The behavioral assumptions upon which Public Choice, and Game Theory are built, are
false. This may not seem to be ‘too serious’ since many theories
are only approximations. But a broad spectrum of experimental results has shown the
problem to be greater than one of workable proportions. We illustrate the problems
by examining some anomalous results in both voluntary contribution games and
dictator games. We argue that there are difficulties with both the content and
structure of the preferences posited in the standard model, sketch the outlines of a
possible solution, and discuss some of the implications of this new perspective for
knowledge and theory construction.
Adler, Jerry
, with
Mary Carmichael
(2004) ‘Mind Reading’,
Newsweek, 5 July.
2.
Andreoni, James
(1995)
‘Cooperation in Public Goods Experiments: Kindness or Confusion?’American Economic Review85:
891–904
.
3.
Ashley, Richard
,
Sheryl Ball
and
Catherine Eckel
(2004) ‘Analysis of Public Goods Experiments
Using Dynamic Panel Regression Models’, Mimeo,
Virginia Tech University
.
4.
Baumol, William J.
and
Wallace E. Oates
(1979) Economics Environmental Policy and the Quality of
Life.
Englewood Cliffs, NJ: Prentice Hall
.
5.
Berg, Joyce
,
John Dickhaut
and
Kevin McCabe
(1995)
‘Trust, Reciprocity, and Social History’
, Games and Economic Behavior10:
122–142
.
6.
Bolton, Gary E.
(1991)
‘A Comparative Model of Bargaining: Theory and Evidence’
, American Economic Review81:
1096–1136
.
7.
Bolton, Gary E.
and
Rami Zwick
(1995)
‘Anonymity versus Punishment in Ultimatum Bargaining’
, Games and Economic Behavior10:
95–121
.
8.
Cain, Michael
(1998) ‘An Experimental Investigation of Motives
and Information in the Prisoners’ Dilemma Game’, in
John Skvoretz
and
Jacek Szmatka
(eds) Advances in Group Processes, pp.
133–160.
New York: JAI Press
.
9.
Chaudhuri, P. Ananish
and
Sara Graziano
(2004) ‘A Dynamic Analysis of the Evolution of
Conventions in a Public Goods Experiment with Intergenerational
Advice’, Mimeo.
10.
Cox, James C.
,
Klarita Sadiraj
and
Vjollca Sadiraj
(2001)
‘A Theory of Competition and Fairness without Equity Aversion’
. Paper presented at the International Meetings of the Economics
Society of America, Barcelona, Spain, June.
11.
Croson, Rachel T. A.
(1998) ‘Theories of Commitment, Altruism and
Reciprocity: Evidence from Linear Public Goods Games’, Mimeo.
12.
Damasio, Antonio
(1999) The Feeling of What Happens.
New York: Harcourt Brace
.
13.
Dawes, Robyn
and
Richard Thaler
(1988)
‘Anomolies: Cooperation’
, Journal of Economic Perspectives2(3):
187–197
.
14.
Dawes, Robyn, A. J. C. van de Kragt
and
J. M. Orbell
(1990) ‘Cooperation for the Benefit of Us: Not
Me, or My Conscience’, in
J. J. Mansbridge
(ed.) Beyond Self-interest, pp.
97–110.
Chicago: University of Chicago Press
.
15.
Dickhaut, John
,
John Hubbard
and
Kevin McCabe
(1995) ‘Trust, Reciprocity and Interpersonal
History: Fool Me Once, Shame on You, Fool Me Twice, Shame on
Me’, Mimeo,
University of Minnesota
.
16.
Downs, A.
(1957) An Economic Theory of Democracy.
New York: Harper and Row
.
17.
Eckel, Catherine C.
and
Philip J. Grossman
(1996a)
‘Altruism in Anonymous Dictator Games’
, Games and Economic Behavior16:
181–191
.
18.
