IMCH7new07 - Chapter 7 Explaining Tastes The Importance of...

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Chapter 7 Explaining Tastes: The Importance of Altruism and Other Nonegoistic Behavior Chapter Summary Chapter 7 examines the concept of rationality, in particular the idea that rationality implies selfishness. The well-known example of the prisoner's dilemma illustrates that acting in one's own interest, narrowly defined, often leads to outcomes which are less than optimal. The chapter begins with a discussion of altruistic behavior and expands that notion into an extended example of hawks and doves. Behavior commonly viewed as irrational may serve the individual’s interest because for certain personality types and for certain types of tasks, the results of cooperation are better than the results of narrow self-interested behavior. Identifying other cooperators is an important part of making altruism work, so commitment and signaling devices are analyzed. Some attention is given to the role of emotions in signaling the type of person one is. If one is known to have emotions of a particular kind, advantages could result. For example, it may be irrational for someone to prosecute over a petty theft, but if the thief believes that his potential victim will pursue him to the utmost extent of the law, then stealing may become irrational. A commitment to act in a certain way will often deter an undesirable outcome. It is important that tastes vary among individuals. Indeed they will vary if optimal welfare is to be achieved. Chapter Outline Chapter Preview An Application of the Present-Aim Standard: Altruistic Preferences The Strategic Role of Preferences The Commitment Problem Illustration: The Cheating Problem A Simple Thought Experiment Tastes Not Only Can Differ, They Must Differ The Importance of Tastes Summary Teaching Suggestions 1. For this chapter to be taught well, one must recognize the methodological implications, and the practical and institutional applications of the material. One should first read and study the last paragraph in the chapter. Unless this section is understood, the material will be taught as trees in a vague forest. In Chapter 1 we learned that rational choice, not present aim rationality, was useful because it worked from objectives common to most. People with unusual objectives do things that are not predictable. However, now we examine behavior that is not common to most, cooperation rather than competition. We find that it can be rational to sacrifice individual self interest and focus on the common good. Some have a taste for cooperation and some for competition, or defecting as the text harshly calls it. What is necessary for the cooperation models to be helpful is an explanation of how an alternative taste, such as cooperation, can be advantageous to the person having that taste. If we find that cooperating is advantageous, then it will exist and perhaps thrive. Wherever there are joint production opportunities, the cooperators fare better than the self-interested competitors. The key is recognizing that cooperating must be heartfelt and can not be faked effectively. Consequently there is a role for cooperators to play in a society, and the higher the payoff to
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IMCH7new07 - Chapter 7 Explaining Tastes The Importance of...

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