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Monday, May 23, 2022

Game Theory, Behavioral Econ, and a Middle Ground? New Book by Hoffman and Yoeli

Many of us in the law and policy fields care about how game theory, and our behavioral inconsistencies that work around its rational predictions, shape our contractual and regulatory market relations. I am excited about this new book which I just got in the mail and started reading and enjoying. Here is the description from the jacket:

Two  MIT economists  show  how  game theory—the ultimate theory of rationality—explains irrational behavior.    

We like to think of ourselves as rational. This idea is the foundation for classical economic analysis of human behavior, including the awesome achievements of game theory. But as behavioral economics shows, most behavior doesn’t seem rational at all—which, unfortunately, casts doubt on game theory’s real-world credibility.  

In Hidden Games, Moshe Hoffman and Erez Yoeli find a surprising middle ground between the hyperrationality of classical economics and the hyper-irrationality of behavioral economics. They call it hidden games. Reviving game theory, Hoffman and Yoeli use it to explain our most puzzling behavior, from the mechanics of Stockholm syndrome and internalized misogyny to why we help strangers and have a sense of fairness.  

Fun and powerfully insightful, Hidden Games is an eye-opening argument for using game theory to explain all the irrational things we think, feel, and do.

 

Hidden Games: The Surprising Power of Game Theory to Explain Irrational Human Behavior

Posted by Orly Lobel on May 23, 2022 at 05:03 PM | Permalink

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