Macroeconomic events often require individuals and policy-makers to make decisions that they are not accustomed to making. For example, a sovereign debt crisis makes it necessary to either default on government debt, increase taxes, cut public spending or to impose a mixture of these measures. I argue that decisions on such matters are not derived from deep preferences; they require reflections and judgement under uncertainty. Past experiences and the interaction with other individuals are likely to influence the salience of (...) preferences in the situations of decision making. Using a simple model, I illustrate how the salience of preferences changes with different degrees of individuality and conformity. Individuality is associated with the importance of private habits, while conformity is related to the perceived dissonance between initial intuitions and social opinions. The results obtained from simple simulation exercises stress that a high degree of conformity or a low degree of individuality may lead to overreactions when social opinion makers err for a short period of time. At the same time, a low degree of conformity or a high degree of individuality or leads to delayed adjustments to new circumstances. (shrink)

It is easy to think of attention as a purely sensorimotor, exogenous mechanism divorced from the influence of an agent’s preferences and needs. However, according to the active inference framework, such a strict reduction cannot be straightforwardly invoked, since _all_ cognitive and behavioural processes can at least be described as maximising the evidence for a generative model entailed by the ongoing existence of that agent; that is, the minimisation of variational free energy. As such, active inference models could cast (...) an (embodied) cognitive mechanism like attention, described in this paper as a relevance filter, as constrained (or enslaved) by these prior preferences for which an agent must seek evidence, whether or not such priors are having direct, real-time neurocognitive effects on the sensorimotor loops that couple the attending agent and her surrounding environment. This duality with respect to the role of priors corresponds to a wider, ongoing debate in the active inference community regarding the framework’s explanatory power. More specifically, the debate centres on whether the notion of a generative model and the priors embedded ubiqitously therein act as a purely useful instrumental tool for scientists aiming to model the behaviours of self-organising entities, or, rather, the brain (and body) is genuinely constituted by a predictive hierarchy within which higher-order dynamics constrain and contextualise activity unfolding at lower levels. With a focus on the second (ontologically realist) construal of active inference presented here, this paper argues that in cognitive systems endowed with attentional schema, higher-order preferences do, indeed, impose a demonstrable and powerful modulating effect on the way attention unfolds. Furthermore, these preferences in question transcend the contingent, task-relevant goals that have already been shown to bias attention. Rather, attention is powerfully tuned by the most-deep rooted priors the agent possesses, such that, when sensory evidence against these priors is observed and free energy spikes, the agent attentionally prioritises the homeostatic restoration of these preferred states over their shorter-term desires. This suggests that, at its core, attention is a goal-driven process, which calls into question the putative dichotomy that exists between endogenous (goal-directed) attention and exogenous (stimulus-driven) attention. What emerges in its place is a symbiotic relationship between attention and preferences, whereby the fulfilment of the latter rests on successful application of the former, and the former derives its function from the organismic need to find evidence for the latter. (shrink)

We present evidence against the standard assumptions that social preferences are stable and can be measured in a reliable, nonintrusive manner. We find evidence that measures of social preferences can affect subsequent behavior. Researchers often measure social preferences by posing dictator type allocation decisions. The social value orientation (SVO) is a particular sequence of dictator decisions. We vary the order in which the SVO and a larger stakes dictator game are presented. We also vary the form of (...) the dictator game. In one study, we employ the standard dictator game, and in the other, we employ a nonstandard dictator game. With the standard dictator game, we find that prosocial subjects act even more prosocially when the SVO is administered first, whereas selfish subjects are unaffected by the order. With the nonstandard dictator game, we find evidence across all subjects that those who first receive the SVO are more generous in the dictator game but we do not find the effect among only the generous subjects. Across both dictator game forms, we find evidence that the subjects who are first given the SVO were more generous than subjects who are given the SVO last. We also find that this effect is stronger among the subjects with a perfectly consistent SVO measure. Although we cannot determine whether the order affects preferences or the measure of preferences, our results are incompatible with the assumptions that social preferences are stable and can be measured in a reliable, nonintrusive manner. (shrink)

Does the desirability of social institutions for public goods provision depend on the extent to which they include mechanisms for endogenous enforcement of cooperative behavior? We consider alternative institutions that vary the use of direct punishments to promote social cooperation. In one institution, subjects participate in a public goods experiment in which an initial stage of voluntary contribution is followed by a second stage of voluntary, costly sanctioning. Another institution consists of the voluntary contribution stage only, with no subsequent (...) opportunity to sanction. In a third stage subjects vote for which institution they prefer for future interactions: do they prefer one that does allow sanctions or one that does not allow sanctions? Our results show that even though sanctions are frequently used when available, the clear majority of individuals vote for the institution that does not allow sanctions. Thus, a distinction is required between the principles that guide the choice of institutions and the principles that apply to actions guided by institutions. Our results indicate that it is the wealth generated by the institution that determines its desirability. (shrink)

Rational choice theory analyzes how an agent can rationally act, given his or her preferences, but says little about where those preferences come from. Preferences are usually assumed to be fixed and exogenously given. Building on related work on reasons and rational choice, we describe a framework for conceptualizing preference formation and preference change. In our model, an agent's preferences are based on certain "motivationally salient" properties of the alternatives over which the preferences are held. (...) Preferences may change as new properties of the alternatives become salient or previously salient properties cease to be salient. Our approach captures endogenous preferences in various contexts and helps to illuminate the distinction between formal and substantive concepts of rationality, as well as the role of perception in rational choice. (shrink)

