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Economics, Rational Choice and
Normative Philosophy

Following Amartya Sen’s insistence on expanding the framework of rational

choice theory by taking into account ‘non-utility information’, economists, politi-
cal scientists and philosophers have recently concentrated their efforts on analys-
ing the issues related to rights, freedom, diversity intentions and equality. Thomas
Boylan and Ruvin Gekker have gathered essays that reflect this trend.
The particular themes addressed in this volume include the measurement of
diversity and freedom, formal analysis of individual rights and intentions, judg-
ment aggregation under constraints and strategic manipulation in fuzzy environ-
ments. Some chapters in the volume also deal with philosophical aspects of
normative social choice.
This book will be of great interest to students engaged in social choice, public
choice and normative philosophy.

Thomas A. Boylan is a Personal Professor of Economics in the Department of

Economics at the National University of Ireland, Galway.

Ruvin Gekker is a Lecturer in Economics in the Department of Economics at the

National University of Ireland, Galway.
Routledge Frontiers of Political Economy

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Edited by Gary Mongiovi and Fabio
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History of Economics open economies
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Firm volume two
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29 Hahn and Economic Methodology
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and commercial contest
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capitalism Charles R. McCann Jnr.
Alfredo Saad-Filho
56 Affirmative Action in the United
42 Issues in Positive Political Economy States and India
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A journey to a new stage of capitalism 57 Global Political Economy and the
Robert Went Wealth of Nations
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and policies
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Edited by Phillip Anthony O’Hara
S. N. Afriat
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Essays in honour of Jean-Paul
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S. N. Afriat
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Keynesian economics Mongiovi and Steven Pressman
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87 Consumer Capitalism
76 The Future of Social Security Anastasios S. Korkotsides
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Women, work and a Citizens’ Basic
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Income
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the Twenty-First Century
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92 Human Ecology Economics 105 The Keynesian Multiplier
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sustainability Philippe Rochon
Edited by Roy E. Allen
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93 Imagining Economics Otherwise Distribution
Encounters with identity/difference Towards a macroeconomic theory of
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John Smithin
94 Reigniting the Labor Movement
Restoring means to ends in a 107 Fiscal Decentralization and Local
democratic labor movement Public Finance in Japan
Gerald Friedman Nobuki Mochida
95 The Spatial Model of Politics 108 The ‘Uncertain’ Foundations of
Norman Schofield Post-Keynesian Economics
Essays in exploration
96 The Economics of American
Stephen P. Dunn
Judaism
Carmel Ullman Chiswick 109 Karl Marx’s Grundrisse
Foundations of the critique of
97 Critical Political Economy
political economy 150 years later
Christian Arnsperger
Edited by Marcello Musto
98 Culture and Economic Explanation
110 Economics and the Price Index
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Time Travelling through Paradigms
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in Industrial Democracies Calvin Hayes
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113 The Political Economy of Work
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114 Institutional Economics
102 Advances on Income Inequality and
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Concentration Measures
Edited by Gianni Betti and Achille 115 Religion, Economics and
Lemmi Demography
The effects of religion on education,
103 Economic Representations
work, and the family
Academic and everyday
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Edited by David F. Ruccio
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104 Mathematical Economics and the
Normative Philosophy
Dynamics of Capitalism
Edited by Thomas A. Boylan and
Goodwin’s legacy continued
Ruvin Gekker
Edited by Peter Flaschel and Michael
Landesmann
Economics, Rational Choice
and Normative Philosophy

Edited by Thomas A. Boylan

and Ruvin Gekker
First published 2009
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Ave, New York, NY 10016

This edition published in the Taylor & Francis e-Library, 2008.

