Subversive Game Theory

[Herbert Gintis <gintis@xxxxxxxxxxxxxxx>]

Abu Rizvi writes:
>With regard to the:
>
>> the subversive implications of game theory.
>>
>
>This has been mentioned a number of times without it being made
>explicit what exactly is so subversive.  Would it be possible to
>state what these implications are?
>
	I think subversive is too strong a word. Game theory in its
orginal form (zero-sum games, cores, minimax etc.) is not very
interesting for general economic theory. But when it was supplemented
by asymmetric information, Bayesian sequential equilibrium, the theory
of strategic interaction in contract formation, moral hazard and
adverse selection, it leads to theories that are far from the
neoclassical general equilibrium model. In particular, markets need
not clear in equilibrium, wages need not equal marginal products,
power can exist in competitive equilibrium, the fundamental theorem of
welfare economics fails (i.e., allocation and distribution cannot be
separated), economic reasoning becomes more biological and less
physics-oriented, homo economicus no longer makes sense. And I could
go on.

	It is not that game theory is 'subversive,' but rather that it
supplies really interesting tools for dealing with topics that
previously defied mathematical model building. For instance, one can
now do institutional analysis using rigorous model building.

	It is also true that the various behavioral sciences
(economics, political science, sociology, and even social psychology,
ecology, and behavioral biology) have never been more closely linked
than they are now. This itself is 'subversive' to the traditional
quest of economic theory to free itself from life in the largest
sense.

Herb gintis@xxxxxxxxxxxxxxx