The Nash-Harsanyi theory of bargaining is usually taken as the correct theory of rational bargaining, and, as such, as the correct theory for the basic political contract for a society. It grafts a theory of cooperation to a base that essentially articulates the perspective of non-cooperative interaction. The resultant theory is supposed make clear how rational bargaining can fully realize the mutual gains that cooperation can make possible. However, its underlying commitment to the concepts of non-cooperative interaction renders this doubtful. (...) I argue for an alternative theory—the theory of Full Cooperation—that avoids this difficulty. As applied to bargaining over the basic political contract, it calls for the selection of the most egalitarian of the Strictly Pareto-Optimal outcomes. This is essentially a version of Rawls’ principle of Justice as Fairness, but it is derived, unlike Rawls’ theory, without appeal to a problematic theory of individual decision-making behind the veil of ignorance. It also provides an alternative basis for what Hart calls the Principle of Mutual Restrictions, and what Rawls’ calls the Duty of Fair Play. (shrink)

Being scientific research a process of social interaction, this process can be studied from a game-theoretic perspective. Some conceptual and formal instruments that can help to understand scientific research as a game are introduced, and it is argued that game theoretic epistemology provides a middle ground for 'rationalist' and 'constructivist' theories of scientific knowledge. In the first part , a description of the essential elements of game of science is made, using an inferentialist conception of rationality. In the second part (...) , some ideas for the reconstruction of case studies are introduced, and applied to one example: Latour's analysis of Joliot's attempt to build an atomic bomb. Lastly, in the third part , a formal analysis of the constitution of scientific consensus is offered. (shrink)

University of North Carolina at Greensboro Most approaches to the philosophy of the natural and social sciences are basedon completed scientific investigations. However, there are many importantcases in science in which testing is incomplete. These cases are termed suspendedtrials and are particularly significant in biomedical and allied health fields. Initially,the authors' interest in suspended trials was piqued by a controversialmethod for assisting autistic children known as facilitated communication. Thisarticle examines facilitated communication and other examples of suspendedtrials from the perspective of (...) an economics of science and game theory. Themodel is consistent with recent evolutionary approaches to the philosophy ofthe natural and social sciences and with recent contributions to an economicunderstanding of science. Key Words: clinical trials • innovative therapies • economics of science • suspended trials • facilitated communication • economics of clinical research. (shrink)

Nash Equilibrium is a central concept ingame theory. It has been argued that playing NashEquilibrium strategies is rational advice for agentsinvolved in one-time strategic interactions capturedby non-cooperative game theory. This essaydiscusses arguments for that position: vonNeumann–Morgenstern's argument for their minimaxsolution, the argument from self-enforcingagreements, the argument from the absence ofprobabilities, the transparency-of-reasons argument,the argument from regret, and the argument fromcorrelated equilibrium. All of these argumentseither fail entirely or have a very limited scope.Whatever the use of Nash Equilibrium is, therefore,it is (...) not useful as a rational recommendation inone-time strategic interactions. This is good newsfor Bayesians: although this discussion does notargue directly for the Bayesian idea of rationalityas expected utility maximization, it argues againsta position that has been regarded as a contender insituations of strategic interaction. (shrink)

Libertarians claim that human behaviour is undetermined and cannot be predicted from knowledge of past history even in principle since it is based on the random movements of quantum mechanics. Determinists on the other hand deny thatmacroscopic phenomena can be activated bysub-microscopic events, and assert that if human action is unpredictable in the way claimed by libertarians, it must be aimless and irrational. This is not true of some types of random behaviour described in this paper. Random behaviour may make (...) one unpredictable to opponents and may therefore be rational. Similarly, playing a game with a mixed strategy may have an unpredictable outcome in every single play, but the strategy is rational, in that it is meant to maximize the expected value of an objective, be it private or social. As to whether the outcome of such behaviour is genuinely unpredictable as in quantum mechanics, or predictable by a hypothetical outside observer knowing all natural laws, it is argued that it makes no difference in practice, as long as it is not humanly predictable. Thus we have a new version of libertarianism which is compatible with determinism. (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)

The development of access rights as, perhaps, a replacement for copyright in digital rights management (DRM) systems, draws our attention to the importance of ‚the balance problem’ between information industries and the individual user. The nature of just what this ‚balance’ is, is often mentioned in copyright writings and judgments, but is rarely discussed. In this paper I focus upon elucidating the idea of balance in intellectual property and propose that the balance concept is not only the most feasible way (...) to examine whether past solutions to copyright problems are fair, but it also provides the ability to predict what will be the better solution for all affected parties. Based upon an envy-free contribution towards predicting the efficient balance, game theory is applied in a novel manner to the DRM problem to infer where and what might be the optimal balance in the debate over the nature of access right. (shrink)

I argue that folk psychology does not serve the purpose of facilitating prediction of others' behaviour but if facilitating cooperative action. (See my subsequent book *The Importance of Being Understood*.

