The Case Against Keynes

Off Topic Politics & World Issues
81

[quote]shookers wrote:
Sure.

Game theory basically proves that while everyone is acting in their own self-interest, it doesn’t necessarily mean there is a net gain.

Lets take advertising for example

There are two companies
If neither advertise, they both make 10Million Profit

If one advertises and the other doesn’t, the advertiser gets 20Million profit and the one who doesn’t gets 0 Million Profit

If they both advertise, they both get 5Million profit.

By definition of self interest (that is, each company is better off regardless of the other, if they advertise), both companies will decide to advertise (assuming no collusion), thus spending money INEFFICIENTLY, yet still in self-interest. Austrian School assumes a perfect free market, game theory proves otherwise[/quote]

Uh…no.

The particular game theoretical problem you are discussing (the prisoner’s dilemma) states that in a zero-sum game, if both players have no ability to predict the choice of the other, the optimal strategy is to defect every time, the reason being that no matter what the outcome, one always does the best possible if he defects (either winning completely if the other player cooperates or sparing himself from total loss if the other player defects).

But an iterated prisoner’s dilemma (which makes up the vast majority of real world encounters), which is not a zero-sum game, states that the rationally self-interested agents will cooperate using a Tit-for-Tat strategy. You are referring to self-interest very narrowly conceived, which is not the way the free market works.

82

[quote]dhickey wrote:
Curious to see someone apply this to economics.[/quote]

Er…Game Theory is the mathematical model of choice for economics.

83

[quote]dhickey wrote:
Cutting spending, cutting taxes or a flat tax, eliminating protectionism would all be a really good start.
[/quote]

You may be interested in the Fair Tax.

http://www.fairtax.org/site/PageServer

84

[quote]dhickey wrote:
The comment about man made CO2 and global warming just ensured you will not be taken seriously here.
[/quote]

Haha, uh oh. Guess I’ll have to check other threads…

85

[quote]shookers wrote:
Austrian School assumes a perfect free market, game theory proves otherwise
[/quote]

  1. Game theory does not apply to economics because by definition all exchanges are a net gain.

  2. The Austrian School does not assume a free market.

86

[quote]Fiction wrote:
dhickey wrote:
Curious to see someone apply this to economics.

Er…Game Theory is the mathematical model of choice for economics.[/quote]

No it isn’t. Economics isn’t a game.

Do you know what a game is?

87

[quote]LIFTICVSMAXIMVS wrote:
shookers wrote:
Austrian School assumes a perfect free market, game theory proves otherwise

  1. Game theory does not apply to economics because by definition all exchanges are a net gain.

  2. The Austrian School does not assume a free market.[/quote]

…Did you even read the prisoner’s dilemna above? You seem to be attached to this perfection ideal as dogma, not for logical reasons.

88

People in an exchange are not prisoners.

Game theory does not have any reference to economics, indeed, mathematics in general cannot make predictions about human behavior.

When I walk into a store to buy a candy bar the store owner is not competing with me. He may compete with other store owners but it is not a game, in the strict sense.

I defy you to write out a formal proof of game theory that applies to me buying new Hyundai.

89

[quote]LIFTICVSMAXIMVS wrote:
People in an exchange are not prisoners.

Game theory does not have any reference to economics, indeed, mathematics in general cannot make predictions about human behavior.

When I walk into a store to buy a candy bar the store owner is not competing with me. He may compete with other store owners but it is not a game, in the strict sense.

I defy you to write out a formal proof of game theory that applies to me buying new Hyundai.[/quote]

This is dogma, not reason

If people act RATIONALLY, then their actions can therefore be predicted through mathematical models. Are models perfect? no, but they’re the best we’ve got.

Read the prisoners dilemna, it has nothing to do with being prisoner (they way you mean it), it has to do with self-interest being to the detriment of both parties in competition.

90

[quote]LIFTICVSMAXIMVS wrote:
Fiction wrote:
dhickey wrote:
Curious to see someone apply this to economics.

Er…Game Theory is the mathematical model of choice for economics.

No it isn’t. Economics isn’t a game.

