When Social Ontology Meets Economics

A recent issue of the Journal of Institutional Economics was partially dedicated to the nature of rules and institutions. It was centered on an important and stimulating paper by philosophers Frank Hindriks and Francesco Guala with comments by well-known economists and philosophers: Vernon Smith, Masahiko Aoki, Robert Sugden, Ken Binmore, Geoffrey Hodgson and John Searle. In this paper, Hindriks and Guala criticize the two dominant accounts of the nature of institutions in the social sciences: the “institutions-as-equilibria” account which characterize institutions as behavioral patterns induced by equilibrium play in games on the one hand; the “institutions-as-rules” account which define institutions as constraints in which individual and collective behavior are embedded. They propose instead an original approach which they label “rules-in-equilibrium”. Following the provocative suggestion of Herbert Gintis, they suggest that institutions act as “choreographers” signaling to each individual what they have to do in a given social situation. Formally, institutions are then modeled as correlated equilibria in a game.

Francesco Guala’s book Understanding Institutions, published last year, builds and expands this rules-in-equilibrium account. It explores several implications and issues related to this view if institutions: the normativity of rules, the role of collective intentionality and of mindreading in social interactions, the issue of reflexivity and (causal and constitutive) dependence of institutions on individual perceptions and behavior, realism versus constructionism, … For interested readers, I have published a review of Guala’s book in OEconomia (freely available here) where I discuss some of these points but also point out some limits. I think the most significant contribution of Guala and Hindriks’s work is that it highlights the necessity and the relevance of what I would call a “naturalistic” approach to social ontology, i.e. the philosophical and methodological commitment to use methods, tools and results of (social) sciences to inquire into the nature of the social world. A similar commitment also characterizes a series of papers by J.P. Smit, Filip Buekens and Stan du Plessis in which they develop “incentivized-action view” of institutions (see this recent paper in JOIE or this older one in Economics and Philosophy). I would suggest that this reflects a more global change in the relationship between philosophy and the social sciences which is well-illustrated for instance by Don Ross and Harold Kincaid’s introduction of the Oxford Handbook of Philosophy of Economics. This is also pointed out by Robert Sugden in his review of another recent and important work in social ontology, Brian Epstein’s book The Ant Trap: Rebuilding the Foundations of the Social Sciences (which has recently received the Lakatos Prize). Sugden suggests that social ontology’s contribution cannot be to provide foundations to economics or other social sciences but rather to point out details or problems in scientific accounts of social phenomena and to motivate further scientific theoretical and empirical explorations. In other words, social ontology is not prior to social science modeling and empirical research; it rather goes with it taking seriously the tools used and the issues tackled by social scientists.

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One thought on “When Social Ontology Meets Economics

  1. Thanks for an interesting comment on social ontology and economics. I agree that social ontology is itself of Field of contested theory, but it seems that the question of human rationality, as a competence of all humans, biologically based and independent of specific cultures in its basic structure is a fundamental question in social and Natural science. Searle treats this question in his ouevre and especially in Rationality in action (2001). Nadia von Jacobi and I touch on the fundamental in Our 2016 analysis of social innovation. I try to move somewhat more extensively into how Searle’s gap theory can be transposed into the Field of institution studies in Gran 2017 (Routledge), investigating aspects of the transposition in the Development of Norwegian fisheries, both its modes of organization and Public regulation. I would appreciate the chance to expand a bit on the results of that investigation here in the blog – and perhaps in a New article in JOIE. TG

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