Integrity and Agreement: Economics When Principles Also Matter (Economics, Cognition, and Society)

180 Pages·2008·10.53 MB·English

by  Lanse Minkler

I ntegrity and Agreement
This series provides a forum for theoretical and empirical
investigations of social phenomena. It promotes works that
focus on the interactions among cognitive processes, indivi
dual behavior, and social outcomes. It is especially open to
interdisciplinary books that are genuinely integrative.
Founding Editor: Timur Kuran
Series Editor: Peter J. Boettke
Editorial Board: Tyler Cowen Richard Swedberg
Diego Gambetta Viktor Vanberg
Avner Greif Paul Zak
Daniel Klerman
Titles in the Series
Glenn R. Parker. Capitol Investments: The Marketability of Political Skills
Lanse Minkler. Integrity and Agreement: Economics When Principles also Matter
Stephen T. Ziliak and Deirdre N. McCloskey. The Cult of Statistical Significance:
How the Standard Error Costs Us Jobs, Justice, and Lives
Eirik G. Furubotn and Rudolf Richter. Institutions and Economic Theory:
The Contribution of the New Institutional Economics, Second Edition
Tyler Cowen. Markets and Cultural Voices: Liberty vs. Power in the Lives of
Mexican Amate Painters
Thnlinn Eggertsson. Impeifect Institutions: Possibilities and Limits of Reform
Vernon W. Ruttan. Social Science Knowledge and Economic Development:
An Institutional Design Perspective
Phillip J. Nelson and Kenneth V. Greene. Signaling Goodness: Social Rules and
Public Choice
Stephen Knack, Editor. Democracy, Governance, and Growth
Omar Azfar and Charles A. Cadwell, Editors. Market-Augmenting Government:
The Institutional Foundations for Prosperity
Randall G. Holcombe. From Liberty to Democracy: The Transformation of
American Government
David T. Beito, Peter Gordon, and Alexander Tabarrok, Editors. The Voluntary City:
Choice, Community, and Civil Society
Alexander J. Field. Altruistically Inclined? The Behavioral Sciences, Evolutionary
Theory, and the Origins of Reciprocity
David George. Preference Pollution: How Markets Create the Desires We Dislike
Julian L. Simon. The Great Breakthrough and Its Cause
E. L. Jones. Growth Recurring: Economic Change in World History
Rosemary L. Hopcroft. Regions, Institutions, and Agrarian Change in
European History
Lee J. Alston, Gary D. Libecap, and Bernardo Mueller. Titles, Conflict, and
Land Use: The Development of Property Rights and Land Reform on the
Brazilian Amazon Frontier
(continues on last page)
I ntegrity and Agreement
Economics When Principles Also Matter
Lanse Minkler
THE UNIVERSITY OF MICHIGAN PRESS • Ann Arbor
Copyright © by the University of Michigan 2008
All rights reserved
Published in the United States of America by
The University of Michigan Press
Manufactured in the United States of America
@ Printed on acid-free paper
2011 2010 2009 2008 432 1
No part of this publication may be reproduced,
stored in a retrieval system, or transmitted in any form
or by any means, electronic, mechanical, or otherwise,
without the written permission of the publisher.
A elP catalog record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Minkler, Lanse.
Integrity and agreement: economics when principles also matter /
Lanse Minkler.
p. cm. - (Economics, cognition, and society)
Includes bibliographical references and index.
ISBN -13: 978-0-472-11643-0 (cloth: alk. paper)
ISBN-I0: 0-472-11643-6 (cloth: alk. paper)
1. Economics-Moral and ethical aspects. 2. Integrity. 3. Self
interest. 4. Truthfulness and falsehood. 5. Choice (Psychology)
1. Title. II. Title: Economics when principles also matter.
HB72.M52 2008
174-dc22 2007052489
ISBN -13: 978-0-472-02422-3 ( electronic)
For my parents and my brother.
And to all those who do as they say
without expecting a big parade.

Contents
Acknowledgments
IX
Chapter 1. Why Integrity? 1
Chapter 2. Preference-Integrity 12
2.1. Utility Theory 12
2.2. Preference-Integrity 16
2.3. An Assessment of Preference-Integrity 18
Chapter 3. Commitment-Integrity 22
3.1. Commitment-Integrity 22
3.2. Reasons 30
3.3. An Assessment of Commitment-Integrity 34
3.4. Failures to Act with Commitment-Integrity 37
3.5. Psychological Foundations 41
3.6. Conclusion 51
Chapter 4. Social Dilemmas and Game Theory 54
4.1. The Prisoner's Dilemma 55
4.2. Preference-Integrity and Lying in Game Theory 59
4.3. Evolutionary Game Theory 68
4.4. Integrity in Evolutionary Game Theory 71
Chapter 5. Lying, Contracts, and Political Behavior 74
5.1. Lying and Mutual Deceit 74
5.2. Legal Contracts 79
5.3. Political Agreements 81
Chapter 6. The Employment Agreement 87
6.1. The Theory of the Firm and the Importance of Shirking 88
6.2. Worker Integrity 92
viii • CONTENTS
6.3. Mutual Deceit in the Employment Agreement 95
6.4. Managing Workers of Integrity 99
6.5. Integrity and Other Views of the Firm 102
6.6. Conclusion 105
Chapter 7. Religious Agreements: Beyond the
Minimalist Principle 107
7.1. The Economic Theory of Religion 108
7.2. Religious Integrity 110
7.3. Multidimensional Identity and Incoherence 114
Chapter 8. The Social Contract and Human Rights 117
8.1. HumanRights 117
8.2. Coherence, Dignity, and Human Rights 121
Chapter 9. On the Possibility of Integrity 128
9.1. Moral Training and Moral Leadership 128
9.2. Institutions 134
9.3. Conclusion 140
Chapter 10. Conclusion 142
Bibliography 151
Index 163
Acknowledgments
My great teachers have included Kostas Scoulas, Jerry Sanders, Moshe Adler,
Christopher Titmus, Jose Reissig, and Sharda Rogell. I'm grateful to each for
teaching me to challenge my current views as a way of coming closer to truth.
In writing this book, I have benefited from the skilled readings and advice
of many people. I'm grateful to Donald Baxter, James Boudreau, John Davis,
Dhammika Dharmapala, Margaret Gilbert, Shareen Hertel, Vicki Knoblauch,
John Rickards, Jonathan Wight, Richard Ashby Wilson, and a number of
anonymous reviewers. Even when I did not include their comments, each un
doubtedly improved the clarity of ideas in this volume.
I am indebted to Metin Cosgel and Thomas Miceli, my coauthors on pre
viously published articles about integrity. I am grateful for their willingness to
work on the topic, and their skillful contributions that enhanced this project.
I also thank Metin and Tom for providing helpful comments on different
chapters.
Timur Kuran, the series editor, did a remarkable job editing this book. He
painstakingly read and provided detailed comments on a couple different
drafts. The wise advice derived from his careful scrutiny clearly improved the
quality of this book, sometimes in spite of my own resistances.
Finally, I am most grateful to my wife, Fe Delos-Santos. Not only did she
eagerly participate in many lively debates about the ideas in this book, she also
expertly edited many chapter drafts, as well as an early version of the whole
thing. Because she is a lover of great literature and great writing, I want to
publicly acknowledge her torment.