Playing Strategically against Nature? Decisions Viewed from a Game-Theoretic Frame
21 Pages Posted: 2 Oct 2008
Date Written: September 2008
Abstract
Common research on decision-making investigates non-interdependent situations, i.e., "games against nature". However, humans are social beings and many decisions are made in social settings, where they mutually influence each other, i.e., "strategic games". Mathematical game theory gives a benchmark for rational decisions in such situations. The strategic character makes psychological decision-making more complex by introducing the outcomes for others as an additional attribute of that situation; it also broadens the field for potential coordination and cooperation problems. From an evolutionary point of view, behavior in strategic situations was at a competitive edge. This paper demonstrates that even in games against nature, people sometimes decide as if they were in a strategic game; it outlines theoretical and empirical consequences of such a shift of the frame. It examines whether some irrationalities of human decision-making might be explained by such a shift in grasping the situation. It concludes that the mixed strategies in games against nature demand a high expertise and can only be found in situations where these strategies improve the effects of minimax-strategies that are used in cases of risk-aversion.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Instinctive and Cognitive Reasoning: A Study of Response Times
-
Small- and Large-Stakes Risk Aversion: Implications of Concavity Calibration for Decision Theory
By James C. Cox and Vjollca Sadiraj
-
Measuring Intertemporal Preferences Using Response Times
By Christopher F. Chabris, David Laibson, ...
-
Fast or Fair? A Study of Response Times
By Marco Piovesan and Erik Wengström
-
Strategic Choice of Preferences: The Persona Model
By David Wolpert, Julian C. Jamison, ...
-
Response Time Under Monetary Incentives: The Ultimatum Game
By Pablo Brañas-garza, Ana Leon-mejia, ...
-
Schelling Formalized: Strategic Choices of Non-Rational Personas