By Smith V.L.
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Additional info for Constructivist and ecological rationality in economics
People in both rooms know that if $x is sent by anyone, it is tripled, so that the counterpart receives $3x. Thus, the most generous offer, $10, yields a gain to $30. The counterpart can then respond by sending any part (0 to $3x) of the amount received back to his or her matched sender. Now an exchange with gains to both parties is possible, and BDM ask if this context is a significant treatment. Note that the analysis of the game is no different than the onestage dictator game: by the principle of backward induction Player 1 can see that Player 2’s interest is to keep all the money received, and therefore nothing should be sent.
Our folk predilection for believing in the ‘blank slate’ concept of mind (Pinker, 2002) makes plain that this interpretation of mind is just as consonant with our direct experience as was once the idea that the earth is flat, or that witches had to be destroyed. In each case to escape from the folk perception requires the falsifying indirect evidence, based on reason, to become part of our ‘felt’ experience. Constructivist rationality then becomes ecologically rational. Experimental procedures The experiments I will report will show how social context can be important in the interactive decision behaviour we observe.
What have we learned, not as final truth, but as compelling working hypotheses for continuing examination? 1. Markets constitute an engine of productivity by supporting resource specialization through trade and creating a diverse wealth of goods and services. 2. Markets are rule-governed institutions providing algorithms that select, process and order the exploratory messages of agents who are better informed as to their personal circumstances than that of others. As precautionary probes by agents yield to contracts, each becomes more certain of what must be given in order to receive.