Abstract
From the industrial revolution to our modern economies, the organization of our societies has been built on two pillars: creation of value (Adam Smith) and accountability (Arthur Pigou). We will ask whether individual and corporate social responsibility is a substitute for, or a natural product of market economies. This will bring us to a discussion of the morality of markets.
The second part of the lecture will develop a theoretical framework to explain recent empirical findings on the malleability of morality. Building on the presence of image concerns, we will introduce the concept of narratives that allow individuals to maintain a positive image when in fact acting in a morally questionable way. We show how narratives, however feeble, inhibit moral behavior in downplaying externalities, magnifying the cost of moral behavior, or in suggesting not being pivotal. We further investigate why narratives are shared and get disseminated. We then turn to imperatives, i.e., moral rules or precepts, as a mode of communication to persuade agents to behave morally, and identify the conditions under which Kantian behavior will emerge in an otherwise fully utilitarian environment.
The lecture will be based on work with Roland Bénabou, and for the part on narrative with Roland Bénabou and Armin Falk.
Readings required prior to lecture
Bénabou, R. and J. Tirole (2010) "Individual and Corporate Social Responsibility," (Coase lecture) Economica, 77: 1-19.
Bénabou, R., and J. Tirole (2006) “Incentives and Prosocial Behavior” American Economic Review, 96(5): 1652-1678.