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7 - Theory and experiment in the analysis of strategic interaction

Published online by Cambridge University Press:  05 January 2013

Kenneth F. Wallis
Affiliation:
University of Warwick
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Summary

One cannot, without empirical evidence, deduce what understandings can be perceived in a nonzero-sum game of maneuver any more than one can prove, by purely formal deduction, that a particular joke is bound to be funny.

Thomas Schelling, The Strategy of Conflict

INTRODUCTION

Much of economics has to do with the coordination of independent decisions, and such questions - with some well-known exceptions - are inherently game theoretic. Yet when the Econometric Society held its First World Congress in 1965, economic theory was still almost entirely non-strategic and game theory remained largely a branch of mathematics, whose applications in economics were the work of a few pioneers. As recently as the early 1970s, the profession's view of game-theoretic modeling was typified by Paul Samuelson's customarily vivid phrase, “the swamp of n-person game theory”; and even students to whom the swamp seemed a fascinating place thought carefully before descending from the high ground of perfect competition and monopoly. The game-theoretic revolution that ensued altered the landscape in ways that would have been difficult to imagine in 1965, adding so much to our understanding that many questions whose strategic aspects once made them seem intractable are now considered fit for textbook treatment.

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Publisher: Cambridge University Press
Print publication year: 1997

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