The Economics of Morality and The Fabric of Social Sciences

Abstract The paper presents an economic theory of morality and, based on it, a classification of social sciences and economic subdisciplines. Following the introduction, sections 2 to 4 seek to internalise morality into economics, both from a decision-theoretic and a game-theoretic point of view. In sections 5 and 6 moral principles are reconstructed as institutions, and it is shown why and how moral principles turn mixed-motive games into coordination games (along a hierarchy of moral stages and the respective games). This reveals the immense importance of morality not only in real life but also with respect to theoretical and empirical work in economics. Further, it may be asked whether there remains a proper realm for morality (or ethics) above and beyond the economic frame of reference. This issue is addressed in section 7, where the structural differences and the systematic relations between economic and neighbouring disciplines are discussed. Section 8 concludes and discusses important ramifications.