Our last talk yesterday was from Nobel Prize winning economist Vernon Smith, the founder of experimental economics. The link is to a very interesting piece in Scientific American on a variation of the famous Prisoner’s Dilemma game.
Money quote:
If I were to play this game, I would say to myself: “Forget game-theoretic logic. I will play a large number (perhaps 95), and I know my opponent will play something similar and both of us will ignore the rational argument that the next smaller number would be better than whatever number we choose.� What is interesting is that this rejection of formal rationality and logic has a kind of meta-rationality attached to it. If both players follow this meta-rational course, both will do well. The idea of behavior generated by rationally rejecting rational behavior is a hard one to formalize. But in it lies the step that will have to be taken in the future to solve the paradoxes of rationality that plague game theory and are codified in Traveler’s Dilemma.
Jim
Discoverers and Discoveries 