Philosophy, Politics, and Economics: An Introduction

by Gerald Gaus, John Thrasher

Overview

An updated and expanded edition of the classic introduction to PPE—philosophy, politics, and economics—coauthored by one of the field’s pioneers

Philosophy, Politics, and Economics offers a complete introduction to the fundamental tools and concepts of analysis that PPE students need to study social and political issues. This fully updated and expanded edition examines the core methodologies of rational choice, strategic analysis, norms, and collective choice that serve as the bedrocks of political philosophy and the social sciences. The textbook is ideal for advanced undergraduates, graduate students, and nonspecialists looking to familiarize themselves with PPE’s approaches.

Starting with individual choice, the book develops an account of rationality to introduce readers to decision theory, utility theory, and concepts of welfare economics and consumer choice theory. It moves to strategic choice in game theory to explore such issues as bargaining theory, repeated games, and evolutionary game theory. The text also considers how social norms can be understood, observed, and measured. Concluding chapters address collective choice, social choice theory and democracy, and public choice theory’s connections to voters, representatives, and institutions.

Rigorous and comprehensive, Philosophy, Politics, and Economics continues to be an essential text for this popular and burgeoning field.

• The only book that covers the entirety of PPE methods
• A rigorous, nontechnical introduction to decision theory, game theory, and positive political theory
• A philosophical introduction to rational choice theory in the social sciences

Product Details

ISBN-13:	9780691219806
Publisher:	Princeton University Press
Publication date:	11/16/2021
Sold by:	Barnes & Noble
Format:	eBook
Pages:	338
File size:	59 MB
Note:	This product may take a few minutes to download.

About the Author

Gerald Gaus (1952–2020) was the James E. Rogers Professor of Philosophy at the University of Arizona. His books include The Tyranny of the Ideal (Princeton). John Thrasher is an associate professor in the Department of Philosophy and the Smith Institute for Political Economy and Philosophy at Chapman University. He is the coauthor of The Ethics of Capitalism.

