understanding behavioral game theory and sociology

hafsa jahan
understanding behavioral game theory and sociology
 written by
hafsa jahan
 GAME THEORY PROVIDES A THEORETICAL FRAMEWORK
FOR CONCEPTUALIZING SOCIAL INTERACTIONS BETWEEN
RIVAL PLAYERS. PARTICIPANTS IN GAME THEORY CAN
CHOOSE BETWEEN A FEW BASIC GAME-PLAYING OPTIONS.
IN GENERAL, IT IS UP TO EACH PARTICIPANT TO DECIDE
HOW MUCH DANGER THEY ARE WILLING TO ACCEPT AND
HOW FAR THEY ARE WILLING TO GO IN ORDER TO ACHIEVE
THE BEST RESULTS.
 THE GOAL OF GAME THEORY IS TO
ENCOURAGE INDEPENDENT, COMPETITIVE
AGENTS TO MAKE THE BEST DECISIONS
POSSIBLE IN A STRATEGIC CONTEXT.
ACCORDING TO GAME THEORY, EACH
PARTICIPANT'S CHOICES AND ACTIONS HAVE
AN IMPACT ON THE FINAL RESULT. IT IS
CONSIDERED THAT GAME PLAYERS ARE
LOGICAL AND WILL WORK TO INCREASE THEIR
GAINS AND PAYOFFS IN THE GAME.

 THE MAJORITY OF GAMES PLAYED IN GAME THEORY HAVE TWO

PARTICIPANTS. HOWEVER, THERE ARE NO LIMITATIONS BECAUSE
THE NUMBER CAN GO AS HIGH AS IT CAN GO, UP TO AND
INCLUDING INFINITY. THE FACT THAT GAME THEORY, LIKE MANY
ECONOMIC MODELS, COMPRISES A SET OF RIGOROUS
ASSUMPTIONS THAT MUST HOLD IN ORDER FOR THE THEORY TO
PRODUCE ACCURATE PREDICTIONS IN PRACTICE, IS ONE OF THE
MOST CRUCIAL CONSIDERATIONS WE MUST MAKE.

 ALSO, THE MAJORITY OF GAMES FORBID PLAYERS FROM

INTERACTING OR COMMUNICATING WITH ONE ANOTHER.

THE FORECASTS MIGHT ULTIMATELY GIVE US THE ERRONEOUS

RESULTS IF WE DON'T ADHERE TO THESE TIGHT PRESUMPTIONS
IN THE FIRST PLACE. AS A RESULT, THIS WOULD LEAD TO MORE
ANOMALIES AND INCORRECT PREDICTIONS.

MATHEMATICIAN JOHN VON

NEUMANN AND ECONOMIST
OSKAR MORGENSTERN WERE
THE MAIN PIONEERS OF GAME
THEORY IN THE 1940S. IN
ADDITION, WHEN
PARTICIPATING IN THE GAMES,
THE PLAYERS ARE TOTALLY
SENSIBLE. A DECISION-MAKING
PROCESS THAT YIELDS THE
MOST POSSIBLE UTILITY OR,
CONVERSELY, THE HIGHEST
POSSIBLE LEVEL OF BENEFIT IS
REFERRED TO AS RATIONAL
BEHAVIOR.

 A PARTICIPANT WHO ACTS RATIONALLY WEIGHS ALL RELEVANT

INFORMATION, WEIGHS COSTS AND REWARDS, AND TAKES ENOUGH
TIME TO REACH A UTILITY-MAXIMIZING DECISION. USUALLY, WE
CONSIDER IF THE OUTCOME WILL BE TO OUR ADVANTAGE OR NOT
BEFORE MAKING A GIVEN DECISION. FURTHERMORE, WE
FREQUENTLY CHOOSE BASED ON OUR PERCEPTION OF WHAT IS BEST
FOR US AND OCCASIONALLY OTHER PEOPLE, RATHER THAN WHAT
THE SITUATION OR CIRCUMSTANCES DICTATE.

IN ADDITION, IT IS ASSUMED THAT ALL OF THE PLAYERS IN

THE GAME ARE ACTING RATIONALLY AND MAKING AN
EFFORT TO MAXIMIZE THEIR WINNINGS OR PAYOFFS.
ADDITIONALLY, THE PLAYERS ARE FULLY AWARE OF THE
GAME'S GUIDELINES, RESTRICTIONS, AND PENALTIES.
THEY'LL BE ABLE TO CONSIDER THEIR OPTIONS CAREFULLY
BEFORE ACTING, SO THAT IS THE SCENARIO.

