Comments on: Deconstructing Bob and Jeff

By: michael webster

michael webster — Sun, 09 Dec 2007 20:55:49 +0000

I think that a more correct thesis is that in game theory the study of the non-cooperative solution has been unfortunate. Methodological individualisms does have its limits.

Cooridinated game theory has a wealth of insights which have been overlooked by the theoretical insistence on “self-enforcing” solutions.

If the nash solution, and its variants, are self-enforcing in an serious manner, I will eat my hat.

By: Gavin Kennedy

Gavin Kennedy — Sat, 24 Nov 2007 19:40:32 +0000

If people are misled that economists assert ‘relentless self interest’ (in its extreme the ‘greed is good’ perversion) we have George Stigler to thank (Wealth Of Nations ‘is a stupendous palace erected upon the granite of self-interest’).

It is a misreading of that famous passage about the ‘butcher, the baker, and the brewer’ (WN I.ii.9: p 27). Smith specifically enjoins you to address yourself ‘not to our own necesities, but of their advantages’.

In bargaining that is what we must do: address the other party’s self-interest, not our own. If we both relentlessly address own interests, we would never agree to a deal. We must mediate our self interest by taking account of the other party’s self interests.

By: Paolo Mariti

Paolo Mariti — Fri, 23 Nov 2007 17:10:05 +0000

Self-interest is but an assumption economists make to draw conclusions about human behavior. As such, it does not imply that people are all and/or always selfish. One may not even know what his own interest is in given circumstances. It may require much self-knowledge and information. Nor, as such, is it stating that people are someway impeded to care for others. And game theory convincingly tells us that self-interest is not necessarily conducive to the best outcomes.

Yet there is some truth in what Graeme Pietersz says: It is [also] “… an ideology that genuinely exists, and it does affect people’s values”. Is economics responsible for that? Are economists?Some probably are.
French Blaise Pascal wrote that man is somewhere in between an angel and an animal. Animals are typically self-interested. To study human behavior under the assumption of self-interest is certainly not a complete theory of human behavior but it is more than a starting point.

By: Karl Wennberg

Karl Wennberg — Fri, 23 Nov 2007 02:03:58 +0000

Well, actually there are a number of such studies, one of them a longitudinal one showing that student _become_ more reliant on “pursuing self-interest” by undertaking an economics degree (which I happily did). I think these are cited in Ferrarro et al., article. I would suspect one could dig up a number of objections, such as self-selection of selfishly inclined students or alternative explanations of psychological or sociological nature - such as regression towards the group mean - , or socialization in a group with cohesive norms. The questions remains: what is the value which these studies?

In interesting application of these arguments would be to the peer review process: I have limited experience reviewing at econ journals, but my friendly tell me stories of 10-months waiting times and reviewers being more insulting than professional. I would be fun to hear the opinion of someone with lots of experience from both econ and management journals…

By: dhoopes

dhoopes — Wed, 21 Nov 2007 18:09:00 +0000

I recall seeing an article discussing the results you mention. I doubt it is so conclusive. I certainly don’t find economists as a race any more selfish than any other academics.

By: Graeme Pietersz

Graeme Pietersz — Wed, 21 Nov 2007 07:39:54 +0000

It is not what Adam Smith said, and it may not be what all economists say, but it is an ideology that genuinely exists, and it does affect people’s values.

The strongest evidence for the idea that economics contributes to this are the various studies showing that economics graduates are more selfish in their behaviour.

What ever Adam Smith said, there is an implicit assumption that is often made by economists that “rational” means “pursues self-interest”.

By: Steve Phelan

Steve Phelan — Wed, 21 Nov 2007 03:21:08 +0000

Nice post, David. I, for one, would be interested in hearing your ‘darker image of humanity’ thesis.