We argue that neuroeconomics should be a mechanistic science. We defend this view as preferable both to a revolutionary perspective, according to which classical economics is eliminated in favour of neuroeconomics, and to a classical economic perspective, according to which economics is insulated from facts about psychology and neuroscience. We argue that, like other mechanistic sciences, neuroeconomics will earn its keep to the extent that it either reconfigures how economists think about decision-making or how neuroscientists think about brain mechanisms underlying behaviour. We discuss some ways that the search for mechanisms can bring about such top-down and bottom-up revision, and we consider some examples from the recent neuroeconomics literature of how varieties of progress of this sort might be achieved.

Expected-utility (EU) theory has been a popular and influential theory in philosophy, law, and the social sciences. While its original developers, von Neumann and Morgenstern, presented it as a purely predictive theory useful to the practitioners of economic science, many subsequent theorists, particularly those outside of economics, have come to endorse EU theory as providing us with a representation of reason. But precisely in what sense does EU theory portray reason? And does it do so successfully?

There are two strikingly different answers to these questions in the literature. On the one hand, there is the view of people such as David Gauthier that EU theory is an implementation of the idea that reason's only role is instrumental. On the other hand, there is the view suggested by Leonard Savage (1954/1972; and see Anderson, 1993) that the theory is a “formal” and noninstrumental characterization of our reasoning process.

Recent debates on the nature of preferences in economics have typically assumed that they are to be interpreted either as behavioural regularities or as mental states. In this paper I challenge this dichotomy and argue that neither interpretation is consistent with scientific practice in choice theory and behavioural economics. Preferences are belief-dependent dispositions with a multiply realizable causal basis, which explains why economists are reluctant to make a commitment about their interpretation.

The paper discusses the sense in which the changes undergone by normative economics in the twentieth century can be said to be progressive. A simple criterion is proposed to decide whether a sequence of normative theories is progressive. This criterion is put to use on the historical transition from the new welfare economics to social choice theory. The paper reconstructs this classic case, and eventually concludes that the latter theory was progressive compared with the former. It also briefly comments on the recent developments in normative economics and their connection with the previous two stages.

This paper explores the contrast between mentalistic and behaviouristic interpretations of decision theory. The former regards credences and utilities as psychologically real, while the latter regards them as mere representations of an agent's preferences. Philosophers typically adopt the former interpretation, economists the latter. It is argued that the mentalistic interpretation is preferable if our aim is to use decision theory for descriptive purposes, but if our aim is normative then the behaviouristic interpretation cannot be dispensed with.

Social scientists could learn some useful things from philosophy. Here I shall discuss what I take to be one such thing: a better understanding of the concept of utility. There are several reasons why a better understanding may be useful. First, this concept is commonly found in the writings of social scientists, especially economists (see, for example, Sen and Williams, 1982). Second, utility is the main ingredient in utilitarianism, a perspective on morality that, traditionally, has been very influential among social scientists. Third, and most important, with a better understanding of utility comes, as I shall try to show here, a better understanding of “personal welfare”. or, in other words, of what may be said to be in people's best interests. Such an understanding is useful to social scientists and philosophers alike, whether for utilitarian purposes or not.

Al-Najjar and Weinstein (2009) propose to scrutinize the implications of recent theories of ambiguity in dynamic settings. They conclude that such implications are so unreasonable as to cast doubts on the legitimacy of the theories under consideration. The present paper argues that the seemingly unreasonable implications highlighted by Al-Najjar and Weinstein can be understood as the result of basic trade-offs that arise naturally in the presence of ambiguity. In particular, Al-Najjar and Weinstein are uncomfortable with the possibility that an ambiguity-averse individual may reject freely available information; however, this phenomenon simply reflects a trade-off between the intrinsic value of information, which is positive even in the presence of ambiguity, and the value of commitment.

Some empirical findings seem to show that people value health benefits differently depending on the age of the beneficiary. Health economists and philosophers have offered justifications for these preferences on grounds of both efficiency and equity. In this paper, I examine the most prominent examples of both sorts of justification: the defence of age-weighting in the WHO's global burden of disease studies and the fair innings argument. I argue that neither sort of justification has been worked out in satisfactory form: age should not be taken into account in the framework of the burden of disease measure, and on the most promising formulations of the fair innings argument, it turns out to be merely an indicator of some other factor. I conclude by describing the role of age in theories of justice of healthcare resource allocation.

