Has game theory been refuted?

Journal of Philosophy

Volumn 103, Issue 5, 2006, Pages 239-263

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EID: 45849152928     PISSN: 0022362X     EISSN: 19398549     Source Type: Journal    
DOI: 10.5840/jphil2006103532     Document Type: Article

References (60)

1. "Rational Fools: A Critique of the Behavioral Foundations of Economic Theory, " Philosophy and Public Affairs, VI (1977): 317-44.
2. On the interaction between normative and descriptive interpretations ofgame theory see Joseph Kadane and Patrick Larkey, "The Confusion of Is and Ought in Game Theoretic Contexts, " Management Science, XXIX (1983):1365-79.
3. On the theory of individual decision making (in nonstrategic situations), see, for example, Francesco Guala, "The Logic of Normative Falsification:Rationality and Experiment in Decision Theory, " Journal of Economic Methodology, VII (2000): 59-93;
4. and Chris Starmer, "Normative Notions in Descriptive Dialogues, " Journal of Economic Methodology, XII (2005): 277-89.
5. Martin Osborne and Ariel Rubinstein, A Course in Game Theory (Cambridge:MIT, 1994).
6. See, for example, Elliott Sober, Philosophy of Biology (Boulder:Westfield, 1993), pp. 68-72.
7. On this point, see also Daniel Hausman, "'Testing' Game Theory, " Journal of Economic Methodology, XII (2005): 211-23.
8. See also Binmore, "Why Experiment in Economics?" Economic Journal, CIX (1999): F16-24, p. F18: "[a consolidating experimentalist]does not see as his task as asking whether economics works or not. He alreadyknows that sometimes it does and sometimes it does not. The task is to classifyeconomic environments into those where the theory works and those where it doesnot."
9. See, for example, Ronald Giere, Explaining Science (Chicago: University Press, 1988), chapter 3.
10. Game Theory and the Social Contract, p. 98.
11. Paul Samuelson, "A Note on the Pure Theory of Consumer's Behavior, " Economica, V (1938): 61-71.
12. See, for example, Daniel Hausman, "Revealed Preference, Belief, and Game Theory, " Economics and Philosophy, XVI (2000): 99-115;
13. Keith Dowding, "Revealed Preference and External Reference, "Rationality and Society, XIV (2002): 259-84.
14. See, for example, Hausman, "Revealed Preference, " pp. 101-06.
15. The Theory of Games and Economic Behavior (Princeton: University Press, 1944).
16. Ramsey, "Truth and Probability, " in Richard Braithwaite, ed., The Foundations of Mathematics and Other Logical Essays (New York: Routledge, 1931), pp. 156-98;
17. Savage, The Foundations of Statistics (New York: Wiley, 1954).
18. See, for example, Anatol Rapoport and Albert Chammah, Prisoner's Dilemma:A Study in Conflict and Cooperation (Ann Arbor: Michigan UP, 1965).
19. Fun and Games: A Text on Game Theory (Lexington, MA.: D.C. Heat, 1992).
20. Amos Tversky, "A Critique of Expected Utility Theory: Descriptiveand Normative Issues, " Erkenntnis, IX (1975): 163-73;
21. Sen, "Rationality and Uncertainty, " Theory and Decision, XXII(1985): 109-27,
22. and "Internal Consistency of Choice, " Econometrica, LXI (1993):495-521;
23. Mark Machina, "Dynamic Consistency and Non-Expected Utility Modelsof Choice Under Risk, " Journal of Economic Literature, XXVII (1989):1622-68;
24. Michael Bacharach, "Preferenze Razionali e descrizioni, " in Maria Carla Galavotti and Guido Gambetta, eds., Epistemologia ed economia(Bologna: CLUEB, 1988), pp. 43-63,
25. Peter Hammond, "Consequentialist Foundations for Expected Utility Theory, " Theory and Decision, XXV (1988): 25-78;
26. Robert Sugden, "Rational Choice: A Survey of Contributions from Economics and Philosophy, " Economic Journal, CI (1991): 751-85;
27. John Broome, Weighing Goods (Cambridge: Blackwell, 1991);
28. Paul Anand, Foundations of Rational Choice Under Risk (New York: Oxford, 1992);
29. and Bertrand Munier, "Comment, " in Kenneth Arrow, Ennio Colombatto, Mark Perlman, and Christian Schmidt, eds., The Rational Foundationsof Economic Behavior (New York: St. Martin's, 1996), pp. 43-47.
30. See, for example, Terence Hutchison, The Significance and Basic Postulates of Economic Theory (New York: Kelley, 1938), pp. 114-15;
31. for recent versions, see Machina, "Dynamic Consistency, " pp.83-87;
32. Alexander Rosenberg, Economics: Mathematical Politics or Science of Diminishing Returns? (Chicago: University Press, 1992), chapter 5;
33. and Anand, Foundations of Rational Choice Under Risk, pp. 105-06.
34. This fictional example is not far from historical reality, as shown by Imre Lakatos, "Falsificationism and the Methodology of Scientific Research Programmes, " in Philosophical Papers, Volume 1 (New York: Cambridge, 1970), pp. 8-101, and others.
35. Cox "How to Identify Trust and Reciprocity, " Games and Economic Behavior, XLVI (2004): 260-81;
