Standard game theory cannot explain the selection of payoff-dominant outcomes that are best for all players in common-interest games. Theories of team reasoning can explain why such mutualistic cooperation is rational. They propose that teams can be agents and that individuals in teams can adopt a distinctive mode of reasoning that enables them to do their part in achieving Pareto-dominant outcomes. We show that it can be rational to play payoff-dominant outcomes, given that an agent group identifies. We compare team (...) reasoning to other theories that have been proposed to explain how people can achieve payoff-dominant outcomes, especially with respect to rationality. Some authors have hoped that it would be possible to develop an argument that it is rational to group identify. We identify some large—probably insuperable—problems with this project and sketch some more promising approaches, whereby the normativity of group identification rests on morality. (shrink)

This paper reappraises the idea, traceable to Adam Smith, of a fundamental distinction between market transactions and genuinely social relationships. On Smith's account, each party to a market transaction pursues his own interests, subject only to the law of contract. Using the work of Smith's contemporary Antonio Genovesi as our starting point, we reconstruct an alternative understanding of market interactions as instances of a wider class of reciprocal relationships in civil society, characterized by joint intentions for mutual assistance. We consider (...) the implications of our arguments for current debates about whether marketed personal care services can be genuinely caring. (shrink)

For most of the problems that economists consider, the assumption that agents are self-interested works well enough, generating predictions that are broadly consistent with observation. In some significant cases, however, we find economic behavior that seems to be inconsistent with self-interest. In particular, we find that some public goods and some charitable ventures are financed by the independent voluntary contributions of many thousands of individuals. In Britain, for example, the lifeboat service is entirely financed by voluntary contributions. In all rich (...) countries, charitable appeals raise large amounts of money for famine relief in the Third World. The willingness of individuals to contribute to such projects is an economic fact that requires an explanation. (shrink)

In the literature of collective intentions, the ‘we-intentions’ that lie behind cooperative actions are analysed in terms of individual mental states. The core forms of these analyses imply that all Nash equilibrium behaviour is the result of collective intentions, even though not all Nash equilibria are cooperative actions. Unsatisfactorily, the latter cases have to be excluded either by stipulation or by the addition of further, problematic conditions. We contend that the cooperative aspect of collective intentions is not a property of (...) the intentions themselves, but of the mode of reasoning by which they are formed. We analyse collective intentions as the outcome of team reasoning, a mode of practical reasoning used by individuals as members of groups. We describe this mode of reasoning in terms of formal schemata, discuss a range of possible accounts of group agency, and show how existing theories of collective intentions fit into this framework. (shrink)

This note comments on Bruni and Sugden's interesting notion of fraternity among contract partners as joint commitment to cooperate for mutual benefit. I raise two points on their paper, both concerning the role of sacrifice. First I maintain that, differently from other social preferences, guilt aversion does not imply self-sacrifice. Secondly, I argue that aiming for mutual benefit does not prevent individuals from facing trade-offs between their own and their partners’ surplus, so the notion of sacrifice cannot be entirely eschewed. (...) To the contrary, reciprocal ‘sacrifices’ enhance cooperative intentions and help create feelings of friendliness. (shrink)

This paper responds to Gui and Nelson's separate comments on our paper ‘Fraternity’, which analysed sociality in markets as joint commitment to mutual assistance. We argue that our analysis is fundamentally different both from Nelson's analysis and from that provided by theories of warm glow or guilt aversion, as discussed by Gui. We agree with Gui that, in initiating and maintaining cooperative relationships, individuals sometimes incur personal costs to benefit others without any certainty of reciprocation, but we argue that the (...) intentions underlying such actions are cooperative rather than self-sacrificing. (shrink)

