Rational choice theory enjoys unprecedented popularity and influence in the behavioral and social sciences, but it generates intractable problems when applied to socially interactive decisions. In individual decisions, instrumental rationality is defined in terms of expected utility maximization. This becomes problematic in interactive decisions, when individuals have only partial control over the outcomes, because expected utility maximization is undefined in the absence of assumptions about how the other participants will behave. Game theory therefore incorporates not only rationality but also common (...) knowledge assumptions, enabling players to anticipate their co-players' strategies. Under these assumptions, disparate anomalies emerge. Instrumental rationality, conventionally interpreted, fails to explain intuitively obvious features of human interaction, yields predictions starkly at variance with experimental findings, and breaks down completely in certain cases. In particular, focal point selection in pure coordination games is inexplicable, though it is easily achieved in practice; the intuitively compelling payoff-dominance principle lacks rational justification; rationality in social dilemmas is self-defeating; a key solution concept for cooperative coalition games is frequently inapplicable; and rational choice in certain sequential games generates contradictions. In experiments, human players behave more cooperatively and receive higher payoffs than strict rationality would permit. Orthodox conceptions of rationality are evidently internally deficient and inadequate for explaining human interaction. Psychological game theory, based on nonstandard assumptions, is required to solve these problems, and some suggestions along these lines have already been put forward. Key Words: backward induction; Centipede game; common knowledge; cooperation; epistemic reasoning; game theory; payoff dominance; pure coordination game; rational choice theory; social dilemma. (shrink)
Even if game theory is broadened to encompass other-regarding preferences, it cannot adequately model all aspects of interactive decision making. Payoff dominance is an example of a phenomenon that can be adequately modeled only by departing radically from standard assumptions of decision theory and game theory – either the unit of agency or the nature of rationality. (Published Online April 27 2007).
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. (shrink)
Payoff dominance, a criterion for choosing between equilibrium points in games, is intuitively compelling, especially in matching games and other games of common interests, but it has not been justified from standard game-theoretic rationality assumptions. A psychological explanation of it is offered in terms of a form of reasoning that we call the Stackelberg heuristic in which players assume that their strategic thinking will be anticipated by their co-player(s). Two-person games are called Stackelberg-soluble if the players' strategies that maximize against (...) their co-players' best replies intersect in a Nash equilibrium. Proofs are given that every game of common interests is Stackelberg-soluble, that a Stackelberg solution is always a payoff-dominant outcome, and that in every game with multiple Nash equilibria a Stackelberg solution is a payoff-dominant equilibrium point. It is argued that the Stackelberg heuristic may be justified by evidentialist reasoning. (shrink)
A significant increase in the probability of an action resulting from observing that action performed by another agent cannot, on its own, provide persuasive evidence of imitation. Simple models of social influence based on two-person sequential games suggest that both imitation and pseudo-imitation can be explained by a process more fundamental than priming, namely, subjective utility maximization.
Although in modern times and clinical settings, we rarely see the old characteristics of tribal shamanism such as deep trances, out-of-body experiences, and soul retrieval, the archetypal dreams, waking visions and active imagination of modern depth psychology represents a liminal zone where ancient and modern shamanism overlaps with analytical psychology. These essays explore the contributors' excursions as healers and therapists into this zone. The contributors describe the many facets shamanism and depth psychology have in common: animal symbolism; recognition of the (...) reality of the collective unconscious; and healing rituals that put therapist and patient in touch with transpersonal powers. By reintroducing the core of shamanism in contemporary form, these essays shape a powerful means of healing that combines the direct contact with the inner psyche one finds in shamanism with the self-reflection and critical awareness of modern consciousness. The essays draw from the contributors' experiences both inside and outside the consulting room, and with cultures that include the Lakota Sioux, and those of the Peruvian Andes and the Hawaiian Islands. The focus is on those aspects of shamanism most useful and relevant to the modern practice of depth psychology. As a result, these explorations bring the young practice of analytical psychology into perspective as part of a much more ancient heritage of shamanistic healing. Contributors: Margaret Laurel Allen, Norma Churchill, Arthur Colman, Lori Cromer, Patricia Damery, C. Jess Groesbeck, Pansy Hawk Wing, June Kounin, Carol McRae, Pilar Montero, Jeffrey A. Raff, Janet S. Robinson, Meredith Sabini, Dyane N. Sherwood, Sara Spaulding-Phillips, Bradley A. Te Paske and Louis M. Vuksinick. (shrink)
Game theory poses problems for modeling rational belief, but it does not need a new theory of rationality. Experimental results that suggest otherwise often reveal difficulties in testing game theory, rather than mistakes or paradoxes. Even though the puzzles Colman discusses show no inadequacy in the standard theory of rationality, they show that improved models of belief are needed.
Colman shows that normative theories of rational decision-making fail to produce rational decisions in simple interactive games. I suggest that well-formed theories are possible in local settings, keeping in mind that a good part of each game is the generation of a rational approach appropriate for that game. The key is rationality defined in terms of the game, not individual decisions.