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Unitary Agent Models at

Multiple Levels: The Consistency

Problem

Paper presented by John Quiggin*CEAR Seminar on Risk and Agency, 22-23 January 2011, Atlanta

* Australian Research Council Federation Fellow* Risk and Sustainable Management Group, Schools of Economics

and Political Science,University of Queensland

Tuesday, 18 January 2011

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Websites

Web site http://www.uq.edu.au/economics/

johnquiggin

WebLog http://johnquiggin.com

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http://www.uq.edu.au/economics/johnquigginhttp://johnquiggin.com/http://johnquiggin.com/http://www.uq.edu.au/economics/johnquigginhttp://www.uq.edu.au/economics/johnquigginhttp://www.uq.edu.au/economics/johnquigginhttp://www.uq.edu.au/economics/johnquiggin

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Unitary agent models

Outcomes reflect decisions of individual

agents

Agents undertake constrained maximization

of (expected values of) well-defined

objective functions

Outcome is a Bayes-Nash equilibrium

In limiting case, behavior is competitive

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Levels of agency

Gene - Evolutionary psychology

Individual/household - consumer theory

Firm - Production theory

Class-For-itself - Marxism

Interest group - Public choice theory

Nation-state - International realism

Planetary ecosystem - Gaia

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Stylistic consistency

With some exceptions, same people tend to

like/dislike these models

Becker on Evolutionary psychology, new

household economics, Public choice

Similar style of explanation, hence similaraesthetic appeal

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One level to rule them all

lower levels disregarded

Higher levels are aggregate outcomes of

decisions at master level

Compare micro foundations of macro

Logical inconsistency

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Resolution:Co-operation

Co-operation between agents at the same

level

Genes - group selection

Individuals - altruism

Interest groups - democratic pluralism

Nations - idealism in international relations

Aggregate outcomes maximize some welfare

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Resolution: Multi-

level Agency models

Freudian psychology - Id, Ego, superego

Olson on internal structure of interest

groups

International relations models with non-state actors

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Risk and unitary agent

models

How do the objectives of the decision agent

affect outcomes at level of interest

Example: If behavior is driven by Genes, how doevolutionary imperatives affect individual

Behavior under risk

Example: What does international realism

imply about risky behavior by states?

Individuals?

Example: How do firm decisions reflect risk

preferences of shareholders (Modigliani-Miller)

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Risk and co-operation

Collective choices under uncertainty

Informal institutions for risk management

Large literature on both of these topics

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Risk and multi-level

AgencyHeuristics and Biases

Ideal of rational Individual choice

compromised by (genetically determined)

biases

Risk for firms and factor suppliers with

incomplete markets

Risk aversion for Nation-States or for

Citizens - Implications for War and Peace

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Unitary Agent Models at

Multiple Levels: The Consistency

Problem

Paper presented by John Quiggin*CEAR Seminar on Risk and Agency, 22-23 January 2011, Atlanta

* Australian Research Council Federation Fellow* Risk and Sustainable Management Group, Schools of Economics

and Political Science,University of Queensland

Tuesday 18 January 2011

atlanta 1101

Documents