Wikipedia and this McGill University page states that the two games "have been taken as both evidence for and against the Homo economicus assumptions of rational, utility-maximizing, individual decisions"

This argument makes some senses; however I am having trouble finding one famous economist, mathematician, or scientist who explicitly states that the assumption of individual utility maximization is "wrong" because of the findings in these games.

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    $\begingroup$ Probably it is more reasonable to think about how these games changed our understanding of using a utility function (a thing we made up) to approximate the benefit accrued to people by their choices. And what comes with this is an understanding that humans think about more than themselves (at least in a direct, immediate sense) when making choices (so maybe not homo economicus). I think Vernon Smith did some of this work with Hoffman and McCabe. Eckel is another example. The literature throughout the late 80s and early 90s is full of good examples. $\endgroup$
    – 123
    Sep 28 '19 at 5:10
  • $\begingroup$ 'rational' and 'utility-maximizing' can't be mathematically defined without a bunch of practically ridiculous assumption. Publicly making a categorical statement based on something so soft is bad business. $\endgroup$ Sep 28 '19 at 10:49
  • $\begingroup$ @ArthurTarasov Are you suggesting that the wikipedia statement need to be fixed? $\endgroup$
    – High GPA
    Sep 28 '19 at 21:04
  • $\begingroup$ @123 So basically the wikipedia statement is focusing on criticizing the word "individual"? $\endgroup$
    – High GPA
    Sep 28 '19 at 21:04
  • $\begingroup$ @HighGPA I don't think fixing wikipedia pages of such edge cases is a good time investment. Also, having evidence against something doesn't make it wrong, especially in social sciences. Practically, it means models based on such framework might be less useful. $\endgroup$ Sep 28 '19 at 23:03

Utility maximization is a proposition that can neither be confirmed nor refuted. For one thing, "utility" does not even exist as an entity; it's a mere conceptual construct. For another, "maximization" as a motivation is inherently unobservable. Even behavioral economists, who are adept at finding so-called empirical "anomalies" --- behaviors that apparently contradict economic predictions --- talk of "rationalizing" those anomalous behaviors by coming up with models in which the anomalies are outcomes of some maximization process. See, for example, Thaler's review of the literature on ultimatum/dictator games which he pioneered.

What the experimental results from ultimatum/dictator (and trust) games tells us is merely that people are not income maximizers. It is nevertheless invalid to conclude that people do not seek to maximize some other criterion or objective, which may or may not be part of what economists call "utility".

As economists, we understand that the specific measures we use for utility, like income, satisfaction, or selfishness, are adopted because of analytical convenience for the problem at hand, not because we seriously believe that those measures reflect human nature in any deep philosophical sense.

In a way, it's unsurprising that no economist, famous or otherwise, would declare utility maximization "wrong", since doing so would first require a precise definition of what "utility" is. Such a definition, despite nearly two hundred years of intellectual endeavor, remains frustratingly elusive.

  • $\begingroup$ "Individual Utility maximization" is refutable in my opinion: once you demonstrated that someone's preference is not complete or not transitive, then she doesn't have a utility function and utility maximization is not possible. $\endgroup$
    – High GPA
    Sep 28 '19 at 21:02
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    $\begingroup$ @HighGPA: The nonexistence of a utility function as defined by economists/mathematicians does not imply that people do not pursue objectives to the greatest extent possible. Most people have not even the slightest clue about what a "utility function" is, and yet they go on conducting their lives as if they were trying to maximize some criterion that economists call "utility". Just because people's goals/objectives are not amenable to mathematical analysis (i.e. satisfying some mathematical axioms) does not mean those goals and motives do not exist. $\endgroup$
    – Herr K.
    Sep 29 '19 at 2:23

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