The Mythology of Game Theory
Mathew D. McCubbins
Duke University School of Law
Mark B. Turner
Case Western Reserve University - Department of Cognitive Science
University of Southern California - Department of Political Science; University of Southern California - School of International Relations
January 6, 2012
Proceedings of the International Conference on Social Computing, Behavioral-Cultural Modeling, & Prediction, Springer Lecture Notes in Computer Science
Marshall School of Business Working Paper No. FBE 01-12
Non-cooperative game theory is at its heart a theory of cognition, specifically a theory of how decisions are made. Game theory's leverage is that we can design different payoffs, settings, player arrays, action possibilities, and information structures, and that these differences lead to different strategies, outcomes, and equilibria. It is well-known that, in experimental settings, people do not adopt the predicted strategies, outcomes, and equilibria. The standard response to this mismatch of prediction and observation is to add various psychological axioms to the game-theoretic framework. Regardless of the differing specific proposals and results, game theory uniformly makes certain cognitive assumptions that seem rarely to be acknowledged, much less interrogated. Indeed, it is not widely understood that game theory is essentially a cognitive theory. Here, we interrogate those cognitive assumptions. We do more than reject specific predictions from specific games. More broadly, we reject the underlying cognitive model implicitly assumed by game theory.
Number of Pages in PDF File: 8
Keywords: game theory, human behavior, Nash equilibrium, economics, Trust game, prediction markets
Date posted: January 6, 2012 ; Last revised: May 9, 2012
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