We use epistemology, the study of knowledge and justified belief, to investigate decision making in social, political and financial situations. Against the backdrop of debates about financial bubbles, fake news and populism, we investigate what we can know and what we are justified in believing. We approach applied epistemology through two lenses: epistemic virtues (individual), and social epistemology (social). And we will look at models of collective belief formation and information diffusion in markets and networks. This will include hands-on exercises, in which we run diffusion simulations.
We look at individual belief formation, discussing theories of epistemic virtues and contrasting them economic models of belief formation. Epistemic virtues are traits guiding the way we deal with information, form beliefs, and acquire knowledge. We will explore philosophical questions about the nature of epistemic virtue. And, turning to empirics, we will look at research that shows which epistemic virtues make individuals better forecasters, how they impact social media behaviour and people’s ability to detect financial fraud.
We also look at belief formation in groups. Social epistemology starts from the insight that we all rely on others for almost everything we know. Groups face the challenge of how to best elicit and aggregate the information held by their individual members. While the ‘wisdom of the crowds’ can lead to better outcomes than individual deliberation, it can also lead the amplification of errors (for example, rumours), cascade effects (such as financial bubbles), and polarization. We discuss these effects using the network economics literature and we explore what virtues groups should have in order to overcome such group-level biases. We will look at empirical case studies and simulations on price formation in financial markets, voting behaviour and online ratings.
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Philosophy and Economics Programme, University of Bayreuth
Winter 2017/18, with Carsten Jung