1 J. L. Econ. & Org. 341 (1985)
Goals, Commitment, and Identity

handle is hein.journals/jleo1 and id is 347 raw text is: Goals, Commitment, and Identity

All Souls College, Oxford
The choice of behavioral assumptions in economics tends to pull us in two
different-sometimes contrary-directions. The demands of tractability can
conflict with those of veracity, and we can have a hard choice between
simplicity and relevance. We want a canonical form that is uncomplicated
enough to be easily usable in theoretical and empirical analysis. But we also
want an assumption structure that is not fundamentally at odds with the real
world, nor one that makes simplicity take the form of naivety. There is a
genuine conflict here-a conflict that cannot be easily disposed of either by
asserting the need for simplification in theorizing or by pointing to the need
for realism. What we have to face is the need for discriminating judgment,
separating out the complications that can be avoided without much loss and
the complexities that must be taken on board for our analysis to be at all
The nature of the behavioral foundation of economics poses a particularly
difficult problem. The ability of groups and societies to deal with conflicts of
interests, and of goals, among their members depends largely on the way
individuals think and act and how they assess their respective objectives,
achievements, and obligations. I shall argue that in analyzing the so-called
privateness of individual orderings, we have to make some basic distinctions.
In particular, distinctions will be made, in section 3, among: (1) self-centered
welfare; (2) self-welfare goal, and (3) self-goal choice. The analysis will draw on
the differences between different aspects of privateness.
1. Friedman has rightly emphasized the need to judge assumptions in economic theory in
terms of their usefulness, though, as I have tried to argue elsewhere (1980), Friedman takes an
unduly limited view of the uses of economic theory and the methodology for judging these uses.
See also Hicks; Helm.
This is a revised version of a paper presented at a conference on Law, Economics, and Organiza-
tion at Yale University, October 19-20, 1984. For helpful comments on the earlier version, I am
most grateful to George Akerlof, Raj Sah, Oliver Williamson, and Gordon Winston.
Journal of Law, Economics, and Organization vol. 1., no. 2 Fall 1985
 1985 by Yale University. All rights reserved. ISSN 8756-6222

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