Linking Strategic Interaction and Bargaining Theory. The Harsanyi - Schelling Debate on the Axiom of Symmetry

This paper analyses the early contributions of John Harsanyi and Thomas C. Schelling to bargaining theory. In his work, Harsanyi (1956) draws Nash’s solution to two-person cooperative games from the bargaining model proposed by Zeuthen (1930). Whereas Schelling (1960) proposes a multi-faceted theory of conflict that, without dismissing the assumption of rational behaviour, points out some of its paradoxical consequences. Harsanyi and Schelling’s contrasting views on the axiom of symmetry, as postulated by Nash (1950), are then presented. The analysis of this debate illustrates that, although in the early 1960s two different approaches to link strategic interaction and bargaining theory were proposed, only Harsanyi’s insights were fully developed later. Lastly, the causes of this evolution are assessed.bargaining, game theory, symmetry

Analytic Narratives: What they are and how they contribute to historical explanation

The expression "analytic narratives" is used to refer to a range of quite recent studies that lie on the boundaries between history, political science, and economics. These studies purport to explain specific historical events by combining the usual narrative approach of historians with the analytic tools that economists and political scientists draw from formal rational choice theories. Game theory, especially of the extensive form version, is currently prominent among these tools, but there is nothing inevitable about such a technical choice. The chapter explains what analytic narratives are by reviewing the studies of the major book Analytic Narratives (1998), which are concerned with the workings of political institutions broadly speaking, as well as several cases drawn from military and security studies, which form an independent source of the analytic narratives literature. At the same time as it gradually develops a definition of analytic narratives, the chapter investigates how they fulfil one of their main purposes, which is to provide explanations of a better standing than those of traditional history. An important principle that will emerge in the course of the discussion is that narration is called upon not only to provide facts and problems, but also to contribute to the explanation itself. The chapter distinguishes between several expository schemes of analytic narratives according to the way they implement this principle. From all the arguments developed here, it seems clear that the current applications of analytic narratives do not exhaust their potential, and in particular that they deserve the attention of economic historians, if only because they are concerned with microeconomic interactions that are not currently their focus of attention

Three Remarks on “Reflective Equilibrium“

John Rawls’ “reflective equilibrium” ranges amongst the most popular conceptions in contemporary ethics when it comes to the basic methodological question of how to justify and trade off different normative positions and attitudes. Even where Rawls’ specific contractualist account is not adhered to, “reflective equilibrium” is readily adopted as the guiding idea of coherentist approaches, seeking moral justification not in a purely deductive or inductive manner, but in some balancing procedure that will eventually procure a stable adjustment of relevant doctrines and standpoints. However, it appears that the widespread use of this idea has led to some considerable deviations from its meaning within Rawls’ original framework and to a critical loss of conceptual cogency as an ethico-hermeneutical tool. This contribution identifies three kinds of “balancing” constellations that are frequently, but inadequately brought forth under the heading of Rawlsian “reflective equilibrium”: balancing theoretical accounts against intuitive convictions; balancing general principles against particular judgements; balancing opposite ethical conceptions or divergent moral statements, respectively. It is argued that each of these applications departs from Rawls’ original construction of “reflective equilibrium” and also deprives the idea of its reliability in clarifying and weighing moral stances

A simple questionnaire can change everything: Are strategy choices in coordination games stable?

This paper presents results from an experiment designed to study the effect of self reporting risk preferences on strategy choices made in a subsequently played 2x2 coordination game. The main finding is that the act of answering a questionnaire about one's own risk preferences significantly alters strategic behavior. Within a best response correspondence framework, this result can be explained by a change in either risk preferences or beliefs. We find that self reporting risk preferences induces an increase in subjects' risk aversion while keeping their beliefs unchanged. Our findings raise some questions about the stability of strategy choices in coordination games. --coordination game,questionnaire,risk preferences,beliefs,best response correspondence

Human Errors in Decision Making

The aim of this paper was to identify human errors in decision making process. The study was focused on a research question such as: what could be the human error as a potential of decision failure in evaluation of the alternatives in the process of decision making. Two case studies were selected from the literature and analyzed to find the human errors contribute to decision fail. Then the analysis of human errors was linked with mental models in evaluation of alternative step. The results of the study showed that five human errors occur in the evaluation of alternatives step; ignorance or neglect, overconfidence, underestimate, moral and fail to see, which led to un-achievement of objectivesDecision making process, human errors, mental models, decision fail

Explaining higher education progress through risk dominance in an n-person coordination (Stag Hunt) game

In this paper, we use HARSANYI and SELTEN (1988)’s risk dominance concept to explain the growth in the Portuguese higher education system during two time periods: 1998 - 2005 and 2005-2018. During the first time period, the high annual growth rate in tertiary schooling (8.2%) can be accounted for by a n – person, k – coordination Stag Hunt game framework. Hence, the progress in university education can be described as the outcome of a noncooperative game, where youngsters and their families can take decisions without needing to communicate previously. By contrast, during 2005-2018, the former coordination game seems inadequate to rationalize the continued progress in college schooling at an annual rate of 5%, since the wage premium of tertiary education fell drastically (more than 20%) during the same interval. Hence, we switch to an “unanimity” game as framework of analysis. Within such a game, the widespread tertiary enrolment can be accounted for a diminishing “unanimity” requirement, derived from a shrinking demography and the sheer cumulative effect of past spread of college education. We apply here NASH (1950, 1953)’s intuition that the selection of an equilibrium point within an unanimity game is a tool for modelling the outcome of a game, where the players discuss in order to reach an agreement. Hence, we can describe the rise in college education in Portugal in the more recent time period as the outcome of a cooperative process, leading to a wide policy consensus.info:eu-repo/semantics/publishedVersio