We examined the current field identity of Islamic banks and its evolution. We conducted interviews with 44 Sharia (Islamic law) scholars and related professionals in the fields of Islamic and conventional banking, representing nine jurisdictions. We found that Islamic banks are still hybrid organizations belonging to two equally powerful fields of Islamic law (Sharia) and conventional banking. Consequently, Islamic banks abide by two completely different institutional logics. The hybrid identity of Islamic banks resultantly became static due to institutional pressures exerted (...) by both root fields. We discuss how hybrid fields evolve focusing on the conditions that prevent hybrid field identities from becoming independent. We also contribute to the literature on elastic hybrid identity of organizations by theorizing an elastic fatigue model. Finally, we suggest some practical motions to boost the static hybrid identity of Islamic banks and transform it to an elastic one. (shrink)

This paper suggests that Nash equilibrium can be interpreted as a conceptual tool for addressing comparative-statics issues on an aggregate level. Together with additional assumptions, Nash equilibrium helps generate testable predictions about changes or differences of behavior induced by changes or differences of exogenous variables. However, Nash-equilibrium behavior, as such, is not subject to empirical testing. Instead, widespread and persistent behavior is modeled as a Nash equilibrium by assumption. The paper argues that this interpretation is in line with the traditional (...) use of an equilibrium concept in price theory. The suggested interpretation is illustrated with the model of public-goods provision. The paper compares this interpretation of Nash equilibrium with other interpretations and discusses its limits. (shrink)

Suppose that you prefer A to B, B to C, and C to A. Your preferences violate Expected Utility Theory by being cyclic. Money-pump arguments offer a way to show that such violations are irrational. Suppose that you start with A. Then you should be willing to trade A for C and then C for B. But then, once you have B, you are offered a trade back to A for a small cost. Since you prefer A to B, you (...) pay the small sum to trade from B to A. But now you have been turned into a money pump. You are back to the alternative you started with but with less money. This Element shows how each of the axioms of Expected Utility Theory can be defended by money-pump arguments of this kind. The Element also defends money-pump arguments from the standard objections to this kind of approach. This title is also available as Open Access on Cambridge Core. (shrink)

This PhD thesis focuses on the philosophical foundations of Neuroeconomics, an innovative research program which combines findings and modelling tools from economics, psychology and neuroscience to account for human choice behaviour. The proponents of Neuroeconomics often manifest the ambition to foster radical modifications in the accounts of choice behaviour developed by its parent disciplines. This enquiry provides a philosophically informed appraisal of the potential for success and the relevance of neuroeconomic research for economics. My central claim is that neuroeconomists can (...) help other economists to build more predictive and explanatory models, yet are unlikely to foster revolutionary modifications in the economic theory of choice. The contents are organized as follows. In chapters 1-2, I present neuroeconomists’ investigative tools, distinguish the most influential approaches to neuroeconomic research and reconstruct the case in favour of a neural enrichment of economic theory. In chapters 3-7, I combine insights from neuro-psychology, economic methodology and philosophy of science to develop a systematic critique of Neuroeconomics. In particular, I articulate four lines of argument to demonstrate that economists are provisionally justified in retaining a methodologically distinctive approach to the modelling of decision making. My first argument points to several evidential and epistemological concerns which complicate the interpretation of neural data and cast doubt on the inferences neuroeconomists often make in their studies. My second argument aims to show that the trade-offs between the modelling desiderata that neuroeconomists and other economists respectively value severely constrain the incorporation of neural insights into economic models. My third argument questions neuroeconomists’ attempts to develop a unified theory of choice behaviour by identifying some central issues on which they hold contrasting positions. My fourth argument differentiates various senses of the term ‘revolution’ and illustrates that neuroeconomists are unlikely to provide revolutionary contributions to economic theory in any of these senses. (shrink)

