Equilibrium explanations use an equilibrium to represent and explain a system’s dynamic behavior. They provide a system with the property of global stability: a system will converge towards and remain in equilibrium regardless of its initial conditions and dynamic process. Thus, equilibrium explanations are generally treated as non-causal explanations. There are two claims subsumed under that comprehensive thesis. The first claim is that equilibrium explanations do not identify any causes because a system with global stability resists manipulation. The second claim (...) is that even if equilibrium explanations do identify causes by manipulation, those causes are embedded in a system’s deeper, underlying structural relationships, and those causes are irrelevant to explaining a system’s behavior. Only the system’s structural relationships are relevant. But equilibrium explanations are not monolithic. I compare dynamic systems with multiple, competing equilibria to systems with a globally stable equilibrium. Equilibrium explanations of the former use intervention on a system’s initial conditions and dynamic process to manipulate equilibria, which identifies causes. Furthermore, a system’s initial conditions and dynamic process are relevant to explaining why one equilibrium is selected instead of another. I then apply these lessons to systems with a globally stable equilibrium and discuss when their corresponding equilibrium explanations have a proper role in the parent sciences. (shrink)

Normative game theory unsatisfactorily explains rational behavior. Real people do not behave as predicted, and what is prescribed as rational behavior is normally unattainable in real-life. The problem is that current normative analysis does not account for people's cognitive limitations – their bounded rationality. However, this paper develops an account of bounded rationality that explains the rationality of more realistic behavior. I focus on the Centipede Game, in which boundedly rational players explore and test others' immediate behavior, until they can (...) apply limited backward induction. The result is that the game has a solution in the form of a subjective Nash equilibrium, which boundedly rational players can possibly realize. (shrink)