Game theory has proved a useful tool in the study of simple economic models. However, numerous foundational issues remain unresolved. The situation is particularly confusing in respect of the non-cooperative analysis of games with some dynamic structure in which the choice of one move or another during the play of the game may convey valuable information to the other players. Without pausing for breath, it is easy to name at least 10 rival equilibrium notions for which a serious case can (...) be made that here is the “right” solution concept for such games. (shrink)

This article described three heuristics that are employed in making judgements under uncertainty: representativeness, which is usually employed when people are asked to judge the probability that an object or event A belongs to class or process B; availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development; and adjustment from an anchor, which is usually employed in numerical prediction when a relevant value (...) is available. These heuristics are highly economical and usually effective, but they lead to systematic and predictable errors. A better understanding of these heuristics and of the biases to which they lead could improve judgements and decisions in situations of uncertainty. (shrink)

This article critically discusses the concept of economic rationality, arguing that it is too narrow and specific to encompass the full concept of practical rationality. Economic rationality is identified here with the use of the optimizing model of decision, as well as of expected utility apparatus to deal with uncertainty. To argue that practical rationality is broader than economic rationality, the article claims that practical rationality includes bounded rationality as a particular case, and that bounded rationality cannot be reduced to (...) economic rationality as defined here. (shrink)

The paper revisits the rationality principle from the particular perspective of the unity of social sciences. It has been argued that the principle was the unique law of the social sciences and that accordingly there are no deep differences between them (Popper). It has also been argued that the rationality principle was specific to economics as opposed to the other social sciences, especially sociology (Pareto). The paper rejects these opposite views on the grounds that the rationality principle is strictly metaphysical (...) and does not have the logical force required to deliver interesting deductions. Explanation in the social sciences takes place at a level of specialization that is always higher than that of the principle itself. However, what is peculiar about economics is that it specializes the explanatory rational schemes to a degree unparalleled in history and sociology. As a consequence, there is a backward-and-forward move between specific and general formulations of rationality that takes place in economics and has no analogue in the other social sciences. (shrink)

Searle’s tool for understanding culture, law and society is the opposition between brute reality and institutional reality, or in other words between: observer-independent features of the world, such as force, mass and gravitational attraction, and observer-relative features of the world, such as money, property, marriage and government. The question posed here is: under which of these two headings do moral concepts fall? This is an important question because there are moral facts – for example pertaining to guilt and responsibility – (...) which hover uncomfortably close to the boundary between the observer-relative and the observer-independent. By means of a thought experiment involving an imagined Chinese society in which guilt is determined by the random throwing of sticks, I seek to show that moral concepts threaten the foundations of Searle’s philosophy of social reality. (shrink)

Résumé L’influence des discours théoriques sur leur objet d’étude est une particularité propre aux sciences sociales : le simple fait de formuler un discours sur le monde social entraîne des changements au sein de ce dernier. En économie, ce phénomène a fait l’objet de traitements variés. Récemment, une frange de la sociologie économique a pris le parti d’étudier le monde économique comme encastré dans la science qui l’étudie. Auparavant, certains grands noms la discipline économique s’étaient déjà penchés sur le sujet. (...) Ce travail a pour objectif d’éclaircir ces deux cheminements de pensée ayant le même objet, d’en identifier les principales différences et d’expliquer ces dernières par des problématiques de départ distinctes. Nous identifierons, dans la lignée de ce qui a pu être fait en économie des conventions, une approche stratégique de l’influence des discours théoriques (celle des économistes), et une approche interprétative (celle des sociologues). (shrink)

To explain the phenomena in the world of our experience, to answer the question “why?” rather than only the question “what?”, is one of the foremost objectives of all rational inquiry; and especially, scientific research in its various branches strives to go beyond a mere description of its subject matter by providing an explanation of the phenomena it investigates. While there is rather general agreement about this chief objective of science, there exists considerable difference of opinion as to the function (...) and the essential characteristics of scientific explanation. In the present essay, an attempt will be made to shed some light on these issues by means of an elementary survey of the basic pattern of scientific explanation and a subsequent more rigorous analysis of the concept of law and of the logical structure of explanatory arguments. (shrink)

