The issue of trust has recently attracted growing attention in research on work relations, capital – owner relations, cultural influences on the economic structures of different countries, and other topics. This paper analyzes a simple experiment on trust and the reward of trust. Mr A is endowed with DM 80. He decides to trust Ms B (and give her his money) or not. Ms B is able to double the sum of money (if she gets it) and can then decide (...) to give back as much as she likes. In an experiment, 76% of subjects A decided to trust. The average reward they received was DM 79.2 which is not significantly different from DM 80, the value of mistrust; nor was the average reward different from the average expectations of subjects A, i.e. a weak variant of the Rational Expectations Hypothesis is supported. In the paper we also look for differences between trusting and mistrusting A-subjects, for behavioral norms, and other determinants of rewards. (shrink)

Economics as a science of human behavior has been grounded in a remarkably parsimonious postulate: that of the self-interested, isolated individual who chooses freely and rationally between alternative courses of action after computing their prospective costs and benefits. In recent decades, a group of economists has shown considerable industry and ingenuity in applying this way of interpreting the social world to a series of ostensibly noneconomic phenomena, from crime to the family, and from collective action to democracy. The “economic” or (...) “rational-actor” approach has yielded some important insights, but its onward sweep has also revealed some of its intrinsic weaknesses. As a result, it has become possible to mount a critique which, ironically, can be carried all the way back to the heartland of the would-be conquering discipline. That the economic approach presents us with too simpleminded an account of even such fundamental economic processes as consumption and production is the basic thesis of the present paper. (shrink)

an unpublished paper written in 1998-1999.

One of Hume's most well-known works and a masterpiece of philosophy, A Treatise of Human Nature is indubitably worth taking the time to read.

Some philosophers hold that trust grows fragile when people become too rational. They advocate a retreat from reason and a return to local, traditional values. Others hold that truly rational people are both trusting and trustworthy. Everything hinges on what we mean by 'reason' and 'rational'. If these are understood in an egocentric, instrumental fashion, then they are indeed incompatible with trust. With the help of game theory, Martin Hollis argues against that narrow definition and in favour of a richer, (...) deeper notion of reason founded on reciprocity and the pursuit of the common good. Within that framework he reconstructs the Enlightenment idea of citizens of the world, rationally encountering, and at the same time finding their identity in, their multiple commitments to communities both local and universal. (shrink)

Combining principles of individual rational choice with a sociological conception of collective action, James Coleman recasts social theory in a bold new way. The result is a landmark in sociological theory, capable of describing both stability and change in social systems. This book provides for the first time a sound theoretical foundation for linking the behavior of individuals to organizational behavior and then to society as a whole. The power of the theory is especially apparent when Coleman analyzes corporate actors, (...) such as large corporations and trade unions. He examines the creation of these institutions, collective decision making, and the processes through which authority is revoked in revolts and revolutions. Coleman discusses the problems of holding institutions responsible for their actions as well as their incompatibility with the family. He also provides a simple mathematical analysis corresponding to and carrying further the verbal formulations of the theory. Finally, he generates research techniques that will permit quantitative testing of the theory. From a simple, unified conceptual structure Coleman derives, through elegant chains of reasoning, an encompassing theory of society. It promises to be the most important contribution to social theory since the publication of Talcott Parsons' Structure of Social Action in 1936. (shrink)

A Treatise of Human Nature, David Hume's comprehensive attempt to base philosophy on a new, observationally grounded study of human nature, is one of the most important texts in Western philosophy. It is also the focal point of current attempts to understand 18th-century western philosophy. The Treatise addresses many of the most fundamental philosophical issues: causation, existence, freedom and necessity, and morality. The volume also includes Humes own abstract of the Treatise, a substantial introduction, extensive annotations, a glossary, a comprehensive (...) index, and suggestions for further reading. (shrink)

The Cunning of Reason, Reason in Action, and now Trust within Reason—no philosopher of our time has reflected more deeply or more wisely on the theme of practical reason than Martin Hollis. With Trust within Reason we have what we must, regrettably, take as his legacy to us, and a splendid legacy it is. This is a book that deserves the attention, not only of philosophers and social scientists, but of anyone who professes to think about the implications of the (...) Enlightenment for the maintenance of social order. Hollis tells us “We cannot flourish without trust” and with this we surely must agree, following “John Locke [who] declared trust to be ‘the bond of society’”. In a “reliable social order,…people find it rational to trust one another”. Hollis’ question, and it is absolutely fundamental to debates between liberals and communitarians, or between rationalists and traditionalists, is whether reason sustains trust, and with trust social order, or whether reason undermines trust. (shrink)

Some philosophers hold that trust grows fragile when people become too rational. They advocate a retreat from reason and a return to local, traditional values. Others hold that truly rational people are both trusting and trustworthy. Everything hinges on what we mean by 'reason' and 'rational'. If these are understood in an egocentric, instrumental fashion, then they are indeed incompatible with trust. With the help of game theory, Martin Hollis argues against that narrow definition and in favour of a richer, (...) deeper notion of reason founded on reciprocity and the pursuit of the common good. Within that framework he reconstructs the Enlightenment idea of citizens of the world, rationally encountering, and at the same time finding their identity in, their multiple commitments to communities both local and universal. (shrink)