Boudewijn de Bruin

The ethics of cloud computing

Cloud computing is rapidly gaining traction in business. It offers businesses online services on demand (such as Gmail, iCloud and Salesforce) and allows them to cut costs on hardware and IT support. This is the first paper in business ethics dealing with this new technology. It analyzes the informational duties of hosting companies that own and operate cloud computing datacentres (e.g., Amazon). It considers the cloud services providers leasing ‘space in the cloud’ from hosting companies (e.g., Dropbox, Salesforce). And it examines the business and private ‘clouders’ using these services. The first part of the paper argues that hosting companies, services providers and clouders have mutual informational (epistemic) obligations to provide and seek information about relevant issues such as consumer privacy, reliability of services, data mining and data ownership. The concept of interlucency is developed as an epistemic virtue governing ethically effective communication. The second part considers potential forms of government restrictions on or proscriptions against the development and use of cloud computing technology. Referring to the concept of technology neutrality, it argues that interference with hosting companies and cloud services providers is hardly ever necessary or justified. It is argued, too, however, that businesses using cloud services (e.g., banks, law firms, hospitals etc. storing client data in the cloud) will have to follow rather more stringent regulations.

Common Knowledge of Rationality in Extensive Games

We develop a logical system that captures two different interpretations of what extensive games model, and we apply this to a long-standing debate in game theory between those who defend the claim that common knowledge of rationality leads to backward induction or subgame perfect (Nash) equilibria and those who reject this claim. We show that a defense of the claim à la Aumann (1995) rests on a conception of extensive game playing as a one-shot event in combination with a principle of rationality that is incompatible with it, while a rejection of the claim à la Reny (1988) assumes a temporally extended, many-moment interpretation of extensive games in combination with implausible belief revision policies. In addition, the logical system provides an original inductive and implicit axiomatization of rationality in extensive games based on relations of dominance rather than the usual direct axiomatization of rationality as maximization of expected utility.

Socially Responsible Investment in the alcohol industry: an assessment of investor attitudes and ethical arguments

I examine and evaluate the ethical standards and arguments that Socially Responsible Investment (SRI) investors use when they deselect the alcohol industry and alcohol corporations. The alcohol industry was the first industry excluded by SRI investors and is, relative to fund size, the second most prominent negative screen (after tobacco). I discuss the role of shareholder democracy in the alcohol industry, review some evidence on the financial effects of SRI on sin stocks and investigate the motivations that SRI investors may have to eschew investment in the alcohol industry (almost no motivation can be found). I discuss a number of ethical issues that are salient in the alcohol industry and that ought to concern ethical investors. I draw attention to, in particular, the marketing of alcopops (flavoured alcoholic beverages or malternatives such as Smirnoff Ice and Bacardi Breezer), and strategies involving so-called beer girls. This prepares the way to a reconstruction of two kinds of arguments that SRI investors might implicitly adhere to when they put a negative screen on alcohol: a Public Goods Argument and a Religious Values Argument. I show that the Public Goods Argument is problematic because it risks democratic legitimacy and effectiveness, and that while the Religious Values Argument is a coherent defence for individual investors accepting particular religious views, it is unacceptable if used by institutional investors forcing religious values upon involuntary participants when no societal unanimity concerning these religious values exists. Pension funds and health-care plans are examples of such investors. Finally, I provide an alternative Ethical Issues Argument and defend the claim that there are no good moral reasons for institutional SRI investors to circumvent the alcohol industry; rather, they should use shareholder democracy to make alcohol corporations address the ethical issues lest these issues will never be addressed by the corporations themselves.I examine and evaluate the ethical standards and arguments that Socially Responsible Investment (SRI) investors use when they deselect the alcohol industry and alcohol corporations. The alcohol industry was the first industry excluded by SRI investors and is, relative to fund size, the second most prominent negative screen (after tobacco). I discuss the role of shareholder democracy in the alcohol industry, review some evidence on the financial effects of SRI on sin stocks and investigate the motivations that SRI investors may have to eschew investment in the alcohol industry (almost no motivation can be found). I discuss a number of ethical issues that are salient in the alcohol industry and that ought to concern ethical investors. I draw attention to, in particular, the marketing of alcopops (flavoured alcoholic beverages or malternatives such as Smirnoff Ice and Bacardi Breezer), and strategies involving so-called beer girls. This prepares the way to a reconstruction of two kinds of arguments that SRI ...

Applications of Game Theory

The aim of this book is to contribute to the philosophy of the theory of games by offering internal as well as external investigations of game theory. The internal investigations were reported in the first three chapters, especially in the discussions in Chapters 2 and 3, and in places made use of heavily technical, logical apparatus. Among the outcomes were that the Nash equilibrium implausibly presupposes veridicality of beliefs, that the Dekel–Fudenberg procedure is not necessarily the only consequence of common true belief about payoff-uncertainty, and that both Aumann’s and Reny’s analyses of backward induction make conceptually inconsistent assumptions.