Nous proposons dans cet article de rechercher chez les prédécesseurs de Frank Knight un peu de lumière pour éclairer sa distinction entrerisque etincertitude. D'une part, la lecture des économistes qui l'ont précédé permet de comprendre sa situation dans lapolémique sur la répartition. D'autre part, l'examen des sources philosophiques qui informent sa théorie de la connaissance conduit à analyser l'opposition risque/incertitude comme une opposition théorie de la probabilité/théorie de la connaissance (imparfaite). Le recours à l'épistémologie de Knight fait saisir en quoi (...) sa démarche philosophique le mène à conclure par l'absurde la polémique sur la répartition, et l'autorise alors à proposer une reconstruction de la théorie économique comme science des choix rationnels. (shrink)

Three things must be clarified before we can proceed with the examination. These are the terms sustainability, politics and megatrend. Unfortunately, all three are ambiguous and few disciplines have arrived at a consistent definition for any of them. While we will not resolve the ambiguity to everyone's satisfaction, we will attempt to achieve an extensional bargain (Rappaport, 1953) through which we develop an understanding of how we are using the terms. First, sustainable development became a construct in 1987 through the (...) Brundtland Report (Brundtland, 1987) and has remained ambiguous ever since. This is where we begin our examination of sustainable consumption. Megatrend, as a phenomenon, has been defined in a multitude of ways over the past thirty-five years. In this chapter, we adopt the criteria set forth by Mittelstaedt et al. (2014) for categorising megatrends, but will use a broader interpretation of what constitutes megatrends. Finally, our use of the term political will be broader than the more common use of the term relating to legal structures, laws or agencies, and include the underlying institutions that frame the more micro aspects of politics. This approach is necessary because of the scale of sustainability and megatrends in both time and space. (shrink)

Pourquoi accorder un rôle essentiel à la délibération publique dans le choix des normes éthiques et politiques guidant les sciences? À partir d’un débat récent en économie du bien-être, cet article soutient que l’introduction de normes éthiques et politiques en sciences doit respecter le principe de neutralité procédurale, et qu’une délibération publique bien encadrée respecte ce principe. Je présenterai deux raisons de croire que les sciences doivent respecter la neutralité procédurale. Le premier argument est lié au rôle que devrait jouer (...) l’examen libre et critique dans le développement des sciences. Le second argument repose sur l’idée que les sciences devraient être sensibles aux procédures présentant le meilleur potentiel épistémique. Pour ces deux raisons, si elle prend position en faveur d’idéaux normatifs, l’économie du bien-être devrait se tourner vers une approche délibérative, rationnelle et impartiale pour y parvenir. (shrink)

Barbara Fried described John Rawls’s response to libertarianism as “the unwritten theory of justice.” This paper argues that while there is no need for a new theory of justice to address the libertarian challenge, there is a need for an additional chapter. Taking up Fried’s suggestion that the Rawlsian response would benefit from a revised list of primary goods, I propose to add employment to the list, thus leading to adoption of a full employment principle in the original position that (...) ensures that anyone who wants to work will be able to do so. I argue that although Rawls famously proposed government as employer of last resort, he never integrated that comment into his theory, which lacks a full employment principle and says nothing about the injustice of involuntary unemployment in its ideal theory. I first refute the received view of Rawls’s treatment of employment as required by its importance for citizens’ self-respect, then show that in fact, the full employment assumption is the result of the role of general equilibrium theory in Rawls’s model of a well-ordered society, and indicate why developments in economic theory and economic policy support the proposed revision. (shrink)

InStabilizing Dynamics Roy Weintraub provides a history of stability theory from the work of Hicks and Samuelson in the late 1930s to the Gale and Scarf counterexamples in the 1960s. Unlike his earlier work in the history of general equilibrium theory this recent contribution is not an attempt to fit the Walrasian program into the narrow framework of some particular philosophy of natural science. Rather, the theme inStabilizing Dynamicsis broadly social constructivist. Simply put, the constructivist view of science is “that (...) scientific knowledge itself is constructed socially, in communities of scientists: Knowledge is constructed, not found”. (shrink)

