Home > The Economics Profession > Game theory – a critique

Game theory – a critique

from Lars Syll

Back in 1991, when yours truly earned his first Ph.D. with a dissertation on decision making and rationality in social choice theory and game theory, I concluded that “repeatedly it seems as though mathematical tractability and elegance – rather than realism and relevance – have been the most applied guidelines for the behavioural assumptions being made. On a political and social level it is doubtful if the methodological individualism, ahistoricity and formalism they are advocating are especially valid.”

This of course was like swearing in church. My neoclassic colleagues were – to say the least – not exactly overjoyed.

Now, twenty years later, one of the most renowned game theorists in the world, Ariel Rubinstein, in an interview confirms the validity of my rather harsh verdict (italics added): 

What are the applications of game theory for real life?

That’s a central question: Is game theory useful in a concrete sense or not? Game theory is an area of economics that has enjoyed fantastic public relations. [John] Von Neumann [one of the founders of game theory] was not only a genius in mathematics, he was also a genius in public relations. The choice of the name “theory of games” was brilliant as a marketing device. The word “game” has friendly, enjoyable associations. It gives a good feeling to people. It reminds us of our childhood, of chess and checkers, of children’s games. The associations are very light, not heavy, even though you may be trying to deal with issues like nuclear deterrence. I think it’s a very tempting idea for people, that they can take something simple and apply it to situations that are very complicated, like the economic crisis or nuclear deterrence. But this is an illusion. Now my views, I have to say, are extreme compared to many of my colleagues. I believe that game theory is very interesting. I’ve spent a lot of my life thinking about it, but I don’t respect the claims that it has direct applications.

The analogy I sometimes give is from logic. Logic is a very interesting field in philosophy, or in mathematics. But I don’t think anybody has the illusion that logic helps people to be better performers in life. A good judge does not need to know logic. It may turn out to be useful – logic was useful in the development of the computer sciences, for example – but it’s not directly practical in the sense of helping you figure out how best to behave tomorrow, say in a debate with friends, or when analysing data that you get as a judge or a citizen or as a scientist.

In game theory, what we’re doing is saying, “Let’s try to abstract our thinking about strategic situations.” Game theorists are very good at abstracting some very complicated situations and putting some elements of the situations into a formal model. In general, my view about formal models is that a model is a fable. Game theory is about a collection of fables. Are fables useful or not? In some sense, you can say that they are useful, because good fables can give you some new insight into the world and allow you to think about a situation differently. But fables are not useful in the sense of giving you advice about what to do tomorrow, or how to reach an agreement between the West and Iran. The same is true about game theory.

In general, I would say there were too many claims made by game theoreticians about its relevance. Every book of game theory starts with “Game theory is very relevant to everything that you can imagine, and probably many things that you can’t imagine.” In my opinion that’s just a marketing device.

Why do it then?

… What I’m opposing is the approach that says, in a practical situation, “OK, there are some very clever game theoreticians in the world, let’s ask them what to do.” I have not seen, in all my life, a single example where a game theorist could give advice, based on the theory, which was more useful than that of the layman.

Looking at the flipside, was there ever a situation in which you were pleasantly surprised at what game theory was able to deliver?

None. Not only none, but my point would be that categorically game theory cannot do it.

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  1. Claude Hillinger
    November 5, 2012 at 12:35 pm

    Game theory has many very good applications in biology, both qualitativ and quantitativ. I can’t give refernces at the moment because I recently moved and have not unpacked my books.

    • Paul Schächterle
      November 8, 2012 at 10:41 am

      I would be very interested in some examples and references.

      My view of game theory is much more positive than my view of neoclassical micro. But I am a little unsure about what to think about game theory and I find this blog post and the discussion here very interesting.

    • bruceedmonds
      November 13, 2012 at 6:28 pm

      Game theory has NOT had “many very good applications in biology, both qualitativ and quantitativ”, rather (as in many areas of economics) it has been applied to IDEAS about biology not the phenomena itself. This is precisely the point Ariel Rubinstein is making. There is a big difference between using models of ideas (which may be used to understand observed phenomena as any other analogy) and models of the phenomena itself.

      • Claude Hillinger
        November 13, 2012 at 9:02 pm

        I said in my comments that unfortunately I don’t have access to my books at the moment. So I will give a example from memory. Biologists studied in the field the behavior of a particular king of spider. They wanted to know when a spider would attack another one to gain his choice location. As the reward they measured the amount of captured pray. The probability of the outcome they computed from the relative weights of the combattants. They found that they could predict if a spider would attack or not by using the Neuman/Mogenstern theory. As I said, there are many such examples both quantitative as in this example or qualitativ. This is nitty-gritty biology, not philosophy about biology.

      • bruceedmonds
        November 14, 2012 at 9:20 am

        OK, well I will wait for your citation when you have access again. I have read quite a lot of such biology papers (and I am not talking about philosophy of bioloby), and sofar the conclusion stands.

