The traditional solution concept for noncooperative game theory is the Nash equilibrium, which contains an implicit assumption that players’ probability distributions satisfy t probabilistic independence. However, in games with more than two players, relaxing this assumption results in a more general equilibrium concept based on joint beliefs. This article explores the implications of this joint-beliefs equilibrium concept for two kinds of conflictual coordination games: crisis bargaining and public goods provision. We find that, using updating consistent with Bayes’ rule, players’ beliefs (...) converge to equilibria in joint beliefs which do not satisfy probabilistic independence. In addition, joint beliefs greatly expand the set of mixed equilibria. On the face of it, allowing for joint beliefs might be expected to increase the prospects for coordination. However, we show that if players use joint beliefs, which may be more likely as the number of players increases, then the prospects for coordination in these games declines vis-à-vis independent beliefs. (shrink)

Aconvention is a state in which agents coordinate their activity, not as the result of an explicit agreement, but because their expectations are aligned so that each individual believes that all will act so as to achieve coordination for mutual benefit. Since agents are said to follow a convention if they coordinate without explicit agreement, the notion raises fundamental questions: (1) Why do certain conventions remain stable over time?, and (2) How does a convention emerge in the first place? In (...) a pioneering study, Lewis (1969) addresses these questions by applyingnoncooperative game theory. Lewis defines a convention as aNash coordination equilibrium of a noncooperative game that issalient, that is, it is somehow conspicuous to the agents so that all expect one another to conform with the equilibrium. This paper presents a new game theoretic definition of conventions, which formalizes the notion of salience and which also generalizes the class of conventions Lewis discusses in his work. I define a convention as acorrelated equilibrium (Aumann 1974, 1987) satisfying apublic intentions criterion: Every agent wants his intended action to becommon knowledge. I argue that many conventions correspond to correlated equilibria that are not Nash equilibria, and that this is consistent with Lewis' general viewpoint. Finally, I argue that game theoretic characterizations of convention, such as Lewis' and my own, help to explain a convention's stability, but that a fully satisfactory account of the emergence of convention requires a theory of equilibrium selection beyond the scope of Lewis' work. (shrink)

Individual rationality, or doing what is best for oneself, is a standard model used to explain and predict human behavior, and von Neumann–Morgenstern game theory is the classical mathematical formalization of this theory in multiple-agent settings. Individual rationality, however, is an inadequate model for the synthesis of artificial social systems where cooperation is essential, since it does not permit the accommodation of group interests other than as aggregations of individual interests. Satisficing game theory is based upon a well-defined notion of (...) being good enough, and does accommodate group as well as individual interests through the use of conditional preference relationships, whereby a decision maker is able to adjust its preferences as a function of the preferences, and not just the options, of others. This new theory is offered as an alternative paradigm to construct artificial societies that are capable of complex behavior that goes beyond exclusive self interest. (shrink)

Normative game theory unsatisfactorily explains rational behavior. Real people do not behave as predicted, and what is prescribed as rational behavior is normally unattainable in real-life. The problem is that current normative analysis does not account for people's cognitive limitations – their bounded rationality. However, this paper develops an account of bounded rationality that explains the rationality of more realistic behavior. I focus on the Centipede Game, in which boundedly rational players explore and test others' immediate behavior, until they can (...) apply limited backward induction. The result is that the game has a solution in the form of a subjective Nash equilibrium, which boundedly rational players can possibly realize. (shrink)

Famously, Kripke has argued that the central portion of the Philosophical Investigations describes both a skeptical paradox and its skeptical solution. Solving the paradox involves the element of the community, which determines correctness conditions for rule-following behavior. What do such conditions precisely consist of? Is it accurate to say that there is no fact to the matter of rule following? How are the correctness conditions sustained in the community? My answers to these questions revolve around the idea that a rule (...) is followed insofar as a convention is in place. In particular, I consider the game-theoretic definition of convention offered by David Lewis and I show that it illuminates essential aspects of the communitarian understanding of rule-following. Make the following experiment: say “It’s cold here” and mean “It’s warm here”. Can you do it?Ludwig Wittgenstein, Philosophical Investigations, 1953, §510.I can’t say “it’s cold here” and mean “it’s warm here”—at least, not without a little help from my friends.David Lewis, Convention. (shrink)

