About a month ago I accidentally found out that the LW idea of quining cooperation is already studied in academia:
1) Moshe Tennenholtz's 2004 paper Program Equilibrium describes the idea of programs cooperating in the Prisoner's Dilemma by inspecting each other's source code.
2) Lance Fortnow's 2009 paper Program Equilibria and Discounted Computation Time describes an analogue of Benja Fallenstein's idea for implementing correlated play, among other things.
3) Peters and Szentes's 2012 paper Definable and Contractible Contracts studies quining cooperation over a wider class of definable (not just computable) functions.
As far as I know, academia still hasn't discovered Loebian cooperation or the subsequent ideas about formal models of UDT, but I might easily be wrong about that. In any case, the episode has given me a mini-crisis of faith, and a new appreciation of academia. That was a big part of the motivation for my previous post.
You say that as if it were an obviously bad thing. But, well, if you don't understand the motion of electrons or protons, but want to figure them out, what else can you do than start conducting easy experiments and start looking for regularities that you could build your theory on?
And yes, many research programs are partially built on self- and peer-evaluations. But those evaluations are also checked for stability between rating occasions and between raters, and then looked at in order to find stable correlations between the evaluation and objective measures, ones which persist after other factors have been controlled for.
Sure, it might be better if you could find some completely objective measures to start out from... but the human brain has great tools to evaluate other human brains. Humans have effectively been handed a ready-made toolkit, parts of which evolved for the express purpose of extracting complex regularities about the behavior of themselves and others and distilling their observations into a highly compressed format. If you devise a measure which achieves good consistency and inter-rater reliability, that's strong evidence of something, and you'd be crazy not to take advantage of it to try to figure out what it means.
Now I'm not saying that psychology would be perfect, or even great. There is a lot of crap, and the theories are still a mess. But I don't think it's as hopelessly bad as you're implying it to be, either.