When modern economists use the notions of sympathy or empathy, they often claim that their ideas have their roots in Adam Smith's Theory of Moral Sentiments, while sometimes complaining that Smith fails to distinguish clearly enough between the two concepts. Recently, Philippe Fontaine has described various forms of sympathy and empathy, and has explored their respective roles in Smith's work. My objective in this paper is to argue that Smith's analysis of how people's sentiments impinge on one another involves a (...) concept of fellow-feeling that is distinct from both sympathy and empathy. Unlike sympathy and empathy, fellow-feeling does not fit into the ontological framework of rational choice theory – which may explain why it tends to be overlooked by modern readers of Smith. (shrink)

The concept of preference dominates economic theory today. It performs a triple duty for economists, grounding their theories of individual behavior, welfare, and rationality. Microeconomic theory assumes that individuals act so as to maximize their utility – that is, to maximize the degree to which their preferences are satisfied. Welfare economics defines individual welfare in terms of preference satisfaction or utility, and social welfare as a function of individual preferences. Finally, economists assume that the rational act is the act that (...) maximally satisfies an individual's preferences. The habit of framing problems in terms of the concept of preference is now so entrenched that economists rarely entertain alternatives. (shrink)

This paper proposes a concept of intentional cooperation for mutual benefit. This concept uses a form of team reasoning in which team members aim to achieve common interests, rather than maximising a common utility function, and in which team reasoners can coordinate their behaviour by following pre-existing practices. I argue that a market transaction can express intentions for mutually beneficial cooperation even if, extensionally, participation in the transaction promotes each party’s self-interest.

This article analyses the Fair Trade sector as a “mixed-form market,” i.e., a market in which different types of players (in this case, nonprofit, co-operative and for-profit organizations) coexist and compete. The purposes of this article are (1) to understand the factors that have led Fair Trade to become a mixed-form market and (2) to propose some trails to understand the market dynamics that result from the interactions between the different types of players. We start by defining briefly Fair Trade, (...) its different dimensions (including the “fair” quality of the products) and its organizational landscape, focusing on the distinction between the pioneer “Alternative Trading Organizations” and the second-mover companies. Then, we recall the theoretical emergence factors for each type of organization (nonprofit, co-operative and for-profit) and apply these emergence factors to the context of Fair Trade. This analysis allows us to capture the specificities of each type of operator with regard to Fair Trade and, thus, to have a better understanding of the dynamics in the sector. Such dynamics includes competition, but also conflict and partnership. Our analysis includes elements on ethical imitation, consumers’ behaviors, effects on welfare and the role of the government. (shrink)

We-thinking theories allow groups to deliberate as agents. They have been introduced into the economic domain for both theoretical and empirical reasons. Among the few scholars who have proposed formal approaches to illustrate how we-thinking arises, Bacharach offers one of the most developed theories from the game theoretic point of view. He presents a number of intuitions, not always mutually consistent and not fully developed. In this article, I propose a way to complete Bacharach’s theory, generalizing the interdependence hypothesis and (...) building on his intuition about vacillation. It is a simple model of vacillation between the I and we-modes of reasoning, as a way in which we-thinking can come to mind in the face of a decision problem. The vacillation model makes we-reasoning more easily usable in game theory. (shrink)

Current corporate systems risk generating inequality among workers, insofar as they concentrate only on economic results by favoring, through the incentive and award system, only what can be seen, produced, and measured. As such, these systems are unable to recognize workers’ agapic behaviors – similar to the ones considered in organizational citizenship behavior literature – that cannot be quantified, i.e. workers’ generosity, humanity, kindness, compassion, help for others and mercy. Although these types of behaviors may appear unproductive or irrational, they (...) create symbols of belonging to the company and social cohesion. This article claims that beyond focusing on reward systems, companies should recognize agapic behaviors to increase workers’ intrinsic motivation. These behavioral attitudes allow fraternal relationships -as conceived in the Civil Economy tradition- to arise within organizations; moreover, they contribute to advancing new managerial practical implications in the humanistic management field. (shrink)

An article by Luigino Bruni and Robert Sugden published in this journal argues that market relations contain elements of what they call ‘fraternity’. This Response demonstrates that my own views on interpersonal relations and markets – which originated in the feminist analysis of caring labour – are far closer to Bruni and Sugden's than they acknowledge in their article, and goes on to discuss additional important dimensions of sociality that they neglect.