This paper investigates the epistemic assumptions that David Lewis makes in his account of social conventions. In particular, I focus on the assumption that the agents have common knowledge of the convention to which they are parties. While evolutionary analyses show that the common knowledge assumption is unnecessary in certain classes of games, Lewis’ original account (and, more recently, Cubitt and Sugden’s reconstruction) stresses the importance of including it in the definition of convention. I discuss arguments pro et contra to (...) argue that, although the assumption might be relevant to a descriptively adequate account of social convention, it is not required for its rational reconstruction. I then point out that Lewis’ account, properly speaking, is of common reason to believe, rather than of common knowledge, and argue that, in order to formalize aptly the distinction between reason to believe and belief, standard formal epistemic models need to be supplemented with so-called awareness structures. Finally, I stress that the notion of knowledge implicit in Lewis’ text involves interesting elements that cannot be captured in the standard propositional formalizations, but need the full expressive force of quantified epistemic logic. (shrink)

Some arguments against the assumption that ordinary people may share common knowledge are sound. The apparent cost of such arguments is the rejection of scientific theories that appeal to common knowledge. My proposal is to accept the arguments without rejecting the theories. On my proposal, common knowledge is shared by ideally rational people, who are not just mathematically simple versions of ordinary people. They are qualitatively different from us, and theorizing about them does not lead to predictions about our behavior. (...) Nevertheless, models of action that assume common knowledge have a role to play in our understanding of collective rationality. (shrink)

I argue that contemporary accounts of ideology critique—paradigmatically those advanced by Haslanger, Jaeggi, Celikates, and Stanley—are either inadequate or redundant. The Marxian concept of ideology—a collective epistemic distortion or irrationality that helps maintain bad social arrangements—has recently returned to the forefront of debates in contemporary analytic social philosophy. Ideology critique has similarly emerged as a technique for combating such social ills by remedying those collective epistemic distortions. Ideologies are sets of social meanings or shared understandings. I argue in this paper (...) that because agents must coordinate on them to be mutually intelligible, ideologies, on the fashionable contemporary account, are conventions. They are equilibrium solutions to a particular kind of social coordination problem. The worry is that changing pernicious conventions requires more than the epistemic remedy contemporary critical social theorists prescribe. It also requires overcoming strategic impediments like high first-mover costs. Thus contemporary proponents of ideology critique—the “new ideology critics,” as I’ll call them—face a dilemma. Either their account of social change fails to account for important strategic impediments to social change, in which case it is inadequate, or it incorporates a theory of strategic behavior, and thus merely reinvents the wheel, poorly. It adds nothing to prominent convention-based accounts of social change in the social sciences. More generally, this is an example of a pernicious trend in contemporary critical social theory. Contemporary critical social theorists have abandoned their predecessors’ commitment to engaging with social science, thereby undermining their efforts. (shrink)

The paper begins by providing a game-theoretic reconstruction of Gilbert’s (1989) philosophical critique of Lewis (1969) on the role of salience in selecting conventions. Gilbert’s insight is reformulated thus: Nash equilibrium is insufficiently powerful as a solution concept to rationalize conventions for unboundedly rational agents if conventions are solutions to the kinds of games Lewis supposes. Both refinements to NE and appeals to bounded rationality can plug this gap, but lack generality. As Binmore (this issue) argues, evolutive game theory readily (...) explains the origin of conventional behavior, but that is not Lewis’s project. Gilbert’s critique is generalized by reference to Bacharach’s (2006) work on team reasoning in games. The paper then argues that although Lewis’s account of the rationalization of conventions is shown by the reconstruction of Gilbert’s critique to be incomplete, Gilbert is wrong to conclude that classical (‘eductive’) game theory lacks the resources to explain conformity to conventions among people. A game-theoretic account of the dynamics of socialization, based on Ross’s (2005, 2006) idea of ‘game determination’, rationalizes choices of conventional strategies in overlapping generations contexts, provided agents are products of evolutionary selection and know that other players are also such products. (shrink)

Hume is rightly credited with giving a brilliant, and perhaps the best, account of justice as convention. Hume's importance as a forerunner of modern economics has also long been recognized. However, most of Hume's readers have not fully appreciated how closely Hume's analysis of convention foreshadows a particular branch of economic theory, namely, game theory. Starting with the work of Barry, Runciman and Sen and Lewis, there has been a flowering of literature on the informal game-theoretic insights to be found (...) in classics of political philosophy such as Hobbes, Locke, Hume and Rousseau. A number of authors in this tradition, including Lewis, Gauthier, Mackie, and Postema, have identified passages in Hume which they interpret as giving informal examples of specific games. Yet, unlike his predecessors, Hobbes and Locke, Hume does much more than present examples which have a game-theoretic structure. In his account of convention, Hume gives general conditions which characterize the resolution of social interaction problems, and in the examples he uses to illustrate this account, Hume outlines several different methods by which agents can arrive at such a resolution. Hume's general account of convention and his explanations of the origins of particular conventions together constitute a theory of strategic interaction, which is precisely what game theory aspires to be. (shrink)

