Re: game theory

[andie nachgeborenen <andie_nachgeborenen@xxxxxxxxx>]

I think it is bizarre to ask whether game theory is
evil, or (as Jim Divine suggests) whether it makes you
crazy, or comes from paranoid schizophrenia, or
something like that. Nash went mad, but you can't
argue with his maths. The prisoner's dilemma and the
Nash equilibrium are two of the very greatest -- maybe
the very greatest -- results in social theory in the
20th century.

GT is an extremely powerful and beautiful set of
mathematical tools that has a wide application in
thinking about society, particularly in competitive
situations, which of course is really important if you
are an economist whose job it is to understand
capitalism, or a political scientist who wants to
understand international/world politics. It involves
abstractions and idaelizations, of course,a nd people
are really like that -- duh -- in this theory, as
someone who used an important precursor of it once
said, men are mere bearers of social relations. People
are working are the complsxifications with, in my
area, e.g., behavioral law and economics. But that it
still poorly understood and litle developed, and will
never have the elegant simplicity of game theory.

The theory, like most theories, rests on assumptions
taht are technically false. But it is powerful and
predictive theory, and the problem with it from the
left is just that it should be allowed to become
ideology, that is assumed to be about invariant human
nature in all times and places regardless of
circumstances.

Besides the theory is useful to the left in lots of
ways. For example, the PD is a real kick in the teeth
to the Panglossian assumptions of Gen Equil Theory,
which says that rational self interested actors will
give us The Best Of All Possible Worlds. vary the
assumprions just a tad, from Arrow to von Neumann, and
you can prove as a theorem that it aint so, that the
resulst will be suboptimal, and you need to change the
incentiveds truicture (that is, society) or human
nature to make things come out right. How can the left
not rejoice in this demonstration?