Eckel, Catherine C.
and
Philip Grossman
(1996b)
‘The Relative Price of Fairness: Gender Differences in a
Punishment Game’
, Journal of Economic Behavior and Organization30:
143–158
.
19.
Fehr, Ernst
and
Klaus M. Schmidt
(1999)
‘A Theory of Fairness, Competition, and Cooperation’
, Quarterly Journal of Economics114:
817–868
.
20.
Frank, Bjorn
and
Gunther Schultze
(2000)
‘Does Economics Make Citizens Corrupt?’
, Journal of Economic Behavior and Organization43:
101–113
.
21.
Frohlich, Norman
and
Joe A. Oppenheimer
(1996)
‘Experiencing Impartiality to Invoke Fairness in the n-PD: Some
Experimental Results’
, Public Choice86:
117–135
.
22.
Frohlich, Norman
and
Joe A. Oppenheimer
(1998)
‘Examining the Consequences of E-Mail v. Face to Face
Communications in Experiments’
, Journal of Economic Behavior and Organization35:
389–403
.
23.
Frohlich, Norman
and
Joe A. Oppenheimer
(2000) ‘How People Reason about
Ethics’, in
Arthur Lupia
,
Matthew McCubbins
and
Sam Popkin
(eds) Elements of Political Reason: Cognition, Choice and the Bounds of
Rationality, pp. 85–107.
Cambridge: Cambridge University Press
.
24.
Frohlich, Norman
and
Joe A. Oppenheimer
(2001)
‘Choosing from a Moral Point of View’
, Interdisciplinary Economics12:
89–115
.
25.
Frohlich, Norman
and
Joe A. Oppenheimer
(2003a)
‘Optimal Policies and Socially Oriented Behavior: Some
Problematic Effects of an Incentive Compatible Device’
, Public Choice: Essays in Honor of Mancur Olson
(117):
273–293
.
26.
Frohlich, Norman
and
Joe A. Oppenheimer
(2003b)
‘Justice Preferences and the Arrow Problem’
, Paper presented at the 2003 Annual Meeting of the Public Choice
Society, Nashville.
27.
Frohlich, Norman
and
Joe A. Oppenheimer
(2005) ‘Choosing’,
Mimeo,
University of Maryland
. Available at: www.bsos.umd.edu/gvpt/oppenheimer/research/choosing.pdf
28.
Frohlich, Norman
and
Joe A. Oppenheimer
, with
Pat Bond
and
Irvin Boschman
(1984)
‘Beyond Economic Man’
, Journal of Conflict Resolution28(1):
3–24
.
29.
Frohlich, Norman
and
Joe Oppenheimer
, with
Anja Kurki
(2004)
‘Problems in Modeling Social Preferences: Insights from Modified
Dictator Experiments’
, Public Choice119:
91–117
.
30.
Frohlich, Norman
,
Joe A. Oppenheimer
and
J. Bernard Moore
(2001)
‘Some Doubts About Measuring Self-Interest Using Dictator
Experiments: The Costs of Anonymity’
, Journal of Economic Behavior and Organization46:
271–290
.
31.
Gaetz, Michael
,
Hal Weinberg
,
Edward Rzempoluck
and
K. J. Jantzen
(1998)
‘Neural Network Classifications and Correlation Analysis of EEG
and MEG Activity Accompanying Spontaneous Reversals of the Necker Cube’
, Cognitive Brain Research6:
335–346
.
32.
Grether, David M.
and
Charles R. Plott
(1979)
‘Economic Theory of Choice and the Preference Reversal Phenomenon’
, American Economic Review69:
623–638
.
33.
Gunnthorsdottir, Anna
,
Daniel Houser
,
Kevin McCabe
and
Holly Ameden
(2001) ‘Disposition, History and Contributions
in Public Goods Experiments’, Mimeo,
University of Arizona
.
34.
Hausman, Daniel M.
(1995)
‘Rational Choice and Social Theory: A Comment’
, The Journal of Philosophy91:
96–102
.
