Rationality and Society

It is well known that the `shadow of the future' affects behavior in social dilemma situations such as the Prisoner's Dilemma or the Trust Game (e.g. Axelrod 1984). How past experience, stemming from interactions with other subjects (`history' or `shadow of the past'), is influencing a subject's current behavior in social dilemma situations is less well known. In this article, we distinguish between situations with and without such a history. The simple theory we lay out here predicts no effects of the past on current behavior in dilemma situations. However, we present experimental evidence on behavior in social dilemma situations that is in conflict with this theory, revealing that history effects do indeed influence a subject's behavior. Two main elaborations of the theory are suggested which stem from the past of these dilemma situations, namely, additional and more complex utility arguments and additional and more complex information structures. We discuss how these arguments can be taken into account, leading to a more accurate analysis of behavior in social dilemma situations.

Friedrich A. Hayek's critique of rationalism is often deemed inevitably to lead to conservative conclusions regarding designed change in the social world. Indeed, Hayek produced plenty of arguments to discourage state intervention. After spelling out the main elements of his cognitive view of society with its typical stress on the limited role of reason, I elaborate on his multiple argumentative strategy against intervention to argue that the convincing premises of Hayek's thought, his social epistemology, in particular, (i) have no necessary connection with his normative and political convictions and (ii) are, in fact, at odds with the conclusions, leading to challenging these convictions.

This article brings a rational-choice perspective to bear on (1) some utility characteristics of people who initiate collective action and (2) reasons why such initiators' actions induce followers who appear to act according to the threshold theory described by Granovetter. This article also identifies certain personality/psychological factors and their interactions with individual costs/benefits of alternative choices that determine (1) the relative utility of taking Action versus Non-action and (2) individual thresholds of choosing Action.

Among personality/psychological factors, this article examines the effect of uncertainty preference, susceptibility to rumor or prophecy, and personal efficacy. Certain parametric non-expected utility models and a binary choice model are used to accommodate those factors into a rational-choice framework.

Three examples, including two situations of collective action, are discussed. One is a case of Mertonian self-fulfilling prophecy where the initially groundless rumor of a bank's insolvency causes bankruptcy. The second is a case of participation in a risky social/political movement. As a third example, the famous Allais paradox is revisited to show how the parametric non-expected utility models employed provide a rational explanation for this empirically observed paradox.

This article describes a vignette experiment on the effects of temporal embeddedness and network embeddedness in trust situations. The experiment uses a setting in which a buyer wants to buy a used car from a car dealer. We distinguish between effects on trust of the past relation and the effects of the expected future relation between the buyer and the dealer. A buyer can learn about the trustworthiness of the dealer from past transactions of the dealer. Moreover, the buyer can control the dealer if the buyer and the dealer expect more transactions in the future, because the buyer may sanction the dealer if the dealer would act untrustworthy in the present transaction, for example, by refraining from future transactions. Temporal embeddedness facilitates learning and control through the bilateral relation of the buyer and the dealer, while network embeddedness facilitates learning and control through third parties. In the experiment, subjects are asked to compare different settings for buying a used car, while the relation between the buyer and dealer is varied in these settings. We conclude that both learning and control affect trust at the level of the dyad (temporal embeddedness) as well as at the group-level (network embeddedness).