36. see also Weibull, "Testing Game Theory, " in Stephan Huck, ed., Advances in Understanding Strategic Behavior (New York: Palgrave, 2004), pp.85-104, especially pp. 85-86.
37. See, for example, his "Paradoxes of Irrationality, " in Richard Wollheim and James Hopkins, eds., Philosophical Essays on Freud (New York:Cambridge, 1982), pp. 289-305, see p. 294.
38. See, for example, Kenneth Clark and Martin Sefton, "The Sequential Prisoner's Dilemma: Evidence on Reciprocation, " Economic Journal, CXI(2001): 51-68.
39. See for example, David Levine, "Modeling Altruism and Spitefulnessin Experiments, " Review of Economic Dynamics, I (1998): 593-622;
40. Ernst Fehr and Klaus Schmidt, "A Theory of Fairness, Competition and Cooperation, " Quarterly Journal of Economics, CXIV (1999): 817-68;
41. Gary Bolton and Axel Ockenfels, "ERC: A Theory of Equity, Reciprocity and Cooperation, " American Economic Review, XC (2000): 166-93.
42. First proposed by John Geannakoplos, David Pearce, and Ennio Stacchetti, "Psychological Games and Sequential Rationality, " Games and Economic Behavior, I (1989): 60-79.
43. "Incorporating Fairness into Game Theory and Economics, "American Economic Review, LXXXIII (1993): 1281-302.
44. The two prominent models in this tradition are Armin Falk and Urs Fischbacher, "A Theory of Reciprocity, " Working Paper 6 (2000), Institute for Empirical research in Economics, University of Zurich
45. Martin Dufwenberg and Georg Kirchsteiger, "A Theory of Sequential Reciprocity, " Games and Economic Behavior, XLVII (2003) : 268-98.
46. As a matter of fact, there is some puzzling evidence suggesting that indilemma experiments some subjects "reciprocate" even when they areplaying against a computer; see Daniel Houser and Robert Kurzban, "Revisiting Kindness and Confusion in Public Goods Experiments, "American Economic Review, XCII (2002): 1062-69.
47. Reprinted in Jacques Drèze, Essays on Economic Decisions Under Uncertainty (New York: Cambridge, 1987), pp. 76-81.
48. Broome, Weighing Goods, pp. 115-17;
49. see also Sugden, "Rational Choice, " pp. 761-63.
50. See also Sugden, "Rational Choice"; Munier, "Comment"; and Bruno Verbeek, "Consequentialism, Rationality, andthe Relevant Description of Outcomes, " Economics and Philosophy, XVII(2001): 181-205.
51. These and related problems have been addressed in the literature byintroducing so-called "state-dependent" utilities. At the price ofintroducing some extra axioms, it has been shown that individual choices can bedescribed as maximizing a state-dependent utility function over acts. This leadsto some problems, however, in the estimation of subjective probabilities; see, for example, Mark Schervish, Teddy Seidenfeld, and Joseph Kadane, "State-Dependent Utilities, " Journal of the American Statistical Association, LXXXV (1990): 840-47.
52. Such problems can be overcome if one is ready to abandon the Savagemeasurement procedure and especially the strong operationalism associated withit; see, for example, Edi Karni and Philippe Mongin, "On the Determinationof Subjective Probability by Choices, " Management Science, XLVI (2000):233-48.
53. Regret is another motivation that can lead to problems with therectangular field assumption not only in the realm of game theory, but also inindividual (nonstrategic) decision making. See, for example, Sugden, "Regret, Recrimination and Rationality, Theory and Decision, XIX (1986):77-99. Unlike reciprocity, however, we do not have strong evidence about regretat the moment.
54. See, for example, Robert Forsythe, Joel Horowitz, N.E. Savin, and Marun Sefton, "Fairness in Simple Bargaining Experiments, " Games and Economic Behavior, VI (1994): 347-69.
55. "Understanding Social Preferences with Simple Tests, " Quarterly Journal of Economics, CXII (2002): 817-69.
56. See, for example, Armin Falk, Ernst Fehr, and Urs Fischbacher, "Onthe Nature of Fair Behavior, " Economic Inquiry, XLI (2003): 20-26;
57. Kevin McCabe, Mary Rigdon, and Vernon Smith, "Positive Reciprocityand Intentions in Trust Games, " Journal of Economic Behavior and Organization, LII (2003): 267-75.
58. Reciprocity seems to be a fairly erratic phenomenon. Cristina Bicchieriargues, convincingly in my view, that social norms (such as reciprocity) arehighly context-sensitive and usually must be "triggered" or"cued" by some factor signalling that "this is a context wherethe norm applies, " that is, where it is generally expected that peoplebehave according to the norm. See, for example, Bicchieri, The Grammar of Society (New York: Cambridge, 2006).
59. See, for example, Vernon Smith, "Microeconomic Systems as an Experimental Science, " American Economic Review, LXXII (1982): 923-55.
60. See, however, Guala, The Methodology of Experimental Economics (New York:Cambridge, 2005), especially-chapter 11.