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Phiilo 143A
Social Policy: An application of Rationality, Game, Decision and Probability Theory
Philosophy of Economics and Moral Philosophy
Professor Berger email:
SYLLABUS
Requirements and Proposed Grading:
All students taking this course for credit will be required to present a small discussion paper on one of my many assigned topics. I will help you prepare for this. You must have a one to three page summary, outline or paper of what you will be presenting to class, with a list of your sources to be distributed to the class one week before you are to make the class presentation. 30 to 35% of your grade will be based on your class presentation and the material that you distribute to the class. An additional 5-10% of your grade will be based upon your class participation. The remainder of your class grade will be based upon your term paper, which will be due roughly at the end of the semester. The grade on your term paper will be worth approximately 60%.
Reading List—Philosophy of Economics: A Contemporary Introduction Routledge
Contemporary Introductions to Philosophy by Julian Reiss
Choice and Chance by Brian Skyrms paperback, published by
Wadsworth
Economic Analysis, Moral Philosophy and Public Policy, second edition, by
Daniel Hausman and Michael McPherson, Cambridge University Press
Choices: An Introduction to Decision Theory by Michael D. Resnik
Course Objectives:
This course is intended to show the interdependence of economics and social moral philosophy. I hope to show how understanding moral philosophy can improve economic theory and how moral philosophy can benefit from some of the analytical tools of economics, and how both economic analysis and moral philosophy are required to form social and public policy.
I believe it is extremely important for students in general, and students in particular specializing in Social Philosophy and Public Policy to have a clear sense as to how various quasi-technical machinery used in such decisions are employed in Social Philosophy and Public Policy. This will better enable students to evaluate how such machinery is implemented and whether it has a legitimate role (or is merely used as a pretext to smuggle in some controversial assumptions and value judgments). In particular, the course will show where and when value judgments are introduced in policy decision making as opposed to being introduced in mathematical notation because it is legitimate objective science. Consequently, we will have to cover a limited amount of philosophy of science, and a lot of the foundations of Economic theory, Decision theory, notions of Rationality, and Game Theory, especially with regard to their applications in Public Policy.
Along the way I will articulate some of the relations between the version of rational choice theory that economists employ and accounts of human action discussed by philosophers. This course will also assemble the materials out of which models of preference formation and modification can be constructed, and I will present comments for class discussion on how reason and emotion shape preferences.
The course will be open to both advanced undergraduate and graduate students. It is the first and only course in the philosophy department at Brandeis that will combine quasi-technical apparatus with a discussion of what this machinery implies for a given social choice. The course fills an important gap that is missing, of the relation between scientific theories and the normative judgments made in applying these theories to social/public policy. Many faculty members, realizing the importance in filling a big gap in our philosophy program have asked me to teach this course every year because of its importance in a philosophy program and because of the serious gap mentioned above. I would prefer, however, to teach this course less frequently.
I intend to discuss Game Theory and its use, especially in cost/benefit analysis. We will also discuss its role in mini-max decisions as opposed to maximizing expected utility. Most of these theories, because of their quasi-technical nature is often used in claims that they are “scientific” or more scientific than simple value judgments. My view is the exact opposite. I claim that these techniques merely hide the value judgments that are implicit in their use and application. For further details please see my rough outline of the major themes covered in the course (below).
Rough outline of the major themes to be covered in class:
Most weeks, I intend to invite distinguished faculty members who are experts on the given topic of the week, and its application to the particular social policy issue. Such people will include Paul Solman, an alumni who now explains economic issues on PBS T.V., and many other luminary's.
One of the key notions of economics is the notion of preferences. But few, if any economists say anything about either the foundations of preference or what they mean by this notion. I find four distinct things that could be meant by this notion, none of which are discussed by economists. I argue for one particular notion as what economists should mean by this notion, primarily on the grounds that this particular notion of preferences plays a key role in explaining and predicting and evaluating behavior and states of affairs, particularly in economics. These comments are mostly positive. My assessment of what economists say about what they do is less favorable than a lot of the above, and I criticize some misconceptions that distort the interpretations economists have offered of their practice. Accordingly, we shall begin the course with this topic.
There are generally four senses of probability theory: subjective, statistical, Bayesian and logical. I will explain how all four of these different senses of probability theory are used in making weather predictions and how we get different social policies depending upon which theory we use.
As a natural follow up to this topic I will then explore several different notions of rationality and their connection to morality. I will argue that economists, in defending their model of rationality, implicitly espouse contestable moral principles. We will also reveal the value judgment assumptions that are made in the notion of ‘rationality’ as presupposed in Economic Theory, sometimes referred to as "Pareto Optimizability." The next main topic I intend to discuss will be welfare, utilitarianism, and standard welfare economics. I will also introduce the notions of rationality of mini-max and Nash Equilibrium from game theory, and maximizing expected utility from decision theory.
After this topic, I intend to discuss important moral notions that are left out of standard welfare economics, such as freedom, rights, equality, and justice. Last, I will then introduce technical work in social choice theory and game theory that is guided by ethical concepts and relevant to moral theorizing. Some of the more technical material will be introduced at an earlier stage to see how it is used in economics to attempt to justify certain social policies.
Although it should be clear that I cannot teach all these notions in one semester, a rough approximation of what will be taught during the semester is something like the following:
Week 1: An Introduction to the general problems in macro-economics that are relevant to decision making for social policy.
Week 2: A detailed analysis of preference Required Reading, Picking and Choosing by Morgenbesser and Margolit
Week 3: What is Decision Theory? Decisions made under, Certainty, Ignorance, and Risk Chapter 1 of Resnik
Week 4: Decisions under Ignorance: The Maximum Rule, The Mini-Max Regret Rule, and the Optimism-Pessimism Rule. An application in Social Philosophy: Rawls vs. Harsanyi
Week 5: Decisions Under Risk: Probability
Maximizing Expected Values, Bayes's Theorem and the Value of Additional Information
Week 7: Decisions under Risk: Utility; Interval Utility Scales and Monetary Values vs. Utilities; Von-Neumann-Morgenstein Utility Theory
Week 8: Midterm exam
Week 9: Criticisms of Utility Theory: Allais's Paradox; Ellsberg's Paradox; The St. Petersburg Paradox; The Predictor Paradox
Week 10: Causal Decision Theory: Objections and Alternatives
Week 11: Game Theory: The basic Concepts of Game Theory; Two-Person Strictly Competitive Games
Week 12: Equilibrium Strategy Pairs and Proof of the Maximum Theorem for two by two Games
Week 13: Two-Person Nonzero Sum Games: Failures of the Equilibrium Concept; The Prisoner's Dilemma and the Predictor; Morals for Rationality and Morality (with different concepts of each)
Week 14: Social Choices: The Problem of Social Choice; Arrow's Theorem and his conditions and its Proof;
Week 15: Majority Rule, Utilitarianism, and Harsanyi's Theorem; Critique of Harsanyi's Theorem and Interpersonal Comparisons of Utility