Contents. Introduction. 1. Preliminaries. 2. Normal Form Games. 3. Extensive Games. 4. Applications of Game Theory. 5. The Methodology of Game Theory. Conclusion. Appendix. Bibliography. Index. Does game theory—the mathematical theory of strategic interaction—provide genuine explanations of human behaviour? Can game theory be used in economic consultancy or other normative contexts? Explaining Games: The Epistemic Programme in Game Theory—the first monograph on the philosophy of game theory—is an attempt to combine insights from epistemic logic and the philosophy of science to (...) investigate the applicability of game theory in such fields as economics, philosophy and strategic consultancy. I prove new mathematical theorems about the beliefs, desires and rationality principles of individual human beings, and explore in detail the logical form of game theory as it is used in explanatory and normative contexts. I argue that game theory reduces to rational choice theory if used as an explanatory device, and that game theory is nonsensical if used as a normative device. A provocative account of the history of game theory reveals that this is not bad news for all of game theory, though. Two central research programmes in game theory tried to find the ultimate characterisation of strategic interaction between rational agents. Yet, while the Nash Equilibrium Refinement Programme has done badly thanks to such research habits as overmathematisation, model-tinkering and introversion, the Epistemic Programme, I argue, has been rather successful in achieving this aim. "The 'epistemic' approach to game theory has emerged over the past twenty-five years. What is this approach? How does it differ from the conventional equilibrium-based approach to game theory? What have been its strengths and weaknesses to date? To find out, read this comprehensive and excellently written account". Adam Brandenburger, J. P. Valles Professor of Business Economics and Strategy, Stern School of Business, New York University "Reading Boudewijn de Bruin's book should be rewarding both for game theorists interested in the conceptual foundations of their discipline and for philosophers who want to learn more about formal analysis of strategic interaction. It provides an in-depth logical study of the currently dominant epistemic approaches to non-cooperative games, with an eye both to the attractions and to the serious challenges facing the Epistemic Programme". Wlodek Rabinowicz, Professor of Practical Philosophy, Department of Philosophy, Lund University . (shrink)

We argue that the declining female enrollment in graduate business schools is a manifestation of gender bias in business education. The extant conceptual foundation of business education is one which views business activity in terms of a game with fixed and wholly material objectives. This concept betrays an underlying value system that reflects a male orientation. Business education is not merely amoral, therefore, but is gender biased. We suggest that business educators adopt a broadened behavioral rubric. Virtue-ethics theory provides such (...) a rubric. (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)

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)

I take pseudoscience to be a pretence at science. Pretences are innumerable, limited only by our imagination and credulity. As Stove points out, ‘numerology is actually quite as different from astrology as astrology is from astronomy’ (Stove 1991, 187). We are sure that ‘something has gone appallingly wrong’ (Stove 1991, 180) and yet ‘thoughts…can go wrong in a multiplicity of ways, none of which anyone yet understands’ (Stove 1991, 190). Often all we can do is give a careful description of (...) a way of pretending, a motivation for pretence, a source of pretension. In this chapter I attempt the latter. We will be concerned with the relation of conviction to rational belief. I shall be suggesting that the question of whether an enquiry is a pretence at science can be, in part, a question over the role of conviction in rational belief, and that the answer is to be found in the philosophical problem of the role of values in rational belief. (shrink)

