Towards Teaching a Normative Ethics: Or, Ethics Even an Economist Can Accept

Abstract

This article presents a new method of teaching ethics in economics based on recent developments in game theory. Economics traditionally divides normative questions from positive questions, and relies only on the Pareto principle to distinguish good actions and policies from bad ones in answering the former. The traditional presentation of ethics as constraints on behavior makes it hard to justify ethics normatively using only the Pareto principle. Binmore (1994, 1998) instead presents ethics as coordinating conventions in games with multiple equilibria, in which all players gain from coordination. The author adds a discussion of stability to Binmore's presentation to construct a normative argument in favor of ethical or fair behavior, based only on the Pareto principle. The author describes teaching this material in a course on economics and game theory, and proposes ways to implement discussions of ethics at other points in the economics curriculum.