Abstract

http://ssrn.com/abstract=2278029
 


 



Can We Build Behavioral Game Theory?


Gale M. Lucas


University of Southern California

Mathew D. McCubbins


Duke University

Mark B. Turner


Case Western Reserve University - Department of Cognitive Science

June 12, 2013


Abstract:     
The way economists and other social scientists model how people make interdependent decisions is through the theory of games. Psychologists and behavioral economists, however, have established many deviations from the predictions of game theory. In response to these findings, a broad movement has arisen to salvage the core of game theory. Extant models of interdependent decision-making try to improve their explanatory domain by adding some corrective terms or limits. We will make the argument that this approach is misguided. For this approach to work, the deviations would have to be consistent. Drawing in part on our experimental results, we will argue that deviations from classical models are not consistent for any individual from one task to the next or between individuals for the same task. In turn, the problem of finding an equilibrium strategy is not easier but rather is exponentially more difficult. It does not seem that game theory can be repaired by adding corrective terms (such as consideration of personal characteristics, social norms, heuristic or bias terms, or cognitive limits on choice and learning). In what follows, we describe new methods for investigating interdependent decision-making. Our experimental results show that people do not choose consistently, do not hold consistent beliefs, and do not in general align actions and beliefs. We will show that experimental choices are inconsistent in ways that prevent us from drawing general characterizations of an individual’s choices or beliefs or of the general population's choices and beliefs. A general behavioral game theory seems a distant and, at present, unfulfilled hope.

Number of Pages in PDF File: 13

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Date posted: June 12, 2013 ; Last revised: July 20, 2013

Suggested Citation

Lucas, Gale M. and McCubbins, Mathew D. and Turner, Mark B., Can We Build Behavioral Game Theory? (June 12, 2013). Available at SSRN: http://ssrn.com/abstract=2278029 or http://dx.doi.org/10.2139/ssrn.2278029

Contact Information

Gale M. Lucas
University of Southern California ( email )
Los Angeles, CA 90089
United States
Mathew D. McCubbins
Duke University ( email )
Department of Political Science
208 Gross Hall, 140 Science Drive
Durham, NC 27708
United States
(213) 973-7538 (Phone)
(213) 973-3623 (Fax)
HOME PAGE: http://mccubbins.us
Mark B. Turner (Contact Author)
Case Western Reserve University - Department of Cognitive Science ( email )
10900 Euclid Avenue
Cleveland, OH 44106-7068
United States
HOME PAGE: http://markturner.org
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