======================= HES POSTING ================= 
 
 
On Fri, 08 Aug 1997 08:14:26 -0500 (EST) "Michael L. Robison" 
<[log in to unmask]> wrote: 
 
> > In neo-classical economics we assume that all agents are motivated 
solely 
> > by 'self-interest'. But what precisely do we mean? Do we mean that 
> > individuals will only do something if it directly benefits themselves 
(a 
> > narrow definition)? Or do we mean that individuals might also sometimes 
do 
> > things for other people to the extent that they indirectly reap 
> > satisfaction from such 'generosity' (a broad definition)? 
> > 
[cut] 
> > I have two questions: 
> > 
> > 1. Does 'mainstream' neo-classical economics have a strict position on 
> > which assumption is the valid one? 
> > 2. Is the attainment of Pareto-optimality conditional, inter alia, on 
> > utilisation of the narrow assumption? (as Sen (1987) suggests)? 
> > 
> > I would appreciate your help on this. I would particularly like to be 
> > steered to 'authoritative' literature that answers these questions. 
> > 
On altruism, try D. Collard, Altruism and Economy, 1978. 
 
My understanding of modern economics is that we assume that people have 
preferences. Details unspecified. We then assume transitivity, etc, but 
there is no reason to rule out altruism. 
 
Pareto efficiency, however, is a problem. If my preferences relate to 
someone else's consumption, which I don't choose (he/she does), there 
is an externality/missing market. Consumption by that person becomes a 
sort of public good. Hence markets may fail. 
---------------------- 
Tony Brewer ([log in to unmask]) 
University of Bristol, Department of Economics 
8 Woodland Road, Bristol BS8 1TN, England 
Phone (+44/0)117 928 8428 
Fax (+44/0)117 928 8577 
 
 
============ FOOTER TO HES POSTING ============ 
For information, send the message "info HES" to [log in to unmask]