Tuesday, June 19, 2007
More Game Theory
Here's what I mean: A game theorist can set up a game and say "If a real situation exactly duplicates this game, and a fully rational actor in the situation is concerned solely with monetary [for instance] payoffs, then he will employ this strategy." The theory itself cannot say how closely any real world situation does match its structure, nor that an actor in the situation should be concerned only with what the game describes as the payoffs. For example, we sometimes hear something like, "While fully rational actors would bet this way at Game X, real humans are less than fully rational and, through their [love of risk / fear of loss /etc.] bet differently. But why is it "irrational" not to seek solely the reward that the game theorist has stipulated, and instead seek, say, the thrill of risk taking? Other than the theorist having mistaken his model for reality, there is no reason at all.