“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2009 Editorial matter and selection, Thomas A. Boylan and Ruvin

Gekker; individual chapters, the contributors

All rights reserved. No part of this book may be reprinted or reproduced or

utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Economics, rational choice, and normative philosophy / edited by Thomas
A. Boylan and Ruvin Gekker.
p. cm.
Includes bibliographical references and index.
1. Economics. 2. Philosophy. 3. Rational choice theory. I. Boylan, Thomas
A. II. Gekker, Ruvin.
HB72.E277 2009
330.01–dc22
2008021536

ISBN 0-203-88764-6 Master e-book ISBN

ISBN10: 0–415–43580–3 (hbk)

ISBN10: 0–203–88764–6 (ebk)

ISBN13: 978–0–415–43580–2 (hbk)

ISBN13: 978–0–203–88764–6 (ebk)
Contents

List of contributors xii

Preface xiii

Introduction 1

PART I
Diversity, rights, norms and intentions 13

1 What is diversity? 15
Nicolas Gravel

Introduction 15
Comparing sets of objects: general principles 18
Diversity as generalized entropy 31
Diversity as aggregate dissimilarity 37
Diversity as the valuation of realized attributes 47
Conclusion 51

2 Intentions, decisions and rationality 56

Martin van Hees and Olivier Roy

Introduction 56
Intentions to act 57
Extensive decision models 58
Intentions as plans of action 61
Intentions and counterfactuals 65
The formation of intentions 67
Conclusion 70

3 Waiving and exercising rights in the theory of social situations 73

Ruvin Gekker

Introduction 73
Sen’s and game form formulations of rights 74
x Contents
Individual rights and the theory of social situations 76
Concluding remarks 86

4 Consequentialist choice and behavior: a comparison 89

Nicholas Baigent

Introduction 89
Choice consequentialism 89
Examples 90
Conclusion 92

PART II
Social choice, judgment aggregation and rationality of
legal order 93

5 Social choice, fuzzy preferences and manipulations 95

Juan Perote-PeÑa and Ashley Piggins

Introduction 95
Fuzzy set theory 96
The literature 97
Preliminaries 97
The theorem 101
Conclusion 107

6 Judgment aggregation under constraints 111

FranZ Dietrich and Christian List

Introduction 111
The model 112
Why explicit constraints? 114
Impossibility results 116
An application: binary relations 119

7 Rationality and the legal order 124

Gerald Pech

Introduction 124
The model 127
Results 130
Extensions and discussion 135
Conclusion 137
Appendix 7A: The household’s optimization problem 138
Appendix 7B: Proof of Proposition 7.1 138
 Contents xi
PART III
Philosophical aspects of normative social choice 143

8 Distributing causal responsibility in collectivities 145

Matthew Braham and Manfred J. Holler

Introduction 145
Causal relations 147
Defusing the ‘many hands problem’ 150
Social power 154
The uses of power 156
Taking stock 158

9 The logic of valuing 164

Boudewijn de Bruin

Introduction 164
Quantification and beliefs 165
Typology 167
Application to political freedom 169
Conclusion 170

10 Holistic defences of rational choice theory: a critique of

Davidson and Pettit 173
Thomas A. Boylan and Paschal F. O’Gorman

Introduction 173
Davidson’s defence of Homo economicus 174
An alternative model of rationality 176
Pettit’s conciliationist thesis 179
Economic rationality: empirical challenges of the SHLF model 182

