In this book, I make use of an idea from economics to suggest how noble human tendencies might not only have survived the ruthless pressures of the material world, but actually have been nurtured by them.

This book explores how individual actions coordinate to produce unintended social consequences. In the past this phenomenon has been explained as the outcome of rational, self-interested individual behaviour. Professor Bicchieri shows that this is in no way a satisfying explanation. She discusses how much knowledge is needed by agents in order to coordinate successfully. If the answer is unbounded knowledge, then a whole variety of paradoxes arise. If the answer is very little knowledge, then there seems hardly any possibility of (...) attaining coordination. The solution to coordination and cooperation is for agents to learn about each other. The author concludes that rationality must be supplemented by models of learning and by an evolutionary account of how social order can persist. (shrink)

This book explores how individual actions coordinate to produce unintended social consequences. In the past this phenomenon has been explained as the outcome of rational, self-interested individual behaviour. Professor Bicchieri shows that this is in no way a satisfying explanation. She discusses how much knowledge is needed by agents in order to coordinate successfully. If the answer is unbounded knowledge, then a whole variety of paradoxes arise. If the answer is very little knowledge, then there seems hardly any possibility of (...) attaining coordination. The solution to coordination and cooperation is for agents to learn about each other. The author concludes that rationality must be supplemented by models of learning and by an evolutionary account of how social order can persist. (shrink)

This paper proposes a revised Theory of Moves (TOM) to analyze matrix games between two players when payoffs are given as ordinals. The games are analyzed when a given player i must make the first move, when there is a finite limit n on the total number of moves, and when the game starts at a given initial state S. Games end when either both players pass in succession or else a total of n moves have been made. Studies are (...) made of the influence of i, n, and S on the outcomes. It is proved that these outcomes ultimately become periodic in n and therefore exhibit long-term predictable behavior. Efficient algorithms are given to calculate these ultimate outcomes by computer. Frequently the ultimate outcomes are independent of i, S, and n when n is sufficiently large; in this situation this common ultimate outcome is proved to be Pareto-optimal. The use of ultimate outcomes gives rise to a concept of stable points, which are analogous to Nash equilibria but consider long-term effects. If the initial state is a stable point, then no player has an incentive to move from that state, under the assumption that any initial move could be followed by a long series of moves and countermoves. The concept may be broadened to that of a stable set. It is proved that every game has a minimal stable set, and any two distinct minimal stable sets are disjoint. Comparisons are made with the results of standard TOM. (shrink)

An agent whose preferences violate the Independence Axiom or for some other reason are not representable by an expected utility function, can avoid 'dynamic inconsistency' either by foresight ('sophisticated choice') or by subsequent adjustment of preferences to the chosen plan of action ('resolute choice'). Contrary to McClennen and Machina, among others, it is argued these two seemingly conflicting approaches to 'dynamic rationality' need not be incompatible. 'Wise choice' reconciles foresight with a possibility of preference adjustment by rejecting the two assumptions (...) that create the conflict: Separability of Preferences in the case of sophisticated choice and Reduction to Normal form in the case of resolute choice.. (shrink)