Isolation, Assurance and Rules : Can Rational Folly Supplant Foolish Rationality?
AbstractConsider an “isolation paradox” game with many identical players. By definition, conforming to a rule which maximizes average utility is individually a strictly dominated strategy. Suppose, however, that some players think “quasi-magically” in accordance with evidential (but not causal) decision theory. That is, they act as if others’ disposition to conform, or not, is affected by their own behavior, even though they do not actually believe there is a causal link. Standard game theory excludes this. Yet such “rational folly” can sustain “rule utilitarian” cooperative behavior. Comparisons are made with Newcomb’s problem, and with related attempts to resolve prisoner’s dilemma.
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Bibliographic InfoPaper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 842.
Length: 17 pages
Date of creation: 2008
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-08 (All new papers)
- NEP-CBE-2008-03-08 (Cognitive & Behavioural Economics)
- NEP-CDM-2008-03-08 (Collective Decision-Making)
- NEP-EVO-2008-03-08 (Evolutionary Economics)
- NEP-UPT-2008-03-08 (Utility Models & Prospect Theory)
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