On homework 3 there was a question about rational and irrational behavior of players in a game and how they influence each other. This on-line discussion reminded me of this problem and how game theory can be evolved over time to take various factors into account. The discussion can be found at: http://www.marginalrevolution.com/marginalrevolution/2008/01/logic-of-life-.html. The discussion starts from Fabio Rojas’s post. First, he gives a brief introduction to game theory and focused on Chapter Two of Tim Harford’s book, “Las Vegas: The Edge of Reason,” he introduces a broad range of applicability of game theory which ranges from poker, nuclear war, quitting smoking, to life saving. The part where I found the most interesting was about his criticism of game theory. He says although game theory does its best in suggesting the dominant strategy to go with and in predicting other’s behavior, its assumption that people behave rationally in their selection of optimal strategies is a lot to ask for. His example was strategies employed by world class poker players. World class poker players come up with their dominant strategies based on game theory-related analysis, but more based on trial and error. This is where he puts emphasis on an aspect of evolutionary process that game theory is lack of. According to Fabio’s argument, game theory is a fitting first step in understanding complicated interactions, but there should be an evolutionary theory of games that will serve better in predicting players’ behavior in a game. At the end, he adds a link to evolutionary game theory (EGT) for more information.

I also had a similar thought with his when I was first introduced to game theory. It was nice to be able to analyze the given payoffs and figure out which strategy would be the most advantageous. However, would people always implement their dominant strategy? I did not think one can take it guaranteed that one will always see rational behavior. Then, how can game theory be used if it is known that irrational behavior will take place? I had questions but no answers. I found Fablo’s point of taking evolutionary characteristics of human beings into account as an attempt to answer these questions very intriguing. It is true in a long run, human beings tend to show certain pattern in behaving and reacting to a situation. Focusing on the dynamics of strategy change should be able to tell something in predicting players’ behavior when the assumption of rationality does not exist any more. Fablo’s post was a good source in providing a general overview of game theory and especially in suggesting one of possible directions to take in order to improve shortcomings of game theory.