Topic: Game theory

Quotes

Ken Binmore, “Modeling Rational Players” (1987)

• The supposed paradox: that game theory necessarily requires rational players to randomize, is therefore a chimera. When a Nash equilibrium calls for the use of mixed strategies, an eductive analysis requires that the probabilities involved be seen as reflecting only the ineradicable uncertainties that a player will necessarily have about what the others will do. Jokes about game theory’s recommending that finance ministers toss coins to decide precisely when to devalue are therefore misplaced: finance ministers can achieve exactly the same effect precisely as they always have – i.e., by using a committee of economic and financial experts.#
• In chess, for example, it simply does not makes sense, given the environment in which it is normally played, to attribute bad play by an opponent to a sequence of uncorrelated random errors in implementing… Rather than resort to such a trembling-hand explanation, one would look for some systematic error in the way in which the opponent analyzes chess positions. The detection of such a systematic error will have important implications about the opponent’s expected future play, whereas the observation of a trembling-hand error will have no such implications.#
• The same formal game might receive different analyses depending on the environment from which it has been abstracted: i.e., that the analysis of a game may require more information than is classically built into the formal definition of a game.#

Gabriel Carroll, “Robustness in Mechanism Design and Contracting” (2019)

• When a small amount of incomplete information is introduced, reaching a part of the game tree that was previously off the equilibrium path becomes a very informative event, and this can discontinuously change predicted behavior. #

Sam Bowles & Herbert Gintis, A Cooperative Species (2011)

• Even presupposing extraordinary cognitive capacities and levels of patience among the cooperating individuals, there is no reason to believe that a group of more than two individuals would ever discover the cooperative Nash equilibria that the [Folk Theorem] models have identified, and if it were to hit on one, its members would almost certainly abandon it in short order.#