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There is growing public concern about the ‘unfairness’ of many pricing practices that have become common in consumer, particularly digital, markets. Industrial and behavioural economists have developed theories that explain the conditions under which these practices are profitable for firms, and their implications for consumer welfare. We identify a mismatch between the welfare economic principles used in this theoretical work and the normative perspective in which these practices are viewed as unfair. We develop a concept of ‘transactional fairness’, grounded in the normative approach of Sugden's Community of Advantage, that is reflective of public concerns. Transactional fairness is complementary to established criteria of economic efficiency and distributional equity but is based entirely on the relationship between individual buyers and sellers. It establishes clear principles with realistic information requirements that are appropriate for compliance by firms. Regulation based on this approach can help to restore public faith in markets.
We present an abstract model of rationality that focuses on structural properties of attitudes. Rationality requires coherence between your attitudes, such as your beliefs, values and intentions. We define three ‘logical’ conditions on attitudes: consistency, completeness and closedness. They parallel the familiar logical conditions on beliefs, but contrast with standard rationality conditions such as preference transitivity. We establish a formal correspondence between our logical conditions and standard rationality conditions. Addressing John Broome’s programme ‘rationality through reasoning’, we formally characterize how you can (not) become more logical by reasoning. Our analysis connects rationality with logic, and enables logical talk about multi-attitude psychology.
Behavioural economists often claim that their policy recommendations are justified by cost–benefit analysis (CBA), but without adequate explanation of the methodology they have in mind. I sketch the outlines of a CBA methodology that is compatible with the findings of behavioural economics and is in accord with my account in Sugden (2018) of a well-functioning market as a network of opportunities for mutually beneficial transactions. The key idea is that the CBA of a project is concerned only with effects that are not transmitted through voluntary interactions. I illustrate this proposal by considering the appraisal of fuel economy mandates.
This is an appreciation of the life and work of Michael Jones-Lee. It describes his pioneering role in establishing and developing the theory and practice of the elicitation of monetary values for changes in risks to life, health and safety, using stated preference methods.
Self-control failure occurs when an individual experiences a conflict between immediate desires and longer-term goals, recognises psychological forces that hinder goal-directed action, tries to resist them but fails in the attempt. Behavioural economists often invoke assumptions about self-control failure to justify proposals for policy interventions. These arguments require workable methods for eliciting individuals’ goals and for verifying occurrences of self-control failure, but developing such methods confronts two problems. First, it is not clear that individuals’ goals are context-independent. Second, facing an actual conflict between a desire and a self-acknowledged goal, a person may consciously choose not to resist the desire, thinking that spontaneity is more important than self-control. We address these issues through an online survey that elicited individuals’ self-reported judgements about the relative importance of self-control and spontaneity in conflicts between enjoyment and health-related goals. To test for context-sensitivity, the judgement-elicitation questions were preceded by a memory recall task which directed participants’ attention either to the enjoyment of acting on desires or to the satisfaction of achieving goals. We found little evidence of context-sensitivity. In both treatments, however, judgements that favoured spontaneity were expressed with roughly the same frequency and strength as judgments that favoured self-control.
I comment on Sunstein's paper proposing ‘Hayekian behavioural economics’. In essence, Sunstein is merely renaming a familiar approach to normative economics, initiated in Sunstein and Thaler's seminal 2003 paper. I argue that this approach cannot fairly be described as in the spirit of Hayek's work. Sunstein's approach is based on a ‘constructivist’ conception of rationality that Hayek consistently criticized. Although both Hayek and Sunstein address ‘knowledge problems’, the two problems are fundamentally different. I develop what I claim are truly Hayekian critiques of Sunstein's claim that fuel economy mandates can be more Hayekian than carbon taxes.
