I introduce an extension of the Lewis-Skyrms signaling game, analysed from a dynamical perspective via simple reinforcement learning. In Lewis’ (Convention, Blackwell, Oxford, 1969) conception of a signaling game, salience is offered as an explanation for how individuals may come to agree upon a linguistic convention. Skyrms (Signals: evolution, learning & information, Oxford University Press, Oxford, 2010a) offers a dynamic explanation of how signaling conventions might arise presupposing no salience whatsoever. The extension of the atomic signaling game examined here—which I (...) will refer to as a salience game—introduces a variable parameter into the atomic signaling game which allows for degrees of salience, thus filling in the continuum between Skyrms’ and Lewis’ models. The model does not presuppose any salience at the outset, but illustrates a process by which accidentally evolved salience is amplified, to the benefit of the players. It is shown that increasing degrees of salience allow populations to avoid sub-optimal pooling equilibria and to coordinate upon conventions more quickly. (shrink)

This paper seeks to defend, develop, and revise Edward Craig's “genealogy of knowledge”. The paper first develops the suggestion that Craig's project is naturally thought of as an important instance of “social cognitive ecology”. It then introduces the genealogy of knowledge and some of its main problems and weaknesses, suggesting that these are best taken as challenges for further work rather than as refutations. The central sections of the paper conduct a critical dialogue between Craig's theory and Wittgenstein's claim–familiar from (...) On Certainty–that common-sense certainties cannot be known. It turns out that Craig's distinction between different stages in the development of our concept of knowledge can illuminate and make plausible Wittgenstein's claim. But it can do so only if Craig's traditional commitment to a central “core” in our concept of knowledge is replaced with the idea of knowledge as a family-resemblance concept. (shrink)

This article argues that evolutionary models based on selection validate, under appropriate conditions, the relevance of optimality as an explanatory mechanism in rational choice theory. The reason is that these frameworks share the mechanism that drives the results, namely, optimization, even if they situate it at different levels. The consequences of our argument are twofold. First, it resolves the tension between those predictions of rational choice theory that are accurate and the evidence showing that individuals seldom optimize. Second, it relativizes (...) the explanatory import of rationality without diminishing the role of optimization as a mechanism. (shrink)

This article focuses on the conventions that sustain social interaction and argues that they are central to Simon's decision-making theory. Simon clearly identifies two kinds of coordination by convention: behavioral mores that shape human actions, and shared mental models that govern human perceptions. This article argues that Poincaré–Carnap's conventionalism provides powerful support for Simon's theory; it contends that this theory offers a more convincing account of decision and coordination than Lewis' concept of convention. Simon's approach to applying conventionalist logic to (...) social interaction emphasizes the normative role played by mental models in solving coordination problems and considers rationality in terms of both cognitive and moral considerations. By connecting conventional phenomena to social identifications, Simon stresses the resulting complexity of coordination problems. (shrink)

Epistemic systems are social processes generating judgments of truth and falsity. I outline a mathematical theory of epistemic systems that applies widely. Areas of application include pure science, torture, police forensics, espionage, auditing, clinical medical testing, democratic procedure, and the market economy. I examine torture and police forensics in relative detail. This paper is an exercise in comparative institutional epistemics, which considers how the institutions of an epistemic system influence its performance as measured by such things as error rates and (...) the volume of judgments generated. (shrink)

Hume’s examination of the conventions of property, trade, and contract addresses the moral foundations that make business possible. In this light, Hume’s theory of justice is also a foundational work in business ethics. In Hume’s analysis of these conventions, both philosophers and game theorists have correctly identified “proto” game-theoretic elements. One of the few attempts to offer a Humean theory of business ethics rests on this game-theoretic interpretation of Hume’s argument. This article argues that game-theoretic reasoning is only one part (...) of a Humean business ethics and this can be shown by further analyzing Hume’s theory of justice. As we examine his theory, it becomes clear that Hume is not trying to show how it is always rational to respect the rules of business. Hume is not engaging in, or attempting, a reconciliation project and neither is a Humean business ethics. The final section of the article is a brief Humean analysis of the effectiveness of codes of ethics. The purpose of this section is not to decide the issue but to show how a Humean approach is both useful, relevant, and involves more than reconciling rationality and morality. (shrink)