Index 185
Contributors

Nicholas Baigent, Graz University, Austria

Thomas A. Boylan, National University of Ireland, Galway

Matthew Braham, University of Groningen, Netherlands

Boudewijn de Bruin, University of Groningen, Netherlands

Franz Dietrich, Maastricht University, Netherlands

Ruvin Gekker, National University of Ireland, Galway

Nicolas Gravel, University of the Mediterranean and IDEP-GREQAM,

Marseilles, France

Manfred J. Holler, University of Hamburg, Germany

Christian List, London School of Economics, UK

Paschal F. O’Gorman, National University of Ireland, Galway

Gerald Pech, American University, Bulgaria

Juan Perote-Peña, University of Zaragoza, Spain

Ashley Piggins, National University of Ireland, Galway

Olivier Roy, University of Amsterdam, Netherlands

Martin van Hees, University of Groningen, Netherlands

Preface

This book is based on the International Workshop that was held at the National
University of Ireland, Galway, in August 2005. The theme of the workshop,
‘Rational Choice and Normative Philosophy’, was designed to further foster a
close collaboration between economists, philosophers and political scientists
working in normative social choice. The organizers were fortunate to attract some
leading experts in normative social choice who contributed their papers to this
volume.
The chapters in this book explore a number of issues pioneered recently by
Amartya Sen in his critique of rational choice theory. The first issue relates to
an examination of how individual rights or liberties affect collective decision-
making. The problem was demonstrated by Sen’s theorem on the impossibility of
a Paretian liberal and has produced an enormous response not only by economists
but also by philosophers. In particular, Robert Nozick has argued that rights do
not establish an ordering of social states but instead divide them into classes or
serve as a constraint. Subsequently Peter Gardenfors, Wulf Gaertner, Persanta
Pattonaik and Kotaro Suzumura among others have developed Nozick’s insights
into analysis of individual rights by suggesting a game-theoretic approach to the
study of rights and liberties.
Another issue that was explored by rational choice theorists, and again was
influenced by Amartya Sen’s work, is the measurement of freedom and diver-
sity. The typical problem here is to determine how the various sets of options
that might be available to an agent could be compared in terms of the amount of
freedom or diversity they offer. The starting point is to formulate certain condi-
tions or axioms that are imposed on possible freedom or diversity measures. This
axiomatic method allows us to assess various measures of freedom and diversity
on the basis of their underlying assumptions.
Recently the problem of judgment aggregation has attracted a lot of attention
from rational choice theorists. A collective decision here is presented not as one
choice between various alternatives but instead as many decisions on intercon-
nected propositions. This model of judgment aggregation is quite general and
it allows us to represent beliefs, desires, acts and other propositional attitudes.
The model of judgment aggregation is also very close to real decision-making
situations.
xiv Preface
In organizing an international workshop and presenting its contents in a book
we have incurred many debts of gratitude. We would like to thank the Department
of Economics and the Faculty of Commerce at the National University of Ireland,
Galway, who helped us with the costs of organizing this workshop. We also would
like to thank all the participants in the workshop for very stimulating discussions
that have helped to revise the conference papers. Special thanks for their help in
organizing this workshop are due to Imelda Howley and Claire Noone. However,
we would like to single out Martin van Hees, who was instrumental in shaping the
idea of this workshop and also provided invaluable help in organizing it.
Claire Noone provided her customary indispensable support on the final stages
of preparation of the manuscript. Without her help we would not have been able
to cope with the deadlines.
Last, but not least, we would like to express our gratitude to the staff of
Routledge, as always, for their professionalism and efficiency in handling our
manuscript. In particular, we would like to thank Terry Clague not only for com-
missioning this volume, but also for his patience and understanding in the face of
a protracted delay in delivering the final manuscript for reasons that were outside
our control. For this we are most grateful. We would also like to thank Sarah
Hastings for her outstanding efforts in coordinating and expediting the publica-
tion of this book.
Introduction

