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BY-NC-ND 4.0 license Open Access Published by De Gruyter 2020

2. Institutional Design and Human Motivation: The Role of Homo Economicus Assumptions

Thomas Voss

Abstract

What kinds of behavioral or motivational assumptions are appropriate if “legislators” want to design “good” social institutions or constitutions? David Hume’s famous advice has been to follow the maxim “that every man must be supposed a knave: Though at the same time, it appears somewhat strange, that a maxim should be true in politics, which is false in fact.” Notice that Hume as well as Adam Smith both argued that humans sometimes and under certain conditions empirically act in accordance with a principle of “sympathy”, that is, they are able and willing to take the roles of their interaction partners and identify with their respective interests. Nevertheless, legislators who try to construct efficient social institutions should not assume that such pro-social motives prevail. In contemporary constitutional economics James Buchanan has endorsed Hume’s maxim with regard to the design of basic societal institutions: “Homo economicus, the rational, selforiented maximizer of contemporary economic theory, is, we believe, the appropriate model of human behavior for use in evaluating the workings of different institutional orders” (Brennan and Buchanan 1985: 61). The paper evaluates the Hume-Buchanan doctrine in the light of empirical evidence and theoretical insights with respect to social preferences and intrinsic motivations.

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