jks

--- "Devine, James" <jdevine@xxxxxxx> wrote:
> I wrote:
> > this is an excellent statement of the
> game-theoretic way of thinking,
> > seen in its starkest way in the kind of paranoia
> that characterized
> > John Nash. It also points to the often-unnoted
> psychic costs of
> > thinking that way.
>
> Ted Winslow writes:
> > The delusional aspect concerns a great deal more
> than paranoid
> delusions about the intentions of others e.g. the
> conception of self
> and others as calculating machines, the complete
> inability to take
> account of and understand cultural distinctiveness,
> etc., etc.<
>
> I wouldn't say that game theory itself is
> necessarily paranoid. Nor does it necessarily
> involve conceiving people as calculating machines,
> totally abstracting from cultural distinctiveness.
> (Due to lack of time, I won't comment on the "etc."
> or the other "etc.") Just as in mainstream
> economics, there are differences of opinion among
> game theory practitioners about what game theory is
> and how it should be used. (I rely on
> Hargreaves-Heap and
> Varoufakis, _
> Game theory: a critical introduction_ (Routledge,
> 1995), David Kreps, _Game Theory and Economic
> Modeling_,  and William Poundstone's _Prisoner's
> Dilemma_).
>
>
> I'm not an expert on game theory (and I've never
> even played one on TV). But I think that the bad
> stuff that Ted associates with game theory might
> best be associated with John Nash, John Von Neumann,
> and the Cold War RAND culture that decided that GT
> was a cool tool. I've never found game theory to be
> very useful in my research; nor does it seem very
> harmful. A lot of it seems like an academic game. My
> feeling is that its main harm comes when people
> reify it and use it as an ideological weapon, as
> some of the RANDites did. I'd blame this dark side
> of the GT force much more on the Cold War than on GT
> itself. And I blame the Cold War on... but I
> digress.
>
> I would agree with Ted that we should reject Nash
> equilibrium except as an abstract notion that might
> (in some circumstances) provide a useful contrast
> with reality. It's very similar to the macro (and
> bogus) concept of "rational expectations": people
> expect the economy to produce the results the model
> predicts it will produce and so act on these
> expectations. Thus, in equilibrium the model
> produces what they expect  (always assuming that the
> economy = the model). (RatEx says people's
> expectations work this way on average; Nash
> equilibrium is _defined_ as having them work
> exactly.)
>
> But the idea of Nash equilibrium and GT don't
> necessarily say that people are calculating
> machines. It could be interpreted as saying that in
> certain circumstances (in "games") people act _as
> if_ they were calculating machines -- or that people
> might be assumed to act this way as a first
> approximation to reality (simplifying reality in
> order to try to understand it). In certain
> oligopolistic market situations, profit-seeking
> firms[*] are pushed to act in this way. Similarly,
> the cops-and-robbers life inhabited by the fictional
> Tyrone Ten Eyck encourages this kind of behavior.
> The Cold War pushed the power elites to train and
> hire people who thought this way.  On the other
> hand, a social situation like a family or a church
> congregation or an anarchists' convention might be
> very hard to understand by assuming that people are
> calculating machines. Part of a practitioner's job
> is to figure out when the use of GT is appropriate.
>
> Even if people are calculating machines (and they're
> not -- or at least I'm programmed to think that
> they're not), that doesn't mean that culture plays
> no role. The values to the participants of the
> rewards in the game matrix can and do reflect the
> culture that those people were brought up in. If a
> meat-eater and a vegetarian are each given a pork
> chop by the play of the game, each would assign
> different values to the reward. Thus, different
> numbers would show up in each individual's box.
>
> A major problem with GT, however, is that it (as far
> as I know) doesn't see culture as endogenous,
> something that develops from the societal "game."
> Playing a prisoners' dilemma game over and over
> again might cause one to become like Ten Eyck or a
> Hobbesian, valuing any marginal advantage over
> others, struggling to survive at any cost, even
> beginning to eat pork chops (and like them!) In a
> lot of circumstances, people in experimental
> prisoners' dilemmas actually learn how to cooperate
> with each other. What GT misses, I think, is that
> this learning process may actually change their
> utility functions -- ahem! -- I mean personalities,
> ethical values, and world-views. So the development
> of cooperation is more than a matter of learning to
> communicate with each other by their actions.
>
> Even if we assume that Nash equilibrium should rule
> the roost and that people all value the rewards
> equally and in the same way, that doesn't mean that
> culture plays no role. Most games don't have unique
> Nash equilibria. And just as with RatEx, the cool
> results aren't as dynamite if the equilibrium isn't
> unique. (_All_ of the "nice" results of RatEx come
> from the assumption of a unique equilibrium lurking
> in the background.) If the equilibrium isn't unique,
> culture must play a role in deciding which
> equilibrium results. (Yeah, it's wrong to think of
> society or parts of society as ever being in
> equilibrium. But sometimes it seems that there are
> major forces pushing toward some sort of
> equilibrium. Some institutions last for years
> without qualitative change. Again, the practitioner
> must decide when use of the equilibrium concept is
> appropriate. It's not omni-appropriate as the
> neoclassicals assume. [Reading the book by Westlake
> got me into all sorts of parenthetical thinking
> {because he (or rather, his protagonist [J. Eugene
> Raxford]) does it (in THE SPY IN THE OINTMENT)}] [Is
> this parenthetical over-kill or what?])
>
> Anyway, as part of an informal democratic process,
> conventions might develop that people generally
> follow, allowing them to collectively "choose"
> between equilibria. Alternatively, they might be
> imposed from above by kings or corporations. A
> capitalist society limits the choices and the
> "games" that people find themselves in, while
> molding our conventions, culture, personalities,
> ethical values, and world-views.
>
> >Isn't it true that, outside of economics, the main
> support for the
> development of game theory has come from the US
> military?   This
> produces the more obvious Strangelove aspect, Herman
> Kahn etc.
> Markowitz is himself a Cowles, Rand person, isn't
> he?  His company
> seems mostly to be involved with war gaming
> simulations for the
> military.<
>
> All sorts of social scientists and philosophers use
> game theory. I don't know to what extent they use it
> for evil rather than for good. That's an empirical
> question. Though given the corrupt nature of
> capitalist academia, I'd guess that much or most of
> it is used for evil. But that doesn't say _a priori_
> that game theory is bad. An experimental economist I
> know tells me that he thinks that GT is pretty
> useless -- except as a guide for how to structure
> experiments. His experiments, among other things,
> show that people aren't calculating machines...
>
> Jim Devine
>
> [*] Reading the GUARDIAN today, I noted a reference
> to the "state-run Anatolian news agency." That
> phrase seems apt, since it helps the reader
> understand any biases that might arise due to state
> interests. But why not refer to the "corporate-run
> New York TIMES" or better yet, the "profit-driven
> New York TIMES." The GUARDIAN, I believe, is a
> not-for-profit.
>





__________________________________
Do you Yahoo!?
SBC Yahoo! - Internet access at a great low price.
http://promo.yahoo.com/sbc/