We analyse the development of Fair Trade in Italy by examining its principles, structure, performance, dilemmas and potential solutions and identifying its main distinctive features. These lead us to develop a specifically Italian model. Fair Trade in Italy is younger than its more established North European counterparts and more focussed on broad social justice issues in addition to its concern to include marginalized producers. This normative difference has given rise to a social-economy-dominated value chain, although it has generated much lower (...) per capita consumption of Fair Trade products. At the same time, we also observe a relatively higher specialization in handicraft products and educational activities as well as a strong capacity to attract voluntary labour and create social capital. We identify clear trade-offs between social goals and the economic performance of the Italian model: reduced economies of scale, a closer focus on non-economic-value-creating social activities and greater consideration of values such as consumption sobriety and environmental concerns which may conflict with economic performance. We propose solutions which may resolve these dilemmas without abandoning the initial ambition not only to achieve the promotion of market access for marginalized producers in the South, but also to pursue a broader concept of well-being in the North and the South. (shrink)

For most of the problems that economists consider, the assumption that agents are self-interested works well enough, generating predictions that are broadly consistent with observation. In some significant cases, however, we find economic behavior that seems to be inconsistent with self-interest. In particular, we find that some public goods and some charitable ventures are financed by the independent voluntary contributions of many thousands of individuals. In Britain, for example, the lifeboat service is entirely financed by voluntary contributions. In all rich (...) countries, charitable appeals raise large amounts of money for famine relief in the Third World. The willingness of individuals to contribute to such projects is an economic fact that requires an explanation. (shrink)

Although Fair Trade has been in existence for more than 40 years, discussion in the business and business ethics literature of this unique trading and campaigning movement between Southern producers and Northern buyers and consumers has been limited. This paper seeks to redress this deficit by providing a description of the characteristics of Fair Trade, including definitional issues, market size and segmentation and the key organizations. It discusses Fair Trade from Southern producer and Northern trader and consumer perspectives and highlights (...) the key issues that currently face the Fair Trade movement. It then identifies an initial research agenda to be followed up in subsequent papers. (shrink)

The Civil Economy approach, as developed by Italian economists Luigino Bruni and Stefano Zamagni, aims at introducing reciprocity into the economy as a humanizing factor. Despite being presented as an innovative perspective, the CE approach shares many characteristics with the German model of Social Market Economy. The present paper compares both approaches, showing that they in fact share a normative basis and similar aims but address them from diverse points of view; namely, CE addresses them from a virtue ethics perspective (...) and SME from an institutional ethics one. This leads them to stress different aspects and to focus on diverse problems. Therefore, CE would not constitute an alternative to SME but a complement. Thus, a combination of both approaches should allow each to take advantage of their respective strengths and lead to a better result in terms of the common good. (shrink)

When my family discusses how we should spend a summer holiday, we start from certain common understandings about our preferences. We prefer self-catering accommodation to hotels, and hotels to campsites. We prefer walking and looking at scenery and wildlife to big-city sightseeing and shopping. When it comes to walks, we prefer walks of six miles or so to ones which are much shorter or much longer, and prefer well-marked but uncrowded paths to ones which are either more rugged or more (...) popular. And so on. These common understandings greatly simplify the task of choosing between holiday destinations and activities, by allowing us quickly to eliminate many options. But what does it mean to say that we prefer one thing to another? (shrink)

Fair Trade has changed considerably since its early days. In this article, we argue that these changes have led to a depersonalization of ethics, thus raising serious questions about the future of Fair Trade. In particular, the depersonalization of ethics which is seen to accompany the current changes has led to greater variety in the interpretations of Fair Trade. Hiding these divergences behind the labels is increasing the risk that the movement will lose its credibility.