Wherever a government or state is concerned with the welfare of its citizens, there will probably also exist policies which compel the individual citizen to undertake or abstain from activities which affect that citizen alone. The set of theories behind such policies is collectively known as ‘paternalism’. It is not hard to understand why this term has developed strong pejorative overtones. Policies of this type appear to offend a fundamental tenet of liberal societies: namely, that the individual is best placed to know what is in his or her interests. Paternalistic policies imply, and are concerned with correcting, failures of precisely this kind of judgement. And yet, at the same time, there is a popular consensus that compelling people to wear a seat belt when driving a car is a reasonable restriction of personal liberty. Paternalism may be difficult to accept in principle, but it is equally difficult to avoid in practice.

Not surprisingly, the literature reveals a long heritage of debate in a wide range of academic disciplines. This debate reveals a failure to make progress in two areas in particular. First, analyses of paternalism often confuse policies which are actually concerned with correcting failures of market exchange — in particular, those concerned with insufficient or imperfect information — with those which are genuinely paternalistic. One objective of this paper will be to clarify the difference between these two kinds of policy.

Jon Elster reports that in 1940, and again in 1970, the U.S. draft lottery was challenged for falling short of the legally mandated ‘random selection’ (1989, pp. 45–6). On both occasions, the physical mixing of the lots appeared to be incomplete, since the birth dates were clustered in a way that would have been extremely unlikely if the lots were fully mixed. There appears to have been no suspicion on either occasion that the deficiency in the mixing was intended, known, or believed to favor or disfavor any identifiable group. If the selection was non-random in the way charged, Elster asks, was it unfair?

Many people believe that we have responsibility towards the distant future, but exactly how far this responsibility reaches and how we can find a reasonable ethical foundation for it has not been answered in any definitive manner. Future people have no power over us, they form no part of our moral community and it is unclear how we can represent them in a possible original position. All these problems can be circumvented when you take an impersonal decision criterion like maximizing total or average utility. Such a sum-ranking criterion is neutral with respect to distance in time or space: my utility, my neighbour's and that of our descendants all carry the same weight. This makes future people an integral part of present decisions. Time-neutrality was defended by, among others, Sidgwick, Pigou and Ramsey.

For the past 20 years or so the literature on noncooperative games has been centered on the search for an equilibrium concept that expresses the notion of rational behavior in interactive situations. A basic tenet in this literature is that if a “rational solution” exists, it must be a Nash equilibrium. The consensus view, however, is that not all Nash equilibria can be accepted as rational solutions. Consider, for example, the game of Figure 1.

A principal aim of the branch of ethics called ‘population theory’ or ‘population ethics’ is to find a plausible welfarist axiology, capable of comparing total outcomes with respect to value. This has proved an exceedingly difficult task. In this paper I shall state and discuss two ‘trilemmas’, or choices between three unappealing alternatives, which the population ethicist must face. The first trilemma is not new. It originates with Derek Parfit's well-known ‘Mere Addition Paradox’, and was first explicitly stated by Yew-Kwang Ng. I shall argue that one horn of this trilemma is less unattractive than Parfit and others have claimed. The second trilemma, which is a kind of mirror image of the first, appears hitherto to have gone unnoticed. Apart from attempting to resolve the two trilemmas, I shall suggest certain features which I believe a plausible welfarist axiology should possess. The details of this projected axiology will, however, be left open.

Recent years have seen the flowering of a new literature on the economic nature of firms marked by a concern with their internal organization and contractual characteristics. Related literatures on the principal-agent problem and the theory of financial markets have also contributed to a better understanding of firms as economic institutions. However, the place of the concept of the ownership of the firm is poorly developed in most of this literature, with many writers either ignoring the concept entirely or arguing that it is of no importance. The purpose of the present article is to point out that the concept of ownership of firms is crucial to an understanding of internal governance issues. Most economists implicitly presume that firms must be ownable and saleable if they are to be operated efficiently, and recently this viewpoint has been made more explicit by writers such as Jensen and Fama and Williamson. Their point of view is to some degree at odds with views of the firm as a coalition, which frequently appear in the same literature, and even more fundamentally in conflict with conceptions of the firm as an association or polity within which greater or lesser degrees of democracy in governance may be pursued. The first purpose of this article is to show that the incompletely articulated position of the leading authors on the economics of organization is that the firm is a commodity and must be so for purposes of efficiency.

Why does Sen maintain that people are capable of putting their own goals offline and deliberating and acting out of sheer commitment to others? How can he endorse such a rejection of the belief-desire model of agency? The paper canvasses three explanations and favors one that ascribes an unusual position to Sen: the belief that so far as agents remain in the belief-desire mould, they cannot deliberate on the basis of reasons other than those that derive from standing goals that form an integrated system. What he thinks of as deliberation on the basis of commitment is just the sort of deliberation that involves the formation of a novel, perhaps occasion-specific goal in which the good of another is prioritised.