 ADDITIONALLY, THEY'LL LOOK FOR

WAYS TO ENSURE THAT IT ONLY
BENEFITS THEMSELVES BECAUSE
THEY'LL WANT TO ACT RATIONALLY.
BUT DEPENDENCY IS A FEATURE THAT
ALL OF THE GAMES HAVE IN COMMON.
IN OTHER WORDS, EACH
PARTICIPANT'S OUTCOME IS BASED ON
THEIR DECISIONS (STRATEGY).

DECISIONS MADE IN A GAME ARE FUNDAMENTALLY DIFFERENT

FROM THOSE MADE IN A NEUTRAL SETTING. CONSIDER THE
DISTINCTION BETWEEN A PLUMBER'S AND A GENERAL'S
DECISIONS TO HELP MAKE THE POINT. IMAGINE THAT ROB, A
PLUMBER, MADE THE DECISION TO PUT IN PLUMBING FITTINGS
AS WELL AS WATER AND GAS PIPES. HE WOULD THEN NEED TO
CHECK AND TEST PLUMBING TOOLS LIKE PRESSURE GAUGES TO
MAKE SURE THEY FUNCTION PROPERLY.

 WHENEVER NECESSARY, HE WOULD ALSO

HAVE TO MAKE ADJUSTMENTS. NOW THAT
THE ENVIRONMENT IS NEUTRAL, ROB DOES
NOT EXPECT THE TILE TO PROTEST WHEN
HE STRIKES IT WITH A CHISEL TO
DISMANTLE IT WITH A BALL PEEN HAMMER.
A GENERAL OF AN ARMY, ON THE OTHER
HAND, WOULD NEED TO MAKE
JUDGMENTS WHILE TAKING INTO
ACCOUNT WHAT THE OPPOSING SIDE
WOULD DO IN A COMBAT.

 A PLAYER MUST BE AWARE OF HIS INTERACTIONS WITH OTHER

THOUGHTFUL AND PURPOSEFUL INDIVIDUALS, JUST LIKE THE
GENERAL. DUE TO THE POTENTIAL FOR EXTERNAL ENFORCEMENT
OF COOPERATIVE BEHAVIOR, WE ALSO NEED TO UNDERSTAND
THAT COOPERATIVE GAMES INVOLVE RIVALRY BETWEEN GROUPS
OF PLAYERS. THE PLAYER'S PERSONAL DECISION MUST PROVIDE
FOR BOTH POTENTIAL CONFLICT AND COOPERATIVE
OPPORTUNITIES. THESE OPPOSE NON-COOPERATIVE GAMES, IN
WHICH FORMING COALITIONS IS EITHER IMPOSSIBLE OR
REQUIRES THAT ALL AGREEMENTS BE SELF-ENFORCING.

BEFORE MAKING A SIGNIFICANT DECISION, WE

HUMANS WOULD FIRST MAKE AN EFFORT TO
GATHER ALL THE PERTINENT INFORMATION THAT
WE MIGHT WANT TO KNOW ABOUT. IN ADDITION,
WE WOULD EVALUATE DIFFERENT OPTIONS. WE
CAN ALSO CREATE NEW OPTIONS BY USING OUR
CREATIVITY AND NEW DETAILS.

WE CAN MENTION EVERY CONCEIVABLE AND

PREFERABLE ALTERNATIVE IN THIS STAGE. IF
THE FINAL DECISION DOES NOT SATISFY THE
SPECIFIED NEED, THE PERSON MAY WISH TO
GO THROUGH THE PROCESS AGAIN IN ORDER
TO REACH A DIFFERENT CONCLUSION.

AS WE HAVE ALREADY LEARNT, PLAYERS IN GAME

THEORY ARE TYPICALLY QUITE RATIONAL AND
ASSESS WHETHER A DECISION WOULD BENEFIT
THEM OR NOT BEFORE MAKING IT. GAME THEORY
IS VERY DIFFERENT FROM BEHAVIORAL GAME
THEORY. IT'S BECAUSE BEHAVIORAL GAME
THEORY AIMS TO INVESTIGATE HOW SOCIAL
PREFERENCES, SOCIAL UTILITY, AND OTHER
PSYCHOLOGICAL ELEMENTS INFLUENCE HOW
PEOPLE MAKE STRATEGIC DECISIONS.

