Ever since philosophers set up their first models to predict human behaviour, it was apparent that their findings had to be handled with care and that experimental evidence was needed to corroborate their theories. In their models, general assumptions such as perfect knowledge or perfect homogeneity make it obvious that these models could not simply be taken as projections of real markets.
The question, however, is, to what extend these theories have their legitimation anyway. Even though assumptions made by economists when setting up market models may be false, many predictions derived from these models are not. We therefore need to find out what determines the market outcome. However, in order to understand how markets work, we first have to understand how human beings work. Experimental economics can be a valuable instrument for that, because, as Alvin E. Roth put it, experimental economics can “bridge the gap between the study of ideally rational behavior and the study of actual behavior” (Roth, 1991, p. 107).
Table of Contents
I. INTRODUCTION
1.1 Economic Theory and Experimental Economics
1.2 Human Behaviour, Social Norms and Cultural Identity
II. INFLUENCES ON ECONOMIC BEHAVIOUR
2.1 Homo Economicus vs. Homo Sociologicus
2.1.1 The Rationale of Homo Economicus
2.1.2 Influences on Homo Sociologicus
2.1.3 Combining the Two
2.2 Social Norms and Economic Behaviour
2.2.1 Norms of Reciprocity
2.2.1.1 Experimental Evidence: Norms of Reciprocity
2.2.2 Norms of Cooperation and Fairness
2.2.2.1 Cooperation and Fairness in Games: The Prisoner’s Dilemma
2.2.3 Norms of Distribution
III. CULTURAL VARIATIONS IN ECONOMIC BEHAVIOUR
3.1 The Assumption of Cultural Variations in Economic Behaviour
3.2 Testing the Model
3.2.1 Restrictions to Cross-Cultural Studies
3.3 Evidence from Experiments
3.3.1 An East-West-German Comparison by Ockenfels and Weimann
3.3.1.1 Experimental Designs
3.3.1.2 Results
3.3.2 Prisoner’s Dilemmas in Japan and the United States
3.3.2.1 Experimental Design
3.3.2.2 Results
3.3.3 Bargaining Behaviour in Four Countries
3.3.3.1 Experimental Design
3.3.3.2 Results
3.4 Deducting “Toughness” of Societies from Experimental Results
IV. SUMMARY AND CONCLUSION
Research Objective and Key Themes
This paper investigates the limitations of the traditional "Homo Economicus" model by analyzing the influence of social norms, fairness, and cultural identity on individual economic decision-making. Through an examination of experimental evidence from diverse societies, the work explores whether universal economic behavior exists or if it is inherently shaped by regional cultural settings.
- The clash between rational income-maximization (Homo Economicus) and socially-oriented behavior (Homo Sociologicus).
- The role of specific social norms such as reciprocity, cooperation, and fairness in game-theoretic scenarios.
- Cross-cultural empirical comparisons, including East-West German experiments and US-Japanese behavioral studies.
- The identification of "sense of control" versus "general trust" as cultural drivers of cooperative behavior.
- Methodological considerations for cross-cultural economic experiments and the interpretation of distributional norms.
Excerpt from the Book
2.1.1 The Rationale of Homo Economicus
Homo economicus is the most frequent actor in economic models, someone guided solely by rationality and without any influences from outside, or, as Ockenfels and Weimann put it, a “strictly rational fellow without sex, age, or cultural identity” (Ockenfels and Weimann, 1999, p. 275). He has no cognitive boundaries, i.e. he knows and anticipates everything, and does not care about his environment at all. He is thus frequently called a “self-contained and asocial atom” (Elster, 1989, p. 99).
In a fictive round of the dictator game, in which homo economicus is free to divide €10 among himself and someone else, who has no choice but to accept the offer, homo economicus would act perfectly rational and maximise his income: he would keep everything to himself.
Summary of Chapters
I. INTRODUCTION: This chapter highlights the necessity of experimental economics to test traditional theoretical market models and introduces the paper's focus on the dual influence of rational self-interest and social norms.
II. INFLUENCES ON ECONOMIC BEHAVIOUR: This section contrasts the rational "Homo Economicus" with the socially-influenced "Homo Sociologicus," detailing various norms such as reciprocity, cooperation, and distribution that govern economic interactions.
III. CULTURAL VARIATIONS IN ECONOMIC BEHAVIOUR: The author evaluates empirical studies across different nations, such as the German reunification impact and US-Japanese comparisons, to demonstrate how cultural background shapes economic decision-making and perceived fairness.
IV. SUMMARY AND CONCLUSION: The final chapter synthesizes findings to conclude that while Homo Economicus is insufficient as a standalone model, cultural variations exist, proving that universal human behavior is a myth and that economic predictions must account for local social norms.
Keywords
Homo Economicus, Homo Sociologicus, Experimental Economics, Social Norms, Reciprocity, Fairness, Cultural Identity, Prisoner's Dilemma, Distribution, Cooperation, Rationality, Market Models, Behavioral Economics, Cross-Cultural Studies, Economic Decision-Making
Frequently Asked Questions
What is the fundamental premise of this paper?
The paper examines whether the traditional economic assumption of a perfectly rational "Homo Economicus" is sufficient to explain human behavior, arguing that social norms and cultural identity are essential factors in economic decision-making.
What are the primary thematic areas covered?
The work focuses on the intersection of game theory and behavioral sociology, specifically addressing norms of reciprocity, fairness, and cooperation across different international subject pools.
What is the central research question?
The primary inquiry is to determine if economic behavior is universal across different societies or if it varies significantly due to divergent social norms and cultural influences.
Which scientific methodology does the author employ?
The author uses a literature-based synthesis of various experimental economic studies, including public good games, solidarity games, and ultimatum games, to corroborate behavioral theories.
What is explored in the main body of the text?
The main body examines the definitions of homo economicus and homo sociologicus, followed by a comparative analysis of experiments from Eastern/Western Germany, Japan, and the United States.
Which keywords best characterize the work?
The paper is best described by terms such as behavioral economics, social norms, cross-cultural comparison, reciprocity, fairness, and experimental evidence.
How did the German reunification affect the results mentioned in the study?
The author presents Ockenfels and Weimann’s findings, which suggest that individuals from different social backgrounds—socialist versus market-oriented—demonstrate measurable differences in their propensity for cooperation and solidarity.
What role does the "sense of control" play in the Japanese versus American studies?
The study found that Japanese participants were highly influenced by a "sense of control" over the outcome in cooperation games, whereas American participants relied more heavily on a broader "general trust" in their partners.
- Quote paper
- Anne-Kathrin Wippermann (Author), 2006, Beyond Homo Economicus - The Influence of Social Norms and Cultural Identity on Economic Behaviour, Munich, GRIN Verlag, https://www.grin.com/document/50307
