Monday, May 25, 2015

Joshua Gans — Economics in One Lesson: Nash

Indeed, even opportunity cost can be rarely computed without working out the full equilibrium of a path not taken. This is why, if I were to re-write Economics in One Lesson, it is Nash equilibrium that would be the lesson and not opportunity cost.
John Quiggin, are you listening?

Economics in One Lesson: Nash
Joshua Gans | Jeffrey Skoll Chair in Technical Innovation and Entrepreneurship at the Rotman School of Management, University of Toronto
ht Mark Thoma at Economists View


Gnash Equilibrium

Read Barkley Rosser's comment, too. I considered writing my doctoral dissertation on the subject that he comments on at the behest of one of my professors who was interested in working on the ethical prospect of it, but didn't have the time himself. The US strategists were "crazy rational" then, as they had already demonstrated in the Vietnam conflct.

The problem I have with this approach is that games are defined by rules — like <a href="">Calvinball</a>. Fine when the rules are explicit, but in social games they seldom are, or there are parties able to change the rules. Often parties to the "same game" are playing by different rules. So one parties tries to guess with the other party is thinking about the game, assuming "rationality." How? By introspection.


Ramanan said...

Did you see the Econospeak post on Nash on fiscal policy?

I quote Nash's views here:

Tom Hickey said...

I did see both Ramanan. Good stuff. Thanks.

John Quiggin said...

I agree entirely with the Calvinball comment. Flavio Menezes and I have been pushing this point for years, with almost no success. We have a paper called "Games without Rules", which came out in Theory and Decision a while back. It has never been cited, except by us.