35.
Houser, Daniel
and
Robert Kurzban
(2002)
‘Revisiting Kindness and Confusion in Public Goods Experiments’
, American Economic Review92:
1062–1069
.
36.
Hoffman, Elizabeth
,
Kevin McCabe
and
Vernon Smith
(1996) Behavioral Foundations of Reciprocity: Experimental
Economics and Evolutionary Psychology, Mimeo.
37.
Hoffman, Elizabeth
,
Kevin McCabe
,
Keith Shachat
and
Vernon Smith
(1994)
‘Preferences, Property Rights and Anonymity in Bargaining Games’
, Games and Economic Behavior7:
346–380
.
38.
Hoffman, Elizabeth
,
Kevin McCabe
and
Vernon L. Smith
(1996)
‘Social Distance and Other-regarding Behavior in Dictator Games’
, American Economic Review86:
653–660
.
39.
Isaac, R. Mark
and
James M. Walker
(1988)
‘Communication and Free-Riding Behavior: The Voluntary
Contribution Mechanism’
, Economic Inquiry26:
585–608
.
40.
Isaac, R. Mark
,
James M. Walker
and
Arlington W. Williams
(1994)
‘Group Size and the Voluntary Provision of Public Goods:
Experimental Evidence Utilizing Large Group’
, Journal of Public Economics54:
1–36
.
41.
Janssen, Marco A.
and
T. K. Ahn
(2003) ‘Adaption vs. Anticipation in Public-good
Games’, Mimeo,
Indiana University and Florida State University
.
42.
Kahneman, Daniel
,
Jack L. Knetsch
and
Richard H. Thaler
(1986)
‘Fairness and the Assumptions of Economics’
, The Journal of Business59:
S285–S301
.
43.
Konow, James
(2000)
‘Fair Shares and Cognitive Dissonance in Allocation Decisions’
, American Economic Review90:
1072–1091
.
44.
Lakatos, I.
(1970) ‘Falsification and the Methodology of
Scientific Research Programmes’, in
I. Lakatos
and
A. Musgrave
(eds) Criticism and the Growth of Knowledge, pp.
91–97.
Cambridge: Cambridge University Press
.
45.
Larrick, Richard P.
and
Sally Blount
(1997)
‘The Claiming Effect: Why Players Are More Generous in Social
Dilemmas Than in Ultimatum Games’
, Journal of Personality and Social Psychology72:
810–825
.
46.
Ledyard, John O.
(1995) ‘Public Goods: A Survey of Experimental
Research’, in
John H. Kagel
and
Alvin E. Roth
(eds) The Handbook of Experimental Economics, pp.
111–194.
Princeton, NJ: Princeton University Press
.
47.
Levati, Maria Vittoria
(2003)
‘Explaining Private Provision of Public Goods by Conditional
Cooperation – An Evolutionary Approach’
, Paper given at an NSF-sponsored conference at the University of
Indiana, 24–5 January.
48.
Lindblom, Charles E.
and
David K. Cohen
(1979) Usable Knowledge: Social Science and Social Problem
Solving.
New Haven, CT: Yale University Press
.
49.
MacDonald, Paul K.
(2003)
‘Useful Fiction or Miracle Maker: The Competing Epistemological
Foundations of Rational Choice Theory’
, American Political Science Review97:
551–565
.
50.
Mackie, Gerry
(2003) Democracy Defended.
Cambridge: Cambridge University Press
.
51.
May, Kenneth O.
(1954)
‘Intransitivity, Utility, and the Aggregation of Preference Patterns’
, Econometrica22:
1–13
.
52.
Olson, Mancur
(1965) The Logic of Collective Action.
Cambridge, MA: Harvard University Press
.
53.
Ostrom, Elinor
(1998)
‘A Behavioral Approach to the Rational Choice Theory of
Collective Action’
, American Political Science Review92:
1–22
.
