An Economic Theory of Greed, Love, Groups, and Networks

An Economic Theory of Greed, Love, Groups, and Networks

Language: English

Pages: 444

ISBN: 1107678943

Format: PDF / Kindle (mobi) / ePub

Why are people loyal? How do groups form and how do they create incentives for their members to abide by group norms? Until now, economics has only been able to partially answer these questions. In this groundbreaking work, Paul Frijters presents a new unified theory of human behaviour. To do so, he incorporates comprehensive yet tractable definitions of love and power, and the dynamics of groups and networks, into the traditional mainstream economic view. The result is an enhanced view of human societies that nevertheless retains the pursuit of self-interest at its core. This book provides a digestible but comprehensive theory of our socioeconomic system, which condenses its immense complexity into simplified representations. The result both illuminates humanity's history and suggests ways forward for policies today, in areas as diverse as poverty reduction and tax compliance.

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to domestic policy. Difficulties also arise when the production of a good involves long-term investments that are hard to observe and that interact with the investments made by other companies. Yet, despite the many nuanced exceptions to the rule, the basic opinion of mainstream economists on the issue of market power is that one perennially strives to increase the level of competition in the provision of a good whenever one can, and otherwise to regulate any existing monopolist such that it

type of explanation has since been regarded as unsatisfactory because of the implausibility of believing one is pivotal if millions of others also vote; hence, other explanations were sought. Harsanyi (1977) explained voting (p. 650) by appealing to the idea that people get utility from behaving in accordance with internal moral standards, via what could be described as a “warm glow.” Blais (2000) similarly appeals to a notion of civic duty when explaining voting. Feddersen and Sandroni (2006)

within public institutions, quite apart from the individuals who populate those institutions at any point in time. Government institutions such as the army or the tax administration exercise power through activities such as commanding armies and taxing people. Large private organizations exercise market power, power to invest or produce, and power through ownership. Schools, churches, political parties, and the media exercise power by influencing opinions. Power is wielded at any point in time and

unpacked to reveal extensive and nuanced theories, but the core observation of all of them is that people, whether intelligent or not, have an astounding capacity for ignoring the truth if the truth gets in their way. For instance, as verified in dozens of experiments, those who are unsuccessful at a game of skill invariably claim they had bad luck, whereas those who were successful claim they simply played better. People who were randomly given gifts and then asked which, out of a whole range of

This survey was managed by Richard Hayes on behalf of the Economic Society of Australia, and the instrument and average responses are available at 12 Introduction and preview Competition regulation What should policy makers do with an organization that dominates a market for a particular good, particularly when that good has no close substitutes? The classic nineteenth-century version of this question was what to do with

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