Richard Bradley’s Bayesian model of preference kinematics is compared with Sven Ove Hansson’s AGM-style model of preference revision. Both seek to model the revision of preference orders as a consequence of retaining consistency when some preferences change. Both models are often interpreted normatively, as giving advice on how an agent should revise her preferences. I raise four criticisms of the Bayesian model: it is unrealistic; it neglects an important change mechanism; it disregards endogenous information relevant to preference (...) change, in particular about similarity and incompleteness; and its representational framework, when expanded with similarity comparisons, may give misleading advice. These criticisms are based on a principle of conservatism, and on two proposals of similarity metrics for the Bayesian model. The performance of the Bayesian model, with and without the similarity metrics, is then tested in three different cases of preference change, and compared to the performance of the AGM model. (shrink)

It is widely recognized that computational theories of learning must posit the existence of a priori constraints on hypothesis selection. The present article surveys the theoretical options available for modelling the dynamic process whereby the constraints have their effect. According to the 'simplicity' theory (exemplified by Fodor's treatment), hypotheses are preference-ordered in terms of their syntactic or semantic properties. It is argued that the same explanatory power can be obtained with a weaker (hence better) theory, the 'minimalist' theory, which dispenses (...) with the preference ordering. According to the 'finitistic' theory, the learner is capable of generating only finitely many hypotheses for evaluation. Chomsky maintains that the occurrence of errorless learning in language acquisition necessitates a finististic explanation. Once again, there is a weaker theory that explains the same data. Finally, Goodman's argument to the effect that there cannot be a computational theory of learning is examined and rejected. (shrink)

Les thèses dites de la “croissance endogène” mettent fort justement en avant le rôle clef d’un certain nombre de secteurs économiques dans le phénomène de croissance des revenus. Cependant, la modélisation qui s’y rattache conduit parallèlement à émettre un certain nombre de jugements normatifs erronés quant au rôle légitime de la puissance publique.En particulier, la structure même des modèles de croissance endogène interdit de rendre compte du caractère subjectif de la valeur et néglige les aspects profondément individuels de l’accumulation de (...) capital. Par conséquent, elle ne s’intéresse qu’aux aspects matériels de cette dernière.Loin de justifier l’intervention publique en vue d’augmenter statistiquement le PIB, les connaissances apportées par la théorie autrichienne conduisent à préférer la propriété naturelle et la liberté de contracter qui en découle comme véritable moyen de faire croître, à un rythme soutenu, les capitaux matériels et immatériels des individus.The so-called theories of “endogeneous growth” rightfully emphasize the key role of some particular economic sectors in the process of income growth. However, their modelling leads to erroneous normative judgements in the rightful role of the government authorities.The very structure of endogeneous growth models makes it impossible to account for the subjective character of value and disregards the deeply individual aspects of capital accumulation. Consequently, it only takes an interest in its material aspects.Far from justifying public intervention in order to statistically increase the GDP, the basic tenets of the Austrian theory rather lead to prefer natural property and the freedom to contract that goes with it, as real means to have the tangible and intangible individual assets grow at a steady rythm. (shrink)

We model economic environments in which individual choice sets are fixed and the level of a specific parameter that systematically modifies the preferences of all agents is determined endogenously to achieve equilibrium. The equilibrium concept, Biased Preferences Equilibrium, is reminiscent of competitive equilibrium: agents’ choice sets and their preferences are independent of the behaviour of other agents, the combined choices must satisfy overall feasibility constraints and the endogenous adjustment of the equilibrating preference parameter is analogous to (...) equilibrating price adjustment. The concept is applied in a number of economic examples. (shrink)

Tough anti-terrorism policies are often defended by focusing on a fixed minority of the population who prefer violent outcomes, and arguing that toughness reduces the risk of terrorism from this group. This reasoning implicitly assumes that tough policies do not increase the group of 'potential terrorists', i.e., of people with violent preferences. Preferences and their level of violence are treated as stable, exogenously fixed features. To avoid this unrealis- tic assumption, I formulate a model in which policies can (...) 'brutalise' or 'appease' someone's personality, i.e., his preferences. This follows the endogenous prefer- ences approach, popular elsewhere in political science and economics. I formally decompose the effect of toughness into a (desirable) deterrence effect and an (un- desirable) provocation effect. Whether toughness is overall effi cient depends on which effect overweighs. I show that neglecting provocation typically leads to toughness exaggeration. This suggests that some tough anti-terrorism policies observable in the present and past can be explained by a neglect of provocation. (shrink)

This paper reviews six attempts to give cooperative solutions to Prisoners Dilemmas: symmetry (agents are in identical situations, so should choose the same way, so should both choose cooperation because that’s better for each), mechanism (each agent should delegate the decision to a machine which will choose cooperation for them provided the other does likewise), inducement (the agents should make a side bet which pays off only upon both cooperating), resolution (each agent should resolve to cooperate, then act on the (...) resolution), alternative principle (rationality requires not dominance reasoning and so defecting, but constrained maximization or resolution compliance or “sophisticated” choosing, and so cooperation), and preference revision (each agent should acquire conditional preferences to cooperate, then cooperate provided the other agent has acquired similar preferences). It distinguishes one-stage from two-stage games, as well as endogenously available solutions (ones available to agents in the circumstances of the game merely due to the nature of rationality) from solutions requiring exogenous devices. It contrasts Edward McClennen’s endogenous solution, which is some combination of resolution and alternative principle solution, with David Gauthier’s endogenous alternative principle solution. It argues that all have problems, ones best solved by the endogenous preference revision solution defended by Duncan MacIntosh. (shrink)

