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Human Nature and Economics

Delve into the interplay of human nature and economics, examining behaviors, rationality, cooperation, competition, and allocative mechanisms. Uncover the complexities of human decision-making and societal dynamics. Gain insights on the evolutionary roots of our actions and their impact on societal structures.

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Human Nature and Economics

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  1. Human Nature and Economics

  2. Articles • The Riddle of the Human Species • By E.O. Wilson • Energy and Climate on the White House Agenda • Rethinking Mill and Paternalism • Mill, who believed that each individual is in a unique position to know what’s in her best interest, concluded that government may coerce citizens to refrain only from acts that are hazardous to others, and has no warrant for regulating an individual’s behavior. Whether this view is correct is, Sunstein claims, “an empirical question,” and recent research in cognitive psychology has seemed to show that in fact, we aren’t so good at choosing what’s best for us.

  3. Good and Bad • Write a list of 5 behaviors characteristic of a good person • Write list of 5 behaviors characteristic of a bad person

  4. Why Study Human Nature? • To what extent are desirable ends constrained by human nature? • Insatiability • Biophilia (ecophilia) • Fairness and concern for others • Attitudes towards the future • To what extent are allocative mechanisms constrained by human nature? • Are we inherently competitive, cooperative, or both? • Are we rational, emotional, or both? • Are people the same everywhere?

  5. Will Competition or Cooperation Solve Society’s Current Crises?

  6. What is the conventional economic model of human nature? • Homo-economicus • Self-interested • Insatiable • Rational • Competitive • Is this closer to your depiction of a good person or a bad person?

  7. Are People Rational?

  8. Split into two groups. Group 2 leave room

  9. Group 1 • Serious flu will kill 6000 people • Choice A: Conventional vaccine will save 2000 people • Choice B: Experimental vaccine has 1/3 chance of saving everyone, 2/3 chance of saving no one • Mark your choice and leave room

  10. Group 2 • Serious flu will kill 6000 people • Choice A: Conventional vaccine will result in death of 4000 people • Choice B: Experimental vaccine has 1/3 chance of saving everyone, 2/3 chance of saving no one • Mark your choice

  11. Are People Rational or Emotional? • Context: social security #, health care • Losses vs. gains • WTP vs. WTA • Is perfect rationality possible in a complex world?

  12. Are we Purely Self-interested? • Game theory and experimental economics • Ultimatum game • Dictatorship game • Public goods game

  13. Or do we care about others? • H. comunicus, concern for fairness and community preferences • H. naturalis, concern for sustainability and whole system preferences

  14. Evidence From Evolution • Cooperation and energy abundance • Dictyostelium discoideum (amoeba) • Myxococcus xanthus (self-organized, predatory, saprotrophic, single-species biofilm called a swarm) • In humans, genetic and cultural evolution interact

  15. Are People the Same Everywhere? • Ultimatum game across cultures

  16. Homo economicus, H. reciprocans, H. Comunicus Behavioral economics • Neuroeconomics Prosocial behavior Easterlin Paradox Choice under conflict Extrinsic and intrinsic • incentives Dictator game Ultimatum game

  17. Prisoner’s dilemma Public-good and commonpool Altruistic punishment Conditional cooperation

  18. Why Does this Matter? • Desirable ends • Humans are satiable • We have a broad range of needs • Desired ends are in relationship to what others have • Allocative mechanisms • Non-rival resources are best provided through cooperation, and we are highly adapted to cooperate • Rival resources may be effectively allocated through competition • Modeling humans as solely cooperative or solely competitive is entirely inappropriate

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