Constructivist and ecological rationality in economics by Smith V.L.

By Smith V.L.

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It turned out that early lighthouses were private enterprise, not government, solutions to a public good problem, and the alleged inevitability of free riding was solved by the owner who contracted with port authorities to collect lighthouse fees when ships arrived portside to load or unload cargo. 56 These are the outside options or threat points in game theory. 57 The same results emerge in laboratory experiments reported by Hoffman and Spitzer (1985) 58 Under open range the animal owner is liable for intentional trespass, trespass of a lawful fence, and trespass by goats, whatever the circumstances, suggesting the hypothesis that goat behavior had long been recognized in pastoral norms and now captured in codified law.

Extensive Form Interactions between Anonymously Paired Individuals Cooperation has also emerged in anonymous two person extensive form games in laboratory experiments. Although such behavior is contrary to rational prescriptions, it is not inconsistent with our examples of spontaneous order without externally imposed law. Why do we study anonymous interactions in the laboratory? The model of non-repeated game theory is about strangers without a history or a future (Rosenthal, 1982), but anonymity has long been used in small group experiments to control for the unknown complexities of natural social intercourse.

55 In the beginning Shasta County California was governed by ‘open range’ law, meaning that in principle ranchers are not legally liable for damages resulting from their cattle accidentally trespassing on unfenced land. Then, in 1945 a California law authorized the Shasta County Board of Supervisors to substitute a ‘closed range’ ordinance in sub regions of the County. Dozens of conversions have occurred since this enabling law. Under a closed range law the rancher is strictly liable–even if not negligent–for damage caused by his livestock.

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