Recent years have witnessed an increased number of game-theoretic approaches to social norms, which apparently share some common vocabulary and methods. We describe three major approaches of this kind (due to Binmore, Bicchieri and Gintis), before comparing them systematically on five crucial themes: generality of the solution, preference transformation, punishment, epistemic conditions and type of explanation. This allows us to show that these theories are, by and large, less compatible than they seem. We then argue that those three theories struggle (...) to account for three phenomena pertaining to social norms (namely context-dependence, conflicting norms and self-evidence), with which any complete game-theoretic account should in principle be able to deal. (shrink)

IntroductionA quick glance at the opening paragraphs in many of the classic logic textbooks reveals a common view: Logical methods highlight the reasoning patterns of a single agent engaged in some form of mathematical thinking.A sampling from my bookshelf: Shoenfield’s Mathematical Logic: “Logic is the study of reasoning; and mathematical logic is the study of the type of reasoning done by mathematicians”; Enderton’s A Mathematical Introduction of Logic: “Symbolic logic is a mathematical model of deductive thought”; and Chiswell and Hodges (...) Mathematical Logic: “In this course we shall study some ways of proving statements.” However, this traditional view of the “subject matter” of logic is expanding. There is a growing literature using phrases such as “rational interaction” or “information flow” to describe its subject matter while still employing traditional logical methods. The clearest example of this can be found in the work of Johan van Benthem and others on l .. (shrink)

This chapter contains sections titled: Highlights of Past Literature Current Work Future Work.

It is a mistake to think that instrumental rationality fixes a single standard for judging or describing actions. While there is a core conception of instrumental rationality, we appeal to different elaborations of that conception for different purposes. An action can be instrumentally rational in some sense(s) but not in others. As we learn more about behavior, it is possible to add useful elaborations of the core conception of instrumental rationality. In this paper, I propose a new elaboration based on (...) Frederic Schick's work on understandings. (shrink)

Proposals for the democratization of technology imply a necessary condition of universal emancipatory technological literacy. However, in the literature on the topic, people’s willingness to assume the cost in time and effort involved in acquiring that knowledge is often taken for granted. In this paper, we apply Anthony Downs’s economic theory of political action in democracy to analyze the cost-benefit ratio of this literacy from the perspective of the individual subject who should acquire it. Our conclusion is that the cost (...) does not rationally justify in an instrumental sense a benefit that, being mainly of an indivisible nature, motivates individuals to avoid their share of the cost to produce it. (shrink)

Gupta has proposed a definition of strategic rationality cast in the framework of his revision theory of truth. His analysis, relative to a class of normal form games in which all players have a strict best reply to all other players’ strategy profiles, shows that game-theoretic concepts have revision-theoretic counterparts. We extend Gupta’s approach to deal with normal form games in which players’ may have weak best replies. We do so by adapting intuitions relative to Nash equilibrium refinements to the (...) revision-theoretic framework. We prove that there is a precise equivalence between trembling-hand perfect equilibria in two-player normal games and a revision-theoretic property. We then introduce lexicographic choice of action as a way to represent players’ expectations, which allows our analysis to reach full generality. Finally, we provide an example of the versatility of revision theory as applied to strategic interaction by formalizing a risk-and-compensation procedure of strategic choice in the revision-theoretic framework. (shrink)

A cornerstone of game theory is backward induction, whereby players reason backward from the end of a game in extensive form to the beginning in order to determine what choices are rational at each stage of play. Truels, or three-person duels, are used to illustrate how the outcome can depend on (1) the evenness/oddness of the number of rounds (the parity problem) and (2) uncertainty about the endpoint of the game (the uncertainty problem). Since there is no known endpoint in (...) the latter case, an extension of the idea of backward induction is used to determine the possible outcomes. The parity problem highlights the lack of robustness of backward induction, but it poses no conflict between foundational principles. On the other hand, two conflicting views of the future underlie the uncertainty problem, depending on whether the number of rounds is bounded (the players invariably shoot from the start) or unbounded (they may all cooperate and never shoot, despite the fact that the truel will end with certainty and therefore be effectively bounded). Some real-life examples, in which destructive behavior sometimes occurred and sometimes did not, are used to illustrate these differences, and some ethical implications of the analysis are discussed. (shrink)

