Monday, November 20, 2006
Frank on Moral Consequential Reasoning, Goodenough on Values and Fairness in Free Market Institutions, and a Gift Recommendation for Your Favorite Philosopher
Based on the posting of two chapters on SSRN, MORAL MARKETS: THE CRITICAL ROLE OF VALUES IN THE ECONOMY, Paul J. Zak, ed., Princeton University Press (2007) has just gone on my book order list or my holiday gift list, whichever comes first. This sounds like a must-read for those of us who play in the overlap between morality and markets. (Unfortunately I cannot find a link for it yet either on Amazon or at the PUP web site.)
First we have "The Status of Moral Emotions in Consequentialist Moral Reasoning" by Robert H. Frank (Cornell - Economics). Here is the abstract:
The philosopher Bernard Williams describes an example in which a botanist wanders into a village in the jungle where ten innocent people are about to be shot. He is told that nine of them will be spared if he himself will shoot the tenth. What should the botanist do? Although most people would prefer to see only one innocent person die rather than ten, Williams argues that it would be wrong as a matter of principle for the botanist to shoot the innocent villager. And most people seem to agree.
The force of the example is its appeal to a widely shared moral intuition. Yet some philosophers counter that it is the presumed validity of moral intuitions that such examples call into question. These consequentialists insist that whether an action is morally right depends only on its consequences. The right choice, they argue, is always the one that leads to the best overall consequences.
I will argue that consequentialists make a persuasive case that moral intuitions are best ignored in at least some specific cases. But many consequentialists appear to take the stronger position that moral intuitions should play no role in moral choice. I will argue against that position on the grounds that should appeal to their way of thinking. As I will attempt to explain, ignoring moral intuitions would lead to undesirable consequences. My broader aim is to expand the consequentialist framework to take explicit account of moral sentiments.
The recognition of the character of consenting players by other consenting players assists humans in taking part in productive, consensual interactions. Classical economic modeling gave insufficient attention to the structural requirements of trade and cooperative interaction. A combination of game theory and institutional economics helps us to redress the balance, and leads us to the conclusion that values play an important role in many kinds of institutions, and are of fundamental importance in interactions that are not subject to complete structuring through such alternatives as law, physical mechanisms, or institutionalized markets. Values such as honesty and trustworthiness can be very effective in transactional contexts, helping in the restructuring process of mechanism design and changing the dominant solutions in interactions from those with poor cooperative outcomes to those with higher mutual potential.
Fairness, by contrast, often plays a different role. It can be viewed, at least in part, as a measuring process in which we decide whether participation in the game as designed is individually rational, i.e. desirable as a matter of uncoerced choice. The pay-off structures set in place by a bargaining system based on the marginal utility of the players may not match up with their fairness pricing, a problem which could lead to instability in the system. This instability can be resolved by adding an appropriately calibrated redistribution rule to the overall game, whether in a dyadic paring, a firm, or in society as a whole.