In the last three decades some new approaches to the study of rights, freedom,
diversity, norms and intentions among others have evolved. These approaches
have their origin in rational choice theory. Rational choice theory covers a wide
variety of disciplines among which particularly helpful for our purposes are social
choice theory, game theory and individual decision theory. Amartya Sen was par-
ticularly influential in his critique of traditional models of rational choice theory.
Since the 1970s the traditional models of rational choice theory not only were
expanded to include welfare consequences but also took into account ‘non-utility
information’ referring to rights, freedom, diversity and equality.
The present collection of papers is based on the workshop ‘Rational choice
and normative philosophy’ which was held in August of 2005 at the National
University of Ireland, Galway. The workshop attracted a number of leading
experts in normative social choice and philosophy from the Netherlands, France,
Germany, the United Kingdom and Ireland. The participants focused their atten-
tion on the formal analysis of issues related to rights, norms, variety and freedom,
intentions and responsibility among others and also on the philosophical aspects
of those issues. The chapters in the book are grouped into three sets. The chapters
in Part I provide a formal analysis of such aspects of normative social choice as
diversity, individual rights, internalized norms and intentions. The three chapters
in Part II discuss issues related to constraints in judgment aggregation, the strate-
gic manipulation in fuzzy environments and the rationality of legal order. Finally,
the chapters in Part III deal with some philosophical aspects of normative social
and public choice.
Part I opens with N. Gravel’s chapter ‘What is Diversity?’ The chapter surveys
many contributions to the formal analysis of diversity. The author strives to keep
the formalism to a minimum and he provides some informal discussion of the
results and the assumptions or axioms. Specifically, he starts with a (finite) set X
of objects which are clearly identified. Then the problem of diversity evaluation
is to provide a ranking of a binary relation ⪰, with asymmetric and symmetric
factors ≻ and ~, defined on subsets of X. Denote by P(X) the set of all non-empty
subsets of X. Then for any A, B in P(X), A ⪰ B means ‘A offers at least as much
diversity as B’, A ≻ B means ‘A offers strictly more diversity than B’ and A ~ B
means ‘A offers the same diversity as B’.
2 Introduction
Typically, the researchers in the field assume that the diversity ranking is
reflexive, complete and transitive. Since X is finite, we know that the diversity
ordering can be represented by a numerical diversity index. This numerical index
can be thought of as ‘measuring’ the diversity of various sets. However, some
other assumptions (axioms) relating to the axiomatic ranking of sets in terms of
their diversity could be imposed. Many axioms introduced in the second section
were already discussed in the context of the axiomatic ranking of freedom. The
list would include weak and strong monotonicity axioms (Axioms 1.1 and 1.2).
In terms of diversity these axioms simply say that the addition of objects to a set
never reduces (strictly increases, respectively, in the case of Axiom 1.2) diversity.
Similarly to the axiomatic analysis of freedom, we can assume that singleton sets
provide no diversity at all. Axiom 1.3, indifference between non-diverse situa-
tions, says precisely this. This axiom is satisfied by most indices used in biology
to measure biodiversity. It is also satisfied by all approaches viewing the diversity
of a set as a result of the aggregation of the pairwise dissimilarities of its elements.
Another group of axioms introduced by Gravel, the so-called independence
axioms, compare sets of objects to the extent to which the contribution of objects
to diversity should depend on the set to which they are added or subtracted.
Using these axioms, the author establishes a very general characterization
result of diversity rankings. He refers to them as additive rankings and he shows
that the cardinality ranking that compares sets on the basis of their number of
elements represents a special case of additive rankings. There exists an extensive
discussion of cardinality ranking in the context of axiomatic ranking of freedom
(see among others Pattanaik and Xu 1990; Jones and Sugden 1982; Barberà,
Bossert and Pattanaik 2004).
In his third section, Gravel examines a wide class of diversity base rankings in
biology that is associated with Renyi’s generalized entropy measure. He notes that
the properties that characterize the generalized entropy family of rankings have
been identified in completely different contexts of income inequality measure-
ment by Shorrocks (1984). It is interesting to point out that the axioms used by
Shorrocks clearly illustrate the limitations of generalized entropy as a method for
evaluating diversity.
The author then evaluates an approach to the ranking of sets in terms of their
diversity initiated by Weitzman (1992). Weitzman uses a distance function in this
recursive method. A distance function (or metric function) d is a mapping from a
Cartesian product of X into non-negative reals. It associates with every ordered
pair (x,y) from X, a non-negative number d(x,y) interpreted as the distance that
separated x from y. Typically it is required that d must be symmetric, normal
(that is, d(x,x) = 0) and that it also satisfies another property of triangle inequality
(which could be problematic in the context of diversity evaluation). Using such a
