Hostname: page-component-cd9895bd7-q99xh Total loading time: 0 Render date: 2024-12-26T04:24:50.533Z Has data issue: false hasContentIssue false
  • English
  • Français

Hume’s Game-Theoretic Business Ethics

Published online by Cambridge University Press:  23 January 2015

Peter Vanderschraaf
Get access Rights & Permissions [Opens in a new window]

Abstract:

In recent years, a number of authors have used game-theoretic reasoning to explain why purely self-interested agents would ever conform their economic activities with the requirements of justice, when by doing so they forego opportunities to reap unilateral net gains by exploiting others. In this paper, I argue that Hume’s justification of honest economic exchanges between self-interested agents in the Treatise foreshadows this contemporary literature. Hume analyzes the problem of explaining justice in self-interested economic exchange as a problem of agents coordinating on a pattern of reciprocal cooperation, as opposed to some other behavioral pattern such as reciprocal exploitation, in exchanges repeated over time. Hume’s arguments anticipate informally the contemporary interpretation of just economic practices as forming part of an equilibrium of a repeated game. I close the paper by arguing that Hume does not provide a satisfactory explanation of how the mutual expectations that support justice in economic exchange arise in a community of self-interested agents. The problem Hume leaves unsolved is one of equilibrium selection, that is: Why do agents follow an equilibrium corresponding to just economic exchanges rather than some other equilibrium corresponding to unjust exchanges? I also argue that contemporary game theory still lacks a satisfactory theory of equilibrium selection, but that such a theory would lead us closer to a satisfactory Humean reconciliation of justice and self-interest in economic exchange.

Type
Articles
Information
Business Ethics Quarterly , Volume 9 , Issue 1 , January 1999 , pp. 47 - 67
Copyright
Copyright © Society for Business Ethics 1999