This article deals with cultural theory in the version of Thompson, Ellis and Wildavsky. Cultural theory is important for research in the area of political and policy science because this theory has the pretension of pinning down endogenous preference formation. Using Durkheim's dimensions, ‘social integration’ and ‘regulation of the actions of individuals’, cultural theory distinguishes five ways of life or cultures, namely individualism, hierarchy, egalitarianism, fatalism and autonomy. The statement that there are only five ways of life is, however, (...) the result of a selective interpretation of the dimension, ‘regulation of the actions of individuals’. A broad perspective on this dimension — including the ‘horizontal’ aspects of human relations — will lead to the conclusion that there is a sixth culture existent that has been neglected by current cultural theory. This sixth culture is essentially ‘mutualism-driven’. In this mutualist way of life, people hold highly specialized positions and are closely associated. The production of goods and services within this culture is based on cooperation and mutual adjustment. Power is widely spread, but not because equal rights and duties are considered a good thing. Knowledge and skills are primary in mutualist settings, and power follows knowledge and skills. (shrink)

In this paper I want to discuss a well-known but poorly understood problem: how can socialists reconcile the observed paucity of cooperatives in capitalist societies with their alleged superiority on normative grounds? If cooperatives are so desirable, why don't workers desire them? If one's ideal of socialism is central planning, it is clear enough that it cannot emerge gradually within the womb of the capitalist economy. If instead it is something like market socialism, it is not clear that a discontinuous (...) transformation of society is required. If workers want socialism, they can start up here and now. If they don't, doesn't it prove that they do not want it? I shall proceed as follows. Section I argues that the usual explanation - that cooperatives are not economically viable or that workers prefer working in capitalist firms – is not necessarily correct. The explanation may lie elsewhere, in endogenous preference formation, adverse selection, discrimination, or externalities. Section II is concerned with the variety of cooperative arrangements. Only rarely do we find cooperatives in their pure form, with all workers and only workers having equal ownership rights. Non-working owners, non-owning workers and unequal distribution of shares are frequent. When the deviations become sufficiently large, the firms cease to become cooperatives in any meaningful sense. Section III extends the argument of Section I by surveying the causes of cooperative failure. Some fail by success: profitable cooperatives often attract or turn into private ownership. Others fail outright, partly because they tend to be established under unfavorable circumstances and partly because of intrinsic difficulties of management. (shrink)

What are the distributive implications of utilitarianism? Is it compatible with a concern for equality, as many utilitarians have argued? We analyse these questions in the context of a pure allocation problem. We consider an infinitely-lived economy and, drawing on the behavioural literature, assume that individuals have reference-dependent preferences: agents’ utility is a function of current consumption and a reference point which captures consumption habits, or the agents’ upbringing. Assuming a history of inequalities in consumption, we show that the (...) utilitarian allocation is equalising: starting from an unequal distribution, inequalities decrease over time at the utilitarian optimum. However, even though agents are in a relevant sense identical, equality does not obtain at any finite time. (shrink)

This paper provides a comprehensive survey of the literature on Analytical Marxism (AM) and analyses its relevance for social theory. AM is precisely defined and distinguished from Rational Choice Marxism (RCM). The different substantive implications of the two approaches are discussed: according to RCM, the role of Marxism in the social sciences is exhausted, whereas AM has reconstructed a set of propositions that aim to provide the foundations of a distinctive approach in social theory. The methodological debate around and within (...) AM is analysed and the shortcomings of methodological individualism and rational choice theory are stressed, raising doubts on the claim that RCM is the only scientific approach to Marx's theory. Yet, wholesale rejections on a priori methodological or exegetical grounds are questioned. A focused, immanent critique of RCM is developed, which emphasizes the lack of an adequate analysis of structural constraints and endogenous preferences in RCM models. It is argued that the analysis of endogenous preferences and structural constraints is consistent with an anti-reductionist AM approach and it may provide the outline of a fertile, distinctive research programme in explanatory social theory that builds on the core of Marxism identified by AM. (shrink)

This paper examines a model in which people’s preferences adjust to changes in their relative ability to attain various goals. Preference changes are modeled as changes in the configuration of weights (or values) attached to these goals. The model permits to explain common prototype changes of preferences such as the ‘sour grapes’ or the ‘overcompensating’ phenomenon. It is found that whether the first or the second phenomenon occurs depends on whether a goal is easy or difficult to substitute (...) by other goals. If two goals are sufficiently strong substitutes for each other, no weight will be placed on that goal which is harder to attain. The results readily apply to the standard microeconomic set-up involving goods and prices, rather than abstract goals and abilities. In this case, one implication of the model is that only a subset of the overall commodity space is relevant for everyday consumer choice, which reduces the complexity of the choice procedure. The model also permits to explain how new and unfamiliar products are incorporated into the consumer’s preference pattern. (shrink)