Over the past 10 years the sales of Fair Trade goods - particularly those carrying the Fair Trade Labelling Organizations International (FLO) certification mark - have grown exponentially. Academic interest in Fair Trade has also grown significantly over the past decade with researchers analysing the model from a wide range of theoretical perspectives. Whilst Fair Trade is generally acknowledged as a new supply chain model, it has tended to be studied at the micro/organisational level rather than at the macro/systems level. (...) As a consequence, its wider impact as institutional innovation at the field level appears to have been under-theorised so far. In order to address this research gap, this article uses a neo-institutionalist perspective to analyse Fair Trade not simply as a new exchange model working within existing organisational and economic structures, but rather as an agent of institutional entrepreneurship at, and beyond, the field level. From this latter perspective, Fair Trade brings a new set of transformational meanings to extant exchange and consumption models and reforms fields of economic exchange by disrupting and then re-assembling key institutional elements around modern consumption to roll back commodity fetishism and reconnect consumers and producers. The type of institutional change driven by Fair Trade can be seen as a form of social entrepreneurship. (shrink)

:In this essay I defend an alternative account of why markets are legitimate. I argue that markets have a raison d’être—a potential to be valuable that, if fulfilled, would justify their existence. I characterize this potential in terms of the goods that are promoted by the legal protection of economic agency: resource discretion, contribution esteem, wealth, diffusion of power, and freedom of association. I argue that market institutions deliver these goods without requiring the participants to have shared ends, or shared (...) deliberation about joint ends—indeed, this feature is the source of the market’s distinctive contribution to well-being. I suggest that when markets lack legitimacy, this is because they fail to fulfill their raison d’être, or fail to be recognized as doing so. Thus, the contours of legal protection must be drawn so that these goods are realized together in a recognizable way, without sacrificing one good for the sake of others. Finally, I argue that this account is appealing because it allows regulators to consider a plurality of goods, and because it makes room for the essential role of rhetoric in securing market legitimacy. (shrink)

Abstract Orthodox decision theory presupposes that agency is invested in individuals. An opposing literature allows team agency to be invested in teams whose members use distinctive modes of team reasoning. This paper offers a new conceptual framework, inspired by David Lewis's analysis of common reasons for belief, within which team reasoning can be represented. It shows how individuals can independently endorse a principle of team reasoning which prescribes acting as a team member conditional on assurance that others have endorsed the (...) same principle. It argues that there can be such assurance even when no individual has an obligation to act on team reasoning. *This paper originated in a lecture that I gave at a Colloquium on Collective Intentions at Erasmus University Rotterdam. I thank participants, and particularly Govert den Hartogh, for comments. The analysis presented in this paper is an offshoot of a larger project, which uses David Lewis's work as the starting point for a reconstruction of the foundations of game theory. That project is joint work with Robin Cubitt. The specific idea of using this approach to analyse team reasoning grew out of a discussion with Michael Bratman. My work was supported by the Leverhulme Trust. (shrink)

It is a truism that a market economy cannot function without trust. We must be able to rely on other people to respect our property rights, and on our trading partners to keep their promises. The theory of economics is incomplete unless it can explain why economic agents often trust one another, and why that trust is often repaid. There is a long history of work in economics and philosophy which tries to explain the kinds of reasoning that people use (...) when they engage in practices of trust: this work develops theoriesoftrust. A related tradition in economics, sociology and political science investigates the kinds of social institution that reproduce whatever habits, dispositions or modes of reasoning are involved in acts of trust: this work develops theoriesofsocialcapital. A recurring question in these literatures is whether a society which organizes its economic life through markets is capable of reproducing the trust on which those markets depend. In this paper, we look at these themes in relation to the writings of three eighteenth-century philosopher-economists: David Hume, Adam Smith, and Antonio Genovesi. (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)