>Message: 3
>Date: Mon, 10 Oct 2005 10:21:26 -0400
>From: Wojtek Sokolowski <sokol at jhu.edu>
>Subject: RE: [lbo-talk] game theory takes a Nobel
>To: lbo-talk at lbo-talk.org
>Message-ID: <001a01c5cda5$e928f2c0$9e66dc80 at WSokolows>
>Content-Type: text/plain; charset=us-ascii
>
>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.
This mathematician who associated with our lab wrote a long piece about prisoner's dilemma, showing how he could make one change, and cause the model to behave entirely differently (producing cooperation), to suit his stated preconceived bias for how the real world should operate. And he could make a similar change (fluctuating payoff matrix) to a lotka volterra competition model and achieve the same thing. His conclusion or point is that mathematical models behave as we design them to. Then he has a long list of examples where ecologists and economists stepped out of appropriate boundaries to forecast political or applied ecological phenomena with their models, such as when one of the Odums took his box model of energy and nitrogen/carbon flows between different parts of the ecosystem to the Vietnam war and calculated that the U.S. would win. http://two.ucdavis.edu/~worden/tmp/pd.pdf
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