The classic logical positivist account of historical explanation, putting forward what is variously called the "regularity interpretation" (#Gardiner, The Nature of Historical Explanation), the "covering law model" (#Dray, Laws and Explanation in History), or the "deductive model" (Michael #Scriven, "Truisms as Grounds for Historical Explanations"). See also #Danto, Narration and Knowledge, for further criticisms of the model. Hempel formalizes historical explanation as involving (a) statements of determining (initial and boundary) conditions for the event to be explained, and (b) statements of (...) general laws that imply that whenever events of the kind described in (a) occur, an event of the kind to be explained will take place. He admits that in practice historians rarely explain historical events in this way, but instead give only fragmentary "explanation sketches." Such sketches can, however, be "scientifically acceptable," providing it points to where "more specific statements" are to be found (351). An interesting aspect of the article is its "late" positivist, proto‑Kuhnian assertion that "the separation of 'pure description' and 'hypothetical generalization and theory construction' in empirical science is unwarranted" (356). But Hempel does not work out the wider implications of this important conclusion. It is also worth noting that he himself was not much interested in the philosophy of history; other authors took up his model and discussed it within that context. Usefully discussed by #Ricoeur, Time and Narrative, 1:112‑17. (shrink)

The classical theory of rational choice is built on several important internal consistency conditions. In recent years, the reasonableness of those internal consistency conditions has been questioned and criticized, and several responses to accommodate such criticisms have been proposed in the literature. This paper develops a general framework to accommodate the issues raised by the criticisms of classical rational choice theory, and examines the broad impact of these criticisms from both normative and positive points of view.

Many methodologists are firmly convinced that Popper's arguments concerning the status of the rationality principle (RP) are incoherent or incompatible with the essentials of falsificationism. The present essay first shows that the accusation of incompatibility of situational logic with falsificationism does not hold up to scrutiny but then shows that Popper's arguments are nonetheless flimsy if not indefensible. For it seems that one can distinguish between two different versions of the RP in Popper's writings. If the first version is plainly (...) "objectivist" and can be characterized with Popper as empirically false, the second one is rather "subjectivist" and is not falsifiable as such. The essay shows that this second reading of the RP is the one that Popper finally adopts but that, unfortunately enough, this formulation of the RP looks more like a metaphysical statement than like an empirical law. It could then be held to be a priori valid as such, by analogy with Popper's line of argument concerning the principle of causality. If this is correct, then Popper's thesis on the empirical status of the RP is confuted. (shrink)

This is the second part of a two-part paper. It can be read independently of the first part provided that the reader is prepared to go along with the unorthodox views on game theory which were advanced in Part I and are summarized below. The body of the paper is an attempt to study some of the positive implications of such a viewpoint. This requires an exploration of what is involved in modeling “rational players” as computing machines.

Economical questions indisputably occupy a central place in everyday life. In order to clarify these questions, people generally turn to those who are familiar with economics. In answering such legitimate questions, economists propose explanations which rest on a few principles among which the rationality principle is by far the most fundamental. This principle assumes that people are rational, but what is meant by this has to be specified. Rationality and Explanation in Economicsclaims that only a minimal kind of rationality is (...) required to ‘animate’ economic explanations. However, such a conception of rationality faces serious objections: it is closely associated with harshly criticised methodological individualism and it is not easily disentangled from sheer irrationality. The book answers these objections and shows that the economists’ way of mobilising the concepts of maximization or of consistency for defining rationality raises more serious problems. Since the latter have encouraged various attempts to downgrade or even to dispense with the very notion of rationality, the book is largely devoted to countering arguments associated with these attempts and to show why postulating that agents are rational is still the only efficient way to explain economic phenomena as such. The author also proposes original views about the role of rationality, the meaning of methodological individualism, the relevance of the selection argument and the relation between ‘rational’ explanations of economics and explanations in natural sciences. (shrink)