Ariel Rubinstein on Game Theory and Behavioral Economics

EconTalk

Library of Economics and Liberty

Ethics, Philosophy, Economics, Books, Science, Business, Courses, Social Sciences, Society & Culture, Interviews, Education, History

4.7 • 4.3K Ratings

🗓️ 25 April 2011

⏱️ 61 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Ariel Rubinstein of Tel Aviv University and New York University talks with EconTalk host Russ Roberts about the state of game theory and behavioral economics, two of the most influential areas of economics in recent years. Drawing on his Afterword for the 60th anniversary edition of Von Neumann and Morgenstern's Theory of Games and Economic Behavior, Rubinstein argues that game theory's successes have been quite limited. Rubinstein, himself a game theorist, argues that game theory is unable to yield testable predictions or solutions to public policy problems. He argues that game theorists have a natural incentive to exaggerate its usefulness. In the area of behavioral economics, Rubinstein argues that the experimental results (which often draw on game theory) are too often done in ways that are not rigorous. The conversation concludes with a plea for honesty about what economics can and cannot do.

Transcript

Click on a timestamp to play from that location

0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	other information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you. Today is April 21st and my guest is Ariel Rubenstein of Tel Aviv University
0:43.4	and New York University. Ariel, welcome to Econ Talk. Now you're a game theorist, a very respected
0:51.4	game theorist, and you recently wrote an afterward for the 60th anniversary of a Neumann
0:59.7	and Morgan Stern's classic work on the theory of games. And you wrote it, you said explicitly
1:04.7	from the position of a skeptic. And in that essay, you wrote, I'm going to read an excerpt
1:14.2	from it, which was rather shocking when I came across it. So it's a little long. Bear
1:18.4	with me, those of you out there. And Ariel, when I'm done, you can elaborate and comment. Here's
1:24.5	the quote. So is game theory useful in any way? The popular literature is full of nonsensical
1:30.6	claims to that effect. But within the community of game theorists, there is sharp disagreement
1:35.4	over its meaning and potential usefulness. There are those who believe that the goal of game
1:39.8	theories ultimately to provide a good prediction of behavior in strategic situations, and even
1:44.8	if we are not there yet, you'll get there once we've enriched the models with additional
1:50.1	parameters and come up with better ways of measuring the considerations of real players.
1:54.6	I'm not sure on what this vision is based. Most situations can be analyzed in a number
1:58.6	of ways, which usually yield contradictory predictions. Furthermore, we need also to deal
2:04.2	with the fundamental difficulty of predicting behavior in the social sciences, where prediction
2:08.7	itself is part of the game, and forecasters are themselves players. And there are those
2:13.8	who believe in the power of game theory to improve performance in real-life strategic interactions.
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Library of Economics and Liberty, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Library of Economics and Liberty and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.