[lbo-talk] game theory takes a Nobel

[Wojtek Sokolowski]

Doug cited:
> Associated Press [via WSJ.com]
> 
> He "showed that a party can strengthen its
> position by overtly worsening its own options,
> that the capability to retaliate can be more
> useful than the ability to resist an attack, and
> that uncertain retaliation is more credible and
> more efficient than certain retaliation," the
> academy said. "These insights have proven to be
> of great relevance for conflict resolution and
> efforts to avoid war."

----
> 
> "In many real-world situations, cooperation may
> be easier to sustain in a long-term relationship
> than in a single encounter. Analyses of short-run
> games are, thus, often too restrictive," the
> academy said. "Robert Aumann was the first to
> conduct a full-fledged formal analysis of
> so-called infinitely repeated games. His research
> identified exactly what outcomes can be upheld
> over time in long-run relations."

It never ceases to amaze me how common sense wisdom becomes a "cutting edge"
discovery in economics.  I bet that an average gangster - or a business man
- knows these strategies by heart.  Is it because of the "formal proof"
(translation: saying the obvious in incomprehensible mumbo jumbo), or what?
It certainly goes with my notion of economics as the modern equivalent of
medieval theology - it is not science but a coherent system of beliefs that
legitimizes the status quo.

Wojtek