MAKING STRATEGIC DECISIONS IS A

LENGTHY PROCESS THAT REQUIRES
A LOT OF RESOURCES AND IS
FRAUGHT WITH UNCERTAINTY.
HUMAN BEHAVIOR IS FOUNDED ON
AND IMPACTED BY A VARIETY OF
ELEMENTS, INCLUDING GENETIC
MAKE-UP, CULTURE, AND PERSONAL
BELIEFS AND ATTITUDES. HUMAN
BEINGS HAVE THE POTENTIAL AND
EXPRESSED ABILITY TO REACT TO
BOTH INTERNAL AND EXTERNAL
STIMULI AT ALL STAGES OF THEIR
LIVES.

 TO BETTER UNDERSTAND HUMAN BEHAVIOR,

BEHAVIORAL GAME THEORY HEAVILY DRAWS ON
BOTH EMPIRICAL AND THEORETICAL STUDY. IT USES
GAME THEORY AND PSYCHOLOGICAL CONCEPTS TO
FORECAST HOW PEOPLE WILL ACT IN THE REAL
WORLD. BRAIN STRUCTURES HAVE DEVELOPED TO
ENABLE COGNITIVE FUNCTIONS AIMED AT
IMPROVING THE RESULTS OF ANY OF OUR BODY-
BASED BEHAVIORS.

 THE STUDY OF BEHAVIORAL GAME THEORY LOOKS AT

HOW ACTUAL HUMAN BEHAVIOR DIFFERS FROM
COMMON HYPOTHESES AND MODELS. EMOTIONS HAVE
A SIGNIFICANT IMPACT ON HUMAN BEHAVIOR AND
DECISION-MAKING, OFTEN IN SUBTLE WAYS THAT WE
MAY NOT ALWAYS NOTICE. INCORPORATING
PSYCHOLOGICAL ELEMENTS INTO NEW MODELS IS THE
GOAL OF BEHAVIORAL GAME THEORY.

 OUR ACTIONS ARE GREATLY INFLUENCED BY

UNCONSCIOUS PROCESSES. ASSUME SAM, A TOURIST,
AND HER PALS VISITED THE TOP LEVEL OF THE BURJ
KHALIFA, THE WORLD'S TALLEST STRUCTURE.
UNFORTUNATELY, SAM, WHO FEARS HEIGHTS, WOULD
FEEL EXTREME ANXIETY AND PANIC WHEN SHE
IMAGINED THE BURJ KHALIFA'S LOFTY HEIGHT. SAM,
WHO EXPERIENCES PHOBIAS, FREQUENTLY
ACKNOWLEDGES THAT HER WORRIES AND ANXIETIES
ARE UNFOUNDED, YET SHE STILL CAN'T FIGHT THE
TEMPTATION TO ACT IN A CERTAIN WAY.

ANY ACTION, EMOTION, OR THOUGHT THAT IS RELATED

TO, INFLUENCED BY, OR DIRECTED BY REASON CAN BE
CONSIDERED TO BE RATIONAL BEHAVIOR. IRRATIONAL
BEHAVIOR, ON THE OTHER HAND, REFERS TO ACTIVITIES
THAT LACK AN OBJECTIVE LOGIC. WITH THE WORK OF
ALLAIS IN 1953 AND ELLSBERG IN 1961, BEHAVIORAL
GAME THEORY WAS ESTABLISHED. THEY
INDEPENDENTLY FOUND THE ALLAIS AND ELLSBERG
PARADOXES.

REFERENCES:

PRINCETON UNIVERSITY PRESS. "THEORY OF GAMES AND ECONOMIC

BEHAVIOR: OVERVIEW."
STANFORD ENCYCLOPEDIA OF PHILOSOPHY. "GAME THEORY."
CAMERER, COLIN F (1997-11-01). "PROGRESS IN BEHAVIORAL GAME
THEORY". JOURNAL OF ECONOMIC PERSPECTIVES. 11 (4): 167–188.
GINTIS, H. (2005). BEHAVIORAL GAME THEORY AND CONTEMPORARY
ECONOMIC THEORY. ANALYSE & KRITIK, 27(1), 48-72.
CAMERER, COLIN F (1997-11-01). "PROGRESS IN BEHAVIORAL GAME
THEORY". JOURNAL OF ECONOMIC PERSPECTIVES. 11 (4): 167–188.
CAMERER, C. (2003). BEHAVIORAL GAME THEORY: EXPERIMENTS IN
STRATEGIC INTERACTION. PRINCETON UNIVERSITY PRESS.
GINTIS, H. (2005). BEHAVIORAL GAME THEORY AND CONTEMPORARY
ECONOMIC THEORY. ANALYSE & KRITIK, 27(1), 48-72.