Collective Rationality

Collective Rationality
Author: Paul Weirich
Publisher: Oxford University Press
Total Pages: 283
Release: 2009-12-01
Genre: Philosophy
ISBN: 019974145X

Groups of people perform acts that are subject to standards of rationality. A committee may sensibly award fellowships, or may irrationally award them in violation of its own policies. A theory of collective rationality defines collective acts that are evaluable for rationality and formulates principles for their evaluation. This book argues that a group's act is evaluable for rationality if it is the products of acts its members fully control. It also argues that such an act is collectively rational if the acts of the group's members are rational. Efficiency is a goal of collective rationality, but not a requirement, except in cases where conditions are ideal for joint action and agents have rationally prepared for joint action. The people engaged in a game of strategy form a group, and the combination of their acts yields a collective act. If their collective act is rational, it constitutes a solution to their game. A theory of collective rationality yields principles concerning solutions to games. One principle requires that a solution constitute an equilibrium among the incentives of the agents in the game. In a cooperative game some agents are coalitions of individuals, and it may be impossible for all agents to pursue all incentives. Because rationality is attainable, the appropriate equilibrium standard for cooperative games requires that agents pursue only incentives that provide sufficient reasons to act. The book's theory of collective rationality supports an attainable equilibrium-standard for solutions to cooperative games and shows that its realization follows from individuals' rational acts. By extending the theory of rationality to groups, this book reveals the characteristics that make an act evaluable for rationality and the way rationality's evaluation of an act responds to the type of control its agent exercises over the act. The book's theory of collective rationality contributes to philosophical projects such as contractarian ethics and to practical projects such as the design of social institutions.

Rationality and Equilibrium

Rationality and Equilibrium
Author: Charalambos D. Aliprantis
Publisher: Springer Science & Business Media
Total Pages: 254
Release: 2006-04-20
Genre: Business & Economics
ISBN: 354029578X

This book contains a collection of original and state-of-the-art contributions in rational choice and general equilibrium theory. Among the topics are preferences, demand, equilibrium, core allocations, and testable restrictions. The contributing authors are Daniel McFadden, Rosa Matzkin, Emma Moreno-Garcia, Roger Lagunoff, Yakar Kannai, Myrna Wooders, James Moore, Ted Bergstrom, Luca Anderlini, Lin Zhou, Mark Bagnoli, Alexander Kovalenkov, Carlos Herves-Beloso, Michaela Topuzu, Bernard Cornet, Andreu Mas-Colell and Nicholas Yannelis.

Rational Behavior and Bargaining Equilibrium in Games and Social Situations

Rational Behavior and Bargaining Equilibrium in Games and Social Situations
Author: John C. Harsanyi
Publisher: CUP Archive
Total Pages: 340
Release: 1986
Genre: Decision-making
ISBN: 9780521311830

This is a paperback edition of a major contribution to the field, first published in hard covers in 1977. The book outlines a general theory of rational behaviour consisting of individual decision theory, ethics, and game theory as its main branches. Decision theory deals with a rational pursuit of individual utility; ethics with a rational pursuit of the common interests of society; and game theory with an interaction of two or more rational individuals, each pursuing his own interests in a rational manner.

The Oxford Handbook of Rationality

The Oxford Handbook of Rationality
Author: Alfred R. Mele
Publisher: Oxford University Press
Total Pages: 498
Release: 2004-01-08
Genre: Philosophy
ISBN: 9780198033240

Rationality has long been a central topic in philosophy, crossing standard divisions and categories. It continues to attract much attention in published research and teaching by philosophers as well as scholars in other disciplines, including economics, psychology, and law. The Oxford Handbook of Rationality is an indispensable reference to the current state of play in this vital and interdisciplinary area of study. Twenty-two newly commissioned chapters by a roster of distinguished philosophers provide an overview of the prominent views on rationality, with each author also developing a unique and distinctive argument.

General Equilibrium and Game Theory

General Equilibrium and Game Theory
Author: Andreu Mas-Colell
Publisher: Harvard University Press
Total Pages: 249
Release: 2016-01-04
Genre: Business & Economics
ISBN: 0674728734

Andreu Mas-Colell revolutionized our understanding of competitive markets, price formation, and the behavior of market participants. This volume presents the papers that solidified his standing as one of the preeminent economic theorists of our time. It also is invaluable for anyone wishing to study the craft of a master of economic modeling.

Complex Economics

Complex Economics
Author: Alan Kirman
Publisher: Routledge
Total Pages: 366
Release: 2010-09-13
Genre: Business & Economics
ISBN: 1136941673

The economic crisis is also a crisis for economic theory. Most analyses of the evolution of the crisis invoke three themes, contagion, networks and trust, yet none of these play a major role in standard macroeconomic models. What is needed is a theory in which these aspects are central. The direct interaction between individuals, firms and banks does not simply produce imperfections in the functioning of the economy but is the very basis of the functioning of a modern economy. This book suggests a way of analysing the economy which takes this point of view. The economy should be considered as a complex adaptive system in which the agents constantly react to, influence and are influenced by, the other individuals in the economy. In such systems which are familiar from statistical physics and biology for example, the behaviour of the aggregate cannot be deduced from the behaviour of the average, or "representative" individual. Just as the organised activity of an ants’ nest cannot be understood from the behaviour of a "representative ant" so macroeconomic phenomena should not be assimilated to those associated with the "representative agent". This book provides examples where this can clearly be seen. The examples range from Schelling’s model of segregation, to contributions to public goods, the evolution of buyer seller relations in fish markets, to financial models based on the foraging behaviour of ants. The message of the book is that coordination rather than efficiency is the central problem in economics. How do the myriads of individual choices and decisions come to be coordinated? How does the economy or a market, "self organise" and how does this sometimes result in major upheavals, or to use the phrase from physics, "phase transitions"? The sort of system described in this book is not in equilibrium in the standard sense, it is constantly changing and moving from state to state and its very structure is always being modified. The economy is not a ship sailing on a well-defined trajectory which occasionally gets knocked off course. It is more like the slime described in the book "emergence", constantly reorganising itself so as to slide collectively in directions which are neither understood nor necessarily desired by its components.

