It is widely believed that experimental results of behavioral game theory undermine standard economic and game theory. This paper suggests that experimental results present serious theoretical modeling challenges, but do not undermine two pillars of contemporary economic theory: the rational actor model, which holds that individual choice can be modeled as maximization of an objective function subject to informational and material constraints, and the incentive compatibility requirement, which holds that macroeconomic quantities must be derived (...) from the interaction and aggregation of individual choices. However, we must abandon the notion that rationality implies self-regarding behavior and the assumption that contracts are costlessly enforced by third parties. (shrink)

Many weaknesses of game theory are cured by new models that embody simple cognitive principles, while maintaining the formalism and generality that makes game theory useful. Social preference models can generate team reasoning by combining reciprocation and correlated equilibrium. Models of limited iterated thinking explain data better than equilibrium models do; and they self-repair problems of implausibility and multiplicity of equilibria.

It is widely believed that experimental results of behavioral game theory undermine standard economic and game theory. This paper suggests that experimental results present serious theoretical modeling challenges, but do not undermine two pillars of contemporary economic theory: the rational actor model, which holds that individual choice can be modeled as maximization of an objective function subject to informational and material constraints, and the incentive compatibility requirement, which holds that macroeconomic quantities must be derived (...) from the interaction and aggregation of individual choices. However, we must abandon the notion that rationality implies self-regarding behavior and the assumption that contracts are costlessly enforced by third parties. (shrink)

Behavioral economics has rejuvenated economic theory and deepened the bonds between economic theory and the other social sciences. Neoclassical economics does not depend on individual preferences being self-regarding. Moreover, in market contexts, laboratory experiments indicate that traditional theory works well. Behavioral economic findings thus enrich and expand neoclassical economics rather than undermining it. In particular, social norms are an emergent property of human sociality, and exist as macrosocial structures that are not reducible to the preferences (...) of individuals. Behavioral economists are not theorists, but rather experimentalists. With few exceptions, they do not provide, nor aim to provide, cogent models for the phenomena they discover. Far from downplaying “inconvenient facts,” as is the practice of traditional economic theory, behavioral economists relish finding novel forms of individual decision-making and strategic behavior. (shrink)

In this article, I critically respond to Herbert Gintis's criticisms of the behavioral-economic foundations of Ken Binmore 's game-theoretic theory of justice. Gintis, I argue, fails to take full account of the normative requirements Binmore sets for his account, and also ignores what I call the ‘scale-relativity’ considerations built into Binmore 's approach to modeling human evolution. Paul Seabright's criticism of Binmore, I note, repeats these oversights. In the course of answering Gintis's and Seabright's objections, I clarify (...) and extend Binmore 's theory in a number of respects, integrating it with Kim Sterelny's and Don Ross's recent work on the evolution of people as cultural entities. The account also yields a novel basis for choosing between socialism and what Binmore calls ‘whiggery’ as normative political programs. Key Words: theory of justice • bargaining theory • evolutionary game theory • human evolution • Ken Binmore • Herbert Gintis • Kim Sterelny. (shrink)

Gintis assumes the behavioral (=social) sciences are in disarray, and so proposes a theory for their unification. Examination of the unity of the physical sciences reveals he misunderstands the unity of science in general, and so fails to see that the social sciences are already unified with the physical sciences. Another explanation of the differences between them is outlined. (Published Online April 27 2007).

Methodological practices differ between economics and psychology because economists use game theory as the basis for the design and interpretation of experiments, while psychologists do not. This methodological choice explains the “four key variables” stressed by Hert-wig and Ortmann. Game theory is currently the most rigorous basis for modeling strategic choice.

The question of reductionism is an obstacle to unification. Many behavioral scientists who study the more complex or higher mental functions avoid regarding them as selected by motivation. Game-theoretic models in which complex processes grow from the strategic interaction of elementary reward-seeking processes can overcome the mechanical feel of earlier reward-based models. Three examples are briefly described. (Published Online April 27 2007).

