Rational Choice Theory Flashcards
What are the basic assumptions of RC theory?
A. Follows the principle of methodological individualism ( behaviour of people and their outcomes are analyses based on personal coast-benefit analyses
B. Follows the principle of micro-economic theory: actors Always maximise their utility given their goals and preferences
Who did the different versions of RC theory
Korobkin and Ulen
What did Korobkin and Ulen did? Explain
The different types of RC theory :
1. “Thin version”
A. Definitional version (interpretivism):
-assumption that people make rational décisions following preferences/ goals to maximise their ends
-we don’t know the goal, how did the decision was taken and why
-not falsifiable, broad so almost everything is rational
B. Expected utility version:
-the how is added: by calculation and by determining for each option thé coast and benefits
- “Thick version”:
A. The self-interest version:
-the why is added: to satisfy my own interests
B. Wealth maximization version:(positivism)
-a choice is rational when I hot money out of it
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Def of RC theory
. Model that simplifies complex social and political behaviour
. Assume that décisions are based on individual’s goals and preferences
. Focus on thé goals and the strategy employed
. Goals and strategy must bé clearly cited before thé analyse bcs otherwise it become a tautology
PS follows the road of economics due to:
. Creeping ‘economism’: eco models are aplied to political phenomena-> influenced the académic researches…
. Straightforwardness of eco principle: borrows clear and simple eco logical( consumer maximizing utility, producers who aims to maximize incomes …)
. Ease of making prediction (espcially thick version bcs Richer context)
Inadequacies of RC theory
.use of ‘calculating’ behaviour sa a tool for theory (assuming that indiv act are based on calculated coast-benefits analysis): often unclear motives
.cultural History: behaviour can be motivated by culture, id (ex:cross the road at a red light)
. expérimental psychology: lack of consistency of some behaviour( rational if I chose according to m’y préférence but prefering A over B has noting rational)
.Cognitive psychology: changing behaviour to feat thé expectations
. Political science: RC theory=/ collective action
. Challenge with préférences and stratégies: when they are ambiguous or unknown, tautology
. Thé existence of Homo Oeconomicus: thé portray of the perfect rational economic actor des not ecist
What is the chicago school of public choice?
- incorporate eco reasoning into thé analysis of political decision-making
-applay RC theory to political actors( utility maximisation..)
_key features:
. Using eco quandaries on political PB:
…voters, politicians, bureaucrates act thé same as market participants, driven by self interests and rational calculation
….critics on gov intervention in the market (sp by Robert-Lucas)
.public choice theory:
…offensive and provicative ( Milton Friedman)
…rational explenations (Robert Lucas): political actors anticipate thé conséquences of policy changes, which affect how efficient the policies Can be over thé Time ( ex: people know that if thé gov lower thé taxes, it is going to Rise again After: not only RC but also rational expectations)
What is the harmony of interests ( if it doesn’t exist)
Individual self-interest that clash, preventing thé achievement of collectivity optimal outcomes
PB of having divergent interests ( no harmony of interests)
. Fallacy of composition: what is rational and beneficial for an indiv is maybe not for the group as a whole
. Collective action issue (Manclur Olson)
What are the different types of good and according to who?
Mankiw:
Excludability( whether it is possible to prevent someone to use thé good)
Rivalery( whether one personnes use of thé good reduces it’s availability for thé others)
.private good: excludable and rival
.club good: not rival but excludable
.common good: rival but not excludable
. Public good: not rival and not excludable
Solution for the lack of harmony of interests
.capture theory (George Stigler): regulatory bodies are sus to being dominanted by industries they regulate so no institutions and no intervention in eco
.coercive mechanisms: using external enfoncement to align indiv actions with collective goals
. Incentivizing coopération: modifying thé play-off structures to make coopérative stratégies more appealing ( sanctions or rewards)
Def of office-seeking and policy-seeking
. Office seeking actors: actors that make policy only in order to have thé benefits associated with holding office ( power, money, prestige)
=/. Policy seeking actors: seek to achieve ideological believes
Forming coalition for office seeking actors
. Minimal size for a wining coalition( a coalition that if you withdraw one part, it become a minority) bcs thé less they are, the less thé pay-off has to bé shared (the more seats, power… a party has)
What are the 3 more popular games of Game Theory
. Chicken game
.prisonniers dilemma
. Assurance game
Tips to recognise which game it is
- situation
-preferences ( rate from 4: thé best to 1: thé worst outcome) - fill the Matrix ( me on the side of it and the other on thé top)
- Wonder thé questions what is thé best for me to do if thé others cooperate, then deflect:
. If u do thé same as the other: assurance game
. If thé dominant outcome is deflection: prisoner’s dilemma
.chicken game: if with threat I Can try to persuade thé others to cooperate while I am not BUT vital danger of thé worst outcome: both deflect