There has been an intellectual debate at least since the 1960s in business ethics on the role of the media in relation to consumer choice driven by either habits or rationality. If consumers are totally rational, then the global media and global corporations provide just information and knowledge. If consumers are influenced by habit then large corporations and global media can greatly influence consumer choice and create problems of self-control (Ainslie, 1992, Pico Economics: The Strategic Interaction of Successive Motivational States (...) Within the Person, Cambridge University press, Cambridge). In this article, we provide a synthesis and integrated approach to this continuing debate. We provide a more institutional approach to consumer choice based on social conventions, rather than just on individual habits and lapses in self-control. (shrink)

If you are more likely to continue a course of action in virtue of having previously invested in that course of action, then you tend to honor sunk costs. It is widely thought both that (i) individuals often do give some weight to sunk costs in their decision-making and that (ii) it is irrational for them to do so. In this paper I attempt to cast doubt on the conventional wisdom about sunk costs, understood as the conjunction of these two (...) claims. (shrink)

La théorie du choix social qui s'est développée durant les dernières décennies, notamment dans la ligne des travaux d'Arrow et de Sen , ne s'est pas seulement soldée par une série de résultats négatifs exprimés dans les théorèmes d'impossibilité d'Arrow, de Sen et d'autres; ses notions centrales ont aussi été utilisées de manière fort variée au point que cette théorie souffre aujourd'hui d'un déficit important qui se traduit par de multiples indéterminations conceptuelles.

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)

In distributive bargaining, bargainers may have an impulse to bluff and thereby risk an impasse. The current paper does not explain bargaining impasses. For our purposes, it suffices to recognize that bargaining impasses may occur without assuming irrationality. The design problem is to ensure that impasses are avoided as often as possible. One possible solution is to allow for the formation of an agreement by “conduct”. The ‘agreement by conduct’ outcome as a commercial norm may coordinate bargainers’ expectations so as (...) to enable them to perform the same contract, even if they made written demands above ½ (as a bluff). The idea that the “deal-is-on” philosophy as expressed in the “agreement-by-conduct” rule affects and promotes economic exchange is probed in the context of a modified Divide-the-Dollar game. (shrink)

Backward induction was one of the earliest methods developed for solving finite sequential games with perfect information. It proved to be especially useful in the context of Tom Schelling’s ideas of credible versus incredible threats. BI can be also extended to solve complex games that include an infinite number of actions or an infinite number of periods. However, some more complex empirical or experimental predictions remain dramatically at odds with theoretical predictions obtained by BI. The primary example of such a (...) troublesome game is Centipede. The problems appear in other long games with sufficiently complex structure. BI also shares the problems of subgame perfect equilibrium and fails to eliminate certain unreasonable Nash equilibria. (shrink)

This paper investigates experimentally the effects of communication in distinct games with complete information. We design four games resulting from the interaction between two incentive elements: strategic complementarity and coordination. These incentive elements allow to analyse the use of cheap talk as an efficiency-enhancing and coordinating device. We implement a restricted communication protocol in repeated settings with fixed partners. Our findings provide robust evidence about how cheap talk interacts with incentives to explain strategic behaviour in a dynamic way. As expected, (...) cheap talk increases efficiency under complementarity incentives, and the coordination level under coordination incentives. As novelty, the use of limited communication in repeated interactions has led to identify specific time-varying message profiles as the most effective messages in the coordination games. While the content of messages is explained by the complementarity incentives, faithfulness to credible messages is determined by the coordination incentives. (shrink)

System effects often stand in the way of attempts to come up with simple explanations of politics. Systems are often characterized by nonlinearities, where an effect is more than the sum of the effects of the actions taken by multiple actors. Another system effect is feedback, where the effect of actions is to amplify the problem the actions are intended to solve. There may also be indirect effects, where an incidental aspect of an action becomes more important (to other actors) (...) than the primary intention; contingencies, such that an effect is not inevitable but depends on idiosyncratic or even anti-strategic initial actions; interaction effects, where the behavior of an actor changes the environment of action, so that other actors do not respond as anticipated; and unintended consequences, where the long-term or secondary effects of an action differ from the intended effect. Each of these system effects can frustrate scholarly attempts to understand political behavior using simple models of action, and, even more, can frustrate the attempts of political decision makers to predict the effects of their actions. (shrink)

