Evolutionary Rationality, 'Homo Economicus', and the Foundations of Social Order

Abstract

This article elaborates on an alternate general approach to rationality, starting with the Hayekian concept of mind as a complex system of genetically, culturally, and individually created and transmitted rules. "Evolutionary Rationality" is an individualistic alternative to "Homo Economicus" and the conventional concept of utility maximization under constraints. Its main elements are examined by means of an analysis paradoxes in the theory of games, as well as anomalies in the conventional approach that have been uncovered by experimental economics. This yields an approach to rationality in which individuals are "power maximizers," able to synthesize both rational and irrational behaviors in their standard meanings. "Evolutionary rationality" is thus an unity of reason and emotion - a unity which can be restated in evolutionary terms as recognizing the negative adaptive consequences of "Homo economicus" in our species' social context. Such unity of reason and emotion also prevails in cultural evolution. "Social affectivity" is linked to particular patterns of competition for power and the production of public goods within specific societies. Different consequences for the general analysis of social order are sketched, with special attention to the role of groups in the making of society

Keywords: paradoxes and anomalies in game experiments, Hayeks's theory of group selection, power and utility, evolutionary accounts of human behavior, social affectivity and social order, power in society

JEL Classification: B40, C70, Z00