RE: Re: Nash equilibrium's relevance

["Devine, James" <jdevine@xxxxxxx>]

Gil writes
>... for what it's worth, the global overfishing problem (see the front-page
NYTimes article from a day or so ago) seems in many respects like a classic
instance of a suboptimal outcome to a prisoners' dilemma-style problem.<

They presented the problem of overfishing at UC Berkeley grad school without
reference to game theory. Instead, the issue of "common property resources"
was very similar to that of "pure public goods." Of course, one can probably
interpret these both in terms of game theory... but it may be possible to
interpret _everything_ in those terms, in which case GT veers toward being
tautological.

> Granting that predictions of the simple Nash equilibrium are often not
realized in practice, though, it doesn't follow that Nash's basic notion of
equilibrium in a noncooperative setting--i.e., each actor seeks to realize
some objective given that all other players are attempting to  seek their
respective objectives--is faulty.  It may just need tweaking.  One
possibility is to abandon the notion of selfish preferences, as eg. Mathew
Rabin has done by introducing fairness considerations into individual
objective functions.  Another possibility is to introduce "bounded
rationality" in decisionmaking (as opposed to imperfect or incomplete
information, which  has already been done--showing how to deal with the
latter was part of co-Nobelist Harsanyi's contribution).<

Game theory-type simulations with actual real-live people (i.e.,
experiments) have suggested such things as  that we reject the >"economists'
canonical assumption that individuals are entirely self-interested: in
addition to their own material pay-offs, many experimental subjects appear
to care about fairness and reciprocity, are willing to change the
distribution of material outcomes at personal cost, and are willing to
reward those who do not, even when these actions are costly to the
individual."< (Henrich, Joseph, Robert Boyd, Samuel Bowles, Colin Camerer,
Ernst Fehr, Herbert Gintis, and Richard McElreath. 2001. In Search of Homo
Economicus: Behavioral Experiments in 15 Small-Scale Societies. American
Economic Review. 91(2) May: 73-78.).

JD