistic economic theory has been replaced by the formalistic use of equlibrium models that bear little resemblance to reality. These models are as serviceable to the right as to the left: they allow the economist either to condemn capitalism for failing to measure up to the model of perfect competition, or to praise capitalism as a utopia of perfect knowledge and rational expectations. Hayek, by contrast, used equilibrium to show that while capitalism is not perfect, it contains (...) error‐correcting institutions that bring it closer to perfection than is intuitively apparent. (shrink)

A person is said to be ‘trust responsive’ if she fulfils trust because she believes the truster trusts her. The experiment we report was designed to test for trust responsiveness and its robustness across payoff structures, and to discriminate it from other possible factors making for trustworthiness, including perceived kindness, perceived need and inequality aversion. We elicit the truster’s confidence that the trustee will fulfil, and the trustee’s belief about the truster’s confidence after the trustee receives evidence relevant to this. (...) We find evidence of strong trust responsiveness. We also find that perceptions of kindness and of need increase trust responsiveness, and that they do so only in conjunction with trust responsiveness. (shrink)

In recent decades, neoclassical economists have made heroic efforts to accommodate within the confines of the concept of rational utility maximization the fact that individual behavior is significantly affected by moral considerations. This article argues the merits of using an alternative approach: recognizing that individuals pursue at least two irreducible sources of value or “utility”, pleasure and morality. The possibility that some additional utilities may have to be recognized is explored. This raises the concern that conceptual anarchy will break out, (...) which in turn will force a search for a common denominator, and thus a return to one overarching utility. Arguments are presented to show that this concern is unfounded. The main focus of the article is a criticism of the monoutility conception and a brief for separating the sense of discharging one's moral obligations from all other satisfactions. The article first deals with general conceptual points, and then cites both everyday observations and empirical evidence in support of this position. (shrink)

This article reports the results of an exploratory investigation of a particular area of moral tension experienced by MBA students in a graduate school of business. During the first phase of the study, MBA students'' own perceptions about the moral climate and culture of the business school were examined. The data gathered in this first part of the study indicate that the students recognize that a central part of this culture is constituted by a shared familiarity with a set of (...) institutionally reinforced premises about human behavior and motivation including the ideas that: 1) people are self-interested utility-maximizers, 2) individuals should be unimpeded in their pursuit of their own self-interest through economic transactions, and 3) virtually all human interactionsare economic transactions. The data further indicated that the business students experience a degree of tension between this ethic of self-maximizing and the everyday ethics prevalent in our broader culture, in which altruism and selflessness are central elements. The final section of the study was an effort to see whether and how these institutionally sanctioned premises were integrated into the students'' arguments about the relationship between self-interest and social responsibility. (shrink)

Inter-organizational models are both a well-documented phenomena and a well-established domain in management and business ethics. Those models rest on collaborative capabilities. However, mainstream theories and practices aimed at developing these capabilities are based on a narrow set of assumptions and ethical principles about human nature and relationships, which constrain the very development of capabilities sought by them. This article presents an Aristotelic–Thomistic approach to collaborative entrepreneurship within and across communities of firms operating in complementary markets. Adopting a scholarship of (...) integration approach and evaluating the six studies of communities of organizations, we contribute an inter-organizational network model based on the assumptions about human motives and choice offered by Aristotle. We argue that the sustainability of inter-organizational communities depends on how rich is the set of assumptions about human nature upon which they are based. In order to develop and sustain collaborative capabilities in inter-organizational communities, a set of assumptions that takes both self-regarding and others’-regarding preferences as ends is required to avoid any kind of instrumentalization of collaboration, which is an end in itself. Implications for theory and practice are discussed. (shrink)

Some people hate themselves. But if I say, “I hate myself,” who is this “I” that stands apart from “myself”? And notice how in the expression “I am not myself today,” the “I” and “myself” change places. Now it is “myself” who is the authentic, the authoritative, the judgmental “I,” and it is “I” who is the self that is judged and found wanting. Some people talk to themselves; when they do, who is speaking and who is listening?