We analyze common reasoning about admissibility in the strategic and extensive form of a game. We define a notion of sequential proper admissibility in the extensive form, and show that, in finite extensive games with perfect recall, the strategies that are consistent with common reasoning about sequential proper admissibility in the extensive form are exactly those that are consistent with common reasoning about admissibility in the strategic form representation of the game. Thus in such games the solution given by common (...) reasoning about admissibility does not depend on how the strategic situation is represented. We further explore the links between iterated admissibility and backward and forward induction. (shrink)

To understand the meaning of evolutionary equilibria, it is necessary to comprehend the ramifications of the evolutionary model. For instance, a full appreciation of Axelrod's The Evolution of Cooperation requires that we identify assumptions under which conditionally cooperative strategies, like Tit For Tat, are and are not evolutionarily stable. And more generally, when does stability fail? To resolve these questions we re-examine the very foundations of the evolutionary model. The results of this paper can be analytically separated into three parts. (...) The first part is conceptual: it identifies the evolutionary model's assumptions and shows how different assumptions imply different types of evolutionary stability. The second part is deductive: it establishes necessary and sufficient conditions for the types of evolutionary stability identified in the first part, and demonstrates in which games these kinds of stability can (and cannot) be attained. The third and final part is applied: it relates the general findings (which are independent of the specific payoffs of any particular evolutionary game) to the issue of the evolutionary stability of cooperation. Results on cooperation appear throughout the paper as they both exemplify and motivate the general results. These results essentially explain when cooperation is and is not stable, and why, thus shedding new light on the meaning and applicability of Axelrod's widely known claims. (shrink)

The paper provides a framework for representing belief-contravening hypotheses in games of perfect information. The resulting t-extended information structures are used to encode the notion that a player has the disposition to behave rationally at a node. We show that there are models where the condition of all players possessing this disposition at all nodes (under their control) is both a necessary and a sufficient for them to play the backward induction solution in centipede games. To obtain this result, we (...) do not need to assume that rationality is commonly known (as is done in [Aumann (1995)]) or commonly hypothesized by the players (as done in [Samet (1996)]). The proposed model is compared with the account of hypothetical knowledge presented by Samet in [Samet (1996)] and with other possible strategies for extending information structures with conditional propositions. (shrink)

We present an axiomatic approach for a class of finite, extensive form games of perfect information that makes use of notions like “rationality at a node” and “knowledge at a node.” We distinguish between the game theorist's and the players' own “theory of the game.” The latter is a theory that is sufficient for each player to infer a certain sequence of moves, whereas the former is intended as a justification of such a sequence of moves. While in general the (...) game theorist's theory of the game is not and need not be axiomatized, the players' theory must be an axiomatic one, since we model players as analogous to automatic theorem provers that play the game by inferring (or computing) a sequence of moves. We provide the players with an axiomatic theory sufficient to infer a solution for the game (in our case, the backwards induction equilibrium), and prove its consistency. We then inquire what happens when the theory of the game is augmented with information that a move outside the inferred solution has occurred. We show that a theory that is sufficient for the players to infer a solution and still remains consistent in the face of deviations must be modular. By this we mean that players have distributed knowledge of it. Finally, we show that whenever the theory of the game is group-knowledge (or common knowledge) among the players (i.e., it is the same at each node), a deviation from the solution gives rise to inconsistencies and therefore forces a revision of the theory at later nodes. On the contrary, whenever a theory of the game is modular, a deviation from equilibrium play does not induce a revision of the theory. (shrink)

This volume concerns Rational Agents - humans, players in a game, software or institutions - which must decide the proper next action in an atmosphere of partial information and uncertainty. The book collects formal accounts of Uncertainty, Rationality and Agency, and also of their interaction. It will benefit researchers in artificial systems which must gather information, reason about it and then make a rational decision on which action to take.

This paper specifies competences and skills of methodologically rational decision making and their impact on security of organisations. The study indicates some reasons for developing the competencies and skills in education, professional development and taking them into account in the recruitment. It is the practical aim of this paper. Its scientific aim is to formulate and to partly justify general hypotheses concerning the impact of methodologically rational and irrational attitudes of members of organisations on their security. We apply the method (...) of ideal types of Max Weber and phenomenological analyses, which concern intentionality of methodologically rational and irrational mental attitudes. (shrink)

Focusing on the work of Friedrich von Hayek and Vernon Smith, we discuss some conceptual links between Austrian economics and recent work in behavioral game theory and experimental economics. After a brief survey of the main methodological aspects of Austrian and experimental economics, we suggest that common views on subjectivism, individualism, and the role of qualitative explanations and predictions in social science may favour a fruitful interaction between these two research programs.