Homo Economicus,AIs, humans and rats: decision-making and economic welfare

ABSTRACT

Critics of economics often highlight two related issues: the empirical falsity of the ‘homo economicus’ assumption of rational, self-interested maximisation; and the ethical consequences of models based on this assumption. Yet many experiments in biology show non-human creatures often seem to behave as if they were rational maximisers, suggesting that context rather than cognitive capacity is important for determining behaviour. The critique of rational choice poses a less serious methodological challenge to economics than is sometimes thought. However, economists do need to respond to the ethical critique that decisions and policies based on the assumption of rational self-interested maximisation change the norms of individual behaviour for the worse. This paper argues that economics has become divorced from ethics because for a century it has dealt only with ordinal, not cardinal, welfare rankings and has thus ruled out interpersonal comparisons. While enabling economists to separate normative from positive analysis, this separation protocol has left welfare economics both internally contradictory and unable to address major societal decisions, even though welfare economics is used constantly in limited ways, such as cost-benefit analysis. This separation reflects empirically inaccurate assumptions concerning preference formation and the conditions of supply and demand (but not the rational choice assumption) in the foundational welfare economic theorems. Economics must urgently revisit welfare economics, particularly in the context of modern economies in which individuals are increasingly interdependent, and the assumptions required for the fundamental welfare theorems therefore increasingly invalid.     

CVM Embedding Effects When There Are Active, Potentially Active and Passive Users of Environmental Goods

Embedding is said to occur when thewillingness-to-pay (WTP) values for a gooddiffer according to whether the good is valuedon its own or as part of a package of goods. Itcan manifest itself as a question order orsequencing effect whereby the WTP for a gooddepends upon the order in which contingentvaluation questions are asked. Usingsplit-sample data from different questionorderings of a survey administered to a generalpopulation, the willingness-to-pay values forimprovements to three recreational activities(swimming, fishing, and boating in HamiltonHarbour, Ontario, Canada) are estimated. Respondents are divided into three types ofuser groups: active users, potentially activeusers, and passive users. The paper thenexamines the extent to which embedding in theform of different question sequences affectseach of these three user types. Severalarguments are put forward to suggest whypassive users might be more susceptible toquestion order than active users. The resultssupport the hypothesis that order effects arelikely to be larger for passive users and alsoshow that potentially active users may beaffected by question order to a greater extentthan active users. This highlights theimportance of considering context when usingmultiple-question CVM to value passive usegoods.     

Quality uncertainty,brand reliance,and dissipative advertising

Consumers may have learned to generalize from usage experiences that nationally advertised, name-brand items tend to be higher in quality than unadvertised brands. Such generalization may have prompted the substitution of brand-name evaluations for search in quality assessments of nondurable experience goods. This paper offers theoretical arguments which suggest that if some consumers do not search, all firms in nondurable, experience goods markets can increase their profits if some substitute dissipative advertising (i.e., advertising which ignores information about product performance characteristics) of brand names for product quality enhancements. Undersearching by consumers invites firms to downgrade value in nondurable, experience goods markets. In support of the hypothesized substitution by consumers of brand-name evaluations for search in nondurable, experience goods markets, this paper reports results of a field experiment in which the influences on quality assessments of brand name and product composition were studied in two categories where dissipative advertising is heavily relied upon. Results suggest that branding is relied upon more heavily than search to assess quality, even when brand cues are inconsistent with actual quality levels and search is costless, suggesting that dissipative advertising can be extremely effective.     

The Role of Political Parties in the Organization of Congress

This article examines theory and evidence on party competitionin the U.S. Congress in the allocation of members to committees.Parties allocate members to committees to maximize the jointutility of its members, taking into account how the committees'memberships affect the legislation adopted by the legislature.Parties are constrained by both institutional rules and theheterogeneity of party members' preferences. Interest groupratings from the U.S. House of Representatives provide evidencethat the parties stack committees in a manner consistent withthe predictions of the theoretical model. Alternative hypothesesexplain no more than half the committees in the U.S. Congress,while the party competition hypothesis is consistent with theoverall structure of the committees. Model selection tests thatnest the party competition and representative majority partyhypotheses reveal that the party competition hypothesis is supportedby the data while the representative majority party hypothesisis not.     

'We have the values': customers, control and corporate ideology in call centre operations

This article analyses the use of normative control through recruitment, work organisation, social events, and bargaining processes within two Australian telecommunication call centres. Rather than arguing that such control reduced employees to 'self-disciplining subjects', it suggests that these control mechanisms embodied significant levels of managerial coercion and therefore attracted varying levels of resistance.     

Modelling Students at Risk

Using a sample of several hundred students we model progression in a first-year econometrics course. Our primary interest is in determining the usefulness of these models in the identification of 'students at risk'. This interest highlights the need to distinguish between students who drop the course and those who complete but who ultimately fail. Such models allow identification and quantification of the factors that are most important in determining student progression and thus make them a potentially useful aid in educational decision making. Our main findings are that Tertiary Entrance Rank (TER), mathematical aptitude, being female and attendance in tutorials are all good predictors of success but amongst these factors only attendance is significant in discriminating between students who fail and those who discontinue. Also, there are differences across degree programs and, in particular, students in Combined Law are very likely to pass but, if they are at risk, they are much more likely to discontinue than to fail.     

“The Night They Took Over”: Misogyny in a Country-Western Gay Bar

Abstract

Informed by feminism and theories of masculinity and space, this ethnography explores how gay men negotiate hegemonic masculinity in response to Lesbian Night, a regular Thursday night occurrence when women outnumber men at a country-western gay bar. Findings are examined to reveal the misogynistic assumptions inherent in gay men's reaction to Lesbian Night. Gay men's attempt to define the bar as a gay male space highlights their allegiance to a normative dialectic that pits men against women, and shows their unwillingness to forgo the authority and power inherent in their position as men. These findings highlight the complexities that lie at the intersection of gender and sexuality, and illustrate leisure spaces as complex and dynamic locations that foster inequity as well as community.     

Developing Learning Objectives for Accounting Ethics Using Bloom's Taxonomy

The purpose of our article is to offer a set of core knowledge learning objectives for accounting ethics education. Using Bloom's taxonomy of educational objectives, we develop learning objectives in six content areas: codes of ethical conduct, corporate governance, the accounting profession, moral development, classical ethics theories, and decision models. We believe that defining core knowledge is important for two reasons. First, many accounting educators continue to debate whether ethics can be taught, apparently unaware that a common body of ethics knowledge exists. This knowledge needs to be imparted before higher-level classroom discussions can ensue. Second, we believe agreement on learning objectives is necessary for the development of meaningful assessment tools. Students should be able to demonstrate ethics knowledge, and accounting educators should be held accountable for whether or not students are learning.     

Accountants' Attitudes and Environmentally-sensitive Accounting

Accounting for the environment (ICAEW, 1992) is receiving increasing attention. A series of initial interviews, visits and other contacts with a wide range of organisations and accountants on three continents left us with the impression that accountants and accounting do not appear to be involved in corporate responses to the environmental agenda. This paper is an exploration and examination of that impression. A mail questionnaire survey confirmed that accountants have low levels of involvement in their company's environmental activities and, from responses to personal opinion questions, appear to experience a conflict between their awareness of environmental issues and an inability to translate this into action within their corporate life. These attitudes are explored in the paper and would be a sufficient explanation for the absence of environmental accounting in practice.