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Evolution and Rationality: Some Recent Game-Theoretic Results

In: Economics in a Changing World

Author

Listed:
  • Abhijit Banerjee

    (Harvard University)

  • Jörgen W. Weibull

    (Stockholm School of Economics)

  • Ken Binmore

    (University College London)

Abstract

A large part of economics, and economic theory in particular, relies on such solution concepts as Nash equilibrium and its refinements. Unfortunately, it is difficult to provide a solid theoretical or empirical justification for Nash equilibrium behaviour. ‘Rationality’, or even ‘common knowledge of rationality’, is not enough to generate such behaviour. Among other things, one also needs to assume that the players coordinate their beliefs about each other’s actions (Armbruster and Boege, 1979; Johansen, 1982; Bernheim, 1984; Pearce, 1984; Bernheim, 1986; Binmore, 1987; Aumann, 1987; Tan and Werlang, 1988; Aumann and Brandenburger, 1991). Moreover, in games with a dynamic structure, the very notion of rationality becomes problematic, and common knowledge of rationality may even lead to logical contradictions (Rosenthal, 1981; Binmore, 1987; Bicchieri, 1989; Basu, 1988, 1990).

Suggested Citation

  • Abhijit Banerjee & Jörgen W. Weibull & Ken Binmore, 1996. "Evolution and Rationality: Some Recent Game-Theoretic Results," International Economic Association Series, in: Beth Allen (ed.), Economics in a Changing World, chapter 4, pages 90-117, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-25168-1_4
    DOI: 10.1007/978-1-349-25168-1_4
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    Cited by:

    1. Cooter, Robert D., 1998. "Models of Morality in Law and Economics: Self-Control and Self-Improvement for the "Bad Man" of Holmes," Berkeley Olin Program in Law & Economics, Working Paper Series qt5dj8m2kf, Berkeley Olin Program in Law & Economics.
    2. Weibull, Jörgen W., 1993. "The 'As if' Approach to Game Theory: 3 Positive Results and 4 Obstacles," Working Paper Series 392, Research Institute of Industrial Economics.
    3. Cooter, Robert D., 1999. "Punitive Damages, Social Norms, and Economic Analysis," Berkeley Olin Program in Law & Economics, Working Paper Series qt7h38w307, Berkeley Olin Program in Law & Economics.
    4. Banerjee, A. & Weibull, J.W., 1993. "Evolutionary Selection with Discriminating Players," Harvard Institute of Economic Research Working Papers 1637, Harvard - Institute of Economic Research.

    More about this item

    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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