This article deals with cultural theory in the version of Thompson, Ellis and Wildavsky. Cultural theory is important for research in the area of political and policy science because this theory has the pretension of pinning down endogenous preference formation. Using Durkheim's dimensions, ‘social integration’ and ‘regulation of the actions of individuals’, cultural theory distinguishes five ways of life or cultures, namely individualism, hierarchy, egalitarianism, fatalism and autonomy. The statement that there are only five ways of life is, however, (...) the result of a selective interpretation of the dimension, ‘regulation of the actions of individuals’. A broad perspective on this dimension — including the ‘horizontal’ aspects of human relations — will lead to the conclusion that there is a sixth culture existent that has been neglected by current cultural theory. This sixth culture is essentially ‘mutualism-driven’. In this mutualist way of life, people hold highly specialized positions and are closely associated. The production of goods and services within this culture is based on cooperation and mutual adjustment. Power is widely spread, but not because equal rights and duties are considered a good thing. Knowledge and skills are primary in mutualist settings, and power follows knowledge and skills. (shrink)

Andrew Levine analyses the theoretical legacy of recent Marxist schools, focusing in particular on analytical Marxism (AM). He argues that AM is uniquely suited to provide the foundations for a revival of Marxist theory. In this paper, Levine's reconstruction of the core of Marxism and his analysis of the trajectory of AM are critically discussed. Although the theoretical contribution of AM should not be overlooked, some objectionable methodological and theoretical tenets of AM, and in particular of Rational Choice Marxism, are (...) discussed, which may help to explain the demise of the school. Various directions for further research are suggested, which emphasise the importance of structural constraints and endogenous preferences. Key Words: analytical Marxism • methodological individualism • rational choice theory • endogenous preferences • structural constraints. (shrink)

Economics prefers complete explanations: general over partial equilibrium, microfoundational over aggregate. Similarly, probabilistic accounts of causation frequently prefer greater detail to less as in typical resolutions of Simpson’s paradox. Strategies of causal refinement equally aim to distinguish direct from indirect causes. Yet, there are countervailing practices in economics. Representative-agent models aim to capture economic motivation but not to reduce the level of aggregation. Small structural vector-autoregression and dynamic stochastic general-equilibrium models are practically preferred to larger ones. The distinction between exogenous (...) and endogenous variables suggests partitioning the world into distinct subsystems. The tension in these practices is addressed within a structural account of causation inspired by the work of Herbert Simon’s, which defines cause with reference to complete systems adapted to deal with incomplete systems and piecemeal evidence. The focus is on understanding the constraints that a structural account of causation places on the freedom to model complex or lower-order systems as simpler or higher-order systems and on to what degree piecemeal evidence can be incorporated into a structural account. (shrink)

This study is aimed to identify the relative effect of online review ratings and perceived crowding on purchase intentions of a consumer. Our study also investigated the contingent effect of gender and perceived crowding between the relationship of exogenous and endogenous variables. This study was conducted in the Malaysian restaurant industry. We applied the purposive sampling technique to identify respondents, the mall intercept survey method was used for data collection. Smart PLS software was applied for data analysis. This study (...) demonstrates through its results that online review ratings and perceived crowding have a positive effect on purchase intentions of a consumer. Moreover, if a consumer perceives crowding at a restaurant, this has a positive contingent effect on the relationship between review ratings and purchase intentions. This demonstrates that the consumer is more inclined to choose a restaurant with a high online review rating and has high perceived crowding at some unfamiliar place. Lastly, no evidence is found for the gender difference between review rating and purchase intentions; however, gender shows contingent effect and results confirmed that males preferred more crowded restaurants as compared to females. There are theoretical and practical implications for managers in the findings of this study. (shrink)

Starting from one of the classical criticisms of evolutionary thinking accusing it of being based on tautological reasoning and being unable to predict future events, the authors propose an escape route from this attack by programmatically specifying the notion of fitness with reference to three particular aspects: cultural context, individual choice and social networks. Paralleling recent developments in economics, that try to explain preference formation endogeneously, the authors argue for an endogeneous explanation of the evolutionary fitness landscape to explain the (...) evolution of structural complexity. (shrink)

In a number of very influential publications, Epstein and Hoover (among other authors) have recently argued that a thoroughly micro-foundationalist approach towards economics is unconvincing for metaphysical reasons. However, as we show in this article, this metaphysical/social ontological approach to the debate fails to resolve the status of micro-foundations in the practice of economic modelling. To overcome this, we argue that endogenizing a model—that is, providing micro-foundations for it—correlates with making that model more complex. Specifically, we show that models with (...) more micro-foundations tend to have more parameters or variables. This matters, as there are well-established methodological reasons for preferring models with fewer parameters or variables—ceteris paribus. We therefore conclude that, from a practice-based point of view, micro-foundations are only defensible to the extent that they significantly improve the ability of the relevant model to fit the data of interest. In this way, we arrive at a practice-based, methodological reconceptualization of the debate surrounding the need for micro-foundations in economics. (shrink)

Germany is widely seen as a “dualized” economy driven by a powerful and stable “insider” coalition in the manufacturing sectors. In this article, that picture is challenged. An examination of the political economy of the outsider-friendly 2014 Minimum Wage Act, using public opinion data, document analysis, and qualitative interviews, shows how earlier dualizing reforms led to unintended negative feedback effects: First, public opinion reacted negatively to increasing inequality in the years preceding the introduction of the minimum wage. Second, a remarkable (...) shift is found among trade unions toward support of a minimum wage, even in manufacturing. Although the threat of low-wage competition and flexibilization did play a role, trade union solidarity was at least as important. Those endogenous dynamics came together in a self-undermining process unfolding over a relatively short period of time. Potential alternative explanations are explored, including classical partisan politics, party competition, and employer preferences. (shrink)

