Foundations of Social Choreography: Rationality, Preference, Motivation, and Institutions
Selections from Chapters 5 to 8 of Collective Action and Exchange: A Game-Theoretic Approach to Contemporary Political Economy (Stanford University Press, 2013)
Seminar Presentation for CeDEx, University of Nottingham, 11 June, 2014
William D. Ferguson, Gertrude B. Austin Professor of Economics
Grinnell College, Grinnell, IA 50112
Ferguso1@grinnell.edu
A bounded-rationality framework that incorporates social preferences can illustrate how institutions coordinate (or choreograph) social activity across relatively large groups of individuals—potentially leading to the resolution of otherwise intractable collective-action problems. The presence of social preference, notably inclinations toward reciprocity, can facilitate resolution of collective-action problems among small groups of agents—primarily by establishing reliable expectations of punishment for defection and/or rewards for cooperation. Classical game-theoretic models, based on substantive rationality with social preferences, can illustrate. Yet, resolution among larger groups requires more sophisticated social mechanisms and, correspondingly, more sophisticated modeling. Bounded rationality implies goal-oriented behavior with limited cognition and adaptive learning processes. Relatively tractable models of boundedly rational behavior, underlying cognitive processes and frameworks (mental models) may be derived from concepts presented by Conlisk (1996), Kahneman (2003), and Denzau and North (1994), among others. A related indirect evolutionary game-theoretic model (based on Güth, 1995) can illustrate that certain types of social preferences can be evolutionary stable. These concepts jointly offer foundations for a theory of institutions. Institutions (roughly, mutually understood behavioral prescriptions—formal or informal) operate as shared mental models (cognitive frameworks that specify categories as well as cause-effect relationships) that, in turn, provide motivation and information to individuals. More fundamentally, as shared mental models, institutions shape agents’ cognition. As such, institutions provide a form of social choreography (that can be modeled with epistemic game theory; Gintis, 2009): institutions channel or structure social relationships into somewhat predictable patterns that, in turn, can sometimes facilitate resolution of substantial collective-action problems among large groups.
JEL Codes: D01, D03, D8, B52