Assumption Of Self-interest Research Articles

Twenty-five Years with The Logic of Collective Action

A quarter of a century has passed since Mancur Olson wrote The Logic of Collective Action (1965). In this seminal work, Olson argued that collective action will not take place if individuals are rational egoists and the group is large. This is a review article summing up 25 years of continuing debate about the validity of this argument Surprisingly little has been added that goes beyond Olson's informal analysis. His formal analysis has proved less robust. Above all, his size argument has been shown to be defective. Collective action is not a simple function of group size. The main message of this article, however, is that the assumption of self-interest, used by Olson and by a majority of rational choice theorists, is inadequate and must be replaced by an assumption of mixed motivations. What this mix is going to be is still an open question.

The demise of the public-interest model of the Federal Reserve System: A review essay

The Political Economy of American Monetary Policy (Cambridge University Press, Cambridge, 19901, edited by Thomas Mayer, is a collection of one previously published and eighteen unpublished works that seeks to review, consolidate, and extend the growing literature on a positive theory of the Federal Reserve System. A major theme of the collection is that the traditional public interest view of the Fed has little to offer as a guide to understanding the behavior of Federal Reserve officials. At the same time, the collection offers a word of caution to practitioners of the positive theory who use a ‘naive’ public-choice approach. According to this subplot, a narrow self-interest approach to the Fed is not much better than the traditional alternative. A general theory of the Federal Reserve System requires the right blend of the best elements from the staid public-interest view and the renegade public-choice view. As a review of the current state of the literature this collection of works has much to offer. The book is at its best in posing questions that force not only the public-interest proponent but also the naive public-choice theorist to rethink their positions. The book is less useful, I think, as a road map to future research. In contrast to this book’s premise, the problem I see with the naive public-choice approach is not that it has been too radical, but that it has not been radical enough. The renegade assumption that Fed decisionmakers are self-interested utility maximizers is misleading only when used within the context of a misspecified model of the macroeconomy. I argue in this review essay that the next discrete step in the evolution of a positive theory of central banking is to supplement the self-interest assumption with

The Human Side of Economic Organization

The assumptions of material self-interest, bounded rationality, and negative opportunism that underlie organizational economics are deficient for many managerial purposes because they underrepresent the importance of interpersonal and other nonmarket resources in human motivation. This paper adds an aspiration-level assumption called betterment that extends transaction cost analysis to include exchanges involving interpersonal resources. Implications are discussed for the efficient design of organizational boundaries, organizational subunits, and employment relations, and special attention is given to cooperation as an organizational asset.

Humanistic economics: the new challenge

Economics has long been imprisoned by a one-dimensional view of the person and the narrow assumption of self-interest that this entails. Humanistic Economics breaks out of this paradigm by proposing an alternative framework that is no longer incompatible with actions undertaken for the sake of deeply held values, compelling reasons, and higher interests. The new theoretical foundation makes it possible to discuss in a new light questions of social institutions, such as the relationship between government and the market, as well as social policy goals like full employment, industrial democracy, and balanced international trade. Equipped with this basic insight, the authors proceed to century-old ideologies of individualist capitalism and scientific socialism.

Altruism as a source of self-interested behavior

It is well-known in economics that the assumption of self-interest can lead to cooperative and altruistic behavior. This paper shows the less well-known converse, that altruism can lead to behavior which appears based on self-interest. This approach leads to a distinction between small groups and large groups which has a number of implications. One which the paper explores is a way of thinking which may help explain why free-rider problems are sometimes not as severe as normal economic assumptions predict.

The Marginality Hypothesis

The issue of legislative pay raises offers several advantages as a perspective from which to study the connection between voting behavior and electoral insecurity (the marginality hypothesis). The incentives for voting either yes or no are obvious and allow us to employ the powerful assumptions of self-interest in our analysis. Data for the Ninety-Fifth Congress supports the hypothesis that electorally secure legislators are more likely to support a pay raise than are less electorally secure legislators.

Self-Interest or Altruism, What Difference?

This paper discusses the difficulties involved in relaxing the self-interest assumption as it is traditionally used in conjunction with the assumption of rationality. A formal model of altruistic behavior is developed and employed in the analysis of the problems of burden-sharing among rational allies. It is demonstrated that altruistic behavior among political actors is not, in general, sufficient to remove all areas of contention between the actors although the scope of disagreement is shown to be narrowed by altruistic behavior. Additional applications of the model of non-self-interested behavior are presented and suggested.