In Instrumental Variables (IV) estimation, the effect of an instrument on an endogenous variable may vary across the sample. In this case, IV produces a local average treatment effect (LATE), and if monotonicity does not hold, then no effect of interest is identified. In this paper, I calculate the weighted average of treatment effects that is identified under general first-stage effect heterogeneity, which is generally not the average treatment effect among those affected by the instrument. I then describe a (...) simple set of data-driven approaches to modeling variation in the effect of the instrument. These approaches identify a Super-Local Average Treatment Effect (SLATE) that weights treatment effects by the corresponding instrument effect more heavily than LATE. Even when first-stage heterogeneity is poorly modeled, these approaches considerably reduce the impact of small-sample bias compared to standard IV and unbiased weak-instrument IV methods, and can also make results more robust to violations of monotonicity. In application to a published study with a strong instrument, the preferred approach reduces error by about 19% in small (N ≈ 1, 000) subsamples, and by about 13% in larger (N ≈ 33, 000) subsamples. (shrink)

Le général André Bach dans une réflexion sur l’« horizon de mort dans la violence de guerre » part d’une approche anthropologique du phénomène de violence et de la peur (quasiment biologique) qu’il engendre en soulignant les difficultés des sociétés occidentales à penser la mort. C’est l’État qui donne à la guerre un sens politique et sacré et qui crée les catégories fonctionnelles de la guerre (les concepts de paix et de guerre ne sont pas en eux-mêmes opérationnels). Dans le (...) cadre d’une réflexion clausewitzienne sur la montée aux extrêmes, l’« extrême » pour le soldat est toujours sa propre mort (plus que celle de l’ennemi). Les notions de barbarisation et humanisation ne peuvent en ce sens rendre compte de la violence et de la peur radicales présentes dans toute guerre où le rôle du commandement est toujours de mettre en œuvre un degré de violence supérieur à celui de l’adversaire, sans aucune considération de « proportionnalité » de cette violence. La mise à distance technique ne diminue pas la violence mais l’augmente à proportion de l’éloignement de la peur. Seul le politique peut et doit mettre des limites à cette violence militaire par nature illimitée. La modernisation des armes ne relève jamais d’une humanisation du combat mais d’une recherche d’une violence plus efficace. L’entraînement du soldat en temps de paix n’est jamais entraînement à la violence mais apprentissage de savoir-faire et effort de constitution d’un groupe soudé, doté d’un bon moral. L’ordre et la formation tentent de limiter la sauvagerie mais il existe une constitution endogène de comportements propres au soldat, que la hiérarchie tente de canaliser dans une symbolique guerrière fondée sur le sentiment de l’honneur (destiné à compenser la peur d’être une proie vouée à mourir et à faire préférer la lutte au coude à coude sur l’instinct de conservation). Le couple violence/honneur fait que l’armée dépourvue de contrat social n’est pas soluble dans le politique (aujourd’hui dans les écoles militaires on ne parle plus d’« honneur » mais d’« éthique »…, mais pour dire la même chose). La conscription fut une rupture de la logique endogène de l’armée et introduisit une brèche dans ce système archaïque. Mais religion (au Moyen Âge) ou logique démocratique (de nos jours) s’avèrent surtout des « béquilles idéologiques » qui, en définitive, sont souvent plus efficaces pour accroître la barbarisation que pour l’éviter (exemple de la colonisation algérienne où une armée de paix, fonctionnarisée et rigoureusement canalisée, appartenant à une génération n’ayant jamais connu de violence de guerre, développe des massacres de masse). (shrink)

Neodevelopmental patent regimes aim to facilitate local actors’ access to knowledge and also encourage incremental innovations. The case of pharmaceutical patent examination in Brazil illustrates political contradictions between these objectives. Brazil’s patent law includes the Ministry of Health in the examination of pharmaceutical patent applications. Though widely celebrated as a health-oriented policy, the Brazilian experience has become fraught with tensions and subject to decreasing levels of both stability and enforcement. I show how one pillar of the neodevelopmental regime, the array (...) of initiatives to encourage incremental innovations, has fostered the acquisition of innovative capabilities in the Brazilian pharmaceutical sector, and how these new capabilities have altered actors’ policy preferences and thus contributed to the erosion of the coalition in support of the other pillar of the neodevelopmental regime, the health-oriented approach to examining pharmaceutical patents. The analysis of capability-derived preference formation points to an endogenous process of coalitional change. (shrink)