  2. robert r locke
    November 5, 2012 at 12:54 pm

    In the late 1980s, Al Simon, a famous game-theory decision modeler, was President of the University of Hawaii. I happened to be in his office on another matter, but took the opportunity to ask him a question. “Tell me, Al you are an expert in decision-theory modeling, did any of that stuff ever prove of any use to you in your job of decision-making as President of the University.” His answer, without hesitation. “Of course not, everybody know that.” I asked him because I was just finishing a chapter in a book with the same conclousiion (. Why peoople keep doing this stuff after they know better is the real question. It doesn’t have to do with logic.

    • merijnknibbe
      November 5, 2012 at 11:23 pm

      Can you give a citation of the book?

      • robert r locke
        November 6, 2012 at 2:03 pm

        Robert R Locke, Management and Higher Education Since 1940. Cambridge University Press, 1989. See chapter 2 The New Paradigm Revisited, pp. 30-55.

  3. Dave Raithel
    November 5, 2012 at 3:25 pm

    Interesting read. My dissertation (’90, University of Mo-Columbia) argued that Gauthier’s arguments in Morals By Agreement failed to justify a Lockean theory of natural rights as the moral ground of civil society. I tend to think that the Prisoner’s Dilemma is a marvellous teaching tool – a useful fable, a way for people to think about how they want to be, as people. Otherwise, what we get from games and decisions seems mostly trivially true – in the same way that I do, in fact, try to get the most out of my buck when I go to the store, given the sum total of all considerations, as best I can evaluate, when choosing between options. (The basic premise of free market fetishists.)

    Can’t say I concur that judges need no logic – have you read Citizen’s United? But a good read, thanks.

    • merijnknibbe
      November 5, 2012 at 11:23 pm

      Can you give a citation of the dissertation?

      • Dave Raithel
        November 6, 2012 at 2:28 pm

        You mean mine? “Rational Self-Interest and Gauthier’s Proviso.” (University Of Missouri-Columbia, 1990, Peter Markie, dissertation director.) I am not an academic. Last real job I had was tending a vineyard. …. should have written a shorter dissertation, probably ….

  4. Jims
    November 5, 2012 at 5:34 pm

    The same can be said about neoclassical economics, which is a collection of fables not linked together to make the whole story. More over its purpose does not fit to what it is about.
    Is it about “study of behavior of … in world of scarce resources”? No. Is it about market? No. Demand and supply is not a market. So what is neoclassical economics about? It is collection of fables about how good is free market and how smart are neoclassical economists with their beautiful models, which, however, are complete rubbish because they can not be applied to reality.

  5. November 5, 2012 at 8:26 pm

    In order to understand the comings and goings of various kinds of theories. I think we need to examine the manifest phenomenon of “fashion”. Fashions figure prominently in clothing, foods, accomodations, transportations, and yes, economics.
    Fashions have historical roots, wherever they occur and are tied to the economic realities of their practitioners (mansions vs straw huts).
    Perhaps, in order to better understand the nature of economic theories one should develop an understanding of human fashions?

  6. Merijn Knibbe
    November 6, 2012 at 9:32 am

    As far as I’m concerned one of the challenges is to incorporate ‘land’, in the sense of ‘natural resources and unproduced assets’, into economic theory (once again). One can think of ownership of these resources and connected rent-incomes in the national accounts. One can think of growth theory and replacing the (Labour-Capital) dichotomy of the basic growth model with a (Labour-Land-Capital) trichotomy, implicitly switching from the passiva side of the balance sheet of the economy to the asset side. One can think of incorporating ‘land’ in Keynesian models in which not only labour or ‘productive capacity’ can restrain output when demand increases (not the present situation, but that’s another question) but where scarcity of ‘land’ and ownership of land can also lead to bottle necks in production and/or price increases/rent incomes. In my view, this last idea is consistent with the idea that, in a depressed economy, we have to invest in ‘land’-saving technology. And that’s not antoher question.

  7. Bruce E. Woych
    November 6, 2012 at 1:11 pm

    The “abuse’ of game theory is a dark reality for manipulating selected factors, but the actual results from simulating reality in large part has never produced the naturally occurring sequences of the unexpected. As with all systems approaches (and this is essentially one of multi-variables) the input determines the output. In the prisoner’s dilemma we never see the option of revolt or passive-resistance to the choices: both of which occur in historic human realities of renown,

    • Dave Raithel
      November 6, 2012 at 3:06 pm

      Mmmm … wouldn’t both “players” in the PD keeping their mouths shut amount to passive-resistance? My question betrays my ambivalence about games and decisions – I was a student of Edward F. McClennen when at Washington University in St. Louis. He once encouraged me to take a course under Hymen Minksy, which I did. And eventually some 30 or so years later, got me to reading some Steve Keen. So I have a sense – especially from Keen’s finance lectures on You-tube, of what is false about games and decisions, but I cannot expel the notion that – even as a fashion – it tells us something about ourselves. We do in fact make choices. That fact can be obscured or exploited for ideological reasons, e.g., the claim that economics is about the allocation of scarce resources, for we know it is sometimes the fact that the scarcity is natural – disasters, crop failures, etc., but itt is sometimes the fact that the scarcity is not natural – all those goods sitting on shelves that nobody cannot afford to buy. Yeah, sure, I’m a commie (I was also a student of Alvin Gouldner), but I think that if I had grad school to do all over again, I might have made a better effort to find a place to study those “analytical Marxists” … whose names mostly elude me….Anyway, I now need to spend time doing some other things. Thanks for shaking some cobwebs loose….

