Philosophy of economics: critique of the foundations of economic theory

Doctoral program in Philosophy, Epistemology, and Human Sciences

University of Cagliari, Department of Education, Psychology, and Philosophy

Course title: Philosophy of Economics: Critique of the Foundations of Economic Theory

Number of hours: 9

Instructor: Gabriele Ballicu, gabriele.ballicu@unica.it, ECON-01/A

Short bio/bibliography: Gabriele Ballicu is a postdoctoral fellow in political economy at the University of Cagliari. He holds a bachelor’s degree in Philosophy and a master’s degree in Economics and Public Policy, and a doctorate in Economics and Business. He has completed training and research at the University of Cologne, the Paris School of Economics, the Pompeau Fabra University of Barcelona, the Mohammed VI Polytechnic University of Rabat, and the University of Crete. A member of CRENoS (Centre For North South Economic Research) and UniCa-BERG (Behavioral Economics Research Group), he has previously collaborated with the National Institute of Economic and Social Research (NIESR) in London and currently collaborates with AVIS, ADMO, and ARES. He focuses on experimental and behavioral economics through the use of randomized controlled trials and the implementation of nudging policies.

Delivery method: Mixed (in-person/online)

Meeting schedule: Thursday, May 14, 21, and 28, 3-6 PM

Classroom: 9A, with connection via MS Teams

Language: Italian, with the option of teaching in English for international students

Prerequisite knowledge: None. Basic knowledge of political philosophy, general psychology, and mathematics is preferred.

Course description: This course offers an interdisciplinary introduction to the theoretical, methodological, and conceptual foundations of economics, with a focus on their relevance to philosophy, psychology, and logic. The aim is to provide critical tools for understanding economic language and models, as well as for reflecting on their normative and epistemological implications. The first part of the course is dedicated to defining economics as a social science. We will discuss its theoretical foundations, the role of models, the problem of causality in the human sciences, and the often ambiguous distinction between positive and normative economics. Particular attention will be paid to welfare theory and the main theories of justice, examining the possibility of objectively measuring collective well-being and the purposes of economic policy. The second part will focus on behavioral and experimental economics, disciplines that lie between economics and psychology. Through an examination of theories such as Prospect Theory, concepts such as cognitive biases, decision-making heuristics, and bounded rationality, we will discuss the challenges these contributions pose to the classical model of the rational actor. Ethical and political issues related to libertarian paternalism and nudging will also be explored, as well as the limits of experimental validity in the face of the replicability crisis and the question of WEIRD subjects. The final part of the course will be devoted to game theory, understood as a formal tool for studying strategic interactions between agents. After an introduction to basic concepts, key games will be analyzed. Particular emphasis will be placed on the emergence of cooperation, altruistic behavior, and social preferences, also considering the contributions of psychological and behavioral game theory.

Internal structure of the seminar meetings:

Lesson 1. What is economics? (3 hours)

What is economics? Basic concepts of political economy and moral implications.
Is economics a science? And what is a model? Advantages and problems of economic reductionism.
Theories of justice in economics and the complicated distinction between positive and normative economics.
Can social well-being be measured objectively? Welfare economics and the objectives of economic policy.

Lesson 2. Homo oeconomicus and behavioral and experimental economics (3 hours)

Can we study causality in the human sciences? The counterfactual problem and the main empirical methods.
A new paradigm: behavioral and experimental economics as an investigation of human beings.
Is man a rational subject (homo oeconomicus)? And what is “rationality” in economics? Prospect theory, psychological biases, and decision-making heuristics.
Behavioral welfare economics and the theory of libertarian paternalism: is it right to nudge?
The replicability crisis and WEIRD subjects: when is an experimental result in the human sciences valid and generalizable?

Lesson 3. Game Theory (3 hours)

Introduction to Game Theory (rules, assumptions, Nash equilibria, and strategic interdependence)
Classification of games and the main games (Stag Hunt, Chicken Game, Prisoner’s Dilemma)
Why do we cooperate? Evolutionary games and the role of repetition
Are humans purely self-interested? And when can we speak of altruism? Intentionality and the Dictator Game
Are humans naturally averse to inequality? Social preferences and the Ultimatum Game

Main bibliographic references:

Carmichael, F. (2005). A Guide to Game Theory. London: Financial Times Press
Cellini, R. (2019). Political Economy: An Introduction to Fundamental Models. McGraw-Hill (3rd ed.)
Guala, F. (2006). Philosophy of Economics: Models, Causality, and Forecasting. Il Mulino.
Thaler, R. (2018). Misbehaving: The Birth of Behavioral Economics. Einaudi.
Schmidt, A. T., & Engelen, B. (2020). The Ethics of Nudging: An Overview. Philosophy Compass, 15(4).
Slides provided during the course

Further bibliographic references:

Arnsperger, C., & Van Parijs, P. (2003). How Much Inequality Can We Accept? Economic and Social Ethics. Il Mulino
Bruin, B. D. (2005). Game Theory in Philosophy. Topoi, 24(2), 197-208.
Heinrich, J. (2022) WEIRD: The Western Mindset and the Future of the World. Il Saggiatore.
Kahneman, D. (2012). Thinking, Fast and Slow. Mondadori Editions.
Thaler, R., Sunstein, C., (2008). Nudge. Milan, Feltrinelli.
Sen, A. K. (2002). Ethics and Economics. Laterza.

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