Beyond rationality: Rigor without mortis in game theory

Behavioral and Brain Sciences 26 (2):180-192 (2003)
Psychological game theory encompasses formal theories designed to remedy game-theoretic indeterminacy and to predict strategic interaction more accurately. Its theoretical plurality entails second-order indeterminacy, but this seems unavoidable. Orthodox game theory cannot solve payoff-dominance problems, and remedies based on interval-valued beliefs or payoff transformations are inadequate. Evolutionary game theory applies only to repeated interactions, and behavioral ecology is powerless to explain cooperation between genetically unrelated strangers in isolated interactions. Punishment of defectors elucidates cooperation in social dilemmas but leaves punishing behavior unexplained. Team reasoning solves problems of coordination and cooperation, but aggregation of individual preferences is problematic.
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