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Published by EH.NET (December 2003)
Nicola Giocoli, _Modeling Rational Agents: From Interwar Economics to Early
Modern Game Theory_. Cheltenham, UK: Edward Elgar, 2003. x + 464 pp. $125
(cloth), ISBN: 1-84064-868-6.
Reviewed for EH.NET by Esther-Mirjam Sent, Department of Economics and
Policy Studies, University of Notre Dame.
During recent months, the listserv of the History of Economics Society has
witnessed a heated exchange among David Colander, Roy Weintraub, and others
who lined up behind either "thin" or "thick" history of economics (see
http://www.eh.net/HE/hes_list/list_archive.php). In the discussions, thin
history was associated with the conventional exegetical approach to the
history of economic ideas, or literature reviews with a broader sense of
the literature and the context of the times. Posters to the list seemed to
agree that this is the type of history that belongs in economics
departments. Thick history, on the other hand, is concerned with the
relationship of economics to other disciplines and the involvement of
economic ideas in the economy and various other social processes. As such,
this is the type of history that is more at home in history departments.
Another contrast that may be drawn is between rational and historical
reconstruction (see Khalil 1995; Rorty 1984), where rational reconstruction
(or a Whiggish perspective) starts from the idea that the theory from one
school could be extracted, without much violence, from the author's body of
thought, its underpinning vision, and its environmental context. Historical
reconstruction (or a contextualist perspective), on the other hand, is
based on the premise that the extraction and comparison of peripheries
without regard to their respective bodies of thought or historical context
imminently violates the constitution of one theory in favor of another.
What Nicola Giocoli offers in _Modeling Rational Agents: From Interwar
Economics to Early Modern Game Theory_ is thin history, or rational
reconstruction. Ignoring historical contingencies, personal vicissitudes,
academic relations, funding availability, and so on, he focuses almost
exclusively on written texts. These lead him to claim that the period from
roughly 1900 to 1970 was characterized by a change in the image of economic
knowledge resulting in a change in the body of knowledge. More
specifically, Giocoli argues that the image of knowledge in economics
shifted from systems of forces to systems of relations. Along the way, the
body of knowledge moved from rationality as maximization to rationality as
consistency, as well as from processes to conditions, from an interest in
behavior to formal representation, from calculus to topology, from physics
to mathematics, and so on.
In Giocoli's opinion, the transition in the image of knowledge in economics
and the accompanying shift in the body of economic knowledge helps to
explain the fall and rise of game theory. Briefly, _Modeling Rational
Agents_ argues that the period up to World War II was characterized by an
escape from psychology as well as an escape from perfect foresight. Whereas
the former connected with the systems of relations image, the latter was
congruent with the systems of forces one. In other words, economics found
itself in a stalemate around the Second World War, in Giocoli's analysis,
with the discipline slowly transitioning to the systems of relations view
in the Post War period. During this gradual shift, Von Neumann and
Morgenstern's approach to game theory and its supposed focus on forces went
against the tide in the discipline. Giocoli claims that Nash's
interpretation of game theory was beset by other difficulties retarding its
acceptance by mainstream economics. In particular, Nash Equilibrium
presumably lacks a compelling interpretation and can be understood as a
fixed point or in rationalistic terms. Whereas the former was adopted, it
was also the one that matched the systems of relations image. In Giocoli's
opinion, it was not until economics had completed the transition to the
systems of relations view that it was ready to embrace non-cooperative game
theory. He concludes: "It was the transformation of neoclassical economics
in the direction of the consistency view of rationality and, more
generally, of the SOR [systems of relations] image that made possible the
rise of non-cooperative game theory and NE [Nash Equilibrium] to their
current outstanding role" (p. 342).
As a result of its focus on thin history, or rational reconstruction,
_Modeling Rational Agents_ is bound to be subject to the same kinds of
criticisms expressed on the HES List. As Rorty (1984, p. 54) perceptively
notes, rational reconstructions are not likely to converge, and there is no
reason why they should. Nevertheless, the lessons one can draw from the
thin approach adopted by the author are unclear. Giocoli makes it seem as
if twentieth century economists were mere pawns in an inevitable grand
scheme. What do we learn from this about the discipline of economics? And
if there has indeed been a transformation in the image of economics, then
how can the recent embracement of bounded rationality on the part of game
theorists, rational expectations economists, and the like be understood
(see Sent forthcoming)? Despite Giocoli's claim that "the two key
innovations brought about by the SOR [systems of relations] image were the
triumph of the consistency view of rationality and the abandonment of the
learning problem" (p. 346), recent developments mark a move away from
rationality as consistent behavior and towards an interest in learning on
the part of economic agents. In addition, the reader is frequently left
with more questions than answers. Can the rich history of economics during
the twentieth century be captured convincingly by a simple, smooth, and
logical narrative that focuses on shifts from forces to relations?
Regardless, Giocoli's book is an impressive tour de force that relies on
extensive and expansive literatures. It should be required reading for
anyone desiring a new perspective on the history of economics in the
previous century.
References:
Khalil, Elias L. 1995. "Has Economics Progressed? Rectilinear, Historicist,
Universalist, and Evolutionary Historiographies." _History of Political
Economy_, 27: pp. 43-87.
Rorty, Richard. 1984. "The Historiography of Philosophy: Four Genres." In
Richard Rorty, Jerome B. Schneewind, and Quentin Skinner, eds., _Philosophy
in History: Essays in the Historiography of Philosophy_, pp. 49-75.
Cambridge: Cambridge University Press.
Sent, Esther-Mirjam. Forthcoming. "The Legacy of Herbert Simon in Game
Theory." _Journal of Economic Behavior and Organization_.
Esther-Mirjam Sent is Associate Professor of Economics and Faculty Fellow
of the Reilly Institute for Science, Technology, and Values at the
University of Notre Dame. She is the author of _The Evolving Rationality of
Rational Expectations: An Assessment of Thomas Sargent's Achievements_
(Cambridge University Press, 1998) and the editor, with Philip Mirowski, of
_Science Bought and Sold: Essays in the Economics of Science_ (University
of Chicago Press, 2002).
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