Lewis ascribes the stubborn persistence of addictions to habit, itself a normal process that does not imply lack of responsiveness to motivation. However, he suggests that more dynamic processes may be involved, for instance that “our recurrently focused brains inevitably self-organize.” Given hyperbolic delay discounting, a reward-seeking internal marketplace model describes two processes, also normal in themselves, that may give rise to the “deep attachment” to addictive activities that he describes: People learn to interpret current choices as test cases for (...) how they can expect to choose in the future, thus recruiting additional incentive against a universal tendency to temporarily prefer smaller, sooner to larger, later rewards. However, when this incentive is not enough, the same interpretation creates incentive to abandon the failed area, leading to the abstinence violation effect and a localized weak will. Normal human value does not come entirely, or even mainly, from expectation of external rewards, but is generated endogenously in imagination. Hyperbolic discounting provides an account of how we learn to cultivate the hedonic importance of occasions for endogenous reward by building appetite. In this account, expectations of the far future have to be rewarded endogenously if they are be as important as currently rewarded alternatives; and this importance is prone to collapse. Both will and hedonic importance are recursive and thus hard to study by controlled experiment, but do represent modelable, reward-based hypotheses about the dynamic nature of habit. (shrink)

Does CEO tolerance to risk affect a firm’s long-run sustainability? Using CEO insider debt holding, we show that CEO’s risk-aversion encourages immoral yet rational decisions of emitting more greenhouse gas thereby adversely affecting the firm’s long-run sustainability. Our result is robust to several endogeneity tests including a quasi-natural experiment. Our finding also suggest that to mitigate potential adverse reactions from stakeholders, carbon emitting firms with risk-averse CEOs tend to spend more on CSR activities. Much of the heterogeneity in our results (...) are attributed to companies with weaker governance, powerful CEOs, and operating in a competitive product market. Overall, contrary to conventional wisdom, CEO preference toward risk-aversion can often lead to unethical outcomes (environmental degradation) and especially appears to be a key determinant for firm-level carbon emissions. (shrink)

Heath and Tversky (1991, Journal of Risk and Uncertainty 4:5–28) posed that reaction to ambiguity is driven by perceived competence. Competence effects may be inconsistent with ambiguity aversion if betting on own judgement is preferred to betting on a chance event, because judgemental probabilities are more ambiguous than chance events. This laboratory experiment analyses whether ambiguity affects prices and volumes in a double auction market, and contrasts ambiguity aversion to competence effects. In order to test for the presence of competence (...) effects, in the experiment uncertainty is tied to the realisation of events about which the decision maker is more or less knowledgeable. Two experiments are presented: in the first, knowledge is exogenous, whereas in the second the knowledge judgement is endogenous. Market prices provide evidence in favour of the competence hypothesis only when competence is self-assessed. Comparable volumes are observed in both experiments. (shrink)

The executives of listed firms play an important role in the fulfillment of corporate social responsibility. Based on behavioral consistency theory, this study examines the association of CSR performance among multiple firms for the same executive served at different times. By tracking the movement of executives across Chinese listed firms over the period 2010–2019, we find that there is a significantly positive association between the predecessor and the successor firm’s CSR performance for the same executive, implying that an individual’s value (...) and preference for CSR maintain consistency within a certain period of time. We also find that a longer employment gap and lower internal control effectiveness will damage the association of CSR performance between the predecessor and the successor firm. Our results are robust to testing in subsamples and controlling the endogeneity problems. Our conclusion provides a new perspective to understand the influence mechanism of CSR performance in the context of inter-firm executive mobility and provides empirical evidence for listed firms to improve their decision-making in hiring and evaluating executives. (shrink)

We analyze a model of conflict with endogenous choice of effort, where subsets of the contenders may force the resolution to be sequential: First the alliance fights it out with the rest and – in case they win – later they fight it out among themselves. For three-player games, we find that it will not be in the interest of any two of them to form an alliance. We obtain this result under two different scenarios: equidistant preferences with (...) varying relative strengths, and varying vicinity of preferences with equal distribution of power. We conclude that the commonly made assumption of super-additive coalitional worth is suspect. (shrink)

This paper provides a model of belief representation in which ambiguity and unambiguity are endogenously distinguished in a purely subjective setting where objects of choices are, as usual, maps from states to consequences. Specifically, I first extend the maxmin expected utility theory and get a representation of beliefs such that the probabilistic beliefs over each ambiguous event are represented by a non-degenerate interval, while the ones over each unambiguous event are represented by a number. I then consider a class of (...) the biseparable preferences. Two representation results are achieved and can be used to identify the unambiguity in the context of the biseparable preferences. Finally a subjective definition of ambiguity is suggested. It provides a choice theoretic foundation for the Knightian distinction between ambiguity and unambiguity. (shrink)

The question posed is whether the optimization methods of calculus that are often used in social and scientific analyses offer an appropriate analytical approach to analyze problems that are immersed in systemic complexity and its consequences. This paper refers to the portfolio of such complex problems belonging to social and scientific forces. We refer to such a complex combination by the term ‘socio-scientific’. In the study of socio-scientific complexity, dynamic preferences, intricate decisions, and uncertain behavior, endogenous relations and (...) systemic perturbations abound. The arguments presented in this paper establish that the methodological approach of optimization and steady-state equilibrium turns out to be nicety rather than objectivity in the presence of complexity. Complex situations of the socio-scientific universe cause perturbations in the variables; there explaining complexity formed by the social embedding of variables. Indeed, human individuals, institutions and governments, and society at large are complex interrelated entities. Therefore, complex interrelations caused by social embedding remain submerged in social perturbations. However, interactions arising from social embedding also generate endogenous and complex relations. The contribution of this paper is in the area of endogenous learning in the wellbeing objective criterion function. The interrelationships between the emergent cognitive variables now cause interactive embedding, complexity, and social perturbations. Yet such perturbations are not altogether uncontrollable. They can be and need to be controlled for the purposes of social explanation—hence demanding predictability—even as the complex nature of evolutionary systemic learning proceeds. The controllability problem of extreme perturbations leads us to formalize a mathematical methodology to study controllable perturbations while avoiding extreme forms of perturbations in socio-scientific theory. (shrink)

