the mit press does game theory work the bargaining challenge apr 2007

[...]... Introduction 11 I don’t plan to press the virtues of my theory of fairness in this book, since I haven’t done any experimental work of my own on the subject But two aspects of this theory are immediately relevant here The first is the significance of the theory of repeated games The second is the importance of evolutionary theory Repeated Games The folk theorem of repeated game theory says that any contract... that Estes was using to defend the (now discredited) theory of ‘‘probability matching.’’ Neither subject knew that they were playing a game with another person Even if they had known they were playing a game, the minimax theory would have been irrelevant to their plight, since they weren’t told in advance what the payo¤s of the game were They were therefore playing a game of incomplete information,... think the arguments in its favor are at their weakest Introduction 3 The Behavioral Challenge I think the claims made for game theory in the previous section would be uncontroversial if the issues weren’t clouded by an emotional debate that seems to me entirely orthogonal to the issue of whether or not game theory works This is the question of whether people are inherently selfish, or whether they... relatively large sums of money They therefore don’t need to seek to discredit game theory by endlessly drawing attention to the fact that it mostly doesn’t work for inexperienced and underpaid subjects Nor have game theorists anything to gain from denying that the payo¤s in real-life games might sometimes be derived from other-regarding preferences Game theory is the same whether it is used to advise Saint... reading the paper that follows, readers can make their own judgment on whether my colleagues and I were guilty of the crime of teaching our subjects to play according to the minimax theory Does Minimax Work? An Experimental Study Ken Binmore, Joe Swierzbinski, and Chris Proulx 1.1 Zero-Sum Games Von Neumann’s (1928) minimax theory of two-person, zero-sum games remains the branch of game theory with the. .. predictions in the laboratory? Will people adapt their behavior so that they end up playing a novel bargaining game strategically? Or must we expect them simply to play fair? Even when the test tubes are clean, experiments on bargaining models therefore come with the dice loaded against game theory But I hope that the evidence to be presented will justify my boldness in defending the theory in a case... economic theory including game theory works badly or not at all, and other domains within which it works rather well What is controversial is how large these domains are, and where they lie Nowadays the followers of Daniel Kahneman and Amos Tversky6 call themselves behavioral economists, to distinguish themselves from experimental economists like Vernon Smith or Charles Plott, who work largely in the tradition... repeated games Don’t they see that the folk theorem would provide a possible evolutionary explanation for the emergence of strong reciprocity? However, my guess is that they reject the support that the theory of repeated games might o¤er the strong reciprocity hypothesis because everyone can see that we don’t need to hypothesize strong reciprocity if we can explain the available data without going beyond the. .. application of the theory? Such enthusiasts certainly exist, but they seem to me no less misguided than the skeptics who determinedly turn a blind eye to any evidence that isn’t hostile to game theory My three environmental criteria aren’t intended to be hard-and-fast necessary and su‰cient conditions for game theory to predict human behavior Game theory sometimes works when one or more of the criteria... generous contribution in the public goods game would be pointless Ensminger is suggesting that the subjects’ behavior is adapted to the public goods game embedded in the repeated game that they play every day of their lives, for which the folk theorem provides an explanation that does not require anything at all to be invented It is admittedly di‰cult to distinguish the interpretation of the data that I share . 2004 7. Does Game Theory Work? The Bargaining Challenge, Ken Binmore, 2006 Does Game Theory Work? The Bargaining Challenge Ken Binmore The MIT Press Cambridge, Massachusetts London, England 6 2007. relevant here. The first is the significance of the theory of repeated games. The second is the impor- tance of evolutionary theory. Repeated Games The folk theorem of repeated game theory says that any. defending the theory in a case where skeptics think the arguments in its favor are at their weakest. 2 Introduction The Behavioral Challenge I think the claims made for game theory in the previous