This article addresses major arguments in the controversy about the “rationality” of moral behavior: can moral behavior be explained by rational choice theory (RCT)? The two positions discussed are the incentives thesis (norms are incentives as any other costs and benefits) and the autonomy thesis claiming that moral behavior has nothing to do with utility. The article analyses arguments for the autonomy thesis by J. Elster, A. Etzioni, and J. G. March and J. P. Olsen. Finally, the general claim is (...) discussed whether norm following and norm emergence are utility maximizing. The conclusion is that the autonomy thesis is not tenable if one applies a wide subjectivist, social psychological version of RCT that includes the assumption of “bounded rationality.” The autonomy thesis is only compatible with a narrow version of RCT that excludes internal outcomes and that refers to norms that do not have external outcomes. It is argued that such a narrow version is not capable of explaining many forms of behavior social scientists are interested in. (shrink)

The widespread association of business with maximising profit has tended to obscure its social dimension. Indeed some writers doubt whether business can ever be socially engaged and others claim that it should not. This paper seeks to show that besides seeking profit businesses can properly practise social responsibility, defined as involving themselves in their communities and engaging in non-profit activities. It explores the ways in which business social responsibility can contribute to social capital, the resources created by social bonds which (...) members of a society can draw upon and which make it possible to achieve otherwise unattainable ends.2. (shrink)

This article discusses the possibility of an economic foundation for a work and savings ethic. In particular, James M. Buchanan has, in his late works, endorsed traditional 'Puritan' demands for working and saving more, while arguing that this is beneficial for all members of a society. I will question Buchanan's analysis of the 'Puritan' ethic both in normative and methodological respects before aiming at a constructive interpretation.

Cet article associe trois approches issues de l’institutionnalisme historique : l’école historique allemande, l’institutionnalisme américain originel et la théorie de la régulation. Il en dégage les principes méthodologiques partagés et analyse leur application au processus d’élaboration théorique. Codes JEL : B15, B25, B40, B52, E02, Z13.

There is a gap between self-interest and morality that is caused not only by individual shortcomings but also by the interdependence of the outcome of individual action with the actions of others. If the others can be expected to be ethical this uncertainty about the others’ behaviour is reduced but not eliminated. Failure of economic motivation will be followed by failure of ethical motivation. Christianity or monotheistic religion in general comes into the picture to assure ethical behaviour of being advantageous (...) in the long run. The paper analyses the sequence ethics as compensation of the failure of economic motivation — religion as the compensation of the failure of ethical motivation. (shrink)

I attempt a reconstruction of Adam Smith's view of human nature as explicated in The Theory of Moral Sentiments. Smith's view of human conduct is neither functionalist nor reductionist, but interactionist. The moral autonomy of the individual, conscience, is neither made a function of public approval nor reduced to self-contained impulses of altruism and egoism. Smith does not see human conduct as a blend of independently defined impulses. Rather, conduct is unified, by the underpinning sentiment of sympathy.

In ordinary circumstances, human actions have a myriad of unintended and often unforeseen consequences for the lives of other people. Problems of pollution are serious examples, but spillovers and side effects are the rule, not the exception. Who knows what consequences this essay may have? This essay is concerned with the problems of justice created by spillovers. After characterizing such spillovers more precisely and relating the concept to the economist's notion of an externality, I shall then consider the moral conclusions (...) concerning spillovers that issue from a natural rights perspective and from the perspective of welfare economics supplemented with theories of distributive justice. I shall argue that these perspectives go badly awry in taking spillovers to be the exception rather than the rule in human interactions. I. Externalities Economists have discussed spillovers under the heading of “externalities.” To say this is not very helpful, since there is so much disagreement concerning both the definition and significance of externalities. (shrink)

Long before his last book, The Gift Relationship: From Human Blood to Social Policy, was published in early 1971, Richard M. Titmuss , a professor of social administration at the London School of Economics, had been a major figure in the debates over the welfare state. The Gift Relationship was the culmination of an eventful relationship with the Institute of Economic Affairs, a think tank that advocated the extension of rational pricing to social services. By arguing that the British system (...) of blood procurement and distribution, based on free giving within the National Health Service, was more efficient than the partly commercialized American system, Titmuss intended to signal the dangers of the increasing commercialization of society. What made for the impact of his book, however, was not merely its argument that transfusion‐transmitted infections were much more common with paid than with voluntary donors, but also its reflections on what it is that holds a society together. And here Titmuss argued that a “socialist” social policy, by encouraging the sense of community, played a central role. The eclecticism of Titmuss’s work, together with its strong ethical and political flavor, makes it a rich and original account of the “social” at a time when heated debates over social policy, both in Britain and in the United States, raised the question of the division of labor among the social sciences. (shrink)

This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.