Hodgson, cumulative causation and reflexive economic agents

In line with his commitment to Veblenian thinking and agency-structure reasoning, Geoff Hodgson rejects the subjectivist conception of individuals as collections of preferences and views individuals in objectivist terms as distinguishable sets of habits that co-evolve with cumulative change in social structures and institutions. The chapter draws on these ideas to propose an account of reflexive economic agents that explains choice behavior in a cumulative causation world, in which both linear causation and circular feedback effects matter. Reflexive agents know that their actions can influence their habits and alter the basis for future action, and therefore form expectations about the consequences of their actions not only on the external world but also on themselves. But reflexive agents are reference-dependent and biased toward the habits they already have, with the implication that they are not only distinguishable but also re-identifiable over time.