      • Dave Raithel
        November 6, 2012 at 3:12 pm

        Duh…. goods on the shelves that nobody CAN afford to buy…. never have been the best proof-reader….

      • Bruce E. Woych
        November 6, 2012 at 3:51 pm

        Dave: I locked on to the age old claim you referenced
        “…economics is about the allocation of scarce resources…”
        (…a tainted bias from neo-classical formalism “as if” establishing normative formulas…)

        And realized that most of us concentrate on the idea of “scarce resources” as the determining factor to this definition.

        However, it now occurs to me that “allocation” is the real slight of hand in this “equation” of differential production and access to resources. While scarcity appears to modify resources in come inherently calculable way,…allocation seems normative and consequential (if not naturally occurring) as a result.

        The contemporary complexity of equating economics to what is actually done seems overlapping if not entirely quixotic at its core. If i were to take a stab at some level of definition, I would untangle a number of primary functions that appear to “govern” economic focus.

        Under such a challenge I would state that It seems now more accurate to say that economics is the bounded rationalization of stratified market processes that allocate asymmetrical knowledge controlling access to capital claims. Capital claims “allocate” privately restricted ownership (boundaries and gates); for resources which determine the monetary rationing of subsistence and sustenance of living standards within in both selected demographic sub-populations of social-political privilege as well as the whole interactive society and its dependencies.

        Of course we can only imagine all that is missing from this snake pit!

  8. Bruce E. Woych
    November 6, 2012 at 1:35 pm

    See: Chomsky (he does not appear to hold Garret Hardin in very high esteem in this):

    http://www.tomdispatch.com/blog/175571/\

    Posted on July 22, 2012

    Destroying the Commons
    How the Magna Carta Became a Minor Carta
    By Noam Chomsky

    {AND}

    http://en.wikipedia.org/wiki/Tragedy_of_the_commons

    =================================================
    Garret Hardin’s original paper was a celebrated exercise in Game Theory presented in the name of science at its best as a presidential address (high ranking and prestigious).
    (see the paper):

    http://www.garretthardinsociety.org/articles/art_tragedy_of_the_commons.html

    _____________________________________________________________

    But while the Tragedy of the Commons seems to sum up the best model for global exhaustion and human resources becoming overwhelmed; it is also a potential use of the very model that validates managerialism’s privatization as ideological discipline. In the process it excludes public “social consciousness” altogether and exempts private sector abuses from even becoming evaluated in this misguided equivocation over end time results.

    see:Free rider problem

    http://en.wikipedia.org/wiki/Free_rider_problem

  9. November 8, 2012 at 8:35 pm

    Bruce, thanks ever so for these links. The Chomsky paper is scary, but I can see why he and you don’t think much of Hardin’s. Curiously, I dealt with his example of population only a couple of days ago (#14 @ Dismal Science has Dismal Future), and his 1968 concepts of natural science and unattainable technical solutions illustrate the still-typical ignorance of the know-how of information science and its identification of how spare (redundant) capacity can be used for error correction and effectively simultaneous pursuit of otherwise inconsistent goals: by time-sharing, “stitch-in-time-saves-nine” error correction, cybernetic self-control and reliability-enhancement techniques. He ridicules the assumption of perfect solutions but still dismisses the Universal Declaration of Human Rights on family size as intolerable, without considering the issues I raised of it being MADE tolerable by the provision of a locally appropriate target range and status feedback. His argument is also full of straw men like the use of the Commons being unrestrained (here residual commoner rights are limited at subsistence level), real people naturally seeking to maximise rather than having been taught to, and needing coercion rather than understanding and the satisfactions of acting honourably. When he quotes Frankel I agree with him: “Responsibility is the product of definite social arrangements”. That is what my arrangement of local population targets and feedback was all about. When Hardin’s bottom line on that is to “insist that a bank is not a commons”, I wonder who his paymaster was.

    • Bruce E. Woych
      November 14, 2012 at 12:39 am

      davetaylor 1: …and thank you in return for your thoughts and reasoning; I read through several times and gained each time.

      I do think that the linearity vs circularity of these models are fallacious dichotomies (false distinctions as categorical universals in real time). If we think through varieties of actual alternative models such as continuous learning systems (originating in engineering but took on a life of its own…ironically presenting a great example in itself of transitional translations in dynamic {wave?} positions)…; self organizing systems and emergent (synergistic) phase changes/stages (with nested systems and weaved potentials entangled within time limited frames), we begin to appreciate that a true “gaming” potential would require self correcting and even “reversing” processes in human applications. It is essential to recall that game theory originates its power from theoretical end game warfare…so it tends to maximize (exhaust) rather than optimize and correct itself or simply creatively fail .

