Morals From Rationality Alone? Some Doubts

Contractarians aim to derive moral principles from the dictates of instrumental rationality alone. But it is well-known that contractarian moral theories struggle to identify normative principles that are both uniquely rational and morally compelling. Michael Moehler's recent book, *Minimal Morality* seeks to avoid these difficulties by developing a novel "two-level" social contract theory, which restricts the scope of contractarian morality to cases of deep and persistent moral disagreement. Yet Moehler remains ambitious, arguing that a restricted version of Kant's categorical imperative is a uniquely rational principle of conflict resolution. We develop a formal model of Moehler's informal game-theoretic argument, which reconstructs a valid argument for Moehler's conclusion. This model, in turn, enables us to expose how a successful argument for Moehler's contractarian principle rests on assumptions that can only be justified by subtle yet significant departures from the standard conception of rationality. We thus extend our understanding of familiar contractarian difficulties by showing how they arise even if we restrict the scope of contractarian morality to a domain where its application seems both promising and necessary. We show that the problem lies not in contractarians' immodest ambitions but in the modest resources rationality can offer to satisfy them

Social Trust, Cooperation, and Human Capital

The importance of social trust on economic growth has been suggested by many empirical works. This paper formalizes the concept of social trust and studies its formation process in a game theoretic setting. It provides plausible explanations for a wide range of empirical and experimental findings. The main results of the paper are as follows. For utility-maximizing players, cooperation arises in one-period prisoner’s dilemmas if and only if there is social trust. The amount of social trust in a given game is determined by the distribution of players’ cooperative tendency. Cooperative tendency is in essence a component of human capital distinct from cognitive ability. Its investment, however, is typically not efficient because the social returns are always strictly larger than individual returns. This positive investment externality leads to multiple equilibria in social trust formation, but a unique stable equilibrium may also exist. The different effects of legal institutions, information structure and education programs on social trust are also investigatedsocial trust, cooperative tendency, prisoner's dilemma

A Reason for Unreason: Returns-Based Beliefs in Game Theory

Players cooperate in experiments more than game theory would predict. We introduce the ‘returns-based beliefs’ approach: the expected returns of a particular strategy in proportion to total expected returns of all strategies. Using a decision analytic solution concept, Luce’s (1959) probabilistic choice model, and ‘hyperpriors’ for ambiguity in players’ cooperability, our approach explains empirical observations in various classes of games including the Prisoner’s and Traveler’s Dilemmas. Testing the closeness of fit of our model on Selten and Chmura (2008) data for completely mixed 2 × 2 games shows that with loss aversion, returns-based beliefs explain the data better than other equilibrium concepts

It is Hobbes, not Rousseau : an experiment on social insurance

We perform an experiment on social insurance to provide a laboratory replica of some important features of the welfare state. In the experiment, all individuals in a group decide whether to make a costly effort, which produces a random (independent) outcome for each one of them. The group members then vote on whether to redistribute the resulting and commonly known total sum of earnings equally amongst themselves. This game has two equilibria, if played once. In one of them, all players make effort and there is little redistribution. In the other one, there is no effort and nothing to redistribute. A solution to the repeated game allows for redistribution and high effort, by the threat to revert to the worst of these equilibria. Our results show that redistribution with high effort is not sustainable. The main reason for the absence of redistribution is that rich agents do not act differently depending on whether the poor have worked hard or not. There is no social contract by which redistribution may be sustained by the threat of punishing the poor if they do not exert effort. Thus, the explanation of the behavior of the subjects lies in Hobbes, not in Rousseau

It is Hobbes, not Rousseau:an experiment on voting and redistribution

We perform an experiment which provides a laboratory replica of some important features of the welfare state. In the experiment, all individuals in a group decide whether to make a costly effort, which produces a random (independent) outcome for each one of them. The group members then vote on whether to redistribute the resulting and commonly known total sum of earnings equally amongst themselves. This game has two equilibria, if played once. In one of them, all players make effort and there is little redistribution. In the other one, there is no effort and nothingWe thank Iris Bohnet, Tim Cason, David Cooper, John Duffy, Maia Guell, John Van Huyck and Robin Mason for helpful conversations and encouragement. The comments of the Editor and two referees helped improve the paper. We gratefully acknowledge the financial support from Spain’s Ministry of Science and Innovation under grants CONSOLIDER INGENIO 2010 CSD2006-0016 (all authors), ECO2009-10531 (Cabrales), ECO2008-01768 (Nagel) and the Comunidad de Madrid under grant Excelecon (Cabrales), the Generalitat de Catalunya and the CREA program (Nagel), and project SEJ2007-64340 of Spain’s Ministerio de Educación y Ciencia (Rodríguez Mora).Publicad