Focal points seem to be important in helping players coordinate their strategies in coordination problems. Game theory lacks, however, a formal theory of focal points. This paper proposes a theory of focal points that is based on individual rationality considerations. The two principles upon which the theory rest are the Principle of Insufficient Reason (IR) and a Principle of Individual Team Member Rationality. The way IR is modelled combines the classic notion of description symmetry and a new notion of pay-off (...) symmetry, which yields different predictions in a variety of games. The theory can explain why people do better than pure randomization in matching games. (shrink)

On many occasions, individuals are able to coordinate their actions. The first empirical evidence to this effect has been described by Schelling (1960) in an informal experiment. His results were corroborated many years later by Mehta et al. (1994a,b) and Bacharach and Bernasconi (1997). From the point of view of mainstream game theory, the success of individuals in coordinating their actions is something of a mystery. If there are two or more strict Nash equilibria, mainstream game theory has no means (...) of explaining why people tend to choose their part of one and the same equilibrium. Textbooks (see, e.g., Rasmusen, 1989 and Kreps, 1990) refer to the fact that players may use focal points (see Schelling (1960)) or social conventions (see Lewis (1969)). Both notions cannot easily be incorporated into mainstream game theory, however. The notion of social conventions has recently been extensively studied in the context of evolutionary game theory where a population of agents interacts with each other. The central focus of this paper, however, is on situations where a few players play a game only once and I study how they may coordinate their actions. (shrink)

Social dilemmas, in which individually selfish behavior leads to collectively deficient outcomes, continue to be an important topic of research because of their ubiquity. The present research with Japanese participants replicates, with slight modifications, public goods games previously run in the United States. In contrast to recent work showing profound cross-cultural differences, the results of two studies reported here show remarkable cross-cultural similarities. Specifically, results suggest that (1) as in the U.S., allowing incremental commitment to a public good is effective (...) at eliciting contributions, (2) individual differences in trust affect contributions, (3) the distribution of player types in the U.S. and Japan are very similar, and (4) the dynamics of play in the public goods games used here are strikingly parallel. These results are discussed in the context of the relationship between cross-cultural differences and economic institutional environments. (shrink)

The created co-creator theology states that human beings have the purpose of creating the most wholesome future possible for our species and the global ecosystem. I evaluate the human aspect of this theology by asking whether it is possible for human beings to do this. Do we have sufficient knowledge? Can we be motivated to do what is necessary to create a wholesome future for ourselves and our planet? We do not at present have sufficient knowledge, but there is reason (...) to believe that with further scientific research we will be able to acquire it. The more difficult question is whether we can be motivated to cooperate on the scale necessary to fulfill this purpose. Evolutionary theories of human sociality, altruism, and cooperation are reviewed. I conclude that it is possible for human beings to fulfill the purpose defined for us by the created cocreator concept, but doing this will not be easy. (shrink)

This essay critiques dual-inheritance theory as presented in Peter Richerson and Robert Boyd's book Not by Genes Alone: How Culture Transformed Human Evolution (2005). The theory states that culture became prominent in human evolution because it allowed relatively rapid adaptation to changing environments by means of imitation. Imitating the behavior of other members of one's community produces adaptive behaviors more readily than either genetic evolution or individual learning. Imitation follows a number of patterns: imitating high-status individuals, imitating the most common (...) forms of behavior, imitating behaviors perceived to be the most effective solutions to various problems relevant to survival. This process combined with occasional innovations in behavior lead to a process of cultural evolution involving populations of cultural variants. Different local human populations were associated with different local populations of cultural variants, and both the human and the cultural populations evolved over time. Human evolution cannot be understood without taking into account these parallel processes of genetic and cultural evolution. Not by Genes Alone traces the implication of dual-inheritance theory for understanding human evolution and refers to various bodies of evidence relevant to the theory. (shrink)