Ostrom, Elinor
and
James Walker
(1991) ‘Communication in a Commons, Cooperation
without External Enforcement’, in
Thomas R. Palfrey
(ed.) Laboratory Research in Political Economy, pp.
287–322.
Ann Arbor, MI: University of Michigan Press
.
56.
Ostrom, Elinor
,
James Walker
and
Roy Gardner
(1992)
‘Covenants with and without a Sword: Self-governance is Possible’
, American Political Science Review86:
404–417
.
57.
Plott, Charles R.
(1983)
‘Externalities and Corrective Policies in Experimental Markets’
, The Economic Journal93:
106–127
.
58.
Quattrone, George A.
and
Amos Tversky
(1988)
‘Contrasting Rational and Psychological Analyses of Political Choice’
, American Political Science Review82:
719–736
.
59.
Rabin, Matthew
(1993)
‘Incorporating Fairness into Game Theory and Economics’
, American Economic Review83:
1281–1302
.
60.
Rabin, Matthew
(1998)
‘Psychology and Economics’
, Journal of Economic Literature36:
11–46
.
61.
Roth, Alvin, E.
(1995) ‘Bargaining
Experiments’, in
John H. Kagel
and
Alvin E. Roth
(eds) The Handbook of Experimental Economics, pp.
253–342.
Princeton, NJ: Princeton University Press
.
62.
Ruffle, Bradley J.
(1998)
‘More Is Better, But Fair Is Fair: Tipping in Dictator and
Ultimatum Games’
, Games and Economic Behavior23:
247–265
.
63.
Saijo, Tatsuyoshi
and
Toru Yamaguchi
(1992)
‘The ‘‘Spite Dilemma’’ in
Voluntary Contribution Mechanism Experiments’
, Paper presented at the Public Choice Meetings,
March, New Orleans.
64.
Satz, Debra
and
John Ferejohn
(1994)
‘Rational Choice and Social Theory’
, The Journal of Philosophy91:
71–87
.
65.
Schelling, Thomas C.
(1973)
‘Hockey Helmets, Concealed Weapons, and Daylight Savings: A Study
of Binary Choices with Externalities’
, Journal of Conflict Resolution17:
381–428
.
66.
Sen, Amartya K.
(1970) Collective Choice and Social Welfare.
New York: North Holland
.
67.
Sen, Amartya K.
(1973) On Economic Inequality.
New York: Norton
.
68.
Shafir, Eldar
and
Amos Tversky
(1995) ‘Decision Making’, in
Edward E. Smith
and
Daniel N. Osherson
(eds) An Invitation to Cognitive Science: Thinking, pp.
77–100.
Cambridge, MA: MIT Press
.
69.
Simon, Herbert
(1947) Administrative Behavior.
New York: Free Press
.
70.
Simon, Herbert A.
(1986)
‘Rationality in Psychology and Economics’
, The Journal of Business59(4):
S209–S224
.
71.
Simon, Herbert
(1992) ‘Bounded Rationality:
Discussion’, in
Massimo Egidi
and
Robin Marris
(eds) Bounded Rationality and the Cognitive Revolution.
Brookfield, VT: Edward Elgar
.
72.
Sweeney, John
(1973)
‘An Experimental Investigation of the Free-rider Problem’
, Social Science Research2:
277–292
.
73.
Tversky, Amos
and
Daniel Kahneman
(1981)
‘The Framing of Decisions and the Psychology of Choice’
, Science221:
453–458
.
74.
Tversky, Amos
and
Daniel Kahneman
(1986)
‘Rational Choice and the Framing of Decisions’
, Journal of Business59:
S251–S278
.
75.
Zeckhauser, Richard
and
Elmer Shaefer
(1968) ‘Public Policy and Normative Economic
Theory’, in
Raymond A. Bauer
and
Kenneth J. Gergen
(eds) The Study of Policy Formation, pp.
27–101.
New York: Free Press
.