I offer two potential diagnoses of the behavioral norms governing post‐truth politics by comparing the view of language, communication, and truth‐telling put forward by David Lewis (extended by game theorists), and John Searle. My first goal is to specify the different ways in which Lewis, and game theorists more generally, in contrast to Searle (in the company of Paul Grice and Jurgen Habermas), go about explaining the normativity of truthfulness within a linguistic community. The main difference is (...) that for Lewis and game theorists, “truthful” signaling follows from an align- ment of interests, and deception follows from mixed motives leading to the calculation that sending false information is better for oneself. Following in the Enlightenment tradition, Searle argues that practical reasoning, which involves mastery of at least one language, requires that actors intend to communicate. This intention includes constraining the content of statements to uphold veracity conditions. After distinguishing between these two accounts, I will artic- ulate the implications for explaining, and even informing actions, constitutive of post‐truth politics. I argue that the strategic view of communication is suffi- cient neither to model everyday conversation nor to reflect a public sphere useful for democratic govern- ment. Both the pedagogy of strategic communication as cheap talk, and its concordance with new digital information technologies, challenge norms of truthful- ness that underlie modern institutions essential to an effective public sphere. (shrink)

This commentary complements the article by De Dreu and Gross from the perspectives of behavioral economics and game theory. It aims to provide a bridge between psychology/neuroscience research and economics research in attack-and-defense by stipulating relevant literature, clarifying theoretical structures, and suggesting improvements in experimental designs and possible further investigations.

In numerous studies, experimental economists have documented the fact that people tend to propose that divisible goods be divided equally. It has often been proposed, most notably by the sociobiologists, that this tendency may have a biological basis, and might be the product of evolution and natural selection. ;My dissertation addresses methodological and philosophical problems that arise in the course of establishing this naturalistic claim. Specifically, the focus of this dissertation is on the project of using evolutionary game (...) class='Hi'>theory to model the emergence of behavioral norms in a population. ;Chapter 1 briefly surveys the experimental economics literature that supports the existence of such behavioral propensities, and gives an overview of the dissertation. Chapter 2 introduces the fundamental concepts of game theory and evolutionary game theory. Chapter 3 argues that certain robustness failures may be overcome if group selection mechanisms are incorporated into the evolutionary models. Chapter 5 defends Peter Railton's causal theory of explanation, and argues that it best accommodates the dynamical models of evolutionary game theory. Chapter 6 addresses the question of whether a descriptive account of the origins of our moral intuitions is relevant to the normative project of identifying our moral obligations, and critiques arguments by Peter Singer and Peter Unger that our moral intuitions lack justification. (shrink)

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)

The advent of functional brain imaging has revolutionized the ability to understand the biological mechanisms underlying decision-making. Although it has been amply demonstrated that assumptions of rationality often break down in experimental games, there has not been an overarching theory of why this happens. I describe recent advances in functional brain imaging and suggest a framework for considering the function of the human reward system as a discrete agent.

Colman proposes that the domain of interpersonal choice requires an alternative and nonindividualistic conception of rationality. However, the anomalies he catalogues can be accounted for with less radical departures from orthodox rational choice theory. In particular, we emphasize the need for descriptive and prescriptive rationality to incorporate recursive interplay between one's own choices and one's expectation regarding others' choices.

Human behavior can be analyzed using game theory models. Complex games may involve different rules for different players and may allow players to change identity (and therefore, rules) according to complex contingencies. From this perspective, mating behaviors can be viewed as strategic “plays” in a complex “mating game,” with players varying tactics in response to changes in the game's payoff matrix.

Evolutionary game theory has recently furnished some exciting theoretical and experimental insights regarding the birth of social power and discrimination. But can this type of theory illuminate the history and nature of capitalism? The answer turns out to be negative: evolutionary models are bound to remain either insufficiently evolutionary or hopelessly indeterminate. However, social theorists have much to gain from understanding what would breathe social life into evolutionary game theory's models: a proper historical account of (...) the sources of behavioral variety, and an adaptive mechanism that leaves room for the cunning of human reason. (shrink)

Focusing on the work of Friedrich von Hayek and Vernon Smith, we discuss some conceptual links between Austrian economics and recent work in behavioral game theory and experimental economics. After a brief survey of the main methodological aspects of Austrian and experimental economics, we suggest that common views on subjectivism, individualism, and the role of qualitative explanations and predictions in social science may favour a fruitful interaction between these two research programs.