We reexamine some of the classic problems connected with the use of cardinal utility functions in decision theory, and discuss Patrick Suppes's contributions to this field in light of a reinterpretation we propose for these problems. We analytically decompose the doctrine of ordinalism, which only accepts ordinal utility functions, and distinguish between several doctrines of cardinalism, depending on what components of ordinalism they specifically reject. We identify Suppes's doctrine with the major deviation from ordinalism that conceives of utility functions as (...) representing preference differences, while being non- etheless empirically related to choices. We highlight the originality, promises and limits of this choice-based cardinalism. (shrink)

Abstract: The paper argues that mainstream economics and mainstream philosophy of natural science had much in common during the period 1945-1965. It examines seven common features of the two fields and suggests a number of historical developments that might help explain these similarities. The historical developments include: the Vienna Circle connection, the Samuelson-Harvard-Foundations connection, and the Cold War operations research connection.

Abstract: This paper examines Mark Blaug's position on the normative character of Paretian welfare economics: in general, and specifically with respect to his debate with Pieter Hennipman over this question during the 1990s. The paper also clarifies some of the confusions that emerged within the context of this debate, and closes by providing some additional arguments supporting Blaug's position that he himself did not provide.

Although most of the marginalist economists' methodology was influenced by nineteenth-century classical physics, the work of Francis Ysidro Edgeworth represents the highest point of classical physics influence to the development of mainstream economic methodology. Subsequent leading theorists were not as explicit, although economic theory continued to be influenced by physics as the work of Pareto, Fisher and Samuelson indicates. However, the physics methodological framework has made a recent reappearance in the relatively new field of econophysics. Although there are a few (...) methodological similarities, there are also many important differences between mainstream economics and econophysics. Econophysicists' emphasis to statistical mechanics rather to mechanical models, their reservations towards rational agent theory and their rejection of many standard assumptions of mainstream economics are examples of such differences. The paper examines the above from a methodological viewpoint. It also discusses the p.. (shrink)

This paper shows that implicit assumptions about the numeraire good in the Kaldor-Hicks efficiency-equity analysis involve a "same-yardstick" fallacy (a fallacy pointed out by Paul Samuelson in another context). These results have negative implications for cost-benefit analysis, the wealth-maximization approach to law and economics, and other parts of applied welfare economics--as well as for the whole vision of economics based on the "production and distribution of social wealth.".

A comment on Paul Schoemaker's target article in Behavioral and Brain Sciences, 14 (1991), p. 205-215, "The Quest for Optimality: A Positive Heuristic of Science?" (https://doi.org/10.1017/S0140525X00066140). This comment argues that the optimizing model of decision leads to an infinite regress, once internal costs of decision (i.e., information and computation costs) are duly taken into account.

The reception so far of Kitcher's Vaulting Ambition reminds me of the old saw about the difference between an optimist and a pessimist. Looking at the same glass of water, the former sees it as half full while the latter sees it as half empty. Some have seen Kitcher's book as a vindication of the possibility of an evolutionary science of human behavior; others have seen it as a devastating critique of the most influential efforts to date to construct such (...) a science. As in the joke about the water glass, both assessments have their point. Sociobiology is a research program, not a unified theory. What one can do is test particular hypotheses within this program and see whether they live up to reasonable standards of rigor and evidence. This is what Kitcher does, with great energy and care. (shrink)

Some economists, notably Gary Becker, claim that economic analysis is applicable to any decision, ethical or otherwise. Ethical principles within Objectivist Ethics are based on long-range success— life being the measure of success. This paper examines these different approaches to decision-making. Decision theory and Rand's Benevolent Universe Premise form the basis for the analysis.

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)

This article discusses the rationality principle, especially in Popper's version, on the occasion of a commentary of Maurice Lagueux's book, Rationality and Explanation in Economics (2010).