      At a global level the tragedy of the macro-commons does warn us that the globe is limited and ultimately a closed system….and that self-regulation is essential for survival. At the private micro-commons level… (vulgar economics?)… it tends to speak towards overpopulation as a public menace with sub-population-private control being the solution. It fails, in that regard, to realize that the “private” sector is simply a segment of the same growing menace to the globe…(the Saudi King has 1200 grandchildren all vying for power..) ….[and] therefore completely fails to recognize that “maximizing” is the critical denominator that must be controlled in direct proportion to the measured limitations.

      Your final discussion and your questioning the “paymaster” lands right on the scope and scale of “meta-commons” as a different order, playing field and magnitude? In this regard, aren’t “Human Rights” as a universal category an abstract “property rights” issue? These must also be subject to controlling measures against (irrationally self-defined and irresponsible) libertarian abuses that see monopoly as a maximizing right of time-fixed bounded claims (ownership) and ignore any true value distribution that would fairly optimize proportions at scale to scope public rights (meta-commons) interest?

      I hope this “thought game” charges you with some new potent directions, even if only to suggest that imagination is the ultimate game for challenging bounded rationalities.

      Regards:
      Bruce

    • November 14, 2012 at 11:20 am

      Thanks again, Bruce. Re the Saudi king, I’ve got ten grandchildren and thought I was doing well! On property rights, and the Tragedy of the Elimination of the Commons, what gets me is that Locke very clearly qualified his advocacy of the right to secure property ownership with the responsibility to take only what one could use oneself. He specifically excluded the personal right to seize surplus; the legal fictions of corporate personality and scarcity dishonestly justify it.

      On the importance of imagination, I can offer you a link as significant as yours to Chomsky: rated “by far the greatest work of English literature this [20th] century”.

      http://archive.org/stream/orthodoxy16769gut/16769.txt

      This ends up in theology but begins with social philosophy and the problem of academics not using both sides of their brain. Curiously, this came up in a discussion of personality differences last night. There are four parts of the brain corresponding to the I/O, logic (index word) processing, parallel processing of images and error-controlling operating system of a PC. This was likened to sitting on a chair with four legs. The two-legged Humean base of logic and emotion is unstable and liable to fall over: one needs three legs for stability. The problem is that we have four legs and they are not all of the same length, so different personalities tend to sit stably on different groups of three legs, and somewhat wobbly when needing to use the fourth, which for around 76% of us is the visual parallel processing. According to Myers-Briggs statistics, only c.2% of us tend to think imaginatively via information-rich visual memories rather than words, with another 10% reacting intuitively to present sensation. A similar proportion are driven by fixated emotion rather than wide observation.

      A N Whitehead famously remarked that “The secret of being a successful reasoner is to grab hold of the big ideas and hang on to them like grim death”. That’s what I’ve tried to do, and a good number of my big ideas are updates of Chomsky’s and Chesterton’s.

      Incidentally, I’m just Dave Taylor: the “1” is an artefact of the login system here.

      • Bruce E. Woych
        November 14, 2012 at 8:48 pm

        Well Dave Taylor, we may well be proving some novel quantum brain wave theory in these exchanges, but I have always felt that synchronicity was at the heart of human experience (if not intuitive connectivity). I adopted this line-quote from your link/text:
        “…Somehow his scheme, like the lucid scheme of the
        madman, seems unconscious of the alien energies and the large
        indifference of the earth; it is not thinking of the real things of the
        earth, of fighting peoples or proud mothers, or first love or fear upon
        the sea. The earth is so very large, and the cosmos is so very small.
        The cosmos is about the smallest hole that a man can hide his head in.”

        It almost seems like a line from Alice’s Wonderland.

        On theoretical regimes and lineages, I think it is wise to see all theories as game theory. In that I might add that any “critique” found in this “stream-thread” (are we entering string theory now/)…would apply equally to all theoretical domains. Theoretical intricacies are much like the living social complexities found in political relations. I will leave it at that!

      • November 15, 2012 at 10:42 am

        Bruce, it took me about twenty years to make sense of Chesterton’s madman! I did so eventually by reflection on his earlier writings, which go from nonsense verse to a writer’s interest in different types of personality, through an interpretation of Robert Browning and his poetry sufficiently acute to make his name, to an extraordinary appreciation of the artist G F Watts, prepared in anticipation of Watts’s death, which answered Bertrand Russell’s paradox before it was posed and intimated the resultant indexed logic which (I happen to know, having been in at the birth of it) made today’s general purpose computer systems practicable. Alice’s “Wonderland” is also not so daft as it seems when you understand the code. (See “The Annotated Alice” of Martin Gardner, sometime editor of Scientific American, and even better, his article on “The Hunting of the Snark”; he also annotated Chesterton’s “Fr Brown” and his riddle, “The Man Who Was Thursday”). Chesterton’s cross-roads (end ch.2), which the literal-minded madman doesn’t see, is in fact in the realm of the Snark: “(mathematics) A graph in which every node has three branches, and the edges cannot be coloured in fewer than four colours without two edges of the same colour meeting at a point” (http://en.wiktionary.org/wiki/snark). A good teacher, I think, points you in the right direction but makes you think for yourself.
        On theories as games, isn’t it wise to play one’s games with obviously non-literal language rather than with people’s lives? Here’s Chesterton on Watts’ iconic art:

