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Dagon comments on Is altruistic deception really necessary? Social activism and the free market - Less Wrong Discussion
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Externalities are in the map, not the territory. Calling something "external" just means your model is ignoring something that actually matters.
No; "externality" is an economic term meaning a cost or benefit imposed by a transaction on agents who were not parties to that transaction.
Yes. It's an economic term for "easily foreseen consequences that we excluded from this simple transactional model of a decision".
Externalities exist in the transaction (the territory), not in a model of the transaction (the map). The "decision", remember, is not "a" decision made by a World Ruler. It's a market transaction made by multiple parties, subject to agreed-on rules or arbitration. Externalities are created by the terms of the transaction. The terms of the transaction are only a model of the transaction in an extreme Marxist analysis such as Althusser would make (who basically turned materialism into strict behaviorism by saying ideas don't exist, only actions--e.g., he would say a contract isn't a transaction; people pushing green pieces of paper across the table is a transaction).
I'm starting to think there are a couple of different ways to frame the question. I'd been thinking of it along the lines of "my economic exchange model doesn't include that the actors can understand the larger world", which is definitely map, not territory: the exchange model of decisionmaking is simply missing a lot.
One can also think of it in terms of general decision theory - in this case "externality" isn't something missing from the model, but something that the agent doesn't care about as much as the analyst applying the term wants them to.