Institutions can be strong or weak. But what does this mean? Equilibrium theories equate institutions with behavioural regularities. In contrast, rule theories explicate them in terms of a standard that people are supposed to meet. I propose that, when an institution is weak, a discrepancy exists between the regularity and the standard or rule. To capture this discrepancy, I present a hybrid theory, the Rules-and-Equilibria Theory. According to this theory, institutions are rule-governed behavioural regularities. The Rules-and-Equilibria Theory provides the basis (...) for two measures of institutional strength. First, institutions that pertain to coordination games solve problems of information. Their strength is primarily a matter of the expected degree of compliance. Second, institutions that concern mixed-motive games solve problems of motivation. Their strength can be measured in terms of the weight people attribute to its rule. (shrink)

This article presents a case study of the structure and logic of the author’s dissertation, with a focus on theoretical content. Designed for use in proposal writing seminars or research methods courses, the article stresses the value of identifying the originating, specifying and subsidiary research questions; clarifying the subject and object of the research; situating research within a particular research tradition, and using a competing theories approach. The article stresses the need to identify conceptual problems and empirical problems and their (...) associated conceptual and operational definitions. The primary theoretical perspective is drawn from emerging sociology of externalities rooted in ecological theory, within the institutionalist tradition. (shrink)

Este documento analiza las siguientes cuestiones: 1) La metodología de la economía y su actual institucionalización. 2) La definición de Economía. 3) Las perspectivas de los economistas acerca de la Economía, sus métodos y justificación. 4) Comprobación y progreso: Popper y Lakatos.5) Los modelos y sus supuestos. 6) Persuasión retórica y verdad. 7) La Economía como un recurso para la Filosofía de la Ciencia. 8) Expansionismo explicativo y relaciones interdisciplinares.

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.

The social science literature abounds with unconnected and, so it seems, diverse propositions about the emergence of norms. This article sets out to show that many of these propositions only differ in regard to terminology. Proponents of different theoretical orientations seem to accept a key hypothesis that is called “instrumentality proposition”: norms emerge if they are instrumental for attaining the goals of a group of actors. Apart from a problematic functionalist version the article focuses on an individualistic version: if actors (...) want to achieve certain goals and if a norm is instrumental to attain these goals individuals perform those actions that bring about the norm. This proposition involves several assumptions that are discussed.This version of the instrumentality proposition explains norms that are planned (i.e., that are second-order public goods). In order to account for the evolutionary emergence of norms a second version of the instrumentality proposition is discussed. It assumes that actors do not want to create a general norm but aim at providing certain private goods in interaction situations. For example, smokers sanction non-smokers in order not to be exposed to smoke in the interaction situation, but non-smokers do not want to engender a general non-smoking-norm. However, the aggregated effect of those actions is often a general norm.The article further explores problems of the two instrumentality propositions, the extent to which they answer important questions of a theory of norm emergence and alternative propositions to explain norms. (shrink)

The paper aims to assess whether the ideas developed by Don Ross in his recent book Economic theory and cognitive science: microexplanation, which relates neoclassical economics to recent developments in cognitive science, might revolutionize the methodology of economics. Since Ross challenges a conception of economics associated with what is pejoratively called 'Folk psychology', the paper discusses ideas of the philosopher Daniel Dennett on which this challenge is largely based. This discussion could not avoid bearing on questions such as the nature (...) of consciousness, the interpretation of ontological realism, the relations between agency and selfhood, and the nature and scope of economics. The paper attempts to rehabilitate the two pieces of the traditional conception of economics that were most radically contested by Ross, namely methodological individualism and the foundational role of rationality in economics. A relatively nuanced judgment on Ross's bold enterprise is proposed in conclusion. (shrink)

A central point of debate over environmental policies concerns how future costs and benefits should be assessed. The most commonly used method for assessing the value of future costs and benefits is economic discounting. One often-cited justification for discounting is uncertainty. More specifically, it is risk aversion coupled with the expectation that future prospects are more risky. In this paper I argue that there are at least two reasons for disputing the use of risk aversion as a justification for discounting (...) when dealing with longterm decisions, one technical and one ethical. Firstly, I argue that technically, it implies an inconsistency between theory and practice. And secondly, I argue that discounting for uncertainty relies on a form of individualism which, while reasonable in standard microeconomic theory where an agent chooses how to spread her own consumption over her own lifetime, is inappropriate in the context of intergenerational social decisions. (shrink)

Recent developments in economics and the science of law emphasize their cooperation for a better understanding of social structures and interactions, an effective application of social scientific knowledge and a rational evaluation and implementation of social norms. There are, however, difficult methodological problems in this endeavor: Whereas economics is mainly (with the exception of welfare economics) an empirical science which collects information about economic activities and the functioning of the economic system, the science of law is a normative discipline aiming (...) at solving social conflicts and establishing rational principles for judicial decisions. In this paper, we suggest a three-level scheme for the interdisciplinary cooperation of law and economics, addressing the different problems that positive and normative economics face as they apply economic knowledge to legal matters. Economic analysis of law is proposed as a model for a general transformation of the traditionally hermeneutical jurisprudence into an analytic-normative science of law based on theoretical expectation (explanation) and the rational evaluation of the consequences of legal rules and principles. (shrink)

