Q: Looking at the flipside, was there ever a situation in which you were pleasantly surprised at what game theory was able to deliver?
A: None. Not only none, but my point would be that categorically game theory cannot do it. Maybe somewhere in a Sherlock Holmes or Agatha Christie story there was a situation where the detective was very clever and he applied some logical trick that somehow caught the criminal, something like that. You know in America there was a programme on CBS, called Numbers, written Numb3rs, with the ‘e’ reversed. Numb3rs wanted to make people curious about mathematics through detective stories. I happened to hear about it because I had done some experimental work with Amos Tversky and Dana Heller, about the game of hide and seek. In one of the episodes they refer to the paper. Of course it was a joke, but the fact that my name was mentioned in such a programme made me very happy. But outside such programmes, I categorically cannot see any case where game theory could be helpful.
That’s from The Browser’s FiveBooks interview with Tel Aviv University’s Ariel Rubinstein, one of the world’s most prominent game theorists.
We used the textbook Rubinstein wrote with Martin Osborne in the second-semester microeconomic theory course I took during the first year of my Ph.D.
I really enjoyed going through the material (especially in contrast with the second half of the course, on general equilibrium theory). Since then, however, I have been struck time and again by the limited applicability of game theory. It’s interesting that one of the world’s leading game theorists is forthcoming about that lack of applicability.
The Mote and the Beam: Context-Dependent Policy Making?
Every paradigm is informed by its contemporary society, even if they seem unrelated. The go-to example of this is Freud’s theories, from which we derive “pent up” and “release” and “drives” and “pressures” – all of which are the language of the turn-of-the century steam industrial world. Whether Freud was right or not isn’t the point– he just sounds wrong because we don’t use steam engines and the brain doesn’t look like an engine anymore.
The point here is that we acknowledge the ideas of prior cultures relied on their context, but we willfully ignore our own immersion in our context. I [The Last Psychiatrist] read this in The Economist:
Note that this isn’t merely a metaphor or analogy to modern computers – it is an earnest but uncritical assumption of an actual similarity.
More here from The Last Psychiatrist.
What I think is particularly interesting here is how different frames of reference (e.g., the steam engine, the computer) not only lead to different ways of describing the same thing, but perhaps to different actions in response to the same problem.
Does one settle upon different policy prescriptions depending on whether one sees the government as a steam engine or as a computer?
I have discussed time and again on this blog (and in public lectures) the difficulty of truly knowing anything in the social sciences, and the usefulness of controlled experiments in chipping away at our ignorance.
But the question I ask above is, I’m afraid, unanswerable. There appears to be such a thing as context-dependent memory (the “improved recall of specific episodes or information when the context present at encoding and retrieval are the same,” or the reason why if you study drunk, you should also take the test drunk), but context-dependent policy making goes beyond that.
Put another way: Would we care so much about social capital, network effects, and spillovers if the Internet had never been invented?
On steam engines and computers, I was reminded of William Gibson and Bruce Stirling’s The Difference Engine, about which Amazon say:
1855: The Industrial Revolution is in full and inexorable swing, powered by steam-driven cybernetic Engines. Charles Babbage perfects his Analytical Engine and the computer age arrives a century ahead of its time. And three extraordinary characters race toward a rendezvous with history—and the future.
The book is thought to have popularized the whole Steampunk aesthetic. I read it in college and didn’t enjoy it half as much as I did Gibson’s Sprawl Trilogy, but your mileage may vary.