Neoclassical economics assumes that individuals have stable and context-independent preferences, and uses preference satisfaction as a normative criterion. By calling this assumption into question, behavioural findings cause fundamental problems for normative economics. A common response to these problems is to treat deviations from conventional rational choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human (...) being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic. (shrink)

Can the general public learn to deal with risk and uncertainty, or do authorities need to steer people’s choices in the right direction? Libertarian paternalists argue that results from psychological research show that our reasoning is systematically flawed and that we are hardly educable because our cognitive biases resemble stable visual illusions. For that reason, they maintain, authorities who know what is best for us need to step in and steer our behavior with the help of “nudges.” Nudges are nothing (...) new, but justifying them on the basis of a latent irrationality is. In this article, I analyze the scientific evidence presented for such a justification. It suffers from narrow logical norms, that is, a misunderstanding of the nature of rational thinking, and from a confirmation bias, that is, selective reporting of research. These two flaws focus the blame on individuals’ minds rather than on external causes, such as industries that spend billions to nudge people into unhealthy behavior. I conclude that the claim that we are hardly educable lacks evidence and forecloses the true alternative to nudging: teaching people to become risk savvy. (shrink)

First published in 1982. Routledge is an imprint of Taylor & Francis, an informa company.

With this book, Richard A. Epstein provides a spirited and systematic defense of classical liberalism against the critiques mounted against it over the past thirty years. One of the most distinguished and provocative legal scholars writing today, Epstein here explains his controversial ideas in what will quickly come to be considered one of his cornerstone works. He begins by laying out his own vision of the key principles of classical liberalism: respect for the autonomy of the individual, a strong system (...) of private property rights, the voluntary exchange of labor and possessions, and prohibitions against force or fraud. Nonetheless, he not only recognizes but insists that state coercion is crucial to safeguarding these principles of private ordering and supplying the social infrastructure on which they depend. Within this framework, Epstein then shows why limited government is much to be preferred over the modern interventionist welfare state. Many of the modern attacks on the classical liberal system seek to undermine the moral, conceptual, cognitive, and psychological foundations on which it rests. Epstein rises to this challenge by carefully rebutting each of these objections in turn. For instance, Epstein demonstrates how our inability to judge the preferences of others means we should respect their liberty of choice regarding their own lives. And he points out the flaws in behavioral economic arguments which, overlooking strong evolutionary pressures, claim that individual preferences are unstable and that people are unable to adopt rational means to achieve their own ends. Freedom, Epstein ultimately shows, depends upon a skepticism that rightly shuns making judgments about what is best for individuals, but that also avoids the relativistic trap that all judgments about our political institutions have equal worth. A brilliant defense of classical liberalism, Skepticism and Freedom will rightly be seen as an intellectual landmark. (shrink)

This paper focuses on tacit versus explicit uses of plural performance metrics as a primary methodological characteristic. This characteristic usefully distinguishes two schools of normative analysis and their approaches to normative interpretations of bounded rationality. Both schools of thought make normative claims about bounded rationality by comparing the performance of decision procedures using more than one performance metric. The consistency school makes tacit reference to performance metrics outside its primary axiomatic framework, but lexicographically promotes internal axiomatic consistency as the primary, (...) and in most cases sufficient, normative outcome with which to undertake welfare comparisons. The consistency school's axiomatization program, in both neoclassical and behavioral forms, pre-commits to welfare interpretations that follow a hierarchy of rationalities based on the stringency of restrictions that different axiomatizations impose on choice data. In contrast, the ecological rational.. (shrink)

I am grateful to the Journal of Medical Ethics for asking these critics to discuss my book, and am grateful to each of the critics themselves for raising interesting and often difficult issues for me to think about.Alan Wertheimer makes a number of good points. One of the most significant, to me, is how paternalism might function at what I will call an institutional level. In my book, I endorse paternalistic actions by the state, when the cost benefit analysis justifies (...) that. I have not supported paternalistic interventions by private individuals, though. For one thing, private individuals will make decisions without public input, and without their justification being examined by experts in the field, and for these reasons they are too likely to make mistakes as to when intervention is appropriate. For another, the interventions by random individuals haranguing us about our failure to eat our broccoli is likely to drive us crazy—unexpected interference from people with no particular authority will give us just that sense of harassment I say paternalists need to avoid.However, between the public, authorised actions of a democratic state and the private actions of individuals with no authority lies the significant area of non-state institutions. Such institutions develop regulations and standards their members are expected to act in accordance with, and these in turn can have a significant impact on private persons. Of course, there have also been legal actions, notably court decisions, that have played a role here, but much of the specific interpretation of things like consent has been determined by the medical community developing what it believes to be an appropriate ethic for itself. And we know, here, that in recent years there has been a movement away from the paternalism that was once common, and a reorientation towards respect for …. (shrink)

Continuing his exploration of the organization of complexity and the science of design, this new edition of Herbert Simon's classic work on artificial ...