Oaths and Codes in Economics and Business—Introducing the Special Issue

The Dutch banking sector responded relatively quickly when the financial crisis hit the country. Only 2 months after the defining moment of the crisis, the dramatic collapse of Lehman Brothers on 15 September 2008, the Netherlands Bankers Association (NVB) set up an Advisory Committee on the Future of Banks in the Netherlands. Chaired by Cees Maas, a former financial director of ING Group, a Dutch financial services conglomerate, the Committee’s key task was to develop a set of recommendations on how to restore trust in the banking sector. Six months later, the Committee published a brief yet surprisingly concrete set of suggestions concerning corporate governance and shareholders, risk management and executive remuneration, its findings being directed both to the sector itself and to the regulatory and supervisory authorities. Ambitiously entitled Restoring Trust (2009), the report draws profound inspiration from the Dutch Corporate Governance code, refers extensively to work by the Institute of International Finance (Committee on Market Best Practices 2007) and has benefited from similar European Union initiatives such as the de Larossière group report (High-level Group 2009). But the report has also greatly influenced later initiatives. Restoring Trust lies at the basis of the Banking Code, published in September 2009 by NVB, which has gone into effect as a code of conduct under Dutch civil law since January 2010. As a form of industry self-regulation sanctioned by the Dutch Government, it applies to any bank or bank subsidiary operating in the Netherlands, including insurance companies (to the extent that they offer banking services) and foreign banks such as the Royal Bank of Scotland. TheDutch BankingCodewould not have attractedmuch attention from national and international media, however, if it had not contained a surprising novelty.

Common knowledge of payoff uncertainty in games

Using epistemic logic, we provide a non-probabilistic way to formalise payoff uncertainty, that is, statements such as ‘player i has approximate knowledge about the utility functions of player j.’ We show that on the basis of this formalisation common knowledge of payoff uncertainty and rationality (in the sense of excluding weakly dominated strategies, due to Dekel and Fudenberg (1990)) characterises a new solution concept we have called ‘mixed iterated strict weak dominance.’

We and the plural subject

Margaret Gilberts plural subject theory defines social collectives in terms of common knowledge of expressed willingness to participate in some joint action. The author critically examines Gilberts application of this theory to linguistic phenomena involving “we,” arguing that recent work in linguistics provides the tools to develop a superior account. The author indicates that, apart from its own relevance, one should care about this critique because Gilberts claims about the first person plural pronoun play a role in the argument in favor of her recent theory of political obligation.

On the narrow epistemology of game theoretic agents

It is argued that game-theoretic explanations of human actions make implausible epistemological assumptions. A logical analysis of game-theoretic explanations shows that they do not conform to the belief-desire framework of action explanation. Epistemic characterization theorems (specifying sufficient conditions for game-theoretic solution concepts to obtain) are argued to be the canonical way to make game theory conform to that framework. The belief formation practices implicit in epistemic characterization theorems, however, disregard all information about players except what can be found in the game itself. Such a practice of belief formation is implausible.

Reducible and Nonsensical Uses of Game Theory

The mathematical tools of game theory are frequently used in the social sciences and economic consultancy. But how do they explain social phenomena and support prescriptive judgments? And is the use of game theory really necessary? I analyze the logical form of explanatory and prescriptive game theoretical statements, and argue for two claims: (1) explanatory game theory can and should be reduced to rational choice theory in all cases; and (2) prescriptive game theory gives bad advice in some cases, is reducible to rational choice theory in other cases, while it makes no sense in yet other cases.The mathematical tools of game theory are frequently used in the social sciences and economic consultancy. But how do they explain social phenomena and support prescriptive judgments? And is the use of game theory really necessary? I analyze the logical form of explanatory and prescriptive game theoretical statements, and argue for two claims: (1) explanatory game theory can and should be reduced to rational choice theory in all cases; and (2) prescriptive game theory gives bad advice in some cases, is reducible to rational choice theory in other cases, while it makes no sense in yet other cases.

Epistemically Virtuous Risk Management: Financial Due Diligence and Uncovering the Madoff Fraud

The chapter analyses how Bernard Madoff’s Ponzi scheme was uncovered by Harry Markopolos, an employee of Rampart Investment Management, LLC, and the contribution of so-called epistemic virtues to Markopolos’ success. After Rampart had informed the firm about an allegedly highly successful hedge fund run by Madoff, Markopolos used qualitative and quantitative methods from financial due diligence to examine Madoff’s risks, returns and strategy, ultimately to conclude that Madoff was running a large Ponzi scheme. Other actors in the financial industry may likely have done the same financial due diligence, but when they reached the same perplexing outcomes that Markopolos had found (alpha of 0.009 and beta of 0.06, for instance), they blamed the maths. Madoff’s impeccable reputation at the time was sufficient to make them doubt the maths and cease their financial due diligence. Markopolos, by contrast, exercised epistemic virtues such as openmindedness, epistemic temperance and justice, which led him to continue his financial due diligence and uncover the fraud. Financial due diligence, the chapter ultimately shows, has to be complemented by epistemic virtues if it is to be an effective shield against fraud and financial crime.