THE LIMITS OF A NEOCLASSICAL FRAMEWORK

Some years ago, I took a methodology course in rational choice theory. As part of our first class, we were taken to a new, gleaming behavioral economics laboratory to play a repeated prisoners’ dilemma game. The system randomly paired anonymous members of the class to play against each other. We were told the objective of the game was to maximize our individual scores. Thinking that there were clear gains to make from cooperation and plenty of opportunities to punish a defector over the course of repeated interactions, I attempted to cooperate on the first round. My partner defected. I defected a couple of times subsequently to show I was not a sucker. Then I tried cooperating once more. My partner defected every single time in the repeated series.

At the end of the game, we were de-anonymized and it turned out, unsurprisingly, that I had the lowest score in the class. My partner had the second lowest. I asked her why she engaged in an evidently suboptimal strategy. She explained: “I didn’t think we were playing to get the most points. I was just trying to beat you!”

Game theoretic models like the prisoners’ dilemma have proved to be compelling and productive analytical tools in social science, clarifying the core of many challenges to collective action. The prisoners’ dilemma illustrates how given certain situations, or rules of the game, self-interested agents will be stymied from reaching optimal or mutually beneficial outcomes. But my experience illustrates a general finding that there is often something more complex going on even in relatively simple social interactions.

The laboratory situation replicated the formal prisoners’ dilemma model as closely as possible with explicit rules, quantified “objective” (though admittedly, in this case, low-value) payoffs, and a situation designed to isolate players as if they were prisoners in different cells. Yet even in these carefully controlled circumstances, it turns out that the situation is subject to multiple interpretations and understandings. Whatever the textual explanation accompanying the game, the score on the screen could mean something different to the various players. The payoffs for the representative agents in the game were not the same as the payoffs in the minds of the human players. In a sense, my partner and I were unwittingly playing different games (although I lost within either rules of the game!).

When we engage with the social world, it is not only the case that our interests may not align with other people’s, rather it’s a question of who gets a seat on the bus or the last chocolate torte at the buffet. We are also uncertain as to what people’s interests and motivations are. Social interaction is open ended. We do not know all the possible moves in the game, and we do not know much about the preference set of everyone else who is playing. Indeed, neither they nor we know what a “complete” set of preferences and payoffs would look like, even of our own (Shackle 1970, 100). We can map out a few options and likely outcomes through reflection and experience, but even then we may face outcomes we do not anticipate. As Boettke (2014, 236) explains: “We strive not only to pursue our ends with a judicious selection of the means, but also to discover what ends that we hope to pursue.”

In addition, the rules of the game themselves are not, in the final analysis, merely exogenous impositions on us as agents. They are constituted intersubjectively by the practices, beliefs, and values of the actors who are also participants in the social game (Grube and Storr 2015; Boettke and Storr 2002). The social world thus presents inherent uncertainty and change that cannot be captured in a formal model that assumes fixed rules of the game and the given knowledge of the players.

This account illustrates some limits to a neoclassical economic framework that assumes given preferences and utility maximizing agents who act independently with complete information (Weintraub 1993). I now turn briefly to why these limits are relevant for behavior in political settings in particular.

 
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