Home > Uncategorized > Game theory — a severe case of ‘as if’ Model Platonism

Game theory — a severe case of ‘as if’ Model Platonism

from Lars Syll

peanutsplatonismThe critic may respond that the game theorist’s victory in the debate is at best Pyrrhic, since it is bought at the cost of reducing the propositions of game theory to the status of ‘mere’ tautologies. But such an accusation disturbs the game theorist not in the least. There is nothing a game theorist would like better than for his propositions to be entitled to the status of tautologies, just like proper mathematical theorems.

Ken Binmore

When applying deductivist thinking to economics, game theorists like Ken Binmore set up ‘as if’ models based on a set of tight axiomatic assumptions from which consistent and precise inferences are made. The beauty of this procedure is, of course, that if the axiomatic premises are true, the conclusions necessarily follow. The snag is that if the models are to be real-world relevant, we also have to argue that their precision and rigour still holds when they are applied to real-world situations. They often do not. When addressing real-world systems, the idealizations and abstractions necessary for the deductivist machinery to work simply do not hold. 

If the real world is fuzzy, vague and indeterminate, then why should our models build upon a desire to describe it as precise and predictable? The logic of idealization is a marvellous tool in mathematics and axiomatic-deductivist systems, but a poor guide for action in real-world systems, in which concepts and entities are without clear boundaries and continually interact and overlap.

Clearly, it is possible to interpret the ‘presuppositions’ of a theoretical system … not as hypotheses, but simply as limitations to the area of application of the system in question. Since a relationship to reality is usually ensured by the language used in economic statements, in this case the impression is generated that a content-laden statement about reality is being made, although the system is fully immunized and thus without content. In my view that is often a source of self-deception in pure economic thought …

200px-Hans_Albert_2005-2A further possibility for immunizing theories consists in simply leaving open the area of application of the constructed model so that it is impossible to refute it with counter examples. This of course is usually done without a complete knowledge of the fatal consequences of such methodological strategies for the usefulness of the theoretical conception in question, but with the view that this is a characteristic of especially highly developed economic procedures: the thinking in models, which, however, among those theoreticians who cultivate neoclassical thought, in essence amounts to a new form of Platonism.

Hans Albert

Seen from a deductive-nomological perspective, typical economic models (M) usually consist of a theory (T) — a set of more or less general (typically universal) law-like hypotheses (H) — and a set of (typically spatio-temporal) auxiliary assumptions (A). The auxiliary assumptions give ‘boundary’ descriptions such that it is possible to deduce logically (meeting the standard of validity) a conclusion (explanandum) from the premises T & A. Using this kind of model game theorists are (portrayed as) trying to explain (predict) facts by subsuming them under T, given A.

An obvious problem with the formal-logical requirements of what counts as H is the often severely restricted reach of the ‘law.’ In the worst case, it may not be applicable to any real, empirical, relevant, situation at all. And if A is not true, then M does not really explain (although it may predict) at all. Deductive arguments should be sound – valid and with true premises – so that we are assured of having true conclusions. Constructing game theoretical models assuming ‘common knowledge’ and ‘rational expectations,’ says nothing of situations where knowledge is ‘non-common’ and  expectations are ‘non-rational.’

Building theories and models that are ‘true’ in their own very limited ‘idealized’ domain is of limited value if we cannot supply bridges to the real world. ‘Laws’ that only apply in specific ‘idealized’ circumstances —  in ‘nomological machines’ — are not the stuff that real science is built of.

When confronted with the massive empirical refutations of almost all models they have set up, many game theorists react by saying that these refutations only hit A (the Lakatosian ‘protective belt’), and that by ‘successive approximations’ it is possible to make the models more readily testable and predictably accurate. Even if T & A1 do not have much of empirical content, if by successive approximation we reach, say, T & A25, we are to believe that we can finally reach robust and true predictions and explanations.

Hans Albert’s ‘Model Platonism’ critique shows that there is a strong tendency for modellers to use the method of successive approximations as a kind of ‘immunization,’ taking for granted that there can never be any faults with the theory. Explanatory and predictive failures hinge solely on the auxiliary assumptions. That the kind of theories and models used by game theorists should all be held non-defeasibly corroborated, seems, however — to say the least — rather unwarranted.

