Local Interaction as a Model of Social Interaction?

Abstract

Neoclassical economics is characterized by methodological individualism, i.e. “the doctrine that all social phenomena (their structure and their change) are in principle explicable only in terms of individuals - their properties, goals, and beliefs” (Elster (1982), p 453)2. In economics these “properties, goals, and beliefs” are taken as given, but some other social sciences try to go further and explain where they come from; still others deny that social phenomena can be reduced to the level of individuals. Despite their differences, all these approaches posit a feedback mechanism between individuals and the social environment as it changes over time. The purpose of this paper is to look into a possible such feedback mechanism for the issue of cooperation and to compare its approach, methods and results with those of “standard” game-theoretic models.