distance function Weitzman proposed to compare sets on the bases of the sum of
these smallest non-zero minimal distances.
Sets with larger sums are considered more diverse than those with smaller
sums. Hence Weitzman’s definition of diversity was in effect an aggregation of
dissimilarities. The procedure was sequential, combining sequential selecting of
 Introduction 3
the objects associated with the minimal distance and an additive procedure of
summing these minimal distances. According to Gravel, the fundamental dif-
ficulty associated with Weitzman’s approach is his assumption of a cardinally
meaningful distance function. Is it possible to view diversity as an aggregation
of dissimilarities between the objects and yet to reject the requirement that these
dissimilarities can be measured cardinally? The positive answer is provided by
Bervoets and Gravel (2007).
An ordinal notion of dissimilarity is formalized by a quaternary relation Q an X.
The statement (x,y) Q (w,z) can be interpreted as ‘x is at least as dissimilar to y as w
is to z’. Asymmetric (‘strictly more dissimilar’) and symmetric (‘equally similar’)
factors of Q can be defined in the usual manner. They are denoted by QA and
QS respectively. To motivate this interpretation, the authors assume that, for all
distinct objects x and y from X, both (x,y) QA (x,x) and (x,x) QS (y,y) hold. Further
it is assumed that Q is symmetric, that is, (x,y) Q (y,x) holds for every x and y
and that a binary relation on the Cartesian product of X is reflexive, complete
and transitive. Furthermore, Bervoets and Gravel introduce three more principles
(axioms): weak monotonicity, dissimilarity monotonicity and robustness of domi-
nation. The third principle (robustness of domination) requires the domination of
a set by another one to be robust to the addition of options when the options added
are themselves dominated in terms of diversity. It turns out that a ranking of sets
that satisfies the principles of weak monotonicity, dissimilarity monotonicity and
robustness of domination compares sets on the basis of their two most dissimilar
objects, that is, we can say that a set A is at least as diverse as set B if the two most
dissimilar objects in A are at least as dissimilar as the two most dissimilar object
to B. The authors refer to this ranking as the ‘maxi-max’ criterion.
Finally, Gravel examines a new approach to the definition of diversity intro-
duced recently by Nehring and Puppe (2002). They propose to define the diversity
of a set as the sum of the values of the attributes realized by the objects in the
set. Hence this approach relies on the categorization of the objects into a certain
number of attributes and may lead to the conclusion that some singleton sets could
have more diversity than sets containing multiplicity of objects, contrary to Axiom
3. This might happen simply because the value of the attributes in the single object
could be larger than the value of the attributes realized in the collection of many
objects. Therefore, this approach, according to Gravel, evaluates not so much the
diversity of a set but rather the attributes possessed by the objects.
Given the current state of the field, the author prefers the approach that defines
the diversity as an aggregation of ordinal information about pairwise dissimilari-
ties between objects expressed by a quaternary relation. This approach seems to
raise fewer objections than other approaches to diversity such as the generalized
entropy approach or the approach initiated by Weitzman that defines diversity
as an aggregation of cardinally meaningful information about the pairwise dis-
similarity objects expressed by a distance function.
The next chapter, ‘Intentions, Decisions and Rationality’ by M. van Hees and
O. Roy, proposes to extend the traditional decision-theoretic model by includ-
ing ‘action intentions’. Action intentions refer to the future performance of some
4 Introduction
actions, for example the intention ‘to take the plane to London’. These inten-
tions can be distinguished from ‘outcome intentions’, which refer to the intention
to bring about some future states of affairs, for example ‘to be in London next
month’. The philosophical theory that motivates the authors’ formal modelling
is Bratman’s planning theory of intentions. This theory describes plans as special
sets of intentions. They have an internal hierarchical structure. On top of the struc-
ture are general intentions, such as going to London, and then come increasingly
more precise intentions, such as going by plane, departure time etc. Rational plans
(which are partial) in this planning theory of intentions are regulated by norms of
consistency, that is, they should not contain inconsistent intentions. This require-
ment is called endogenous consistency. The plan to achieve a certain goal must
be supplied with intentions to undertake appropriate means. This requirement for
plan completion is called means–end consistency.
The authors choose to formalize intentions by working with sequential or exten-
sive models of decision theory (see Osborne and Rubinstein 1994 or Aliprantis
and Chakrabarti 2000). They argue that the intentions of ideal agents (perfectly
rational and capable of representing and solving any decision problem) can be
viewed as plans of action. The authors restrict their attention to intentions that do
not have autonomous effects. Later on they show that some difficulties may arise
when intentions with autonomous effects are introduced in decision theory.
Formally, van Hees and Roy assume that the agent comes with both outcome