Table of Contents

Preface xi

Introduction 1

1 Rationality 6

Rationality and Choice 6

What Is Rationality? 7

Rationality as Effectiveness 9

Subjective Rationality 10

Rationality and Sound Belief 12

Rational Belief and Choice 12

Rationality and Goals 16

Actions and Goals 21

From Rational Choice to Homo Economicus 25

Optimizing-More Is Better than Less 25

Decreasing Marginal Value 26

The Law of Demand-Downward Sloping Demand Curves 29

Self-Interest 30

Constrained Maximization 33

Conclusion 34

Discussion Questions 34

2 Ordinal Utility Theory 36

Building Blocks 36

Preferences 37

Preferences as Tastes or Desires 38

Revealed Preferences: The Behavioral Interpretation 40

Deliberation Actions, and Outcomes 42

Actions and Outcomes 42

Preferences Over Actions 43

Ordinal Utility Theory 45

Why Accept the Axioms? 48

Conclusion 50

Discussion Questions 51

3 Cardinal Utility 53

Cardinal Utility 53

Generating Cardinal Utilities 56

Representation of Utility 58

Interpersonal Comparisons 59

Expected Utility 61

Questioning the Axioms 62

Continuity 63

Better Prizes 63

The Allais Paradox 64

The Ellsberg Paradox 66

Prospect Theory 68

Psychology and Expected Utility Theory 68

Errors in Probability Judgments 69

Framing Effects 72

Endowment Effects 73

Do These Findings Undermine Expected Utility Theory? 73

The Relation Between Utility Theory and Rationality 77

Rationality and Maximizing Utility 79

Conclusion 80

Discussion Questions 80

4 Efficiency and Contract 82

Rationality and Efficiency 82

Exchange and the Edgeworth Box 85

Problems with Pareto Efficiency 88

Indeterminacy 89

Path-Dependence 89

Conflicts Between Efficiency and Rationality 91

Efficiency and Welfare 91

Markets and Efficiency 92

Externalities 94

Compensation and Kaldor-Hicks Efficiency 95

Welfare, Rights, and the Liberal Paradox 97

Property Rights 99

Using Rights to Define Externalities 100

The Coase Theorem 101

Public Goods 103

Non-Excludability and the Free-Rider Problem 105

Non-Rival Consumption 106

Public Goods and State Action 107

Homo Economicus or Voluntary Cooperation? 109

Conclusion 110

Discussion Questions 111

5 Foundations of Game Theory 112

Strategic Rationality 112

Zero-Sum Games 116

Extensive Form Zero-Sum Games 117

The Prisoner's Dilemma 119

Rationality and Efficiency 123

Public Goods and the Prisoner's Dilemma 127

Coordination Games 128

Chicken 128

Stag Hunt 131

Battle of the Sexes 134

Dominance and Rationalizability 136

Mixed Strategies 140

The Nash Existence Theorem 142

Mixed Strategies in a Coordination Game 145

Do People Play Nash? 148

Suhgame Perfection and Backwards Induction 150

The Farmer's Game 150

Two Kidnappers 152

Backwards Induction 153

Gauthier's Solution 154

Nuclear Deterrence 156

Commitment 157

Conclusion 158

Discussion Questions 159

6 Advanced Topics in Game Theory 161

Repeated Games 161

Tit-for-Tat and the Evolution of Cooperation 162

The Folk Theorem 165

The Evolution of Direct Reciprocity 165

Evolutionary Games 166

Hawk-Dove Game 168

Evolutionary Stable Strategies 170

Asymmetries and the Origin of Property Rights 171

Polymorphic Equilibria 174

ESS and Nash 175

Evolutionary Game Theory and Rationality 176

Signaling 177

Bargaining Theory 181

Conclusion 190

Discussion Questions 191

7 Conventions, Norms, and Institutions 192

Conventions 192

Conventions and Coordination 193

How Do Conventions Emerge? 194

Common Knowledge 195

Conventions and Arbitrariness 197

Convention and Contract 198

Social Norms 200

What Norms Do 203

Norms and Cooperation 205

Norms and Nash 207

Bad Norms 209

Institutions 212

Two Types of Institutions 215

Institutions and Transaction Costs 216

Conclusion 218

Discussion Questions 218

8 Social Choice Theory 220

The Problem of Social Choice 220

Social Choice Theory 223

Collective Rationality 225

May's Theorem and Majority Rule 226

May's Conditions 227

May's Argument 229

Arrow's Theorem 230

Condorcet Voting and Its Paradox 230

Arrow's Conditions 231

The First Stage of the Theorem: From Local Semi-Decisiveness to Global Decisiveness 233

The Second Stage of the Theorem: Finding the Dictator 237

Representation and Coherence 238

The Importance of Arrow's Theorem 238

Does Arrow's Theorem Challenge Democracy? 238

Dimensionality 240

Collective Choice Rules 241

Problems of Collective Choice Rules 243

Extending Social Choice Rules 244

Condorcet Method 245

A Wealdy Positional Method: Plurality 245

A Strongly Positional Method: Borda Count 247

Cardinal Methods 249

Elimination Methods 250

What to Choose? 253

Path Dependency and Agenda Manipulation 253

Path Dependency in Legislation 254

Agenda Control in the Flying Club 257

Strategic Voting 260

Other Examples of Strategic Voting 261

Logrolling: Vote Trading in Legislatures 262

The Gibbard-Satterthwaite Theorem 264

Conclusion 264

Discussion Questions 265

9 Public Choice and Democracy 266

Basic Spatial Model of Democracy 267

Uncertainty and Ideology 269

The Simple Spatial Model 270

Complicating the Basic Spatial Model 272

The Plurality Rule and the Two-Party System 274

Choosing the Rules 275

Unanimity 276

Bicameralism 280

Logrolling and Making Everyone Worse Off 283

Intertemporal Coalitions 286

Homo Economicus and the Symmetry Assumption 287

Voting and Rationality 292

Non-Electoral Utility 294

The Act and Expression of Voting 297

Conclusion 298

Discussion Questions 299

Bibliography 301

Index 313

What People are Saying About This

From the Publisher

"Gerald Gaus was an internationally renowned leading figure in the newly emerging field of PPE and one of the top contemporary political philosophers. This book is testimony to both. What is most impressive is how it combines sustained philosophical argument with an overview of important ideas in PPE."—Fabienne Peter, University of Warwick

"Concise, clear, and accessible, Philosophy, Politics, and Economics would work very well in an introduction to PPE gateway course and as a companion text to a philosophy of economics or philosophy of the social sciences course. There isn’t a comparable book on the market."—Ryan Muldoon, University at Buffalo

"I have used the previous edition of Philosophy, Politics, and Economics extensively in my PPE program for nearly a decade. It has worked wonderfully, including for students with no background in game theory or social choice theory, or even basic rational choice theory. But the new edition is somehow far better, with clearer examples, simpler writing, and useful new material on norms and conventions. I will use this textbook in my PPE courses for years to come."—Kevin Vallier, Bowling Green State University

“Given the number of PPE undergrads who go on to become leading politicians around the world, this really is a book that might over time make the world a better place, by introducing rigor with depth to the undergraduate curriculum.”—Paul Tucker, president of the National Institute for Economic and Social Research