weekly quote #16: Herbert Gintis January 10, 2008
Posted by ocmpoma in : economics, society , trackbackOne of the things I’m trying to keep in mind whilst learning some econ is how people’s actions stack up to the predictions of theory. Initially, it seemed to me that theory, at least neoclassical theory, was too simplified to make good predictions. My opinion on that is changing as I learn more (to say nothing of the fact that the layman’s idea of ‘economic theory’ is most probably where the main oversimplifications are).
One aspect of Hayek’s work, as I understand Bruce Caldwell’s take on it, was how people function, especially in the absence of imposed authority. A paper I just finished reading, Herbert Gintis’s “Behavioral game theory and contemporary economic theory”, in part discusses this area as well, focusing on how games where people play employer and employee turn out. Here’s a summary line, from the end of Section 5, ‘Strong reciprocity in the labor market’ — page 15 of the paper:
“We conclude from this study that the subjects who assume the role of ‘employee’ conform to internalized standards of reciprocity, even when they are certain there are no material repercussions from behaving in a self-regarding manner. Moreover, subjects who assume the role of employer expect this behavior and are rewarded for acting accordingly. Finally, employers reward good and punish bad behavior when they are allowed, and employees expect this behavior and adjust their own effort levels accordingly. In general, then, subjects follow an internalized norm not only because it is prudent or useful to do so, or because they will suffer some material loss if they do not, but rather because they desire to do so for its own sake.” (emphasis in the original -oc)
Tags for this article: economics , quotation , society
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