A capability approach prescribes paternalist government actions to the extent that it requires the promotion of specific functionings, instead of the corresponding capabilities. Capability theorists have argued that their theories do not have much of these paternalist implications, since promoting capabilities will be the rule, promoting functionings the exception. This paper critically surveys that claim. From a close investigation of Nussbaum's statements about these exceptions, it derives a framework of five categories of functionings promotion that are more or less unavoidable in a capability theory. It argues that some of these categories may have an expansionary dynamic; they may give rise to widespread functionings promotion, which would defeat the capabilitarian promise that paternalist interventions will be exceptions to the rule of a focus on capabilities. Finally, the paper discusses three further theoretical issues that will be decisive in holding this paternalist tendency in check: how high one sets threshold levels of capability protection, how lengthy one's list of basic capabilities is, and how one deals with individual responsibility for choices resulting in a loss of one's capabilities.

I propose a dynamical analysis of interaction in anarchy, and argue that this kind of dynamical analysis is a more promising route to predicting the outcome of anarchy than the more traditional a priori analyses of anarchy in the literature. I criticize previous a priori analyses of anarchy on the grounds that these analyses assume that the individuals in anarchy share a unique set of preferences over the possible outcomes of war, peace, exploiting others and suffering exploitation. Following Hobbes' classic analysis of anarchy, I maintain that typically in anarchy some moderate individuals will most desire mutual cooperation while other dominators will most desire to exploit others' cooperation. I argue that once one allows for different types of individuals in anarchy, any a priori analysis of anarchy requires unrealistic assumptions regarding the agents' common knowledge of their situation. However, this move also suggests a dynamical analysis of anarchy, one that assumes no common knowledge. In the Variable Anticipation threshold model developed here, individuals modify their behavior as they learn from repeated interactions. I present specific instances of this model where the individuals in anarchy converge to different equilibria corresponding to either peace or war, depending on the initial conditions. I show that individuals are liable to converge to Hobbes' war of all against all even if only a small percentage of are dominators. The presence of only a few “nasty” individuals gradually drives all, including those inclined to be “nicer”, to imitate the “nasty” conduct of these few. This dynamic analysis suggests that the Hobbesian war in anarchy is indeed inevitable in most realistic circumstances.

You have the same propension, that I have, in favor of what is contiguous above what is remote. You are, therefore, naturally carry'd to commit acts of injustice as well as I. Your example both pushes me forward in this way by imitation, and also affords me a new reason for any breach of equity, by showing me, that I shou'd be the cully of my integrity, if I alone shou'd impose on myself a severe restraint amidst the licentiousness of others. (David Hume, A Treatise of Human Nature)

The adequacy of currently popular accounts of the genetic basis for psychological altruism, including inclusive fitness (kin selection), reciprocal altruism, sociality, and group selection, is questioned. Problems exist both with the evidence cited as supporting these accounts and with the relevance of the accounts to what is being explained. Based on the empathy-altruism hypothesis, a more plausible account is proposed: generalized parental nurturance. It is suggested that four evolutionary developments combined to provide a genetic basis for psychological altruism. First is the evolution in mammals of parental nurturance. Second is the evolution in humans (and possibly a few other species) of the ability to see others as sentient, intentional agents and, thereby, to recognize other's needs, even subtle ones. Third is the evolution in humans of tender, empathic emotions as an important component of parental nurturance. Fourth is the evolution in humans of cognitive capacities that make it possible to generalize tender, empathic feelings and, thereby, altruism beyond offspring.

In an interesting letter to Anna George, the daughter of Henry George, Bernard Shaw wrote: “Your father found me a literary dilettante and militant rationalist in religion, and a barren rascal at that. By turning my mind to economics he made a man of me” (George, 1979, p. xiii). I am not able to determine what making a man of Bernard Shaw would exactly consist of, but it is clear that the kind of moral and social problems with which Shaw was deeply concerned could not be sensibly pursued without examining their economic aspects. For example, the claims of property rights, which some would defend and some (including Shaw) would dispute, are not just matters of basic moral belief that could not possibly be influenced one way or the other by any empirical arguments. They call for sensitive moral analysis responsive to empirical realities, including economic ones.

This article surveys the debate over the social discount rate. The focus is on the economics rather than the philosophy literature, but the survey emphasizes foundations in ethical theory rather than highly technical details. I begin by locating the standard approach to discounting within the overall landscape of ethical theory. The article then covers the Ramsey equation and its relationship to observed interest rates, arguments for and against a positive rate of pure time preference, the consumption elasticity of utility, and the effect of various sorts of uncertainty on the discount rate. Climate change is discussed as an application.