The sex ratio at birth in China exhibits a major occurrence of “missing women” due to the high son preference in Chinese culture. Clearly, the large gender discrepancy in China can be explained not only by ethical, moral, or social fairness theories but also by the economic benefits of women's particular abilities, experiences, and talents. This article examines the influence of female chief financial officers on information disclosure violations in order to highlight women's positive contributions. Our data imply that having (...) a female CFO can dramatically lower the number of companies that fail to disclose information. The results are strong after controlling endogeneity with propensity score matching, Heckman's two-stage self-selection model, and CFO change, as well as controlling the gender of the chairman and chief executive officer, utilizing different study periods, and using exogenous shock. We further examined the moderate effects of CFO power and external monitoring, and we found that CFO power magnifies the negative effect of female CFO on violations; the more the power, the more the negative effect of female CFO on violations. We also found that when the firm has effective external monitoring, there are fewer future infractions of information disclosure. (shrink)

This paper engages two debates about trust, deriving from two distinct questions about the nature of trust. The first asks how to define trust. Does trusting B to φ involve anything more than relying on B to φ? The second asks about the normative structure of trust. Does trust most fundamentally embody a two-place or a three-place relation? I’ll defend a new position in the second debate that yields an equally new position in the first. The standard three-place model highlights (...) ‘A trusts B to φ.’ The two-place model prefers ‘A trusts B.’ On my new three-place model, both are less fundamental than ‘A φs through trust in B.’ We do, of course, trust people to do things. But the most fundamental form of trust lies in doing something through trust in a person. I call this the Assurance View of trust because I’ll argue that trusting involves accepting another’s invitation to trust – an assurance, in effect, that the other is relevantly trustworthy. Trust thereby differs from mere reliance by how it makes available a reason to rely on the trusted. In mere reliance, your reason to rely on B is exogenous to the reliance relation, emerging, for example, from B’s track record of relevant reliability. When you trust B, by contrast, you take yourself to have a reason to rely on B that is endogenous to your trust, a reason grounded not merely in B’s reliability, exogenously considered, but in B’s ongoing responsiveness to your relevant needs. The Assurance View’s key insight emerges, I’ll argue, from cases wherein trust is disappointed – the trusted does not do what you trusted her to do – yet not thereby betrayed. (shrink)

Nondeterministic models of collective choice posit convergence among the outcomes of simple-majority decisions. The object of this research is to estimate the extent of convergence of majority choice under different procedural conditions. The paper reports results from a computer simulation of simple-majority decision making by committees. Simulation experiments generate distributions of majority-adopted proposals in two-dimensional space. These represent nondeterministic outcomes of majority choice by committees. The proposal distributions provide data for a quantitative evaluation of committee-choice procedures in respect to outcome (...) convergence. Experiments were run under general conditions, and under conditions that restrict committee choice to several game-theoretic solution sets. The findings are that, compared to distributions of voter ideal points, majority-adopted proposals confined to the solution sets demonstrate different degrees of convergence. Second, endogenous agenda formation is a more important obstacle to convergence than the inherent instability of simple-majority rule. Third, if members maximize preferences in respect to agenda formation, a committee choice that approximates the central tendency of the distribution of voter preferences is unlikely. The conclusion is that the most effective way to increase the convergence of majority choice is to restrict the role of individual preferences in agenda formation: identification of proposals to be voted up or down by a committee. (shrink)

This paper contrasts a picoeconomic approach to theexplanation of akrasia with Davidson's divided-mind approach and defends theformer in a wider context. The distinctive merits of a picoeconomic model of mindlie in the following aspects: First, it relies on a scientifically well-groundeddiscovery about motivational dynamics of animals for its explanation of preference change,which elucidates or materializes some philosophers' speculations both about thepossible mismatch between valuation and motivation and about the relevance of temporalfactors to akrasia. Second, it grounds the necessity of (...) class='Hi'>endogenous higher-order constraints,expressible in forms of judgment, in an intrapersonal dynamic process of interactivefirst-order temporary preferences. Thus the motivational basis for the normativeconstruction of the rationality of `best judgment' can also be illuminated with this model. (shrink)

Game theory has proven useful in clarifying Hobbes’s argument that the state of nature will inevitably devolve into a state of war. Mathematically-leaning philosophers, however, have paid little attention to Rousseau’s depiction of the state of nature as a peaceful, asocial state of solitary wanderers. This paper articulates Rousseau’s critique of Hobbes in formal terms, which pinpoints two crucial issues in Hobbes’s account: the lack of an exit option and an unrealistic depiction of human nature. Building upon recent game-theoretic treatments (...) of Hobbes, we first construct a model that incorporates Rousseau’s criticisms by permitting an exit option and endogenizing human preferences and capacities. Second, we draw out the implications of Rousseau’s analysis for the question of political authority, which cannot be answered, as Hobbes believed, by invoking a hypothetical state of nature. (shrink)