As the end of the Millennium approaches, conspiracy theories are increasing in number and popularity. In this short essay, I offer an analysis of conspiracy theories inspired by Hume's discussion of miracles. My first conclusion is that whereas Hume can argue that miracles are, by definition, explanations we are not warranted in believing, there is nothing analytic that will allow us to distinguish good from bad conspiracy theories. There is no a priori method for distinguishing warranted conspiracy theories (say, those (...) explaining Watergate) from those which are unwarranted (say, theories about extraterrestrials abducting humans). Nonetheless, there is a cluster of characteristics often shared by unwarranted conspiracy theories. An analysis of the alleged explanatory virtues of unwarranted conspiracies suggests some reasons for their current popularity, while at the same time providing grounds for their rejection. Finally, I discuss how conspiracy theories embody an anachronistic world-view that places the contemporary zeitgeist in a clearer light. (shrink)

This title invites readers to discover the simple heuristics that people use to navigate the complexities and surprises of environments populated with others.

The libertarian attribute of Thaler and Sunstein’s nudge theory (Nudge: improving decisions about health, wealth, and happiness. Yale University Press, New Haven, 2008) is one of the most important features for its candidature as a new model for public policy-making. It relies on the reversibility of choices made under the influence of nudging. Since the mind is articulated into two systems, the choice taken by System 1 is always reversible because it can be overridden by the deliberative and corrective role (...) of System 2. This article does not aim to criticise the whole theory of nudge and neither to assess its practical efficacy as a policy-making tool. Rather it intends to show that there are doubts that the specific claim of reversibility is correct for a subset of nudges called “System 1 nudges” (Sunstein in The ethics of influence, Cambridge University Press, Cambridge, 2016). And that therefore, in this case, the libertarian claim seems little justified. The thrust of my argument contests the truth of the main pillar of the libertarian claim, namely the dual-process theory of mind. I will show that even the minimal version of dual reasoning, namely the Type 1 and Type 2 processes proposed by Evans and Stanovich (Perspect Psychol Sci 8(3):223–241, 2013), is weakened by psychological and neural data. (shrink)

The article aims to demonstrate that the nudge theory suffers from three main weaknesses stemming from its theoretical dependence on behavioural economics. The first two weaknesses endanger the paternalistic goal, whereas the third does not justify the libertarian attribute. The first weakness lies in the incomplete realistic characterisation of behavioural economics theory that is the central theoretical pillar of Nudge theory. The second weakness is even more relevant. The normative model of behavioural economics is neoclassical rationality. It can be applied (...) to choices in conditions of risk, when it is possible to forecast the probability of the outcomes of one’s choices. On the contrary the real life problems are inside a complex and uncertain environment. In an uncertain environment the neoclassical algorithms are no longer valid, in that they postulate the knowledge of the probability of the outputs. Thus errors and bias, as observed in behavioural economics, are not such in many instances, but they are instead adaptive and therefore rational responses to the context of decision-making. Therefore nudge theory that pursues the normative paternalistic objective of neutralising the bias and judgement errors discovered by behavioural economics and putting paternalistically the citizen on the right track, is in fact proceeding in the wrong direction. The last weakness concerns an assumption of Nudge theory about the duality of mind. System 1 represents the intuitive mind, while System 2 corresponds to the analytical one. System 1 tends to make decisions quickly and unconsciously, while System 2 follows a slow and conscious process. Biases and judgement errors are mainly generated by System 1. However, System 2 may later intervene to correct them. From this premise, the Nudge theory affirms its libertarian character. In this paper I will argue that the dualism of the mind would not entail the reversibility of some nudges, particularly of default states. In this way the fundamental pillar is weakened to justify the libertarian character of the nudge theory. (shrink)

A principal source of interest in behavioral economics has been its advertised contributions to policies aimed at ‘nudging’ people away from allegedly natural but self-defeating behavior toward patterns of response thought more likely to improve their welfare. This has occasioned controversies among economists and philosophers around the normative limits of paternalism, especially by technical policy advisors. One recent suggestion has been that ‘boosting,’ in which interventions aim to enhance people’s general cognitive skills and representational repertoires instead of manipulating their choice (...) environments behind their backs, avoids the main normative challenges. A limitation in most of this literature is that it has focused on relatively sweeping policy recommendations and consequently on strong polar alternatives of general paternalism and strict laissez faire. We review a real instance, drawn from a consulting project we conducted for an investment bank, of a proposed intervention that is more typical of the kind that economists are more often actually called upon to offer. In this example, the sophistication of current tools for preference attribution, combined with philosophical externalism about the semantics of preferences that makes it less plausible to attribute their literal self-conscious representation to people as propositional attitude content becomes more tightly refined, blocks applicability of the distinction between nudging and boosting. This seems to call for irreducible, context-specific ethical judgment in assessing the appropriateness of the forms of paternalism that economists must actually wrestle with in going about their everyday business. (shrink)