Economists aren't psychologists. Whether they know "the ins and outs" of how people reason is a red herring (your thousandth perhaps). What economists would have known is that the EIC and the robber barons dominated economies more than did bakers and blacksmiths. And it would have been common knowledge that those dominant agents were ruthless and amoral. History shows that power corrupts. Capitalism enriches a few at the expense of the many, so just as kings and emperors were liable to be corrupted by their privileges, captains of industry were evidently corrupted. Whether economists consciously or unconsciously incorporated that common knowledge into their model of instrumental rationality is a question for historians. What's clear to me is that these things aren't coincidental.