This paper uses a game-theoretic framework to formalize the Hayekian notion of equilibrium as the compatibility of plans. To do so, it imposes more structure on the conventional model of strategic games. For each player, it introduces goals, goal-oriented strategies, and the goals’ probabilities of success, from which players’ payoffs are derived. The differences between the compatibility of plans and Nash equilibrium are identified and discussed. Furthermore, it is shown that the notion of compatibility of plans, in general, differs from (...) the notion of Pareto efficiency. Since the compatibility of plans across all players can rarely be achieved in reality, a measurement is introduced to determine various degrees of plan compatibility. Several possible extensions and applications of the model are discussed. (shrink)

We argue in favour of identifying one aspect of rational choice with the tendency to conform to the choice you expect another like-minded, but non-communicating, agent to make and study this idea in the very basic case where the choice is from a non-empty subset K of 2 A and no further structure or knowledge of A is assumed.

This is an excursion into the sociology of American sociology. It is an attempt to present a typology of the relationship between sociological empiricism as an ideology, and the pre?eminence and power of empiricist sociologists. Toward this end, such concrete factors as recruitment practices, educational orientations, status strivings of the social scientists, forms of financial subsidization, and the profes?sionalization of the field are taken into account. The article concludes by noting the limited field of investigations open to sociological empiricism, and (...) its general impoverishment as the leading ideology of the science of sociology. (shrink)

Empirical findings suggest that temptation causes agents not only to change their desires, but also to revise their beliefs, in ways that are not necessarily irrational. But if this is so, how can it be rational to maintain a resolution to resist? For in maintaining a resolution it appears that one will be acting against what one now believes to be best. This paper proposes a two-tier account according to which it can be rational neither to reconsider the question of (...) what one is going to do nor the question of what it is best to do; hence in the resolute agent the change in belief is not actual but merely potential. Various reasons are given for thinking that the resulting account is preferable to an alternative given by Bratman. (shrink)

Individuals, groups, or nations — if rational and self-interested — will be balancing on the margin between two alternative ways of generating income: peaceful production and exchange, versus appropriative efforts designed to seize resources previously controlled by others. Both production and appropriation, on the assumption here, are entirely normal lines of activity engaged in to the extent that doing so seems profitable.The general-equilibrium steady-state model involves a resource partition function, a social production function, a combat power function, and an income (...) distribution equation. Solutions were obtained under thesymmetrical Cournot protocol and two alternativeasymmetrical assumptions: the familiar Stackelberg condition and a more novel hierarchical protocol called Threat-and-Promise. The analysis demonstrates that, in contrast with the harmonistic bias of orthodox economic theory, a general-equilibrium model can also encompass the hostile and destructive interactions that characterize real-world social relations. (shrink)

Alliances and other forms of cooperation between firms often promise great benefits, for example, by the exchange of knowledge or co-specialization of resources. At the same time, the necessary actions to realize these benefits can augment vulnerability to opportunistic behaviour of partners. In addition to formal contracts to mitigate the resulting behavioural uncertainties, often, mechanisms, such as reputation or ethical values, are suggested as important supplements. However, when it comes to assessment of a specific cooperation opportunity, it is difficult to (...) account systematically for the economic consequences of these 'softer factors'. Therefore, this paper aims to surpass mere financial analysis of chance and risk and to integrate systematically both reputation and ethical values into an economic assessment of cooperative relationships. For this purpose, we develop a theoretical framework that is based on a simple-decision model to account for reputation and ethical values of potential partners as drivers of behavioural uncertainty reduction. We also discuss how this framework can be used to assess cooperative relationships and illustrate these ideas with reference to the inter-organizational accounting practices of a large drugstore chain and its suppliers. (shrink)

Alliances and other forms of cooperation between firms often promise great benefits, for example, by the exchange of knowledge or co‐specialization of resources. At the same time, the necessary actions to realize these benefits can augment vulnerability to opportunistic behaviour of partners. In addition to formal contracts to mitigate the resulting behavioural uncertainties, often, mechanisms, such as reputation or ethical values, are suggested as important supplements. However, when it comes to assessment of a specific cooperation opportunity, it is difficult to (...) account systematically for the economic consequences of these ‘softer factors’. Therefore, this paper aims to surpass mere financial analysis of chance and risk and to integrate systematically both reputation and ethical values into an economic assessment of cooperative relationships. For this purpose, we develop a theoretical framework that is based on a simple‐decision model to account for reputation and ethical values of potential partners as drivers of behavioural uncertainty reduction. We also discuss how this framework can be used to assess cooperative relationships and illustrate these ideas with reference to the inter‐organizational accounting practices of a large drugstore chain and its suppliers. (shrink)

