Lecture 6 Flashcards
Rational choice origins
▪ 1960s United States, Economics &
Political Science
▪ Core idea: behaviour is a rational selfinterested response to incentives (homo
economicus)
Types:
Rational actor theory (individual)
Public choice theory (governments)
Silhith(tiidiidl)
Behaviouralists simple question and rational choice (RC)
▪ Why do people behave the way they do?
▪ Rational choice theory fills in the why with
the homo economicus assumptions
Core characteristics rc
▪ Foundationalist (objectivist) ontology
(being)
▪ Positivist (scientific) epistemology
(knowledge)
▪ Privileges quantitative methodology
▪ Rational choice (RC) starts with theory. It
is therefore a deductive approach
Idealization over individual accuracy
▪ Rational choice models ‘work out how, in any
particular situation, people might behave given
their expectations of how other rational and
self-interested people are going to behave”
(LMS 41)
▪ The aim is an accurate prediction of how actors
behave in the aggregate, not a detailed
reconstruction of how they actually reach
decisions (HHM 27)
▪ So, RC models are based on idealization
Adam Smith early RC
It is not from the
benevolence of the
butcher, the brewer,
or the baker, that we
expect our dinner,
but from their regard
to their own interest.
Wealth of
Nations (1776) bk. 1,
ch. 2
RC assumptions in non economic settings
The discipline of
colleges and
universities is in
general contrived,
not for the benefit of
the students, but for
the interest, or more
properly speaking,
for the ease of the
masters.
Methodological individualism
▪ Shared assumptions with behaviouralism:
– behavior is predictable
– scientific explanations are based on the
interests, preferences and behaviors of
individual actors (methodological individualism)
▪ Similar logic is applicable to collective units
(political parties, institutions, cooperation’s,
states, etc.).
▪ This is the unitary actor assumption
Assumptions; rationality and self interest
- Goal oriented: people can be relied upon to try to secure
their goals and these goals reflect their self-interest (LMS
39). - Instrumental rationality: people are able to identify the
course of action most likely to allow them to achieve their
goals” (LMS 41). - Instrumental behaviour: actors try to maximize their selfinterest through cost-benefit analyses of their available
options - Stable interests: groups of actors have the same fixed and
self-interested goals which they pursue rationally (LMS 50).
Interests and preferences are assumed
- To be complete (they take into account all
possible involve courses of action and outcomes) - To be stable/fixed (they do not change easily)
- To be transitive
▪ If I prefer party A to party B
▪ And I prefer party B to party C
▪ Then, I also prefer party A to party C
Logic of collective action
The logic of collective action holds that:
▪ Given that individuals are rational,
groups, being composed of individuals,
are also rational.
▪ If a group shares a common goal which
everyone agrees is worthwhile, ordinarily
everyone will contribute to the realization
of this goal (LMS 43)
Failures collective action
▪ Some of the most interesting rational choice
theory considers when individual rationality can
lead to bad collective outcomes
– Keynes’ paradox of thrift (1936)-> What is this?
– Peltzman’s effect (1975) -> What is this?
▪ Political questions:
– What instruments are there? How effective are these?
– How far should governments go in manipulating such
behaviour?
Game theory; prisoner’s dilemma
▪ It seems rational for each prisoner to betray the
other. If they do, they will both spend 2 years in
prison. (nash equilibria)
▪ But this is not the best outcome – if they both
had stayed silent, they would each serve 1 year
less. (pareto optimal)
Solutions to collective action problems?
▪ Answers within the rational choice perspective
– Changing the incentive structure via rewards,
sanctions or nudges
– Government regulation
▪ Answers outside the rational choice perspective
– Socialization
– Norms
Olson, logic of collective action 1965
▪ Olson challenged the assumption that group
members tend to contribute to a collective goal
▪ Whether this is the case depends on what kind
of group it is. Olsen distinguished:
– Privileged groups
– Intermediate groups
– Latent groups.
Privileged groups
In privileged groups:
– At least one member values the good
enough to carry the entire cost (including
enforcing the outcome unilaterally, if
necessary)
– Individual costs/benefit calculations can
differ
Privileged groups do not suffer CA
problems