        “[The] idea that Watts’ allegorical art is merely literary is eventually based … on the assumption of the perfectibility of language. Every religion and every philosophy must, of course, be based upon the assumption of the authority or the accuracy of something. But it may well be questioned whether it is not saner and more satisfactory to ground our faith on the infallibility of the Pope, or the infallibility of the Book of Mormon, than on this astounding modern dogma of the infallibility of human speech”.

        In case this is seen as special pleading, this was almost twenty years before Chesterton became a Catholic. It reminds me of “Lies, damn lies and statistics”. In any case, the complexity of a cross-roads is not about theoretical intricacies and strings, it is about the almost universality of Cartesian coordinates: which however obscure the fact that the world is not flat but spherical. (See Chesterton’s opening remarks on coming back home).

      • November 15, 2012 at 11:43 am

        To quote Dave Rathiel: “Duh!” For “almost universality” read “almost universal applicability”.

        Let me add an appreciation of Lars Syll’s original blog. I like the idea of the game being a fable, but perhaps, Lars, you gave too narrow an understanding of logic? Even Aristotle’s was not about particulars but about the significance of formal relations, e.g. the ability to add numbers depending on understanding the significance of the position of numberals. The significance of the Snark is eventually that of Cybernetic “steering by error-correcting” logic: sin (missing the mark) being possible in the past, present and the future, and correctible with PID feedbacks (“confession, absolution and a firm purpose of amendment”): with no colour changes in between!

  10. bruceedmonds
    November 13, 2012 at 6:31 pm

    To me the worst impact of game theory has been to sidetrack many modellers from representing observed interactions to the lazy plugging-in of a game as a proxy for these interactions. Game theory was developed before simulation techniques and is basically superceded by them (at least in terms of applications, game theorists can continue to explore the abstract but irrelevant mathematical properties of games)

    • November 15, 2012 at 12:24 pm

      Which observation Bruce Woych has since extended to theorising. When I was taught experimental engineering we weren’t expected to take theories for granted but to both understand their derivation (including history) and see what they now looked like in practice. Specialised scientists seemed to do one or the other, so in practice science as a whole involved teamwork between research uncovering problems, search finding possible solutions, experiment trying them out and quality control deciding whether they worked reliably enough to be used, or whether to continue researching the problems. (Cf. DREI(c) in realist philosopher Roy Bhaskar’s “Dialectic”).

  11. Dave Raithel
    November 15, 2012 at 1:52 pm

    I have been taking note of other’s comments, but deferring to those who still do this kind of thing for a living, or more regularly. One thing jumps out above re Locke and the commons – and perhaps this is what davetaylor1 was pointing at – the qualification on taking from the commons was restricted to – and I think this is the language – “so long as enough, and as good, remains for others.” It is a crucial point we anti-Nozicks would rhetorically enforce against his project (ironically, leaving Marxist like me to to defend Rawls….) It’s the “dialectic”, if you will, of negative and affirmative “natural” rights…

    Did anybody look at the paper Edward Fullbrook referenced a while back, soon after this post – http://rwer.wordpress.com/2012/11/08/adam-smith-f-zamans-rwer-paper-and-the-99-movement/ – the Zaman paper? I confess, it did not do much for me, and Mr. Fullbrook was effusive about it, which I guess underscores I am better off doing other things….

    • November 15, 2012 at 4:47 pm

      Thanks for the anti-Nozicks lead, Dave.

      At http://en.wikipedia.org/wiki/Robert_Nozick, his “typical notion of a ‘free system’ would allow adults to voluntarily enter into non-coercive slave contracts” seems to me contradictory. (It stems of course from Hobbes’s doctrine of the social contract: the argument that voluntary slavery is better than a life “nasty, brutish and short”). Marx’s communal state (or for that matter Fabian socialists and Papal monarchists) never really escaped Leviathon.

      A contract [in the legal sense at least] IS coercive; it is commitment which is not. Christianity is all about the way to freedom from enforced [wage]slavery being voluntary mutual service.

      • Dave Raithel
        November 16, 2012 at 2:09 pm

        I guess that depends on one’s flavor of Christianity; similarly, the Leviathon we may never escape can be distinguished on the extremes. I qualify that I’m just a small “m” marxist, and a possible lesson of the failures of Bolshevism and whatever it is the Chinese Maoists have become is: “d” democracy is a necessary, though not a sufficient, condition for leaving the state of nature not to enter a corral.

      • November 16, 2012 at 11:30 pm

        Dave, I appreciate the restraint of your reply. I was actually knocking a legalistic statement by Nozick, and not Marx but too few people controlling too many others and turning into Orwellian pigs.

