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This chapter explores the relation between individual and collective rationality. A sketch of some of the better-known models of emergent collective organization on the basis of purely individual interactions illustrates some of the advantages, problems, and limitations of the move from individual to collective rationality. The chapter considers the debate concerning the units of selection, group selection, and the main explanations that have so far been adduced to explain the paradox of individual altruism: how is the Darwinian hypothesis of a universal “struggle for survival” compatible with the fact that human beings sometimes actually sacrifice themselves for a cause that benefits only others?

This chapter analyses the concept of individual rationality. It covers internal consistency, procrastination and addiction, the Traveler’s Dilemma, the simplified E-Mail Game, the paradox of cognition. It discusses the rejection of the so-called “axiom of transparency”, which states that if a person knows something, then the person knows that he know it.

Thagard provides a review and assessment of central aspects of rationality in science, dealing first with the traditional question: What is the nature of the reasoning by which individual scientists accept and reject conflicting hypotheses? He also discusses the nature of practical reason in science and then turns to the question of the nature of group rationality in science. In this latter context, Thagard discusses, among other matters, his CCC (for consensus = coherence + communication) model, which shows how epistemic group rationality can arise in agents who communicate with each other while focusing on the explanation of observed phenomena. In the remainder of the chapter he examines whether scientists are in fact rational, that is, whether they conform to normative standards of individual and group rationality. He considers various psychological and sociological factors that have been taken to undermine the rationality of science.

Building on the information developed in the previous six chapters, this chapter develops a theoretical model of international cooperation by means of the treaty instrument. The focus is on explaining why treaty participation is difficult to enforce. The theory shows that a treaty sustains cooperation by transforming the prisoners’ dilemma. It also shows that there is a limit to how far this approach can improve on non-cooperation. The theory is illustrated by the case study of conserving anadromous fish stocks.

This chapter argues that group actions are rational if the individual acts that constitute them are rational. It observes that individuals sometimes have conflicting goals and desires when they make decisions. The chapter goes on to acknowledge that some of the requirements that individuals can face align well with group efficiency, but that satisfying them can conflict with desires that the individuals may have quaqua individuals. The reverse is also possible. The chapter denies, however, that such cases reveal genuine conflicts between individual and collective rationality. Collective rationality does not demand individual efficiency in conditions that are not ideal for joint action. Furthermore, it is not irrational for individuals to make a trade-off between competing goals. In line with this, it argues that in the context of judgment aggregation, individuals can tolerate occasional inconsistencies without this entailing irrationality. The chapter concludes that individual rationality entails collective rationality.

This chapter concerns the rationality of group agents. The chapter challenges List and Pettit’s argument in which group agents have to collectivize reason and apply criteria such as consistency at the group level rather than at the individual level. It argues that, in order for a group’s rationality to truly override the rational concerns of the individuals, it must not be rational for the individuals to implement the group judgment. If this were the case, the group’s decision and subsequent action would be straightforwardly rational from the perspective of the individual members. For example, if the members of a committee were to realize that they were on the cusp of a collectively irrational vote, and the members of the committee were each to be penalized for such a vote, then there is no conflict between individual and group level decisions. It would be straightforwardly rational for the individuals to vote in such a way as to avoid those penalties and thereby to safeguard the rationality of the group. In this way, the chapter raises the stakes in the debate about what Pettit has called “group minds.”

This chapter shows that rational contractors seek to create mutually advantageous, enforcable agreements. Doing so requires that they satisfy three independent rationality conditions: joint, concession, and individual rationality. A process of rational bargaining can satisfy these conditions but still fail to reach fruition because of uncertainty deriving from incomplete or imperfect information, or from potential defection. Creating safeguards requires parties to incur three distinct kinds of cost corresponding to the phases in contracting: search costs (pre-phase), decision costs (negotiation phase), and monitoring costs (post-phase). The ways in which the social environment can be altered to reduce uncertainty thereby increasing the possibility of rational cooperation, are discussed.

The author suggests that the problem of aggregation in economics has been treated in too extreme a way. Economists want to deal with all individuals as in the General Equilibrium approach, or to model a representative agent, or to deal with the relation between aggregate variables. Philippe Michel argues in favour of a partial disaggregation into several categories of representative agents. He suggests that this would be a more fruitful approach to macroeconomics.

The chapter considers H&B and F&F attitudes towards market failure and information disclosure, highlighting first that policymakers influenced by the H&B school have worried about internal as well as external impediments to making self-regarding choices and the misevaluation of the performance of members of “outsider” groups. It further emphasizes the H&B commitment to programs best described as “libertarian paternalist” or “asymmetrically paternalist,” intended to interfere with a subject’s immediate “liberty” but not her autonomy and also meant to permit subjects who have atypical tastes to manifest those tastes in ways that mandates would not. Policymakers influenced by F&F theory have emphasized, to a much greater extent, that typical disclosure policies are misguided: while it is desirable to improve the form in which information is presented, increasing the amount of information that consumers receive is generally counterproductive because information might “crowd out” the search for a single best lexical cue. The chapter questions the viability of each approach, arguing that neither truly works absent a separate theory of what substantive choices are ideal.

The market system is an extraordinarily effective mechanism for creating material prosperity. Countries which have renounced the market system, as in the case of many previously communist regimes, have learned the hard way that it leads to stagnation and collective poverty. Capitalism, by contrast, is successful thanks to its decentralized character, whereby everyone strives for his or her own interests. The market system, however, also comes up against its limits, which arise because individual and collective rationality do not coincide. Firms which pollute the air and water may maximize their individual profit, but not the prosperity of society as a whole. The market system also awakens the cold, calculating System II in individuals, without taking into account our emotional side, System I, thus leading to internal conflict in individuals.

This chapter presents modifications of the Vickrey-Clarke-Groves (VCG) mechanism of combinatorial auctions (CAs) that are computationally easy, and which restore individual rationality and incentive compatibility. These modifications are second-chance mechanisms, which satisfy individual rationality and can be applied whenever other mechanisms such as VCG, weighted VCG, or compensation and bonus mechanisms are applicable. The chapter discusses the game theoretic properties of non-optimal incentive compatible VCG mechanisms, which are individually rational and, as a result, lead to poor economic efficiency. It further describes the effects of limited computation but unlimited communication in VCG mechanisms, along with a discussion of various non-VCG approximation mechanisms for restricted CAs. The chapter also discusses all three categories of alternative approaches to the intractability of VCG mechanisms for CAs.

This chapter expands on the notion of a Samaritan duty of justice to aid society. It dispels the possible objection that only physical emergencies can count as the object of Samaritan assistance, and it explains why a natural duty of justice to help others can be discharged via elections—as elections are the only method to install governments, which affect the quality of governance nontrivially. The chapter proceeds to explain why justice and the erection of governments are uniquely related, which makes voting morally special, and morally mandated if not unduly burdensome for the citizen. The chapter elaborates on the idea that the duty to aid society via the vote is a duty to engage in cooperation with others, by participating in elections. Voting is, then, an instance of collectively rational Samaritanism.