Do you know what a game is?[/quote]

Sweet Jesus dude…the motherfucking origin of Game Theory stemmed from the 1944 seminal work by Neumann and Morgenstern entitled Theory of Games and Economic Behavior.

What about this do you not get?

91

[quote]shookers wrote:
LIFTICVSMAXIMVS wrote:
People in an exchange are not prisoners.

Game theory does not have any reference to economics, indeed, mathematics in general cannot make predictions about human behavior.

When I walk into a store to buy a candy bar the store owner is not competing with me. He may compete with other store owners but it is not a game, in the strict sense.

I defy you to write out a formal proof of game theory that applies to me buying new Hyundai.

This is dogma, not reason
[/quote]

HIS NAME IS ROBERT PAULSON. HIS NAME IS ROBERT PAULSON. HIS NAME IS ROBERT PAULSON. HIS NAME IS ROBERT PAULSON. HIS NAME IS ROBERT PAULSON. HIS NAME IS ROBERT PAULSON.

92

[quote]LIFTICVSMAXIMVS wrote:
People in an exchange are not prisoners.

Game theory does not have any reference to economics, indeed, mathematics in general cannot make predictions about human behavior.

When I walk into a store to buy a candy bar the store owner is not competing with me. He may compete with other store owners but it is not a game, in the strict sense.

I defy you to write out a formal proof of game theory that applies to me buying new Hyundai.[/quote]

It is not just your ignorance that is astounding me, but your lack utter inability to accept that what you have IS ignorance despite the wealth of evidence to the contrary.

From Wikipedia:

Game theory is a branch of applied mathematics that is used in the social sciences (most notably economics), biology, engineering, political science, international relations, computer science (mainly for artificial intelligence), and philosophy. Game theory attempts to mathematically capture behavior in strategic situations, in which an individual’s success in making choices depends on the choices of others.

While initially developed to analyze competitions in which one individual does better at another’s expense (zero sum games), it has been expanded to treat a wide class of interactions, which are classified according to several criteria. Today, game theory is a sort of umbrella or ‘unified field’ theory for the rational side of social science, where ‘social’ is interpreted broadly, to include human as well as non-human players (computers, animals, plants)" (Aumann 1987).

93

[quote]shookers wrote:
LIFTICVSMAXIMVS wrote:
People in an exchange are not prisoners.

Game theory does not have any reference to economics, indeed, mathematics in general cannot make predictions about human behavior.

When I walk into a store to buy a candy bar the store owner is not competing with me. He may compete with other store owners but it is not a game, in the strict sense.

I defy you to write out a formal proof of game theory that applies to me buying new Hyundai.

This is dogma, not reason

If people act RATIONALLY, then their actions can therefore be predicted through mathematical models. Are models perfect? no, but they’re the best we’ve got.

Read the prisoners dilemna, it has nothing to do with being prisoner (they way you mean it), it has to do with self-interest being to the detriment of both parties in competition.
[/quote]

I’m more than familiar with the prisoners dilemma, it’s flawed for economic analysis. It starts out with a flawed assumption that competitors act with the same correct information and it further assumes that people are incapable of changing their minds or learning. Formalized mathematical models have no place in economics.

BTW, all action is rational action in the strictest sense. It does not make sense that one can act with out first reasoning. He may be acting on false theory or he may have made a mistake in applying that theory but to say there is no rationality in it is incorrect.

The more you look to mathematics for economic analysis the further down the wrong path you will be lead. Human beings are not innate objects; we have feelings; we are capable of learning; we can change our mind on a whim without reason.

Besides, there are no game theorists that are even employed in business because business owners don’t find it useful. That in itself shows how great it is for economic analysis.

94

[quote]Fiction wrote:
LIFTICVSMAXIMVS wrote:
People in an exchange are not prisoners.

Game theory does not have any reference to economics, indeed, mathematics in general cannot make predictions about human behavior.

When I walk into a store to buy a candy bar the store owner is not competing with me. He may compete with other store owners but it is not a game, in the strict sense.