        We seem to agree on “small d” democracy, but the word is ambiguous. Early Christian practice was bottom up (local) and the Leviathon model top down (i.e. centralised, so even Christian empire-builders and failures can distance themselves from the discipline of having to live with those who suffer from their mistakes). I say “can”, for it seems to depend on the personality and experience of the leader. Quite apart from the merits of Christianity and Marxism, the papacy provides an interesting series of well-documented case studies with, most notably, Good Pope John calling the world to counsel him, and John Paul II travelling the world trying to counsel it. These are of course on-going strategies; if games have an end perhaps here it has been about succession?

      • Dave Raithel
        November 17, 2012 at 3:23 pm

        “..the Church, diverges radically from the programme of collectivism as proclaimed by Marxism and put into practice in various countries in the decades following the time of Leo XIII’s Encyclical. At the same time it differs from the programme of capitalism practised by liberalism and by the political systems inspired by it. In the latter case, the difference consists in the way the right to ownership or property is understood. Christian tradition has never upheld this right as absolute and untouchable. On the contrary, it has always understood this right within the broader context of the right common to all to use the goods of the whole of creation: the right to private property is subordinated to the right to common use, to the fact that goods are meant for everyone.”….. One could wind up with worser assumptions to begin making the world, though the devil, or lack there-of, would be in the details….

  12. November 17, 2012 at 4:10 pm

    Good quote, Dave; thanks. “The Church …”, as against conservative-minded Christians to whom, so to speak, the devil presents the Church’s Extended Family tradition they wish to conserve as that of the Tribal, Imperial, Capitalist or Marxist tradition they happen to be familiar with.

  13. November 18, 2012 at 2:36 am

    :D WOW! Surprize, surprize – economics may still have some life left in it after all, at least here. Great thread folks (and some great submissions posted for the upcoming journal of “Economic Thought”) . Bruce W: I really appreciate your incisive contributions on a great original post, but no need to entirely imagine “what’s left out” of an essentially sane (humane) and fundamentally ethical economics (nondismal/deplorable/retarded). My “new” equations abstracting the simple ethical logic of humane economics are still up at the “Awareness & Values” page on > mm-greenbook. blogspot. com < Dave T: Lots of great stuff on humane reality and useful/positive thought, but the stuff about the power of information theory and engineering cybernetics still not leaves me cold, but concerns me. Why? Although your narrative description of the tragedies (etc.) of the Commons and commoners seems valid and viable enough, there seems to be an underlying assumption that engineering (even guided by great fables of systems theory & the best design science, both of which i love as much as possible) can or could "do the trick" IF ONLY WE COULD GET THE BIG WINNERS AND ALL THEIR WANNA-BE COPY-CATS TO COOPERATE AS RATIONAL AGENTS. The "as is" view I See still seems determined more by Twainian social theory (viz inherent cussedness and ecocidally selfish arrogance), at least at the level of the most critical decision makers. Those 1%ers seem obviously stuck in severe arrested development, along with their 20%er minions, reminiscent of the RAND Corp. geeks who first tried running the Nashian PD on their secretaries & other female co-workers. It didn't work, but instead of questioning the PD or their own Nashian paranoiac psychosis, they all decided that the women were unsuitable experimental subjects. For a great summation of the whole MAD cold-war strategy of social control, see the Wikipedia synopsis of the Adam Curtis BBC documentary series "The Trap: what happened to our dream of Freedom" or better yet watch the series (via Youtube, but brace yourself, maybe with a few stiff drinks or what have you). The current Pope did an amazing job of synopsizing, diagnosing, and prognosticating the whole dilemma back in 1985 (?, while still Cardinal Ratzinger) in his address on "Church and the Economy" which is included in my "Greenbook: A Sustainability Solutions Resource" (at the blogsite listed above). However, it seems odd that in this fecund thread, no one had yet mentioned the fine work and accurate insights of either EF Schumacher or Manfred Max-Neef (re: Barefoot Economics and Economics Unmasked) and, less so, in Col. M Khadafi's unfortunately titled "Green Book." Hopefully the lack is due to tight focus rather than cowardly dread of punishment by the elite of N-CE or the corporate Demonocracy that finished Khadafi's no doubt annoying career and his vain attempts at rational analysis and next-gen governance (not that I admire MK or agree with his assessment, theories, recommendations, strategies or tactics). Bon Voyage Amigos!

    • Bruce E. Woych
      November 18, 2012 at 5:24 pm

      @ Michael Monterey: It is encouraging to have interactive discussions that are intelligently open and sincere (as we are experiencing here with this blog site). I do agree that it is the best location presently and has not been invaded by rhetorical talking points, group think or outright trolling elements that short circuit emergent. What is missing is the obvious methodical evaluation of the tactics and technical patterns of deceit and distortions that have become so prevalent in (…it is this way because we say so…) “mainstream” consensus thought under economics headings. (One of the great academic experiences I had was under a Greek Economist at a Community college in NYC back in the late 60s. He was full of fire and fury about what was happening each day and his economic insights were powerful results of well placed ordinates from economic methods; co-ordinated with historically informed realism and empirical measures of practical assessment. If I had met 2 Economists of this type…I may well have chosen that field. Instead i went into Anthropology where money…was not a “distraction” and attempted to bundle my learning into a personal unified field (methodology) and became a great cynic of any formalistic “theroy” based “schools” of thought). I mention this because I do believe that this blog attracts similar individuals from distinctive “orientations” (disciplines…ordinates) who are seeking the same base of operations as my original Greek scholar and mentor in economic potentials.

