Chapter 10 Human nature and sociality in economics

Since homo sapiens is a social animal, one might expect human nature the set of psychological propensities with which our species is naturally endowed to equip human beings to live in social groups. In this chapter, we consider the implications of this idea for economics and game theory. We begin by discussing four classic accounts of the forces that hold human societies together those of Hobbes, Hume, Rousseau, and Smith, who focus respectively on rational self-interest, convention, collective reasoning, and natural fellow-feeling. Turning to the modern literature, we review some of the ways in sociality has been introduced into decision and game theory by means of assumptions about non-self-interested preferences specifically, assumptions about altruism, warm glow, inequality aversion and reciprocity. We identify some of the limitations of these theories as explanatory devices, and suggest that these limitations derive from a common source: that sociality is being represented within a framework of methodological individualism. We then discuss more radical approaches to explaining social interaction, based on the concepts of expressive rationality and team reasoning. Finally, we pose the fundamental question of whether it is possible to explain social interaction all the way down without going beyond the bounds of methodological individualism.