Ariel Rubinstein wrote the Afterword for the 2007 reprinting of the book that launched Game Theory as a field, von Neumann and Morgenstern’s Theory of Games and Economic Behavior. Here is a representative excerpt:
Others (including myself) think that the object of game theory is primarily to study the considerations used in decision making in interactive situations. It identifies patterns of reasoning and investigates their implications on decision making in strategic situations. Accordingto this opinion, game theory does not have normative implications and its empirical significance is very limited. Game theory is viewed as a cousin of logic. Logic does not allow us to screen out true statements from false ones and does not help us distinguish right from wrong. Game theory does not tell us which action is preferable or predict what other people will do. If game theory is nevertheless useful or practical, it is only indirectly so. In any case, the burden of proof is on those who use game theory to make policy recommendations, not on those who doubt the practical value of game theory in the first place.
And, by the way, I sometimes wonder why people are so obsessed in looking for “usefulness” in economics generally and game theory in particular. Should academic research be judged by its usefulness?
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October 6, 2010 at 9:10 pm
Lones Smith
Getting into a “useless” field is *not* what attracts people to economics (or at least, people like *me*), and not why we have a Nobel Prize for it, and most certainly not why we are paid so handsomely well. This view is so discouraging. And he goes on later in his game theory dirge to say that game theory is dead: *As to the state of the theory, it is my impression that the well of game theory is relatively dry.* While Rubinstein has led us to the promised land, I sadly infer that he does not want us to enter it. 😦 😦
Please forgive me if I go on writing papers — and strongly encouraging others to do likewise — with the premise that game theory is not just useful, but the *most useful* part of economics. Of all the lies we tell in economics, the most awesome ones — measured by their ability to explain the data of the world of human choice and make sense of its regularities — are based on a sound understanding of game theory.
October 6, 2010 at 11:02 pm
michael webster
1. Yes, current game theory is a dead end. Framing effects are to blame.
2. No, logic has nothing to do with true or false statements. Logic deals with validity or truth preserving patterns. Economists do not cast their models as truth preserving translations.
3. No, the burden of proof is on those who use models.
October 7, 2010 at 9:18 am
azmyth
Spoken like a true mathematican.
October 7, 2010 at 9:28 am
Sean Crockett
I agree with Ariel that game theory is a logical/mathematical exercise and not a normative one with empirical significance ex ante. But I also agree with Lones that most economists hope their work is not strictly a mathematical exercise but also has some empirical significance. Game theory provides a “logical” benchmark for behavior, so it’s natural we’ve investigated it for empirical relevance. Whether or not it is empirically significant in a particular context is irrelevant to its standing as an exercise in applied logic/math. But the investigation itself makes “the math” more useful, even when it fails.
And we’ve learned that game theory certainly does predict behavior quite well in certain settings and not so well in others, and we’ve begun to characterize such settings. For example, game theory tends to do quite well in stationary repeated or continuous environments (see the cool new Hawk-Dove in continuous time paper by Oprea, Henwood, and Friedman, http://people.ucsc.edu/~roprea/hawkEX.pdf ), and tends to do poorly in one-shot games solved by many iterations of backward induction (e.g., centipede, beauty pageant). But even the “failure” of game theory in the latter case has been the starting point for alternative theories of behavior that are consistent with the data (e.g., level-k reasoning, e.g. Costa-Gomes and Crawford), and these theories are tyically structured much like game theory and borrow heavily from it.
So there is room for purely mathematical work in game theory devoid of empirical content, at least in the mind of the maker. However, once theory is in the public domain it may be tested for empirical content by anyone. Failure to fit the data is not a failure of the theorist and shouldn’t be taken as such (unless it was applied theory intended to fit data). But if theory does have empirical substance it becomes more immediately useful, and as Lones notes, it is mostly usefulness on average (or something like that) that allows economists to keep our great jobs. Econ departments would be MUCH smaller if we were all doing purely logical exercises with no empirical content.
October 7, 2010 at 9:31 am
Sean Crockett
Oops, the link in the last post should not have the closing parenthesis at the end.
October 7, 2010 at 9:32 am
jeff
fixed it. thanks
October 10, 2010 at 8:24 pm
beau
Rubinstein has explained many times this idea about what the essence or significance of economic theory is. I tend to agree with him and I don’t think it necessarily means an attack on economic/game theory. The comparison with logic is precisely right, in the sense that economic theory, as logic, forces us to “think correctly” about certain kind of problems inspired by real world situations. This doesn’t mean that the theoretical insights we discover using theory are immediately relevant to the real world, but it is one more step in the right direction. I think Rubinstein is just admonishing those with a naive/interested confidence in economic theory.
October 10, 2010 at 10:22 pm
michael webster
Rubinstein’s reliance on formal logic is misguided. He, and many if not all economists, have no serious understanding about what a formal model has to satisfy.
A formal model is a truth functional translation from the away language to the formal language which preserves validity.
October 12, 2010 at 12:46 pm
Ariel’s afterword « The Leisure of the Theory Class
[…] Jeff, from Ariel Rubinstein’s afterword (pdf) for a reprinting of von-Neumann and […]
October 14, 2010 at 1:49 am
Does Game Theory “Improve the World” « The Leisure of the Theory Class
[…] Jeff and Eran drew our attention to Ariel’s afterward to the new print of von-Nuemann and Morgenstern’s book, where he wonders about the usefullness of game theory to the “prediction of behavior in strategic situations” and to “improve performance in real-life strategic situations”. I must say that I disagree with Ariel and Eran: I believe that Game Theory does improve the world (when properly applied), and it can improve performance in real-life strategic situations. […]
March 21, 2014 at 3:12 am
Emanuele
I have had a few answers to this qieutson but i think they arent reading it right. I would like to know if there is any mahjong solitare that is free and does not have the free trial.Everywhere people tell me to go there is a free trial then have to buy it.I dont want to buy it and i dont want the free trial.