Retreating — as Ken Binmore and other game theorists —  into looking upon their models and theories as some kind of ‘conceptual exploration,’ and give up any hopes whatsoever of relating theories and models to the real world is pure defeatism. Instead of trying to bridge the gap between models and the world, they simply decide to look the other way.

To me, this kind of scientific defeatism is equivalent to surrendering our search for understanding and explaining the world we live in. It cannot be enough to prove or deduce things in a model world. If theories and models do not directly or indirectly tell us anything about the world we live in – then why should we waste any of our precious time on them?

  1. Helge Nome
    March 25, 2018 at 4:41 am

    Game theory in the realm of economics is simply an ideology used to give economists an illusion of “knowing”. Just like Marxism is a mind trap for the economic underdogs. Both groups gain a sense of satisfaction from “knowing” how the world works.

    Escaping into, and living in, ideologies is a popular way of avoiding having to deal with reality.
    It is a characteristic of a lazy mind.

    • March 25, 2018 at 1:01 pm

      But, Helge, what’s to prevent ideologists from rebuilding the world’s economics and other institutions to fit their pre-existing ideology? Neoliberals and neoclassicals have been accused on this very site of doing precisely this. And thereby creating an “unreal” world. But the world is not “unreal” if it’s consistent with dominant ideologies, which largely create the arrangements of the world. Capitalism and science did it. And before capitalism and science, there was feudalism, Catholicism, and the Roman Empire. The important issues are then, how do ideologies become dominant, how do ideologies fail, and what does this mean for the everyday life of people living within or opposing ideologies. Economists give no time to such study. That’s left for historians and a few social scientists.

      • Robert Locke
        March 25, 2018 at 4:10 pm

        Power politics turns ideology into unjust reality.

      • March 26, 2018 at 8:55 am

        Robert, historically, both power and justice have had many manifestations. Each arising as part of a community. So, power and how it’s worked out favoring or attacking justice varies by community. And in most instances, it’s not either all injustice or all justice. But rather some combination. Even Nazism promoted justice in some situations. Even Catholicism prompts injustice in some situations.

      • Helge Nome
        March 25, 2018 at 5:19 pm

        I see ideology as a vehicle for serving the interests of power hungry minority groups. As an ideology becomes dominant in the minds of people a small group of individuals invariably get their hands on the levers of power and exercise that power for their own ends while paying lip service to the ideology.

        What can be confusing sometimes is that the group involved is not necessarily comprised of the front line politicians, who in the west are replaced on a regular basis as the public gets sick of them. (Hillary Clinton being a good example).
        Here in Canada we now have Pretty Boy Trudeau who replaced the marginalized Stephen Harper while the power brokers in the background remain the same.

        In Russia and China the situation is marginally different where strong men tend to entrench themselves but serve a select elite who keeps them in power.

        In the economics profession, those who are the administrators of the prevailing theory (that serves the vested interests) become the fat cats in the profession while those that oppose their theories are marginalized.

        Actually, the common denominator is tribalism on a grand scale.

      • March 26, 2018 at 8:58 am

        An ideology is a to some extent internally consistent style or content of thinking and action of a community of other group. Ideologies include integrated assertions, theories, and objectives that constitute a sociopolitical program. Some have origins in religious or cultural minorities. Such as the Christian evangelical ideology now vying for control in the US. Others arise in academic or other formal settings. Such as neoclassicalism arising from academic economic theories. While others are solely seeking control of a nation or society. Such as the current Republican Party of the US. So, Helge you are correct that sometimes the issue is just control via naked power (usually not military). And sometimes the assertion of an ideology does create oligarchical control. But these are empirical questions to be answered via on the ground research. For example, in the case of China and Russia, both nations have long histories of totalitarian rule that excludes and even persecutes democracy. An empirical question that needs to be addressed by economists supposedly objecting to dominant economic theories is what historically have been the results of these theories on societies and their members?

      • robert locke
        March 26, 2018 at 12:27 pm

        Ken,I didn’t say it was all just or injustice. You did. A famous French writer made the distinction between politique and mystique, when people discuss. One discusses the politique of the opponents position, while discussing the mystique of his own. I find it a useful distinction when looking at what is just or injust.

      • March 26, 2018 at 1:30 pm

        You said, “Power politics turns ideology into unjust reality.” My reply – sometimes but not always.