Rationality in Extensive Form Games

Rationality in Extensive Form Games
Author: Andrés Perea
Publisher: Springer Science & Business Media
Total Pages: 256
Release: 2001-10-31
Genre: Business & Economics
ISBN: 9780792375401

This book is concerned with situations in which several persons reach decisions independently and the final consequence depends, potentially, upon each of the decisions taken. Such situations may be described formally by an extensive form game: a mathematical object which specifies the order in which decisions are to be taken, the information available to the decision makers at each point in time, and the consequence that results for each possible combination of decisions. A necessary requirement for rational behavior in such games is that each decision maker should reach a decision that is optimal, given his preferences over his own decisions. This requirement is far from sufficient, however, since every decision maker should in addition base his preferences upon the conjecture that his opponents will act optimally as well. It is this principle that distinguishes noncooperative game theory from one-person decision theory. The main purpose of Rationality in Extensive Form Games is to discuss different formalizations of this principle in extensive form games, such as backward induction, Nash equilibrium, forward induction and rationalizability, under the assumption that the decision makers' preferences are given by subjective expected utility functions. The various formalizations, or rationality criteria, are illustrated by examples, and the relationships among the different criteria are explored.

A General Theory of Equilibrium Selection in Games

A General Theory of Equilibrium Selection in Games
Author: John C. Harsanyi
Publisher: Mit Press
Total Pages: 378
Release: 1988
Genre: Business & Economics
ISBN: 9780262582384

The authors, two of the most prominent game theorists of this generation, have devoted a number of years to the development of the theory presented here, and to its economic applications. They propose rational criteria for selecting one particular uniformly perfect equilibrium point as the solution of any noncooperative game. And, because any cooperative game can be remodelled as a noncooperative bargaining game, their theory defines a one-point solution for any cooperative game as well.By providing solutions - based on the same principles of rational behavior - for all classes of games, both cooperative and noncooperative, both those with complete and with incomplete information, Harsanyi and Selten's approach achieves a remarkable degree of theoretical unification for game theory as a whole and provides a deeper insight into the nature of game-theoretic rationality.The book applies this theory to a number of specific game classes, such as unanimity games; bargaining with transaction costs; trade involving one seller and several buyers; two-person bargaining with incomplete information on one side, and on both sides. The last chapter discusses the relationship of the authors' theory to other recently proposed solution concepts, particularly the Kohberg-Mertens stability theory.John C. Harsanyi is Flood Research Professor in Business Administration and Professor of Economics, University of California, Berkeley. Reinhard Selten is Professor of Economics Institute of Social and Economic Sciences: University of Bonn, Federal Republic of Germany.

Quantal Response Equilibrium

Quantal Response Equilibrium
Author: Jacob K. Goeree
Publisher: Princeton University Press
Total Pages: 322
Release: 2016-06-28
Genre: Business & Economics
ISBN: 069112423X

Quantal Response Equilibrium presents a stochastic theory of games that unites probabilistic choice models developed in psychology and statistics with the Nash equilibrium approach of classical game theory. Nash equilibrium assumes precise and perfect decision making in games, but human behavior is inherently stochastic and people realize that the behavior of others is not perfectly predictable. In contrast, QRE models choice behavior as probabilistic and extends classical game theory into a more realistic and useful framework with broad applications for economics, political science, management, and other social sciences. Quantal Response Equilibrium spans the range from basic theoretical foundations to examples of how the principles yield useful predictions and insights in strategic settings, including voting, bargaining, auctions, public goods provision, and more. The approach provides a natural framework for estimating the effects of behavioral factors like altruism, reciprocity, risk aversion, judgment fallacies, and impatience. New theoretical results push the frontiers of models that include heterogeneity, learning, and well-specified behavioral modifications of rational choice and rational expectations. The empirical relevance of the theory is enhanced by discussion of data from controlled laboratory experiments, along with a detailed users' guide for estimation techniques. Quantal Response Equilibrium makes pioneering game-theoretic methods and interdisciplinary applications available to a wide audience.

Rational Choice

Rational Choice
Author: Itzhak Gilboa
Publisher: MIT Press
Total Pages: 177
Release: 2012-08-17
Genre: Business & Economics
ISBN: 0262518058

A nontechnical, concise, and rigorous introduction to the rational choice paradigm, focusing on basic insights applicable in fields ranging from economics to philosophy. This book offers a rigorous, concise, and nontechnical introduction to some of the fundamental insights of rational choice theory. It draws on formal theories of microeconomics, decision making, games, and social choice, and on ideas developed in philosophy, psychology, and sociology. Itzhak Gilboa argues that economic theory has provided a set of powerful models and broad insights that have changed the way we think about everyday life. He focuses on basic insights of the rational choice paradigm—the general conceptualization rather than a particular theory—that survive recent (and well-justified) critiques of economic theory's various failures. Gilboa explains the main concepts in language accessible to the nonspecialist, offering a nonmathematical guide to some of the main ideas developed in economic theory in the second half of the twentieth century. Chapters cover feasibility and desirability, utility maximization, constrained optimization, expected utility, probability and statistics, aggregation of preferences, games and equilibria, free markets, and rationality and emotions. Online appendixes offer additional material, including a survey of relevant mathematical concepts.