Glacial landforms and drift stratigraphy in central Magellan Strait, southernmost Chile, document repeated fluctuations during the last glacial cycle of outlet lobes from an ice cap centered over the southern Andes. The lobes developed comparatively low-gradient profiles because of low basal shear stresses over soft deformable beds and this made them sensitive to even small-scale changes in the mass balance. Such low profiles and rapid calving in deep proglacial lakes during deglaciation may have made the Magellan ice lobe particularly responsive to climatic fluctuations during the last glacial cycle, and to advance and retreat over considerable distances. Study of the glacial landforms and drift stratigraphy has led to the identification of at least five glacier advances to limits at and south of the Segunda Angostura. Fragments of mollusc shells contained in basal till indicate marine incursions between some advances, thus documenting extensive deglaciation. A partial chronology based on amino acid studies and radiocarbon dating suggests that five of these advances occurred during the last glacial cycle. The most extensive advances may have culminated during substages of marine isotope stage 5 (substage 5b or 5d) and/or during stage 4. Slightly less extensive advances occurred between ca. 28,000 and 14,000 yr B.P.
In 1975, Gauthier discussed Schelling’s pure coordination games and Hodgson’s Hi-Lo game. While developing an original analysis of how rational players coordinate on ‘focal points,’ Gauthier argued, contrary to Schelling and Hodgson, that successful coordination in these games does not depend on deviations from conventional principles of individually rational choice. I argue that Gauthier’s analysis of constrained maximization in Morals by Agreement, which famously deviates from conventional game theory, has significant similarities with Schelling’s and Hodgson’s analyses of coordination. Constrained maximization can be thought of as a pragmatic and contractarian variant of the team-reasoning approach pioneered by Hodgson.
This paper replies to Christian Schubert's critical review of my work on opportunity as a normative criterion. Schubert argues that the criterion I have proposed would not command general assent because it does not recognize the legitimacy of individuals’ preferences for achieving self-development by constraining their future opportunities. I argue that my account of the ‘responsible agent’ is compatible with self-development, and that preferences for self-constraint are less common than Schubert suggests. For the purposes of normative economics, my opportunity criterion is much more generally applicable than Schubert's criterion of ‘opportunity to learn’.
This note comments on Hindriks and Guala's ‘unified theory of institutions’. One of the components that Hindriks and Guala seek to unify, and which they claim is unsatisfactory on its own, is the analysis of conventions that derives from the work of Lewis. I argue that the Lewisian approach provides simple and powerful explanations of many regularities in the social behaviour of humans and other animals. Those explanations can be seen as good social science even if, as Hindriks and Guala argue, they do not fit with common-sense ontology.
We present a new class of models of players’ reasoning in non-cooperative games, inspired by David Lewis's account of common knowledge. We argue that the models in this class formalize common knowledge of rationality in a way that is distinctive, in virtue of modelling steps of reasoning; and attractive, in virtue of being able to represent coherently common knowledge of any consistent standard of individual decision-theoretic rationality. We contrast our approach with that of Robert Aumann (1987), arguing that the former avoids and diagnoses certain paradoxes to which the latter may give rise when extended in particular ways.
As a writing partnership, Christian List and Philip Pettit are probably best known for a paper in Economics and Philosophy that describes and generalizes the ‘discursive dilemma’ (List and Pettit 2002). That paper is one of the main points of reference for what is now a large literature on the aggregation of judgements – a literature to which List and Pettit have continued to contribute, individually and jointly. Their new book Group Agency reviews and synthesizes that body of work, and proposes an analysis of group agency in which the aggregation of judgements plays a central role.
The discovery of the altruistic punishment mechanism as a replicable experimental result is a genuine achievement of behavioural economics. The hypothesis that cooperation in hunter-gatherer societies is sustained by altruistic punishment is a scientifically legitimate conjecture, but it must be tested against real-world observations. Guala's doubts about the evidential support for this hypothesis are well founded.
This paper argues that measurements of opportunity which focus on the contents of a person's opportunity set fail to capture open-ended aspects of opportunity that liberals should value. I propose an alternative conception of ‘opportunity as mutual advantage’ which does not require the explicit specification of opportunity sets, and which rests on an understanding of persons as responsible rather than rational agents. I suggest that issues of distributive fairness are best framed in terms of real income, and that meaningful measurements of real income are possible if opportunity as mutual advantage is ensured.
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 (a mixture of self-interested and intrinsic motivations) 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.