Review of Economic Philosophy

Tag: Experimental economics

  • Economic philosophy and complexity

    Abstract

    Economic philosophy explores the conditions and limits of economic theory, the development of which implies an accelerated increase in complexity (which is the very definition of ’complexity’). Its first manifestations were the second theorem on general equilibrium, and the impossibility theorems on collective choice, as well as the public goods dilemma. For sure, it is possible to use certain factors of complexity, such as random mutations, to define, for example, evolutionary equilibria, but these factors are also a source of instability. Experimental economics had brought to light the dependence of our choices on our previous evolutions and references and expectations, which is another source of complexity. A rational exploration of these dependencies itself brings into play the complexity of their processes and involves continual revisions. It seems inevitable, since one cannot reduce the complexities which are inherent in these readjustments- which involve a generalized and multi-levels Bayesianism, -to admit that these revisions have only a limited scope (“minimizing free energy”). We can reinterpret in this way the experiences on temporal inconsistencies in our choices, once taken into account the application of this minimization to the very processes of evaluation of the situations of choice. Other limitations could be defined by combining neurological, psychological and economic constraints. Here again, such a combination is also a source of complexity. But in another way, developing these complex relationships can help overcome the circularities of inverse inference (from neurological to experimental economics and vice-versa). Finally, computational simulations reveal to us that evolutions which one believed to be asymptotic are capable of more remote divergences. Complicating computational models can limit their generality. Conversely, simplifying them is only useful if it also reveals which simplifications make us miss which complexity of economic interactions. The exploration of these relationships between this accelerated growth of complexity linked not only to these interactions but to the very enterprise of rationalizing them is first of all the task of economics in its various fields, but the philosophy of economy can have a role in elucidating the relationships between these different sources of complexity and their most reasonable modalities of limitations.

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    [Read the review in Cairn]

  • Reconciling the Formal and the Causal: The Role of the Neuroeconomy

    Abstract

    Rational choice theory (RCT) is standardly interpreted not as a causal theory, but as a normative one. Experimental economics, by replacing underlying assumptions of the standard interpretation of RCT by more realistic ones – by including pro-social preferences to the utility function, for instance – has improved the predictability of the RCT. That was not sufficient, however, to overcome another theoretical difficulty that RCT faces, which is the fact that its postulated entities are not rooted in any causal mechanism. In this paper, we show how neuroeconomics, because it is not limited to behavioral manifestations, may pave the way to the development of a natural science of decision-making.

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    JEL Classification: A12, B13, C79, D01, D87

  • Measure and Characterization of the Attention to the Other in Strategic Interactions: The Contribution of the Experimental Economy

    Abstract

    In some contexts, the actual behaviors of individuals can appear as aberrant with rational agent-based theories. Behavioral theory tries to explain these anomalies, especially with respect to social preferences. The purpose of this paper is to show how experimental economics has provided an accurate measure and further characterization of these preferences. Based on a very selective review of experiments, we show how a fruitful dialogue has been established between behavior analysis in the laboratory and in theory.

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  • Methodological Principles and Experimental Economy Practices: An Overview

    Abstract

    The paper discusses the basis of the experimental method in general, its adaptation to the study of economic phenomena, and the recent philosophical thoughts on the nature of laboratory experiments. It also inventories the main experimental procedures that characterize best practices of economists—some of them quite ingenious—by drawing a parallel with what distinguishes them from former practices established by psychologists. In particular, the issue of monetary incentives is carefully examined. The paper emphasizes the immense progress that has been accomplished in a few decades while taking into account the disagreements that still persist between some experimentalists and the ongoing existence of some important “open” questions. In this regard, the paper tries to clarify a major methodological questioning which only recently has been approached more seriously: the issue of “external validity” of experimental results (i.e., their “generalizability” to the outside world).

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