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Axelrod, Robert. (1981) “The Emergence of Cooperation Among Egoists.” The American Political Science Review 75: 306–318.CrossRefGoogle Scholar
Axelrod, Robert. (1984) The Evolution of Cooperation. New York: Basic Books.Google Scholar
Bicchieri, Cristina. (1989) “Self Refuting Theories of Strategic Interaction: AParadox of Common Knowledge.” Erkenntnis 30: 69–85.Google Scholar
Bicchieri, Cristina. (1993) Rationality and Coordination. Cambridge: Cambridge University Press.Google Scholar
Binmore, Ken. (1987) “Modelling Rational Players I.” Economics and Philosophy 3: 179–241.Google Scholar
Binmore, Ken. (1992) Fun and Games: A Text on Game Theory. Lexington, Mass.: D. C. Heath and Company.Google Scholar
Binmore, Ken. (1994) Game Theory and the Social Contract Volume I: Playing Fair. Cambridge, Mass.: MIT Press.Google Scholar
Casson, Mark. (1991) The Economics of Business Culture: Game Theory, Transaction Costs, and Economic Performance. Oxford: Clarendon Press.Google Scholar
Dekel, Eddie and Gul, Faruk. (1997) “Rationality and Knowledge in Game Theory.” In Advances in Economics and Econometrics: Theory and Applications, Seventh World Congress, Vol. 1, Econometric Society Monographs No. 27, ed. Kreps, David and Wallis, Ken. Cambridge and New York: Cambridge University Press. Pp. 87–172.Google Scholar
Goodpaster, Kenneth. (1991) “Business Ethics and Stakeholder Analysis.” Business Ethics Quarterly 1: 53–73.Google Scholar
Friedman, Milton. (1970) “The Social Responsibility of Business is to Increase Its Profits.” New York Times Magazine, September 13, 1970. Reprinted in Ethical Theory and Business, 4th ed., ed. Beauchamp, Tom L. and Bowie, Norman E.Englewood Cliffs, New Jersey: Prentice Hall. Pp. 55–60.Google Scholar
Fudenberg, Drew and Tiróle, Jean. (1991) Game Theory. Cambridge, Mass.: MIT Press.Google Scholar
Gauthier, David. (1979) “Thomas Hobbes: Moral Theorist.” Journal of Philosophy 76: 547–559.Google Scholar
Gauthier, David. (1986) Morals By Agreement. Oxford: Clarendon Press.Google Scholar
Hobbes, Thomas. (1651, 1991) Leviathan. Edited by Tuck, Richard. Cambridge: Cambridge University Press.Google Scholar
Hume, David. (1740, 1888, 1976) A Treatise of Human Nature. Edited by Selby-Bigge, L. A. Revised 2nd. ed., edited by Nidditch, P. H.Oxford: Clarendon Press.Google Scholar
Hume, David. (1777, 1888, 1975) An Enquiry Concerning the Principles of Morals. Edited by Selby-Bigge, L. A. Revised 3rd. ed., edited by Nidditch, P. H.Oxford: Clarendon Press.CrossRefGoogle Scholar
Jeffrey, Richard. (1983) The Logic of Decision. 2nd ed. Chicago: University of Chicago Press.Google Scholar
Kavka, Gregory. (1983) “When Two ‘Wrongs’ Make A Right: An Essay on Business Ethics.” Journal of Business Ethics 2: 61–66.Google Scholar
Kavka, Gregory. (1986) Hobbesian Moral and Political Theory. Princeton: Princeton University Press.Google Scholar
Kavka, Gregory. (1989) “Political Contractarianism.” Unpublished manuscript.Google Scholar
Kelly, Arthur L. (1979) “Case Study—Italian Tax Mores.” In Ethical Issues in Business, ed. Donaldson, Thomas and Werhane, Patricia. Englewood Cliffs N.J.: Prentice-Hall. Pp. 37–39.Google Scholar
Klein, Daniel. (1989) “Cooperation Through Collective Enforcement: A Model of Credit Bureaus.” University of California at Irvine Economics Paper No. 89–90–2.Google Scholar
Lewis, David. (1969) Convention: A Philosophical Study. Cambridge, Mass.: Harvard University Press.Google Scholar
Linster, Bruce. (1992) “Evolutionary Stability in the Infinitely Repeated Prisoners’ Dilemma Played by Two-state Moore Machines.” Southern Economic Journal 58: 880–903.Google Scholar
Luce, R. Duncan and Raiffa, Howard. (1957) Games and Decisions: Introduction and Critical Survey. New York: John Wiley and Sons.Google Scholar
Maynard Smith, John. (1982) Evolution and the Theory of Games. Cambridge: Cambridge University Press.Google Scholar
Maynard Smith, John and Price, G. R. (1973) “The Logic of Animal Conflict.” Nature 146: 15–18.Google Scholar
Mehta, Judith; Starmer, Chris; and Sugden, Robert. (1994) “Focal Points in Pure Coordination Games: An Experimental Investigation.” Theory and Decision 36: 163–185.Google Scholar
Miller, Gary. (1992) “Ethics and the New Game Theory.” In Ethics and Agency Theory, ed. Bowie, Norman and Freeman, R. Edward. New York: Oxford University Press. Pp. 117–126.Google Scholar
Nash, John. (1950) “Equilibrium points in n-person games.” Proceedings of the National Academy of Sciences of the United States 36: 48–49.Google Scholar
Nash, John. (1951) “Non-Cooperative Games.” Annals of Mathematics 54: 286–295.Google Scholar
Pettit, Philip and Sugden, Robert. (1989) “The Backwards Induction Paradox.” Journal of Philosophy 4: 1–14.Google Scholar
Ramsey, Frank. (1926, 1931) “Truth and Probability.” In The Foundations of Mathematics and Other Essays. Edited by Braithwaite, R. B.New York: Harcourt Brace. Pp. 156–198.Google Scholar
Reny, Philip. 1988 (1992) “Common Knowledge and Games of Perfect Information.” in PSA 1988, vol. 2. Reprinted in Knowledge, Belief and Strategic Interaction, ed. Bicchieri, Cristina and Chiara, Maria Luisa Dalla. Cambridge: Cambridge University Press. Pp. 345–353.Google Scholar
Reny, Philip. (1992) “Rationality in Extensive Form Games.” Journal of Economie Perspectives 6: 103–118.Google Scholar
Skyrms, Brian. (1990) The Dynamics of Rational Deliberation. Cambridge, Massachusetts: Harvard University Press.Google Scholar
Skyrms, Brian. (1994) “Darwin Meets ‘The Logic of Decision’: Correlation in Evolutionary Game Theory.” Philosophy of Science 61: 503–508.Google Scholar
Skyrms, Brian. (1998) “The Shadow of the Future.” In Rational Commitment and Social Justice: Essays for Gregory Kavka. Edited by Coleman, Jules and Morris, Christopher. Cambridge: Cambridge University Press. Pp. 12–22.CrossRefGoogle Scholar
Skyrms, Brian and Vanderschraaf, Peter. (1997) “Game Theory.” In Handbook of Practical Logic. Edited by Smets, Philippe. Dordrecht: Kluwer. Pp. 455–512.Google Scholar
Sobel, Jordan Howard. (1994) Taking Chances: Essays on Rational Choice. Cambridge: Cambridge University Press.Google Scholar
Smith, Adam. (1776, 1976, 1981) An Inquiry Into the Nature and Causes of the Wealth of Nations, ed. Campbell, R. H.Skinner, A. S. and Todd, W. B.Indianapolis: Liberty Classics.Google Scholar
Sugden, Robert. (1986) The Economics of Rights, Cooperation and Welfare. New York: Basil Blackwell.Google Scholar
Taylor, Michael. (1987) The Possibility of Cooperation. Cambridge: Cambridge University Press.Google Scholar
Vanderschraaf, Peter. (1995) “A Study in Inductive Deliberation.” Dissertation, University of California at Irvine.Google Scholar
Vanderschraaf, Peter. (1998) “The Informal Game Theory in Hume’s Account of Convention.” Economics and Philosophy 14: 251–257.Google Scholar
von Neumann, John and Morgenstern, Oskar. (1944) Theory of Games and Economic Behavior. Princeton: Princeton University Press.Google Scholar