In his new book The Idea of Justice, Amartya Sen argues that political theory should not consist only in the characterisation of ideal situations of perfect justice. In so doing, Sen is making, within the context of political theory, a similar argument to another he also made in economic theory, when crtiticising what he called the ?rational fool? of mainstream economics. Sen criticised the ideal and fictitious agent of mainstream economics, while advocating for a return to an integrated view of (...) ethics and economics, which characterised many classical political economists who inspired Sen's theory of justice, from Adam Smith to Karl Marx. I will examine Sen's revival of classical political economy, and argue that a revival of classical political economy, which was undertaken earlier by Piero Sraffa, has much potential for bringing a more plural and realist perspective to economics. (shrink)

The financial crash of 2008 following the selling of fictitious derivatives was a crisis of both rationality and values whose aftermath has thrown the legitimation of deregulated markets, and governments, into question. This paper critiques the Becker metaphor of human capital and submits that human value is central to and the fulcrum of both economic and social values. It illustrates that Hume and Adam Smith directly countered the Hobbesian hypothesis that human nature is based only on self-interest, distinguishes market values (...) from social values, explicit from implicit values and parallels Sen in adopting an ordinal ranking of what people value rather than a search for cardinality. It draws on cognitive psychology, neural research, revealed preference theory and a principle of implicit verification. It also outlines implications for what Adam Smith centrally valued as concern for the welfare of the whole of society. (shrink)

The Pareto principle states that if the members of society express the same preference judgment between two options, this judgment is compelling for society. A building block of normative economics and social choice theory, and often borrowed by contemporary political philosophy, the principle has rarely been subjected to philosophical criticism. The paper objects to it on the ground that it indifferently applies to those cases in which the individuals agree on both their expressed preferences and their reasons for entertaining them, (...) and those cases in which they agree on their expressed preferences, while differing on their reasons. The latter are cases of "spurious unanimity", and it is normatively inappropriate, or so the paper argues, to defend unanimity preservation at the social level for them, so the Pareto principle is formulated much too broadly. The objection seems especially powerful when the principle is applied in an ex ante context of uncertainty, in which individuals can disagree on both their probabilities and utilities, and nonetheless agree on their preferences over prospects. (shrink)

The paper analyses economic evaluations by distinguishing evaluative statements from actual value judgments. From this basis, it compares four solutions to the value neutrality problem in economics. After rebutting the strong theses about neutrality (normative economics is illegitimate) and non-neutrality (the social sciences are value-impregnated), the paper settles the case between the weak neutrality thesis (common in welfare economics) and a novel, weak non-neutrality thesis that extends the realm of normative economics more widely than the other weak thesis does.

The recent economic crisis has brought to the fore another crisis that has been going on for many years, that of economic theory. The latter failed to predict and, after the event, cannot offer an explanation of why it happened. This article sketches out why this is the case and what constitutes the crisis of economics. On this basis, the case is made for the revival of an interdisciplinary political economy as the only way for offering an explanation of the (...) workings of the economy in general and of economic crises in particular. (shrink)

Imagine asking a typical, well informed, contemporary philosopher whether or not she considered biology to be a science. Our informant, being a philosopher, would not necessarily respond with the straightforward “of course” that would be expected from anyone else. She might first reason through a complicated and heavily qualified definition of science, or she might distinguish certain parts of biology that she held to be more clearly scientific than others. If she were partial to a certain sort of critical stance, (...) she might question the political basis for wishing to dignify certain parts of our inquisitive practice with the honorific ‘scientific’ in the first place. But there is at least one thing that she would almost certainly not do. She would not simultaneously embrace a version of the conventional philosophical view of science and deny that biology is a science. This is despite the fact that, as she will acknowledge, biology exploits a range of methodologies and explanatory strategies that have not yet admitted of systematic, consensual philosophical explication. (shrink)

Some behavioral economists argue that the honoring of social norms can be adequately modeled as the optimization of social utility functions in which the welfare of others appears as an explicit argument. This paper suggests that the large experimental claims made for social utility functions are premature at best, and that social norms are better studied as equilibrium selection devices that evolved for use in games that are seldom studied in economics laboratories.