      Thank you for the material references. As an add-on followup for readers I am posting the link for a summary review of “The Trap” BBC series here:

      http://en.wikipedia.org/wiki/The_Trap_%28television_documentary_series%29

      For all those who follow the American traditional holiday:
      …A very heart felt Happy Thanksgiving!

      We do have a great deal to be grateful for; and a great deal to protect for the upcoming generations…that they too will have their Greek enlightenment from our humble collaborations such as these!

    • November 19, 2012 at 12:48 pm

      “Dave T: Lots of great stuff on humane reality and useful/positive thought, but the stuff about the power of information theory and engineering cybernetics still not leaves me cold, but concerns me. Why? Although your narrative description of the tragedies (etc.) of the Commons and commoners seems valid and viable enough, there seems to be an underlying assumption that engineering (even guided by great fables of systems theory & the best design science, both of which I love as much as possible) can or could “do the trick” IF ONLY WE COULD GET THE BIG WINNERS AND ALL THEIR WANNA-BE COPY-CATS TO COOPERATE AS RATIONAL AGENTS. … However, it seems odd that in this fecund thread, no one had yet mentioned the fine work and accurate insights of either EF Schumacher or …”.

      Hi Michael, good to see you chipping in again, and thanks for the appreciation. We are discussing game theory, so I too am concerned about “the power of information theory and engineering cybernetics”: it can be used for evil as well as good. My underlying assumption is however that IT IS THE TRUTH WHICH SETS US FREE, and ignorance, naivety, misunderstanding, being misled and failure to grow up beyond the phase of captivation by our own beauty are innocent reasons we remain enslaved by today’s politicised economics. But since Israel’s leaders and financiers are still playing their ultimately suicidal power game, as they were 2000 years ago, let us not forget the not-so-innocent reason of self-seeking REJECTION of the truth. This is a dangerous game, so the safest strategy is not to play it, and in any case not to put all our eggs in one basket.

      The fact is, cybernetic engineering is being consciously used to direct guided missiles with even nuclear war-heads. Conceptualised as Adam Smith’s “invisible hand” it was and is again being used unconsciously by Ricardians to direct money from the 99% to the 1%, while Keynes used it intuitively to enable government to redirect it back again. My work in the management of an organisation and its many projects used it consciously, and insofar as we understand what it is. In the engineering language of cybernetics or in the ancient Catholic language of “reconciliation” via “confession, forgiveness and a firm purpose of amendment”, it explains how we can sufficiently and more efficiently understand and control local communities and our own diverse interests by investing a bit of “surplus” theoretical know-how in the elimination of our own errors, rather than outdatedly wasting lots of physical power and resources trying to farm people with complementary forms of intelligence by dividing them up and reducing them to animals ignorant of what is being done to them. But given four types of information – aims and three types of feedback – which represents the aim and which the feedbacks? Is the aim to be about me or mankind? about my farming other people or mankind being taught to be grateful for the small mercies we show each other so we learn to notice the “differences which make a difference”? (That being Bateson’s label for the informative).

      If haven’t mentioned E F Schumacher that is not because I under-rate him, for I come from the same stable: ultimately Chestertonian. It is because I see life visually, which is like looking at a jigsaw only partly completed. When I try to express in words what I am seeing, it is difficult to convey my sense of the whole picture while focussing on the bit of it relevant to the discussion. The word “sufficiently” in my previous paragraph was, however, a reference to Schumacher – though not to “Small is Beautiful” so much as the “adequatio” in his “Guide for the Perplexed”, which echoes Keynes in his “Treatise on Probability” and Shannon in his “Mathematical Theory of Communication”.

      I don’t see anyone convincing the incorrigible, but I do believe some of their trusted servants might be brought to experience the “gestalt” of seeing evolution differentiating real men from imaginary supermen, and interest their masters sufficiently for them to look for it themselves. Despite its historical flip side, you might say I’m hoping for “the conversion of Constantine”: a result not of persuasion but of St Helen praying for her cruel son.

  14. November 18, 2012 at 2:41 am

    Woops! Sorry about typos & lacunae, re: “(non-disma/non-deplorable/non-retarded) [economics]” and [an engineered approach] “…not ONLY leaves me cold…”

  15. December 17, 2012 at 11:00 pm

    Other than a solid topic for a debate club event where the focus goes no where and the participant are scored on arguementive points, Game Theory is irrelevant!

    • December 18, 2012 at 8:48 am

      Danny, looking again at the context of this I’m surprised to see how much I figured in it, if pursuing truth rather than Game Theory! I don’t agree with you, though. Untruth can be all too relevant when those pulling the world’s financial strings are playing games with it.