and action intentions, that is, with a decision tree T they associate an intention
structure I consisting of sets of outcomes and a collection of (perhaps partial)
plans of actions. The authors want to impose some constraints on these sets in
order to capture the familiar consistency requirements of the planning theory of
intentions. These are captured in Postulates 2.1 and 2.2, so-called postulates of
endogenous consistency of outcome intentions and endogenous consistency of
action intentions, respectively. Postulate 2.1 says that the set of outcome intentions
is closed under intersection and that the agent intends at least something and does
not intend to do the impossible. Postulate 2.2 precludes the agent from having two
action intentions that are not executable in a single run. Postulate 2.3, means–end
consistency, connects the action intentions to the outcome intentions, saying that
there should be at least one partial plan of action that ensures the agent will obtain
some outcome (if the plan is enacted). Postulate 2.4, actions intentions for ideal
agents, simply requires that intentions of ideal agents reduce to plans of actions.
Although intentions reduce to plans of actions to the ideal agent, van Hees and
Roy show that intentions can be useful ‘to break ties’ between equally desirable
strategies. To establish this result they need yet another Postulate, 2.5, intentions
and expected payoff compatibility, which establishes that certain intentions will
not be formed given the preferences of the agent. Specifically, the result says that
for any decision tree T and intention structure I satisfying Postulates 2.1–2.5,
there exists one and only one plan that coincides with all (partial or non-partial)
plans in the collection of plans of actions and also maximizes expected value. The
result also confirms what philosophers of actions have been claiming all along,
namely, intentions are key anchors to one person in sequential decision-making.
 Introduction 5
The authors also show that the formation of intentions might have some auton-
omous consequences and it may present some additional modelling problems.
They illustrate these problems by using the famous ‘Toxin Puzzle’ introduced by
Kavka (1983). In order to analyze the Toxin Puzzle, van Hees and Roy extend
their framework by allowing the formation of an intention to perform some action
and hence in effect introducing the second-order intentions. They impose the fol-
lowing Postulate 2.6, consistency between first- and second-order intentions, that
says that an agent who has a second-order intention to perform the action a also
has a first-order intention to do so. Then van Hees and Roy produce an impossibil-
ity result that illustrates a clash between Postulates 2.5 and 2.6 and is not bound to
the scenario of the Toxin Puzzle.
In his chapter ‘Waiving and Exercising Rights in the Theory of Social Situations’,
R. Gekker suggests an analysis of individual rights within the framework of the
theory of social situations. The original formulation of individual rights by A.
Sen (1970) within social choice theory simply restricts social choice based on an
individual’s preferences over two social states that differ only with respect to the
individual’s recognized personal sphere (RPS). Gaertner, Pattanaik and Suzumura
(1992), utilizing Gibbard’s example, have pointed out some intuitive problems
with Sen’s original formulation of individual rights. Instead they have suggested
that each individual should be able to determine a certain aspect of any social state
provided that an aspect is within that individual’s RPS. Then according to them
the game-form formulation of individual rights should adequately capture this
intuition. Since the publication of their paper in 1992, the focus of researchers in
the field has shifted from producing impossibility/possibility results to discussing
an issue of adequacy/inadequacy of different formulations of individual rights.
The author’s proposal was motivated by Gardenfors’s (1981) suggestion that an
individual right can be described as a possibility for an individual i to restrict the
set of social states X to a subset Y of X. A right system is defined by Gardenfors as a
set of pairs (i, Y). Gardenfors then imposes various conditions on the right system.
For example, he requires that different individuals should not have conflicting
rights. However, the analysis of individual rights in the situations where these
rights are conflicting is the most interesting. For example, how should we resolve
the conflict of individual rights when the right to smoke for one individual may
conflict with the right of another individual to clean air? Another of Gardenfors’s
conditions on combination of rights allows him to ignore the sequential aspect
of moves in a game and to identify the set of strategies available to an individual
with the set of rights assigned to him or her.
The author, following the lead of Gardenfors, proposes to analyse individual
rights within the framework of the theory of social situations. Similarly to
Gardenfors’s formulation of individual rights, he distinguishes between having
a right and exercising that right. Unlike Gardenfors, however, Gekker does not
impose any restrictions on individual rights, that is, he allows individuals to have
conflicting rights and he also allows them to exercise their rights sequentially.
Using the flexibility of the theory of social situations, the author utilizes differ-
ent rights-exercising protocols to analyse individual rights. For example, the first
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