Economic markets are not morally free zones. Contrary to popular misconceptions, market functioning rests on the ethical principles of fairness and voluntariness. This ethical foundation can be traced back at least to moral philosopher Adam Smith, one of the founders of modern economics. In the inconspicuous form of microeconomic axioms, these moral foundations are preserved. Thus, virtually all “neo-classic” economic concepts presuppose a market ethics of fairness and voluntariness. In a world of pervasive uncertainty on the long-term development of the (...) human-environment interaction, the protection of the global life-support systems is an important test case for the scope of the ethical content of market ethics. We review risk protection strategies in the face of this uncertainty that are (i) based on the insurance effect of biological diversity, and (ii) that employ a safe minimum standard (SMS). Because the fairness principle of market ethics requires that economic agents who cause “external” costs must, at least, compensate those who are burdened with these costs, the interests of future generations have to be included in responsible economic decision-making. The market and market ethics approach is applied to the analysis of a SMS for biological diversity, and to the inherent problems of such an approach. At the microeconomic level of individual decision-making, an unconditional protection is supported by market ethics neither for the putative interests of future generations nor for biological diversity: Poor people who struggle to cover their basic needs cannot not be required to care for biological diversity. In all other cases, the protection of biological diversity in favour of future generations is supported—if costs are not “unacceptably high”. At which cost level this point is approached, market ethics is not designed to decide. (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)

This paper uses the intuition from the game of chickento model client-auditor financial reporting and audit effort strategies. Within an ethical context, our model is concerned with the client misreporting and its detection by the auditor. The paper uses a welfare game(similar to the game of chicken) to more formally model client-auditor strategies. The welfare game is then extended to provide additional insight into ethical and audit effort issues.Such a welfare gameprovides equilibrium in mixed strategies. This mixed strategy solution makes (...) possible four outcomes from the game: 1) Financial Statements are fairly presented by client and the auditor performs a normal audit, 2) Financial Statements are fairly presented by client and the auditor performs an extended audit (over auditing), 3) Financial State-ments are misstated by client and detected by the auditor, and 4) Financial Statements are misstated by client and not detected by the auditor (audit failure despite no intended unethical action on the part of the auditor). (shrink)

I carved a massive cake of beeswax into bits and rolled them in my hands until they softened … Going forward I carried wax along the line, and laid it thick on their ears. They tied me up, then, plumb amidships, back to the mast, lashed to the mast, and took themselves again to rowing. Soon, as we came smartly within hailing distance, the two Sirens, noting our fast ship off their point, made ready, and they sang … The lovely (...) voices in ardor appealing over the water made me crave to listen, and I tried to say ‘Untie me!’ to the crew, jerking my brows; but they bent steady to the oars. (shrink)

This paper brings two major research lines in current sociology together. Research on social networks has long focused primarily on network effects but meanwhile also addresses the emergence and dynamics of networks. Research on trust in social and economic relations shows that networks have effects on trust. Using game theory, we provide a simple model that allows for an integrated and simultaneous analysis of network effects on trust and for the endogenous emergence of the network. The model also allows for (...) characterizing the value of the network. We use standard assumptions on full strategic rationality. Testable implications of the model as well as model extensions are sketched. (shrink)

We associate the semantic game with chance moves conceived by Blinov with Blamey’s partial logic. We give some equivalent alternatives to the semantic game, some of which are with a third player, borrowing the idea of introducing the pseudo-player called Nature in game theory. We observe that IF propositional logic proposed by Sandu and Pietarinen can be equivalently translated to partial logic, which implies that imperfect information may not be necessary for IF propositional logic. We also indicate that some independent (...) quantifiers can be regarded as dependent quantifiers of indeterminate sequence, using the interjunction connective in partial logic. We conclude our paper by indicating some further research in a more general setting. (shrink)

The growth in international trade in recent years necessitates a better understanding of customs and expectations in cross-cultural negotiations. While several researchers have sought to examine and detail the similarities and differences between select countries, their data have generally been obtained under neutral or unspecified negotiating conditions. However, issue importance, opponent (prowess, ethical reputation), and context (location, confederate awareness, urgency) can play a significant role in the use of negotiating tactics. This paper describes a study comparing the perceptions of one (...) hundred and forty-two current and future business professionals from two emerging trade partners, Brazil and the United States, regarding the appropriateness and likely use of five categories of negotiation tactics under seven challenging or unfavorable negotiating conditions commonly faced by negotiators. The results indicate an overall conditional effect for both attitudes (perceived appropriateness) and intentions (likelihood of use). In addition, while no significant difference in perceived appropriateness was found due to country, there were differences in likely use due to country for six conditions-behaviors. (shrink)