The book is addressed to all readers interested in cognitive science, and especially in research combining a logical analysis with psychological, linguistic and neurobiological approaches. The publication is the result of a collaboration between the Department of Cognitive Science at University of Lodz and the Department of Cognitive Science at Lund University. It is intended to provide a comprehensive presentation of the key research issues undertaken in both Departments, including considerations on meaning, natural language and reasoning, linguistic as well as (...) numerical competence, the theory of decision making, modelling of conceptual representations, cognitive and game theoretic approach to social interactions. (shrink)

Accountants preparing information are in a position to manipulate the view of economic reality presented in such information to interested parties. These manipulations can be regarded as morally reprehensible because they are not fair to users, they involve in an unjust exercise of power, and they tend to weaken the authority of accounting regulators. This paper develops a model for detecting earnings manipulators using financial statements’ ratios in a sample of Spanish listed companies. Our results provide evidence that accounting data (...) can be extremely useful in detecting manipulators. This approach can be used by a large category of users of accounting information among which we can cite stock exchange supervisors or investing professionals. (shrink)

Standard game theory cannot explain the selection of payoff-dominant outcomes that are best for all players in common-interest games. Theories of team reasoning can explain why such mutualistic cooperation is rational. They propose that teams can be agents and that individuals in teams can adopt a distinctive mode of reasoning that enables them to do their part in achieving Pareto-dominant outcomes. We show that it can be rational to play payoff-dominant outcomes, given that an agent group identifies. We compare team (...) reasoning to other theories that have been proposed to explain how people can achieve payoff-dominant outcomes, especially with respect to rationality. Some authors have hoped that it would be possible to develop an argument that it is rational to group identify. We identify some large—probably insuperable—problems with this project and sketch some more promising approaches, whereby the normativity of group identification rests on morality. (shrink)

I review the classic skeptical challenges of Foole in Leviathan and the Lydian Shepherd in Republic against the prudential rationality of justice. Attempts to meet these challenges contribute to the reconciliation project (Kavka in Hobbesian moral and political theory , 1986 ) that tries to establish that morality is compatible with rational prudence. I present a new Invisible Foole challenge against the prudential rationality of justice. Like the Lydian Shepherd, the Invisible Foole can violate justice offensively (Kavka, Hobbesian moral and (...) political theory , 1986 ; Law and Philosophy , 14:5–34, 1995 ) without harming his reputation for justice. And like the Foole, the Invisible Foole dismisses the possibility that being just preserves goods intrinsic to justice, and will be just only if he fears that others will punish his injustice by withholding the external goods like labor and material goods that he would otherwise receive for their performance in covenants. I argue that given a plausible folk-theorem interpretation , Hobbes’ response to the Foole’s challenge is inconclusive, and depends crucially upon common knowledge assumptions that may or may not obtain in actual societies. I present two analogous folk-theorem arguments in response to the Invisible Foole’s challenge, one using the idea that the Invisible Foole’s power of concealment might be transitory, and the other using the idea that members of society might stop performing in covenants with anyone, thus punishing the Invisible Foole indirectly, if the Invisible Foole commits sufficiently many injustices. (shrink)

Alliances and other forms of cooperation between firms often promise great benefits, for example, by the exchange of knowledge or co‐specialization of resources. At the same time, the necessary actions to realize these benefits can augment vulnerability to opportunistic behaviour of partners. In addition to formal contracts to mitigate the resulting behavioural uncertainties, often, mechanisms, such as reputation or ethical values, are suggested as important supplements. However, when it comes to assessment of a specific cooperation opportunity, it is difficult to (...) account systematically for the economic consequences of these ‘softer factors’. Therefore, this paper aims to surpass mere financial analysis of chance and risk and to integrate systematically both reputation and ethical values into an economic assessment of cooperative relationships. For this purpose, we develop a theoretical framework that is based on a simple‐decision model to account for reputation and ethical values of potential partners as drivers of behavioural uncertainty reduction. We also discuss how this framework can be used to assess cooperative relationships and illustrate these ideas with reference to the inter‐organizational accounting practices of a large drugstore chain and its suppliers. (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)