I defy you to write out a formal proof of game theory that applies to me buying new Hyundai.

It is not just your ignorance that is astounding me, but your lack utter inability to accept that what you have IS ignorance despite the wealth of evidence to the contrary.

From Wikipedia:

Game theory is a branch of applied mathematics that is used in the social sciences (most notably economics), biology, engineering, political science, international relations, computer science (mainly for artificial intelligence), and philosophy. Game theory attempts to mathematically capture behavior in strategic situations, in which an individual’s success in making choices depends on the choices of others.

While initially developed to analyze competitions in which one individual does better at another’s expense (zero sum games), it has been expanded to treat a wide class of interactions, which are classified according to several criteria. Today, game theory is a sort of umbrella or ‘unified field’ theory for the rational side of social science, where ‘social’ is interpreted broadly, to include human as well as non-human players (computers, animals, plants)" (Aumann 1987).[/quote]

You fail at understanding the distinction between economics and mathematics.

I don’t care what wiki says. I am right and you are not. Believe what you want.

95

[quote]Fiction wrote:
LIFTICVSMAXIMVS wrote:
Fiction wrote:
dhickey wrote:
Curious to see someone apply this to economics.

Er…Game Theory is the mathematical model of choice for economics.

No it isn’t. Economics isn’t a game.

Do you know what a game is?

Sweet Jesus dude…the motherfucking origin of Game Theory stemmed from the 1944 seminal work by Neumann and Morgenstern entitled Theory of Games and Economic Behavior.

What about this do you not get?

[/quote]

I don’t care. It’s incorrect. Morgenstern, et al fail.

I offered more than an explanation why that is. You haven’t offered anything more than a wiki link.

96

Debunking game theory:

97

[quote]LIFTICVSMAXIMVS wrote:
shookers wrote:
LIFTICVSMAXIMVS wrote:
People in an exchange are not prisoners.

Game theory does not have any reference to economics, indeed, mathematics in general cannot make predictions about human behavior.

When I walk into a store to buy a candy bar the store owner is not competing with me. He may compete with other store owners but it is not a game, in the strict sense.

I defy you to write out a formal proof of game theory that applies to me buying new Hyundai.

This is dogma, not reason

If people act RATIONALLY, then their actions can therefore be predicted through mathematical models. Are models perfect? no, but they’re the best we’ve got.

Read the prisoners dilemna, it has nothing to do with being prisoner (they way you mean it), it has to do with self-interest being to the detriment of both parties in competition.

I’m more than familiar with the prisoners dilemma, it’s flawed for economic analysis. It starts out with a flawed assumption that competitors act with the same correct information and it further assumes that people are incapable of changing their minds or learning. Formalized mathematical models have no place in economics.

BTW, all action is rational action in the strictest sense. It does not make sense that one can act with out first reasoning. He may be acting on false theory or he may have made a mistake in applying that theory but to say there is no rationality in it is incorrect.

The more you look to mathematics for economic analysis the further down the wrong path you will be lead. Human beings are not innate objects; we have feelings; we are capable of learning; we can change our mind on a whim without reason.

Besides, there are no game theorists that are even employed in business because business owners don’t find it useful. That in itself shows how great it is for economic analysis.
[/quote]

Again Dogma. If people act rationally for their own benefit, you can identify a strict pattern. Once you have a pattern, bam, mathematical modelling begins. You seem to be contradicting yourself. First you say humans aren’t predictable, then you say they’re strictly rational and act in their self interest.

Incomplete information is a characteristic of the free market, not a nullifying factor

98

[quote]LIFTICVSMAXIMVS wrote:
Debunking game theory:

You Got Game Theory! [/quote]

I know few companies that hire physicists. Clearly physics is a bullshit field to.

Are you honestly trying to debunk an entire field of thought, winning multiple Nobel prizes with an irrelevant article?

99

No! I am not trying to dismiss this field of study; only as it applies to economics.

100

[quote]shookers wrote:
If people act rationally for their own benefit, you can identify a strict pattern.
[/quote]

No you can’t.

How do you account for people who change their mind or learn a new means of acting?