> I'm reposting this, hoping for an answer. In economics, what uses does > methodological individualism have in the actual attempt to understand > the world (that is, beyond mere ideology)? I can think of two so far: > > 1) the free rider or collective action problem: it's really hard for a > group of people to attain collective goals because some will be in it > for themselves.
AKA the prisoners' dilemma problem. > 2) the "representative agent" model, in which macroeconomists lazily > believe that looking at the effects of individual constraints and > incentives tell us how aggregates of people behave. (Not so sure about "laziness." Admittedly it's a modeling shortcut, like two-class-based approaches to social analysis. There's an active debate in mainstream macro re the uses and limitations of the representative agent approach. ... and perhaps (3) Coordination problems, where groups *may* achieve mutually preferred outcomes, but, as experimental evidence suggests, also may not (e.g. if risk considerations dominate maximal payoff considerations). Not the same as prisoners' dilemma problems; e.g., indefinite repetition of the game not necessary to achieve socially prefered outcome as a subgame perfect equilibrium. Russell Cooper has a nice, very readable book on this, discussing GT models, experimental evidence and macro applications. 4)strategic bargaining models a la Ariel Rubinstein, which helped distinguish the effects on relative bargaining position of voluntary exit from vs. forced termination of incumbent relationships--a distinction for which there is both experimental and econometric evidence. Models and real-world applications discussed extensively in, e.g., Jacobsen and Skillman, Labor Markets and Employment Relationships. 5) principal-agent relationships, defined broadly for present purposes as any stackelberg (leader-follower) situation involving imperfect or incomplete information--this would include signalling, efficiency wage, and more generally adverse selection and moral hazard situations. ...and, really, 6) all of applied (at least micro) mainstream economics,which is pretty much entirely based on methodological individualism, and which routinely and massively yields testable predictions that are then brought to the data via more or less rigorous econometric tests. Of course this vast empirical enterprise can be criticized (as can that of any paradigm), but it manifestly involves "actual attempts to understand the world" in its theoretical terms, complete with vigorous and ongoing debates on given empirical claims (such as, for example, the disemployment effects of minimum wage legislation). Anyone asserting that this enterprise represents a manifestation of "mere ideology" would seem to shoulder a pretty hefty burden of proof, whatever one thinks of the paradigm or its tentative empirical conclusions. FWIW-- Gil > -- > Jim Devine / "The more you read and observe about this Politics thing, > you got to admit that each party is worse than the other. The one > that's out always looks the best." -- Will Rogers >
