Re: Article in the Chronicle of Higher Education

["J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>]

Clifford,
       Actually the Nash equilibrium is for non-cooperative
games.  Von Neumann emphasized cooperative game
outcomes, and this is part of the split between them.
      A useful example is the old prisoners' dilemma,
which many consider to be a profound metaphor for
cooperation or the lack thereof across many disciplines
and areas of human endeavor.  The Nash equilibrium is
that people will cheat on each other, will not cooperate,
will "confess."  In the real world we observe that there
are many situations where people do not "confess"
but cooperate.  Explaining this has proven to be a very
long and difficult and controversial matter, one very much
still under discussion.  But the concept of the Nash equilibrium
helps to frame the question and force the issue of this
genuinely profound question.
     For a more profound discussion that is based on
evolutionary game theory, and thus ultimately on the Nash
equilibrium concept, I would suggest Ken Binmore's two
volume _Game Theory and the Social Contract_, if I have
that right.  Very serious stuff.
Barkley Roser
----- Original Message -----
From: "Clifford Poirot" <cpoirot@xxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>; "Ted Winslow" <egwinslow@xxxxxxxxxx>
Sent: Wednesday, January 29, 2003 4:39 PM
Subject: Re: Article in the Chronicle of Higher Education


> I would second Barkley's point. I think the interesting outcome of Nash's
> contribution is that stable cooperation can emerge. That means that you
can
> have a stable outcome of price fixing among oligopolists. This runs
counter
> to much neo-classical research that says that such collusion must be
> unstable.
>
> Personally, I find Galbraith's approach more appealing, but Nash deserves
> credit for expressing this in a language the mainstream can understand.
>
> -----Original Message-----
> From: J. Barkley Rosser, Jr. [mailto:rosserjb@xxxxxxx]
> Sent: Wednesday, January 29, 2003 2:34 PM
> To: Ted Winslow; pkt@xxxxxxxxxxxxxxxx
> Subject: Re: Article in the Chronicle of Higher Education
>
>
> Ted,
>       In case you did not notice, I did not defend deductivism
> in general, and indeed declared that current math econ is
> largely moving beyond it.
>       That said I am definitely going to defend the Nobel for
> John Nash, and not just because of the romanticism of
> "A Beautiful Mind" and his comeback from insanity,
> fascinating as that may be.  The Nash equilibrium is
> indeed a profound concept worthy of a Nobel Prize.  I
> would note that it has been taken over by biologists for
> the analysis of evolutionary processes.  Modern evolutionary
> game theory in turn came back into economics from people
> who became aware of the work of  John Maynard Smith in biology,
> with Reinhard Selten perhaps being the key initial figure in
> economics.  But the biologists, in turn, drew heavily on Nash.
>       If you want to diss Nash, I suggest you read Phil
> Mirowski's account of things in his _Machine Dreams_,
> where he says that von Neumann is the great genius
> and Nash is just a hopeless paranoid, that even his equilibrium
> is simply paranoia writ large.  The opposite view is given in
> the book version of _A Beautiful Mind_ by Sylvia Nasar (the
> movie did not even have a von Neumann character in it).
> Needless to say, I think the reality is somewhere in between
> these two somewhat potted accounts.
> Barkley Rosser
>
> ----- Original Message -----
> From: "Ted Winslow" <egwinslow@xxxxxxxxxx>
> To: <pkt@xxxxxxxxxxxxxxxx>
> Sent: Wednesday, January 29, 2003 12:19 PM
> Subject: Re: Article in the Chronicle of Higher Education
>
>
> >
> > Barkley wrote:
> >
> > > I would associate "rigor" with "logical" and
> > > "consistent."   Properly done deductivism is
> > > rigorous, but it is possible to be rigorous
> > > without being deductivist.  And much deduction
> > > is empty.  Rigor is no guarantee of a serious
> > > argument.  It may be empty rigor, rigor mortis.
> >
> > Whitehead's point is that the axiomatic method itself - "deductivism" -
> > is limited in its applicability by the ontological fact of internal
> > relations.  It isn't just that the axioms may be false; it is that to
> > produce clearly defined axioms you need to be able to abstract from
> > internal relations since the weaving by argument from these axioms of
> > "novel compositions," i.e. changed relations, may invalidate the axioms
> > on which the argument rests.  In social theory this applies to any
> > argument which takes the "identities" of the individuals whose
> > behaviour is being theorized as fixed.
> >
> > Keynes's monetary theory provides an example.  It can't be captured by
> > an analysis that axiomatically fixes the identities of agents because
> > it assumes that in certain circumstances, those that produce a monetary
> > crisis, these identities change.   Conditions of stress can lead to
> > nervous breakdown.
> >
> > "Why should anyone outside a lunatic asylum wish to use money as a
> > store of wealth?
> > "Because, partly on reasonable and partly on instinctive grounds, our
> > desire to hold money as a store of wealth is a barometer of the degree
> > of our distrust of our own calculations and conventions concerning the
> > future.  Even though this feeling about money is itself conventional or
> > instinctive, it operates, so to speak, at a deeper level of our
> > motivation.  It takes charge at the moments when the higher, more
> > precarious conventions have weakened.  The possession of actual money
> > lulls our disquietude; and the premium which we require to make us part
> > with money is the measure of the degree of our disquietude."  (XIV, p.
> > 116)
> >
> > Here is a description by Keynes of an actual crisis:
> >
> > "the most strking feature of the immediate situation is the
> > extraordinary disparity between yields in London and yields in New York
> > of comparable securities.  It seems to me quite impossible that the
> > present situation can long persist.  And I should have supposed it to
> > be probable that the readjustment would be brought about by a
> > substantial rise in prices of prime fixed-interest securities in New
> > York.  The present may be the chance of a lifetime for the purchase of
> > the latter.  Obviously everyone in New York is scared so stiff as to be
> > unable to move.  But that may be the opportunity of others away from
> > any unsettling influence of the local atmosphere.  No serious risk can
> > arise unless the existing financial system in America is going to peg
> > out altogether.  I suppose that that is just possible, but I cannot
> > believe that it is probable." (XXI, p. 113)
> >
> > How can the idea of individuals as able in certain circumstances to
> > become "scared so stiff as to be unable to move" be taken account of by
> > an approach that axiomatically fixes their identities.
> >
> > I know that Keynes could not have been awarded the economics "Nobel".
> > My point was that economics has become a discipline in which Keynes's
> > insights into human nature and human psychology, such as the one to
> > which I've just pointed, are misunderstood, marginalized and
> > disregarded while the ideas of John Nash about the same things are
> > treated as the work of genius, of a "beautiful mind."
> >
> > Ted
> >
> >
>