Many morally significant outcomes can be brought about only if several individuals contribute to them. However, individual contributions to collective outcomes often fail to have morally significant effects on their own. Some have concluded from this that it is permissible to do nothing. What I call ‘the problem of insignificant hands’ is the challenge of determining whether and when people are obligated to contribute. For this to be the case, I argue, the prospect of helping to bring about the outcome (...) has to be good enough. Furthermore, the individual must be in a position to increase the probability of its being brought about to an appropriate extent. Finally, I argue that when too few are willing to contribute, people may have a duty to increase their number. Thus, someone can be obligated to contribute or to get others to contribute. This prospect account is consistent with Kantianism, contractualism and rule consequentialism but inconsistent with act consequentialism. (shrink)

Many morally significant outcomes can be brought about only if several individuals contribute to them. However, individual contributions to collective outcomes often fail to have morally significant effects on their own. Some have concluded from this that it is permissible to do nothing. What I call ‘the problem of insignificant hands’ is the challenge of determining whether and when people are obligated to contribute. For this to be the case, I argue, the prospect of helping to bring about the outcome (...) has to be good enough. Furthermore, the individual must be in a position to increase the probability of its being brought about to an appropriate extent. Finally, I argue that when too few are willing to contribute, people may have a duty to increase their number. Thus, someone can be obligated to contribute or to get others to contribute. This prospect account is consistent with Kantianism, contractualism and rule consequentialism but inconsistent with act consequentialism. (shrink)

Contractualism is one of the most promising ‘centers of gravity’ in business ethics. In this guest editorial we provide a concise roadmap to the field, sketching contractualism’s historic and disciplinary antecedents, the basic argumentative structure of the contract model, and its boundary conditions. We also sketch two main dimensions along which contributions to the contractualist tradition can be positioned. The first dimension entails positive versus normative theorizing – does a given contribution analyze the world as it is or how it (...) ought to be? The second dimension involves four different levels of analysis that are commonly employed in contractualist business ethics: the nano, micro, meso, and macro levels. We then proceed to position the articles comprising this special issue along these two dimensions. (shrink)

ArgumentThe main contribution of the Alfred P. Sloan and Russell Sage Foundations' behavioral economics program (1984–1992) was not the resources it provided, which were relatively modest. Instead, the program's contribution lay in catalyzing “a sense of mission” in the collaboration between psychologists Daniel Kahneman and Amos Tversky, economist Richard Thaler, and their associates. Partly this reflected the common strategy of American foundations to pick an individual or small group of scientists and stick with them until scientific success had been achieved. (...) But moreover, it was a consequence of the careful management of the program's director Eric Wanner. The various actors involved in the behavioral economics program constructed a new behavioral economic sub-discipline in economics by tapping into existing missionary sentiments in the economic and psychological disciplines, while at the same time actively shaping this sense of mission. (shrink)

This paper analyzes the main features of rational choice theory and evaluates it with respect to the conceptions of Lakatos' research program and Laudan's research tradition. The analysis reveals that the thin rationality assumption, the axiomatic method and the reduction to the micro level are the only features shared by all rational choice models. On these grounds, it is argued that rational choice theory cannot be characterized as a research program. This is due to the fact that the thin rationality (...) assumption cannot be understood as a hard core in Lakatos' terms. It is argued that Laudan's conception of a research tradition better characterizes rational choice theory. On the basis of this conclusion, certain important criticisms of rational choice theory are answered. First, the criticisms concerning the core assumptions of rational choice theory are countered. It is argued that this critique is based on a misunderstanding of rational choice theory as a unified set of models, such as Lakatos' research program. Second, Green and Shapiro's rational choice 'pathologies' - inconsistent predictions, post hoc theory development and arbitrary domain restrictions - are evaluated. Contrary to Green and Shapiro, it is argued that post hoc theory development is a more preferable strategy for developing RCT than domain restrictions based on ex ante rules. (shrink)