Game Theory’s Wild Card

The conception of the individual in noncooperative game theory is an extension of the standard utility function conception of the individual that differs in making individuals strategically interactive. Whereas on the standard view individuals’ interaction through markets is indirect and their choices are independent of one another, in game theory individuals’ interaction is direct and their choices depend on one another. Individuals need to know something about one another to make their choices, and this means that interaction is built into the conception of the individual in game theory. The question is: How significant is the effect of this? There are two polar answers to this question in contemporary game theory representing two different views of games, the nature of strategic interaction, and the appropriate methods for their investigation: one emphasizes single-play (and finitely repeated) noncooperative games and has been developed in an a priori logical-deductive manner; the other emphasizes indefinitely repeated play games that may be cooperative and has been developed through experimental investigation. The answer from the former approach is that interaction makes little difference to the standard individual conception; the answer from the latter approach is that interaction can make quite a difference. In this chapter, I argue that the former approach fails to show how the standard individual view can accommodate interaction, whereas the latter approach generates an open-ended approach to interaction that can produce similar open-endedness about individuals.

Adding interaction to our account of individuals consequently functions as something of a wild card in our thinking about them. It also gives us a potentially quite different way of thinking about the individual in economics compared to the views examined in Part 1. If we say that in game theorystrategic interaction frames how we think about individuals, we no longer ask how we might embody sociality in individuals but rather ask how we embed individuals in sociality. Economists, of course, have voted with their feet since the 1980s regarding the centrality of game-theoretic interaction to economics. This does not imply that the internalizing strategies discussed in Part 1 will cease to play a role in economics in the future, but it does suggest that they are likely to be increasingly captive to the alternative logic of interaction. Game theory, the first of the important departures in recent economics from the postwar price equilibration framework, has been seen by many of its critics as looking backward, tied to an inflexible Homo economicus conception. The argument here is that this tie is tenuous, and that game theory across its many forms on the whole shifts the balance in our thinking about what individuals are.