Friendship establishment was analyzed using constructs from social cognitive theory and social network theory. In further studies, we investigated the effect of personality traits, interpersonal self-efficacy, and network structure on the establishment of friendships. In this study, we used social network analysis method and exponential random graph model. The following findings are reported. First, the friendship network of college students had small group characteristics, and the formation of this small group was more based on personality complementarity than similarity. The homogeneity (...) hypothesis of personality was not tenable. Secondly, individuals with dominance or influence personality traits and high interpersonal self-efficacy were more likely to be in the center of the friendship network. Furthermore, personality traits and interpersonal self-efficacy may have interactive effects on the formation of friendship networks. Popularity and activity effects existed in friendship networks, but the reciprocal relationship based on personality traits was not verified. The balance structure can easily explain the agglomeration of friendships in a small range, indicating that small groups of friendships prefer a two-way circular close relationship. Finally, the formation of a friendship network includes the comprehensive process of individual characteristics and endogenous tie formation, which helps us to understand the social population structure and its process over a wider range. (shrink)

Using data from the China Family Panel Studies, this paper investigates the effects of Internet use on residents’ risk attitudes. Both Generalized Ordered Logit Model and Logit model are used to identify the effects of Internet use. The results reveal an association between Internet use and increases in both subjective and objective risk preferences that remains even after we adjust for possible endogeneity. The heterogeneity analysis also reveals that these impacts are different among groups with different reasons for Internet (...) use and different personal characteristics. Our study expands the research on the effects of Internet on people’s concepts from the micro perspective and suggests that while promoting the application of information technology we should also pay attention to the individual characteristics of residents so that we can better share the “digital dividend” brought by the popularization of information technology in the whole society. (shrink)

Heath and Tversky (1991, Journal of Risk and Uncertainty 4:5–28) posed that reaction to ambiguity is driven by perceived competence. Competence effects may be inconsistent with ambiguity aversion if betting on own judgement is preferred to betting on a chance event, because judgemental probabilities are more ambiguous than chance events. This laboratory experiment analyses whether ambiguity affects prices and volumes in a double auction market, and contrasts ambiguity aversion to competence effects. In order to test for the presence of competence (...) effects, in the experiment uncertainty is tied to the realisation of events about which the decision maker is more or less knowledgeable. Two experiments are presented: in the first, knowledge is exogenous, whereas in the second the knowledge judgement is endogenous. Market prices provide evidence in favour of the competence hypothesis only when competence is self-assessed. Comparable volumes are observed in both experiments. (shrink)

Critics argue that adaptive preference theorists misrepresent oppressed people's reasons for perpetuating their oppression. According to critics, AP theorists assume that people who adapt their preferences to unjust conditions lack the psychic capacities that would allow them to develop their own normative perspectives and/or form appropriate values. The misrepresentation is morally problematic, because it promotes unjustified paternalism and perpetuates colonial stereotypes of third‐world women. I argue that we can imagine a conception of AP that is consistent with acknowledging agency (...) in people who perpetuate their oppression. I offer a weak perfectionist conception of AP that is consistent with recognising agentic capacities in the oppressed. On my conception, APs are preferences incompatible with an agent's basic wellbeing that formed under unjust conditions — and that an agent would reverse upon exposure to better conditions. My conception encourages respectful treatment of the oppressed without requiring us to abandon the feminist political goals the notion of AP is meant to serve. It helps us identify real‐world preferences that are problematically adapted to oppressive conditions and offers an account of why they seem not to be women's ‘true preferences’. (shrink)

We establish a simple condition, based on the willingness to bet on events, under which two biseparable preferences have cardinally equivalent utilities.

Adaptive preferences give rise to puzzles in ethics, political philosophy, decision theory, and the theory of action. Like our other preferences, adaptive preferences lead us to make choices, take action, and give consent. In 'False Consciousness for Liberals', recently published in The Philosophical Review, David Enoch (2020) proposes a criterion by which to identify when these choices, actions, and acts of consent are less than fully autonomous; that is, when they suffer from what Natalie Stoljar (2014) calls (...) an 'autonomy deficit'. According to Enoch, such actions are not protected in the usual way against interference by others; there is not the same prohibition against trying to prevent someone from acting in a particular way when that action is motivated by such adaptive preferences and is an attempt to satisfy them. In this note, I raise two concerns about Enoch's criterion. (shrink)

More attention has been devoted to providing evolutionary accounts of the development of beliefs, or belief-like states, than for desires or preferences. Here I articulate and defend an evolutionary rationale for the development of psychologically real preference states. Preferences token or represent the expected values available actions given discriminated states of world and agent. The argument is an application of the ‘environmental complexity thesis’ found in Godfrey-Smith and Sterelny, although my conclusions differ from Sterelny’s. I argue that tokening (...) expected utilities can, under specified general conditions, be a powerful design solution to the problem of efficiently allocating the capacities of an agent. Preferences are for efficient action selection, and count as a ‘fuel for success’ in the sense urged by Godfrey-Smith for true beliefs. They will tend to be favoured by selection when environments are complex in ways that matter to an organism, and when organisms have large behavioural repertoires with heterogeneous returns and costs.The rationale suggested here is conditional, especially on contingencies in what design options are available to selection and on trade-offs associated with the costs of generating and processing representations of value. The unqualified efficiency rationale for preferences suggests that organisms should represent expected utilities in a comprehensive and consistent way, but none of them do. In the final stages of the paper I consider some of the ways design trade-offs compromise the implementation of preferences in organisms that have them. (shrink)