Tuesday, August 4, 2009

Everybody Hates Game Theory

I wrote in April about the Prisoners Dilemma as the template for situations in which Government regulation is appropriate. I have been putting that idea forward for some time in various fora, and it has almost always been greeted with hostility. Not disagreement – although, of course, that, too – but outright hostility. Something there is that does not love game theory.

I’m engaged in another round here. Note how testy some people get. I get accusations of intentional obtuseness, claims that I’m arguing red herrings, and, in general, a flurry of desperate evasions from some very intelligent people who would would see through the same level of logic if it were aimed at them. People just don’t like the thing. And that’s interesting.

I think the problem is that game theory has no agenda. You cannot trust it to support you, and it takes the fun out of being right when it does support you. Where game analysis of a situation suggests that coordination of action would benefit all involved, the result is a prescription for government intervention. But the prescription comes without the feel-good element of sacrifice. To raise the minimum wage because “no one should have to live like that” makes liberals feel all warm and fuzzy, but the emotional pay-off is diminished if, as game theory teaches, the businesses paying the inadequate wages had no rational alternative, and so weren’t villains after all. Even worse, the change will actually increase everybody’s wealth, including the idea’s supporters. Where’s the fun in that? Consequently, liberals tend not to like what game theory has to say.

Conservatives, especially libertarians, don’t like game theory because, where it supports intervention, it impinges on their autonomy. I like autonomy. I like to decide for myself what risks to take, where to shop, how much to pay, etc. So I’m suspicious of nostrums that restrict my action, and when you tell me that it’s in my interest because John Whackjob Nash says it is, well, that’s not likely to change my mind. The whole thing reeks of ivory tower mad science. So what amounts essentially to an immune response to the unknown includes not just resistance, but ad hominem attack. Conservatives do not so much refute game theory arguments as reject them as inconvenient. I think the response is perfectly natural, but it is unhelpful. And fascinating.

I’m not sure why I’m so comfortable with game theory as a tool of policy analysis. Maybe I like the idea that it ignores my prejudices rather than feeds them. Also, I’m not wedded to the outcome of the exercise as determinative of my policy position. Almost all “good” things are only contingently good. Thrift is good unless it destroys consumption. Efficiency if good unless it puts people out of work or shortcuts full exploration of options. That’s a big one: the fastest way to find a qualified person to do something is to limit the pool arbitrarily to the smallest number likely to contain a qualified applicant. You don’t get the "best" person, but you get an adequate person, where, as is often the case, the marginal cost of getting the best person is far greater than the maginal value of the improvement. Nevertheless, that sort of efficiency is unfair, and that matters, no matter what game theory says. Not being overly committed to what game theory suggests, I’m not worried that it will unthinkingly take me where I don’t want to go.

On the other hand, as a philosopher friend once remarked, self-descriptions are not privileged, i.e. I may have no clue as to why I find game theory so hospitable and others don’t. But I do know that I do, and that they don’t, and that it shows.

1 comment:

  1. Larry- Much clearer with these revisions. Very interesting points but my lack of full understanding of game theory makes it difficult for a more in depth comment


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