De gustibus non est disputandum. This maxim reflects a fundamental problem both for the study of markets and for the concern with morals. The problem is the intractability of tastes coupled with their indispensability for both positive and normative economics. Tastes are indispensable in positive microeconomic theory because, under the label ‘preferences,’ they, together with expectations, determine choice and behavior. Tastes are equally indispensable to welfare economics' conception of morally permissible arrangements, because these arrangements must reflect compromises between competing and (...) conflicting preferences. (shrink)

Mainstream economics evaluates capitalism primarily from the perspective of efficiency. Social philosophy typically applies other or additional normative criteria, such as equality, democracy, and community. This essay examines the implications of these contrasting sets of criteria in the evaluation of capitalism. Its first two sections consider the criteria themselves, assuming that a trade-off exists between them. The last three sections question whether such a trade-off necessarily occurs, and explore the claim that improvements in nonefficiency dimensions of capitalist society may enhance, (...) rather than conflict with, efficiency. (shrink)

Most philosophical accounts of the foundations of economics have assumed that economics is intended to be an empirical science concerned with human behaviour, though they have, of course, differed over the extent to which it has been or can be successful as such an enterprise. A prominent source of dissent against this consensus is Alexander Rosenberg. In his recent book, Rosenberg summarizes and completes his statement of a position that he has been developing for some time. He argues that although (...) economists evaluate one another's work according to shared and rigorous standards of adequacy, these standards are strictly internal, like those of mathematics, instead of being derived from discoveries about contingent relationships between theoretical statements and empirical facts. Economics, that is to say, is essentially conceptual rather than empirical inquiry. In the following discussion, I will provide grounds for resisting Rosenberg's conclusion. The point of this criticism, however, is not mainly negative. Most of the historical preoccupations of the philosophy of economics, like those of the philosophy of science in general, have been epistemological. Careful attention to Rosenberg's argument, however, redirects our attention to ontological questions about the objects of economics, and this redirection, I will maintain, is to be welcomed. I will argue that while the majority of philosophers of economics is correct, as against Rosenberg, in regarding economics as an empirical science, the conventional view as to the identity of its empirical objects should be substantially revised under the pressure of Rosenberg's criticisms. My critical analysis of the implications of Rosenberg's work for the ontological commitments of economics is intended to furnish one line of argument towards my own conception of the objects of economics. This conception, which is still preliminary in many respects, will be briefly sketched toward the end of the present paper; a detailed account of it is given in Ross and LaCasse. (shrink)

Economists, in stressing the prescriptive implications of their analysis, typically have ignored the potential contributions of their theorems and methodological principles to the understanding of human behavior as an end in itself. The purpose of the paper is to establish the principle, by detailed reference to the literature of economics, that the 'deductive pattern of explanation' constitutes a valid approach to the general study of human behavior. As such, it is a potentially useful method of analysis in the other social (...) sciences. Literature from the philosophy of social science bearing on the applicability of deductive theory to the study of human behavior is subjected to detailed critical analysis. (shrink)

The paper discusses the sense in which the changes undergone by normative economics in the twentieth century can be said to be progressive. A simple criterion is proposed to decide whether a sequence of normative theories is progressive. This criterion is put to use on the historical transition from the new welfare economics to social choice theory. The paper reconstructs this classic case, and eventually concludes that the latter theory was progressive compared with the former. It also briefly comments on (...) the recent developments in normative economics and their connection with the previous two stages. (Published Online April 18 2006) Footnotes1 This paper suspersedes an earlier one entitled “Is There Progress in Normative Economics?” (Mongin 2002). I thank the organizers of the Fourth ESHET Conference (Graz 2000) for the opportunity they gave me to lecture on this topic. Thanks are also due to J. Alexander, K. Arrow, A. Bird, R. Bradley, M. Dascal, W. Gaertner, N. Gravel, D. Hausman, B. Hill, C. Howson, N. McClennen, A. Trannoy, J. Weymark, J. Worrall, two annonymous referees of this journal, and especially the editor M. Fleurbaey, for helpful comments. The editor's suggestions contributed to determine the final orientation of the paper. The author is grateful to the LSE and the Lachmann Foundation for their support at the time when he was writing the initial version. (shrink)