This commentary focuses on the parts of psychological game theory dealing with preference, as illustrated by team reasoning, and supports the conclusion that these theoretical notions do not contribute above and beyond existing theory in understanding social interaction. In particular, psychology and games are already bridged by a comprehensive, formal, and inherently psychological theory, interdependence theory (Kelley & Thibaut 1978; Kelley et al. 2003), which has been demonstrated to account for a wide variety of social (...) interaction phenomena. (shrink)

We argue that solving the heterogeneous problems arising from the standard game theory requires looking both at reasoning heuristics, as in Colman's analysis, and at how people represent games and the quantities that define them.

A variety of robustness objections have been made against evolutionary game theory. One of these objections alleges that the games used in the underlying model are too arbitrary and oversimplified to generate a robust model of interesting prosocial behaviors. In this paper, I argue that the robustness objection can be met. However, in order to do so, we must attend to important conceptual issues regarding the nature of fairness, justice, and other moral concepts. Specifically, we must better understand (...) the relationship between moral concepts and formal characterizations of games. (shrink)

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)

The COVID-19 pandemic has plunged the housing affordability and living sanitary conditions of China's low-income groups into a crisis. Public rental housing has made a significant contribution to alleviating this crisis, yet its exit problem has become more acute due to the impact of the epidemic. In order to explore how to effectively play the role of multi-governance in public rental housing exit, this paper adopts game theory to analyze the evolution of the behavioral strategies of government (...) departments and public rental housing tenants in public rental housing exit by combining four influencing parameters: the epidemic severity, the epidemic influence coefficient, the public participation degree, and the public reporting fairness. In response to exploring the conditions for the effective functioning of the multi-governance model under the impact of the epidemic, the influences of parameter change on the stability of the system are analyzed. The results show that when the COVID-19 epidemic impact coefficient is high, government departments need to reduce their own supervision costs to achieve better multi-governance effects; when public reports are distorted, the government departments’ own supervision capabilities determine the impact of public participation on governance effects. (shrink)

We compare Colman's proposed “psychological game theory” with the existing literature on psychological games (Geanakoplos et al. 1989), in which beliefs and intentions assume a prominent role. We also discuss experimental evidence on intentions, with a particular emphasis on reciprocal behavior, as well as recent efforts to show that such behavior is consistent with social evolution.

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).

In the process of cultural dissemination, the dissemination of false information will have a negative impact on the entire environment. In this case, it is an effective method to regulate the behavior of cultural dissemination participants. Based on the community network structure and the improved classic network communication model, this paper constructs the susceptible-infected-recovered model for the grassroots communication of engineering safety culture and discusses the law of grassroots transmission of engineering safety culture. The communication process is simulated, and it (...) is concluded that a good engineering safety culture will be the first to be covered by low-level engineering safety culture in the process of dissemination. With a modularity coefficient of 0.5 as the boundary, it will affect the scale of good safety culture in different directions; the dissemination infection rate of low-level engineering safety culture changes in the same direction with the speed and scale of transmission; the maximum transmission scale of low-level engineering safety culture does not decrease with the increase of the initial value of the susceptible state. When the initial value of the immune state is 15%, the low-level safety culture scale is the lowest value of 0.135, which is the low initial value of employees with low-level engineering safety culture and is more conducive to control its maximum spread. It also puts forward management recommendations for the subjects and objects of the grassroots dissemination of engineering safety culture. This paper transforms cultural communication into an evolutionary game model, uses a game tree to describe it, and analyzes that the model has a Nash equilibrium point by adding a penalty function to the income matrix. This model can encourage cultural communication participants to take honest behaviors, effectively restrain the transmission of false information, and promote a virtuous circle of cultural communication. (shrink)

