Wednesday, April 02, 2014

Ariel Rubinstein on Game Theory

Interview with Rubinstein on game theory

1.The choice of the name “theory of games” was brilliant as a marketing device.


2.They can apply it (game theory) to situations that are very complicated, like the economic crisis or nuclear deterrence. But this is an illusion.


3.Game theory is about a collection of fables. 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.


4.That (game theory) has advantages and disadvantages. The advantages are that the formal language allows us to be more precise, it allows us to get rid of associations that are not relevant and it allows us to better examine some arguments. The disadvantage of formal language is the level of abstraction, which has two main downsides. First of all, it makes the theory very far away from one minus epsilon of the population. Secondly, abstraction has the negative side that once you abstract things, you miss a lot of the information and most of the details, which in real life are very relevant.


5.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.


6.There is a need for a book that counters the natural tendency of people to find in game theory solutions to problems that in my opinion game theory doesn’t say anything about.


Rubinstein, Ariel, Dilemmas of an Economic Theorist, July 2006, Econometrica

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