    • Craig
      March 30, 2018 at 6:08 pm

      Helge is right an ideology is an escape INTO one’s own mind. Not looking out from one’s own perspective is an escape from temporal reality, and on both an epistemological scale of knowledge and a scale of scientific integrity it is at the bottom of such scale. Looking out at the temporal universe is second from the top of those scales and knowing is the pinnacle of both. The difference between the two knowings is the scientific one is actually incomplete because it’s only knowing the temporal universe while an epistemological knowing is the integration of seeing/knowing BOTH the temporal reality and one’s own self awareness AT THE SAME TIME. In other words it’s an entirely and completely integrative moment and reality.

      The real problem with macro-economics is that it looks for an abstract answer when the best an abstract answer can give one is an incomplete one. Economists need to look directly at the day to day and moment to moment realities of commerce instead of abstractly and/or mathematically thinking ABOUT it. If they did they would be able to see the fact that the point of retail sale is the terminal end of the legitimate economic process because it is where production becomes consumption, and not coincidentally where all costs for every item and service are terminally summed. These insights and a couple of others regarding such point in the economy are what are referred to as stable datums in the midst of the flux and complexity of the rest of the economy. A stable datum if applied to an economic problem can dispel such flux and complexity and become the basis for powerful and effective policy. I suggest economists reflect upon these facts.

  2. Edward Ross
    March 26, 2018 at 12:06 pm

    I really support the above discussion on ideology because from my observation in the real world ideology is the defence shield of the mainstream neoliberal economists Thus logically that defence system cannot be dismissed or altered until it is fully understood how the ideology is constructed and maintained. Here I add :

    “The real problem with neo classical theory is not it’s “lack of realism but the ideology “( a word Lawson never uses)that it smuggles in and carries with it— [then on social structures]But social structures are implied and it is a pity that Lawson never mentions them , as they are the real Archilles heel of neoclassical economics. [Then on ideology referring to what he regards as useless discussion] the question is again how such intelligent people can propose , and endlessly study-such stupid models? I only see one reason for that ideology (intuitive beliefs which render them blind)” Bernard Gurrien PAE vol 29 P13

    Firstly at the time Guerrien was writing Lawson may not have had much about ideology but I seem to remember him raising the subject a number of times since. Thus the way i see it is if as Gurrien had been listened it is possible that 14 years of theroetical postulatig has wasted a lot of time. However in my opinion those who have now begun the much needed conversation on ideology. Ted

    • March 26, 2018 at 1:32 pm

      Several posts on this blog asserted that to displace neoclassical economic theory, a better theory is needed. Edward, it’s my view to win this struggle neoclassical ideology needs to be replaced by another ideology. Preferably one that is consistent with human biological evolution and cultural adaptation. Seems unlikely, however since economists seem as knowledgeable about these topics as Eskimos about sand. And demonstrate no desire to improve their knowledge.

      • Edward Ross
        March 30, 2018 at 8:23 am

        to Ken Zimmerman March 26, 2018 at 1;32 pm
        While I sometimes may disagree with you I totally support your above bog because while economists refuse include other disciplines they will continue to make false assumptions about people. I also appreceiate Helge Nome’s important comments.Ted

      • March 31, 2018 at 6:01 am

        Edward, this problem of poor education is found in most every part of society today. Increasingly people are educated for a job or for an industry, rather than to make decisions and take actions in day-to-day life in cooperation with other people facing uncertain results. And increasingly people are denied the education appropriate for this life; for human life.

  3. Helge Nome
    March 26, 2018 at 4:42 pm

    There is a strong connection between ideology, belief and rationalization. And it is a “multiway” relationship: Beliefs give rise to ideology and visa versa. An existing state of affairs is rationalized into belief and ideology.
    The net result is the creation of a hard core mindset, resistant to change and maintained for the mental comfort of the individual and group. A sense of belonging to a group with the same mindset is very important to most people. (“progressive” vs “conservative” for example)

    • March 27, 2018 at 4:18 am

      Helge, people create ideologies to protect something, or achieve something, or to win something. Ideologues are not neutral. So, they can become resistant to and even attack change. And sometimes demonize the “others” who oppose the ideology. But this doesn’t mean all ideologies are destructive or menacing. Science is an ideology. On balance, it’s been a benefit for society more often than an injury. Science has high walls and rigorous requirements for membership, along with severe penalties for the members who violate the rules. Similar comments can be made about other ideologies, such as Christianity, capitalism, and Fascism. The big job is assessing the ideologies in terms of their impacts on the daily lives and actions of a society, any society.

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