The economic crisis has exposed shortcomings in standard economic theory and provided an impetus for new economic thinking. But the theoretical debate in the wake of the crisis has been unduly constrained by the terms of the mainstream approach to economic theory. Like any approach, it is characterised by a way of framing reality, giving meaning to terms and setting criteria for good argument. It also determines how any economic theory is understood, whether from the history of economic thought or (...) from the contemporary literature. But there are other approaches to economics which would open up the field to a much wider range of possibilities for new economic thinking. Addressing the challenge that any reader bases her understanding on her own approach, the purpose of this paper is to attempt to explain what it means to consider different approaches and why it matters for policy. This is done by discussing two features of the financial crisis which pose particular problems for economic theory. These are the role of changing market sentiment in driving asset prices on the one hand and the breakdown of trust relationships in banking on the other (the moral hazard issue). We will see how these are addressed by mainstream theory and by alternative approaches. First, market sentiment is discussed within the mainstream rational-optimising framework, where risk is quantifiable, and compared with the Keynesian approach based on the general uncertainty of knowledge, where reason, evidence and sentiment are integrated. The moral hazard issue is then discussed in its mainstream form in terms of rational opportunism and in its institutionalist form in terms of the foundation of social relations (including relations between institutions) in trust. It is shown that different ways of approaching theorising in each case imply different policy measures. It is argued further that an exclusively deductive mathematical approach to analysis of market sentiment and trust is unduly limiting and that a more pluralist approach would more fully address the issues. (shrink)

This inclusive, cross-cultural study rethinks the nexus between engineering, development, and culture. It offers diverse commentary from a range of disciplinary perspectives on how the philosophies of today’s cultural triumvirate—American, European and Chinese—are shaped and given nuance by the cross-fertilization of engineering and development. Scholars from the humanities and social sciences as well as engineers themselves reflect on key questions that arise in this relational context, such as how international development work affects the professional views, identities, practice and ethics of (...) engineers. The first volume to offer a systematic and collaborative study that cuts across continental boundaries, the book delineates the kinds of skills and competences that tomorrow’s engineering success stories will require, and analyzes fascinating aspects of the interplay between engineering and philosophy, such as how traditionally Chinese ways of thinking can influence modern engineering practice in the world’s most populous country. China’s problematic mix of engineering woes and wonders, from the high-profile crash on its high-profile rail network to its ‘bird’s nest’ Olympic stadium, adds to the urgency for reform, while Europe’s Enlightenment-informed legal frameworks are contrasted with Chinese mechanisms in their governance of the field of nanotechnology, a crucial element of future technical evolution. Fascinating and compelling in equal measure, this volume addresses one of the topics at the leading edge of humanity’s quest to survive, and to thrive.​. (shrink)

Economists study "The Economy," or so one might suppose. Yet this overarching entity is strikingly absent from mainstream theory. Since the 1950s, it has generally been described with a few mathematical propositions and not given a description that attends to institutions, power relations, or the emergent properties that form the leading indicators in macroeconomic theory. There is thus a significant divergence between folk economics and scientific economics on this theoretical entity. This article briefly addresses the history of this concept, noting (...) its heyday in the interwar years, and brings to bear some of the analytical apparatus on institutional facts devised by John Searle. Whatever is meant by "The Economy" in folk economics appears to be significantly divergent from what is posited in scientific economics. Key Words: economy • Searle • theoretical entities • macroeconomics • economic indicators • folk economics. (shrink)

Macroeconomic events often require individuals and policy-makers to make decisions that they are not accustomed to making. For example, a sovereign debt crisis makes it necessary to either default on government debt, increase taxes, cut public spending or to impose a mixture of these measures. I argue that decisions on such matters are not derived from deep preferences; they require reflections and judgement under uncertainty. Past experiences and the interaction with other individuals are likely to influence the salience of preferences (...) in the situations of decision making. Using a simple model, I illustrate how the salience of preferences changes with different degrees of individuality and conformity. Individuality is associated with the importance of private habits, while conformity is related to the perceived dissonance between initial intuitions and social opinions. The results obtained from simple simulation exercises stress that a high degree of conformity or a low degree of individuality may lead to overreactions when social opinion makers err for a short period of time. At the same time, a low degree of conformity or a high degree of individuality or leads to delayed adjustments to new circumstances. (shrink)

This paper clarifies the terms “institutions” and “social structures” and related terms “rules”, “conventions”, “norms”, “values” and “customs”. Part one explores the similarities between institutions and social structures whilst the second and third parts explore differences. Part two considers institutions, rules, habits or habitus and habituation, whilst part three critically reflects on three common conceptions of social structures. The conclusion comments upon reflexive deliberation via the internal conversation.