Rational Choice and Freudian Accounts of Cooperation

Abstract

In this paper we discuss one of the richest psychological conceptions of individuals – that offered by Sigmund Freud – in relation to rational choice theory. The purpose is twofold. First, we use coordination games to translate some of Freud's ideas into a choice theoretic framework; including the three central components of Freudian psychoanalysis, the id, ego, and superego. Second, we use this framework to suggest a deeper and richer psychological characterization of the individual within the choice theoretic framework. Freud's more complex view of individuals provides a potentially deeper understanding of social interaction within the rational choice approach. This paper therefore contributes to psychology and economics within the larger field of behavioral economics We focus on Freud’s Civilization and Its Discontents (1930) to discuss both the rational choice and the Freudian conception of the relationship between the individual and society, to note points of commonality and divergence, and to understand the consequences of these differences for models of social behavior. Freud makes two theoretical contributions in this work. The first parallels recent scholarship in rational choice in discussing the relationship between individual behavior and social outcomes. Both approaches emphasize, for example, that individuals bear a cost for participating in schemes of social cooperation and interaction.

In Civilization and Its Discontents, Freud goes beyond this idea, attempting to show the implications of his interpretation of society for the individual, an analysis absent from rational choice analysis. Freud argues that individuals bear a psychological cost in fulfilling the demands and obligations of civilization. Participation in society requires that individuals suppress their desires in order to realize the gains from cooperation. The implications from the second part of Freud’s analysis allow us to study the limits of the standard rational choice conception of the individual.

Keywords: psychology, behavioral economics, Freud, rational choice theory

JEL Classification: B5, D1, Z1