Without the active participation of enterprises and front-line workers, it is difficult for the government to perform effective supervision to ensure behavioral safety among front-line workers. To overcome inadequate government supervision and information attenuation caused by vertical management mode and limited resources, and to change passive supervision into active control with the proactive participation of enterprises and workers, this paper combines the entity responsibility mechanism and the third-party participation mechanism based on government supervision to analyze the decision-making process of (...) government and enterprises on safety behavior supervision. An evolutionary game model was established to describe the decision-making interactions between the government and construction enterprises under the two mechanisms, and a simulation was performed to illustrate the factors influencing the implementation of the mechanisms. The results show that both mechanisms have a positive effect on government supervision, and the third-party participation mechanism was found to be working better. The implementation of the two mechanisms is influenced by punishment, subsidy, and cost, and it has different sensitivities to the three influencing factors. This study provides a theoretical framework for enhancing the government supervision mechanism, and the decision-making between the government and construction enterprises enhances the management form and guides their actual supervision practices. (shrink)

Hertwig and Ortmann imply that failure of many behavioral psychologists to observe several central methodological principles of experimental economics derives mainly from differences in disciplinary culture. I suggest that there are deeper philosophical causes, based (ironically) on a legacy of methodological individualism in psychology from which economists have substantially cured themselves through use of game theory. Psychologists often misidentify their objects of study by trying to wrench subjects out of their normal behavioral contexts in games.

To reveal the mechanisms of firms’ technological strategic choices between innovation and imitation, an evolutionary game model is proposed from the perspective of the behavioral biases. First, behavioral biases such as reference point dependence, loss aversion, and probability weighting can be defined and modeled based on the prospect theory. Second, according to the firm theory, a Cournot or Stackelberg game modeled with a technology spillover effect and intellectual property protection is applied to portray the (...) interaction between firms. Third, an improved evolutionary game model is provided by incorporating behavioral biases into the framework of the decision-making process. Finally, the simulation analysis of some important factors, such as intellectual property protection, patent fees, innovation risks, decision-making attitudes, and consumers’ price preference on firms’ technological strategic choices, is presented. The corresponding results show that innovation risk is an important factor affecting the technological strategic choices of firms, increasing the intellectual property protection and the patent fee for technology transfer can effectively control the spillover effect of technology, there is a partial U-shaped relationship between the consumers’ price preference and innovation, and the behavioral biases such as reference point dependence, loss aversion, and probability weighting will change the perception of payoff and risk and will eventually induce firms to adopt the innovation strategy. (shrink)

The various behavioral disciplines model human behavior in distinct and incompatible ways. Yet, recent theoretical and empirical developments have created the conditions for rendering coherent the areas of overlap of the various behavioral disciplines. The analytical tools deployed in this task incorporate core principles from several behavioral disciplines. The proposed framework recognizes evolutionary theory, covering both genetic and cultural evolution, as the integrating principle of behavioral science. Moreover, if decision theory and game (...) class='Hi'>theory are broadened to encompass other-regarding preferences, they become capable of modeling all aspects of decision making, including those normally considered “psychological,” “sociological,” or “anthropological.” The mind as a decision-making organ then becomes the organizing principle of psychology. (Published Online April 27 2007) Key Words: behavioral game theory; behavioral science; evolutionary theory; experimental psychology; gene-culture coevolution; rational actor model; socialization. (shrink)

This study examined the link between employees’ adult attachment orientations and perceptions of line managers’ interpersonal justice behaviors, and the moderating effect of national culture. Participants from countries categorized as low collectivistic and high collectivistic completed an online survey. Attachment anxiety and avoidance were negatively related to interpersonal justice perceptions. Cultural differences did not moderate the effects of avoidance. However, the relationship between attachment anxiety and interpersonal justice was non-significant in the Southern Asia cultural cluster. Our findings indicate the importance (...) of ‘fit’ between cultural relational values and individual attachment orientations in shaping interpersonal justice perceptions, and highlight the need for more non-western organizational justice research. (shrink)

The principle of differential marginality (Casajus in Theory and Decis 71(2):163-–174) for cooperative games is a very appealing property that requires equal productivity differentials to translate into equal payoff differentials. In this paper we apply this property to axiomatic characterizations of values. We show that differential marginality implies additivity and symmetry under certain conditions. Based on this result, we propose new characterizations of the equal division and the equal surplus division values. Finally, we characterize two classes of convex combinations (...) of values, i.e., α\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$\alpha$$\end{document}-egalitarian Shapley values and α\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$\alpha$$\end{document}-equal surplus division values, by employing differential marginality and establishing the uniqueness of these values on inessential games. (shrink)