When Does "Economic Man" Dominate Social Behavior?

@article{citeulike:528376, abstract = {The canonical model in economics considers people to be rational and self-regarding. However, much evidence challenges this view, raising the question of when "Economic Man" dominates the outcome of social interactions, and when bounded rationality or other-regarding preferences dominate. Here we show that strategic incentives are the key to answering this question. A minority of self-regarding individuals can trigger a "noncooperative" aggregate outcome if their behavior generates incentives for the majority of other-regarding individuals to mimic the minority's behavior. Likewise, a minority of other-regarding individuals can generate a "cooperative" aggregate outcome if their behavior generates incentives for a majority of self-regarding people to behave cooperatively. Similarly, in strategic games, aggregate outcomes can be either far from or close to Nash equilibrium if players with high degrees of strategic thinking mimic or erase the effects of others who do very little strategic thinking. Recently developed theories of other-regarding preferences and bounded rationality explain these findings and provide better predictions of actual aggregate behavior than does traditional economic theory.}, author = {Camerer, Colin F. and Fehr, Ernst }, citeulike-article-id = {528376}, doi = {http://dx.doi.org/10.1126/science.1110600}, journal = {Science}, keywords = {aggregation, behavioral, bounded-rationality, cooperation, economics, minority-influence, preferences}, month = {January}, number = {5757}, pages = {47--52}, posted-at = {2006-03-03 16:07:24}, priority = {0}, title = {When Does "Economic Man" Dominate Social Behavior?}, url = {http://dx.doi.org/10.1126/science.1110600}, volume = {311}, year = {2006} }

TY - JOUR ID - citeulike:528376 L3 - citeulike-article-id:528376 TI - When Does "Economic Man" Dominate Social Behavior? JF - Science VL - 311 IS - 5757 SP - 47 EP - 52 N2 - The canonical model in economics considers people to be rational and self-regarding. However, much evidence challenges this view, raising the question of when "Economic Man" dominates the outcome of social interactions, and when bounded rationality or other-regarding preferences dominate. Here we show that strategic incentives are the key to answering this question. A minority of self-regarding individuals can trigger a "noncooperative" aggregate outcome if their behavior generates incentives for the majority of other-regarding individuals to mimic the minority's behavior. Likewise, a minority of other-regarding individuals can generate a "cooperative" aggregate outcome if their behavior generates incentives for a majority of self-regarding people to behave cooperatively. Similarly, in strategic games, aggregate outcomes can be either far from or close to Nash equilibrium if players with high degrees of strategic thinking mimic or erase the effects of others who do very little strategic thinking. Recently developed theories of other-regarding preferences and bounded rationality explain these findings and provide better predictions of actual aggregate behavior than does traditional economic theory. KW - aggregation KW - behavioral KW - bounded-rationality KW - cooperation KW - economics KW - minority-influence KW - preferences AU - Camerer, Colin AU - Fehr, Ernst PY - 2006/01/06/ UR - http://dx.doi.org/10.1126/science.1110600 ER -