Mark D. White
Sorry this one slipped by me: the September 2010 issue of European Journal of Political Economy, edited by Manfred J. Holler and Vesa KIanniainen, is dedicated to ethics and economics. From the editor's introduction:
The focus is on the economic analysis of ethics and most of the contributors to this volume indeed are economists. This is perhaps also a consequence of the fact that economists have become increasingly interested in issues of justice, on the one hand, and methodology, on the other, and thereby some economists became indeed engaged students of philosophy. One could argue that this returns us to the roots, i.e., to Adam Smith. However, from the contributions in this special issue it is obvious that the tools have increased in quality and variety. The new tools, especially those that derive from game theory, allow a stringent analysis where Adam Smith and his contemporaries took refuge in a guessing game. However, the questions to be answered did not change, although they become more lucid as the contributions to this volume demonstrate. Some answers may still be missing, but this volume should make us to understand why this is the case.
There are a number of interesting papers in this collection, but allow me to highlight just a few (below the fold).
At first sight, modern economics and justice seem not to fit together. Whereas the former primarily deals with individual self-interest and extrinsic incentives, the latter deals with other-regardingness and intrinsic social motives. However, recent findings, mainly from the field of experimental economics, reintroduce aspects of justice into economic modeling. Other theories, evolutionary models for instance, take up the key findings and apply the economic rationale in order to find out why human traits which apparently run counter to individual self-interest may have survived. In this introductory note we date this discussion back to the days of Adam Smith and argue that he already set the basis for such a discussion. Apparently, Smith was well aware that principles of justice and the market may, at times, be contradictory. However, he also found that both served a common purpose, or so we will argue. We further aim at bringing together Smith's classical position with recent ideas, for instance Binmore's theory of justice, and see whether the one can be fruitful for the other.
"On Minimal Morals," by Gebhard Kirchgässner:
I define and classify moral (or altruistic) behaviour and discuss the necessity of moral behaviour for the functioning of a market economic and a democratic political order. I also evaluate claims that moral behaviour is unnecessary. Moral behaviour can only be stable if certain conditions hold, including most importantly that moral requirements for citizens not be too high; only a minimum standard of morality can be demanded if many citizens are expected to comply. Finally, I point to some problems of relying on moral behaviour.
"Firms' Ethics, Consumer Boycotts, and Signalling," by Amihai Glazer, Vesa Kanniainen, Panu Poutvaara:
This paper develops a theory of consumer boycotts. To affect a firm's ethical behavior, moral consumers refuse to buy from an unethical firm. Consumers who do not care about ethical behavior may join the boycott to (falsely) signal that they do care, increasing the disciplinary power of consumer boycotts. In the firm's choice between ethical and unethical behavior, the optimality of mixed and pure strategies depends on the cost of producing ethically. In particular, when the cost is (relatively) low, ethical behavior arises from a prisoners' dilemma as the firm's optimal strategy.
"Corporate Virtue: Treatment of Whistle Blowers and the Punishment of Violators," by Daniel G. Arce:
An evolutionary game-theoretic model is employed to address three essential aspects of whistle blowing: ethical decision making, the duality of mutual accountability among cohorts in large organizations, and role conflict between individual and organizational values. I derive an equilibrium condition relating the treatment of whistle blowers to the punishment of violators. The model facilitates an evaluation of the whistle blowing provisions in the Sarbanes–Oxley (2002) Act.
"A New Approach to Procedural Freedom in Game Forms," By Marlies Ahlert:
This paper presents a new framework for ranking procedures in terms of freedom of choice. The concept of game forms is used to model procedures as a structure of individuals' interactions. Sets of outcomes for an individual are represented by the individual's own perceptions of the social states that are generated by the interaction of all individuals. I condense the information given by a game form and by the perceptions of outcomes to two sets for each individual, first the set of perceived outcomes the individual can actively determine and secondly the set of perceived outcomes the individual can actively exclude from happening. Techniques that are known from the literature on ranking opportunity sets in terms of freedom of choice are applied to the pairs of determination and exclusion sets. I propose different rankings of game forms in terms of procedural freedom, some of which I characterize axiomatically. The model and the rankings are illustrated by classical examples from Game Theory and Social Choice Theory.