Guilt, love, and the behavioral enrichment of Public Choice Theory

Abstract

The prisoner’s dilemma captures the incentive problem present in many contexts of interest to public choice theorists. Self-interest makes defection a dominant strategy, and public choice theorists can identify useful government institutions and rules as government interventions that resolve the prisoner’s dilemma and capture the benefits of cooperation. We can similarly identify useful social norms as interventions that resolve the prisoner’s dilemma. This implies we can extend and enrich public choice theory by recognizing how the relatively “hidden” motivations present in social norms may substitute for or complement government interventions. We examine guilt and love as examples, and we illustrate how they facilitate, respectively, trade and voting. These examples more generally illustrate why public policy makers should consider unseen, or at least subtle, motivations.