Contemporary discussions of the positive relation between rational choice and moral theory are a special case of a much older tradition that seeks to show that mutual agreement upon certain moral rules works to the mutual advantage, or in the interests, of those who so agree. I make a few remarks about the history of discussions of the connection between morality and self-interest, after which I argue that the modern theory of rational choice can be naturally understood as a continuation (...) of this older tradition. I then go on to argue for a controversial three-fold thesis: (1) that grounding a theory of morality in terms of rational self-interest is the only epistemologically respectable way to proceed with the justification of moral principles; (2) that despite this, most of the contemporary explorations of rational choice foundations for moral principles do not work—that the models of rational choice to which they appeal yield less than the substantial results that they are intended to yield; but (3) that if one rethinks just what it means to be rational, one can find in fact a promising way to connect the two—specifically through the development of a theory of genuinely cooperative activity. (shrink)

We study the possibility of cartel formation among primary exporters who face an inelastic world demand for their exports. The phenomenon of immiserizing export growth appears as a non-cooperative equilibrium in a two-country export game. With infinite repetitions of the one shot game, we show that `different country size' will be detrimental to the sustenance of the collusive behavior needed for eliminating the possibility of immiserization.

This article presents four analyses of an interaction between the middle-Bronze Age Pharaoh Nibmuarea and the Babylonian king Kadashman-Enlil as described in the Amarna letters (Moran [1992] The Amarna Letters, The Johns Hopkins Universiy Press, Baltimore, Maryland). Intent on denying the Pharaoh his daughter in marriage, the Babylonian king was faced with the choice of sending messengers who could (''dignitaries'') or could not identify (''non-dignitaries'') his missing sister in the Pharaoh's court. Intent on marrying the king's daughter, the Pharaoh was (...) faced with the choice of showing the sister or showing someone else. Based on the assumption of complete information (game 1), the analysis revealed a dominant-strategy equilibrium: Nibmuarea shows the sister and Kadashman-Enlil sends non-dignitaries. Based on the assumption of one-sided incomplete information (Pharaoh's misperception; game 2), the analysis revealed that the Pharaoh had a dominant strategy of showing the sister irrespective of whether the king is keen or reluctant to learn about his sister's fate. Based on the assumption of one-sided incomplete information (Kadashman-Enlil's misperception; game 3), the analysis revealed that if non-dignitaries are sent, the Pharaoh prefers showing someone other than his sister. Based on the assumption of two-sided incomplete information (game 4), the Pharaoh finds it more beneficial to present the sister irrespective of whether his intentions are genuine or feigned. With incomplete information, it is difficult to judge the other's intentions; the cost of being caught cheating by not showing the sister to knowledgeable messengers was quite high. These analyses highlight the strategic uncertainty that characterized this Bronze-Age interaction. (shrink)

I discuss how simulating another agent can be useful in some game-theoretical situations, particularly iterated games such as the centipede game.

Alliances and other forms of cooperation between firms often promise great benefits, for example, by the exchange of knowledge or co-specialization of resources. At the same time, the necessary actions to realize these benefits can augment vulnerability to opportunistic behaviour of partners. In addition to formal contracts to mitigate the resulting behavioural uncertainties, often, mechanisms, such as reputation or ethical values, are suggested as important supplements. However, when it comes to assessment of a specific cooperation opportunity, it is difficult to (...) account systematically for the economic consequences of these 'softer factors'. Therefore, this paper aims to surpass mere financial analysis of chance and risk and to integrate systematically both reputation and ethical values into an economic assessment of cooperative relationships. For this purpose, we develop a theoretical framework that is based on a simple-decision model to account for reputation and ethical values of potential partners as drivers of behavioural uncertainty reduction. We also discuss how this framework can be used to assess cooperative relationships and illustrate these ideas with reference to the inter-organizational accounting practices of a large drugstore chain and its suppliers. (shrink)

"Ethical Leadership" in modern multicultural corporations is first the consideration of different personal and cultural value systems in decision-making processes. Second, it is the assignment of responsibility either to individual or organisational causalities. The task of this study is to set the stage for a distinction between rational entities and the arbitrary preferences of individuals in economic decision making processes.Defining rational aspects of behaviour in economics will lead to the formal structures of organisational systems, which are independent of concrete but (...) varying values. Luhmann''s Theory of systems of communication describes the internal dynamic forces of economic communication processes in terms of formal structures. On the other hand Habermas'' Theory of discourse integrates the previous relationship between individual subjectivity and rational behaviour. Habermas gives an indication of how to separate subjective values and meaning from rational arguments in rational communication processes. The translation of these theoretical structures into practical applications for decision making processes and decision taking acts links the ethical, or value-oriented, context precisely to both individual and organisational areas of responsibility. (shrink)

I argue that the contrast between models and theories is important for public policy issues. I focus especially on the way a mathematical model explains just one aspect of the data.