    • Bruce E. Woych
      December 18, 2012 at 7:34 pm

      @Danny L. McDaniel: chipping away at the wood can result in a work of art or kindling; but either way it is part of the process of bringing emergent understanding into play. Some generalizations about “realism” these days are presumptious and game theories as absolute determination is certainly one of them…and perhaps part of the bigger “confidence gaming” of consensus. But like chess playing, those who study all the possible moves are certainly at an advantage (…unless by chance a telepathic genius…gets into the mix: which actually is a physiological possibility…although THAT is another tangent). In a word, I would say it is not possible to call game theory “irrelevant” or to presume that these “arguments” go nowhere since dispute and dissent lead to discovery and emergent foundation. Critical thinking is classically a correction process that may well parallel game theory more than dialectics itself. The paradoxical object of complexity is to simplify, and that process and conundrum is a hard nut to crack!

      You might consider:

      http://en.wikipedia.org/wiki/Ludic_fallacy

      The ludic fallacy is a term coined by Nassim Nicholas Taleb in his 2007 book The Black Swan. “Ludic” is from the Latin ludus, meaning “play, game, sport, pastime.”[1] It is summarized as “the misuse of games to model real-life situations.”[2] Taleb explains the fallacy as “basing studies of chance on the narrow world of games and dice.”[3]

  16. BC
    December 19, 2012 at 12:38 am

    “Game Theory”: Game = winners and losers. Theory = a supposition or a system of ideas intended to explain something; ergo, a system of ideas intended to explain how winners beat losers.

    Biological systems are not winner-take-all contests in an infinite space of resources and rewards accruing to the winners at the expense of the losers; rather, there is a symbiotic mutualism between predators and prey in which the population and resource consumption of both are checked by the limit bounds of various niches and larger systems.

    Economists have constructed an unrealistic model of the thermodynamically/exergetically bounded finite planetary system as sub-set of “the economy”, when the precise converse is the intuitive and demonstrative reality.

    Today, we increasingly face a system in which the top 0.1-1% rentier parasitic caste is draining the resources, labor product, capital returns, and gov’t receipts (social capital) of the bottom 90-99% and thus bleeding the host dry of its vital productive capacity for the majority to subsist at a desirable standard of material consumption and well-being.

    If one of the first premises of economics is the erroneous claim that the ecological system is a sub-set of “the economy”, it follows that all other assumptions, models, and intellectual rationalizations for the current system are faulty and thus in need of radical reformulation or else become irrelevant.

  17. April 5, 2013 at 10:59 am

    my view is game theory is as useful as any other set of ‘ideas’ or ‘formalisms’. But, what use or applicability or utility is ‘heterodox economics’, the theory of evolution, ecologhical theory, or cosmology. Many of those fields have large parts which really have no application at present. They are merely an extrapolation of ideas, or formalisms, used to describe some phenomena, and have some uses (eg theories of speciation, mutation rates and origin of human differences, niche packing and extinction probabilities in ecology, origin and evolution of the universe, etc.) In social sciences, like economics, again one is translating ideas or metaphors into a formalism. All of these are idealizations, but so is presentation of ideas in prose.

    Mathematically, game theory in ecology and evolution is essentially formally equivalent to earlier models using differential equations—except typically the game theory versions are discrete, as opposed to continuous models (which use calculus). (Basically the difference between using linear algebra versus calculus, or a discrete computer model versus the continuous equations version). There are many examples of this equivalence in the lit(t)erature — look it up.

    Just look up ‘game theory’ on wikipedia and ‘applications’—eg J M Smith on biology. Those models maY not be right, but noone knows what is right, and they probably have some ‘truth’. Some interesting ideas in ‘mechanism design’ and voting procedures also emerge from this field, though most are too complex at present to be used by most people (who prefer ‘majority rules’ or ‘push your way to the front of the line’ for example.)

    I thik it is true that for the last 10 years or so game theory has gotten more an more divorced from analyzing real worled situations and ijnstead become more concerned with puzzles generated within its own universe (eg a recent PD paper by Freeman Dyson (physics) in PNAS). This reminds of a paper I saw in an anthropology journal, arguing one could do ethnographic studies in the anthropology department (they called it ‘corridor talk’) saving the dfifficulty of having to go to Borneo or the Amazon for example—just go the bar or starbucks or faculty lounge instead, and you can become the next Margaret Mead—and fully funded by the NSF.

    Whether we need any ideas or formalizations at all is an open question, just as whether Newton or Darwin or Einstein did something useful and applicable or cursed us with superflous homework. But the same goes for economics of all varieties.

    I do think alot of anti-formalization and anti-mathematical biases really are just forms of bias (partly stemming from religion, which holds all we need to know is some holy text, not differential equations) and laziness. Of course, the same people who assert this also think the ‘internet’ and technology is their right to use and don’t connnect its existance to formalization. Rush Limbaugh has no use for science or formal rigor either—you can make millions just talking spouting off.

    .

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