Wim Hordijk — The Evolutionary Roots of Irrationality

Standard economic theory assumes that humans behave fully rationally and are able to objectively calculate the value (or cost) of the different choices they are presented with. In fact, we pride ourselves on our rationality. Different from the animals, we humans have the unique capacity for logical thought and rational decision making. Or do we?

According to behavioral economist Dan Ariely, we should be less proud of ourselves. In his entertaining book Predictably Irrational, Ariely describes many case studies of every-day irrational human behavior. His simple but clever scientific experiments often require nothing more than a box of chocolates. However, subtle differences in the way these chocolates are offered to people can cause large and completely irrational differences in the way we behave. Moreover, these irrational behaviors fly square in the face of what conventional economic theory, based on rationality, would predict....

So much for methodological atomist in economics, or other social disciplines as James Buchanan's rational choice theory spreads.

Humans are not like atoms in physics and chemistry or even like cells in biology. They are not homogeneous and cannot be assumed to be so as the concepts of homo economicus and representative agent that underly neoclassical method do.  

Social systems in which human agents are elements, or families, do not resemble atoms and molecules closely enough to serve as a framework for representational models, where the arrangements of symbols in possibility space are asserted to reflect the configuration and behavior of objects in actual space with more than rough approximation.

Wim Hordik argues that this is not a imperfection, but rather an important aspect of the evolutionary development of humans that serves to protect. For example, if homo economicus were entirely true then life would be determined by quantity, objectivity and positivity, while quality, subjectivity and values would be largely excluded from importance and banished from consideration in decisions. The world would be colorless, so to speak.

The Evolution Institute
The Evolutionary Roots of Irrationality
Wim Hordijk | Senior Fellow at the Konrad Lorenz Institute for Evolution and Cognition Research in Klosterneuburg, Austria

Jag Bhalla — Justice Is in Our Nature

Christopher Boehm in Moral Originsconcludes, after intensive analysis of 50 representative hunter-gatherer cultures, that our ancestors likely experienced a “radical political change,” evolving from a hierarchic “apelike ‘might is right’…social order,” to become more egalitarian. About 250,000 years ago, their survival became a team sport because chasing big-game toward teammates was much more productive than solo hunting. But only if profit-sharing was sustainable. Even with fit teammates hunting needs luck (e.g. 4% success today). Then, as now, the logic of social insurance solved team problems by sharing profits and risks. Productivity gains in interdependent teams radically changed our evolution. Cooperators thrived. As did teams with the best adapted sharing rules, provided they were well enforced.

Homo socialis versus homo economicus.

The first stage in the development of humanity was as homo socialis (social man), then as homo fabulans (story-telling man), and then homo publicus (public man). 

There has never been a homo economicus historically. 

It's a theoretical fabrication. In fact, individuals who "rationally" pursued maximum utility were at a disadvantage against teams, and if they happened to gain dominance, they were eliminated at the communal stage of development. It was not until surplus societies that the warrior and priestly classes, which survived on the surplus of the worker class, could dominate the more numerous workers, so that the hierarchy of these classes were able to dominate politically. 

However, the length of time that the latter arrangement has been in place is much shorter than the length of time that the communal society operative, so that the evolutionary influence of homo socialis is still strong. Therefore, the impetus toward cooperation, reciprocity, and fairness remain strong, in spite of the increase of individualism. Thus, the very recent story of homo economicus and the fable of makers and takers only works to the degree that people can be convinced that there is a free rider problem rather than that some are better than others.

Scientific American — Blogs
Justice Is in Our Nature
Jag Bhalla

Jonathan Larson — Status emulation as a change agent

Status emulation as a driving force in modern capitalism. Looks to be the harnessing of an evolutionary trait, although Veblen saw it as not only powerful but often also nutty.

Real Economics

Status emulation as a change agent

Jonathan Larson

Dirk Ehnts — Survival of the least skilled?

Recently I have been thinking whether intelligence is aimed at finding the truth or aimed at survival. I came to the conclusion that the latter was right, but that we can use reason to build a society where the two coincide. Institutions matter....

...the lesson is to create institutions that bring out the best behavior of human beings. And for those that say that this suppresses freedom: we already have lots of institutions that influence us. Think of school, families and so on. These are not natural, so we might as well think about how to improve those institutions. The result could be a survival of the most social.

econoblog 101
Survival of the least skilled?
Dirk Ehnts | Berlin School for Economics and Law

"Survival of the fittest" is about species survival through natural selection, not individual survival through competition as social Darwinism has it wrongly. The most "fit" supposedly have more chances at leaving offspring, hence their DNA, which on balance favors the survival and spread of a species over time through adaptation to emerging environmental challenges.