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Reconstructing normative economics on a foundation of mutual advantage

Objective

Economics has traditionally assumed that individuals seek to satisfy coherent and asocial preferences, and has used the satisfaction of those preferences as a normative criterion. This ‘neoclassical’ approach has supported a view of the market as an institution in which privately-motivated individual actions tend to produce socially beneficial consequences. These ideas have been called into question by recent developments in behavioural economics, which point to the cognitive limitations of economic agents, the instability of preferences, and the existence of pro-social motivations. A common inference is that traditional presumptions in favour of the market and against paternalism are invalidated. I aim to develop an approach to normative economics, and a corresponding understanding of the role of markets, which do not require neoclassical rationality assumptions but may still support those presumptions.

My approach is innovative in two ways. First, the criterion for normative analysis is opportunity, not preference satisfaction. Even if individuals lack coherent preferences, opportunities for mutually advantageous transactions can be defined in a normatively significant way, and competitive markets can be shown to be effective in providing such opportunities. Second, using a new version of the theory of ‘team reasoning’, the relationship between parties to a market transaction can be construed in terms of a joint intention to achieve mutual benefit. This motivation can support practices of trust and cooperation without disabling market incentives. Using the methods of theoretical and experimental economics and analytical philosophy, I will formalise and integrate these ideas and extend them to provide a new understanding of the role of government in the economy. This work will include analyses of distributional fairness, market ethics, and of the role of regulation in maintaining competitive markets in the face of consumers’ cognitive limitations.

Field of science

  • /social sciences/economics and business/business and management/commerce
  • /social sciences/economics and business/economics
  • /humanities/languages and literature/literary genres/essay
  • /humanities/philosophy, ethics and religion/ethics
  • /social sciences/economics and business
  • /humanities/philosophy, ethics and religion/philosophy/history of philosophy/modern philosophy
  • /humanities/philosophy, ethics and religion/philosophy

Call for proposal

ERC-2014-ADG
See other projects for this call

Funding Scheme

ERC-ADG - Advanced Grant

Host institution

UNIVERSITY OF EAST ANGLIA
Address
Earlham Road
NR4 7TJ Norwich
United Kingdom
Activity type
Higher or Secondary Education Establishments
EU contribution
€ 993 616,44

Beneficiaries (2)

UNIVERSITY OF EAST ANGLIA
United Kingdom
EU contribution
€ 993 616,44
Address
Earlham Road
NR4 7TJ Norwich
Activity type
Higher or Secondary Education Establishments
THE UNIVERSITY OF WARWICK
United Kingdom
EU contribution
€ 178 757,56
Address
Kirby Corner Road - University House
CV4 8UW Coventry
Activity type
Higher or Secondary Education Establishments