game theory essay content

Question 1

intro

Answer 1

economic games & game theory have been instrumental in ELUCIDATING the DYNAMICS of cooperation in various social context.

THIS ESSAY aims to assess the extent to which economic games and game theory contribute to our understanding of cooperative behaviours, CRITICALLY EVALUATING their UTILITY through empirical evidence and theoretical frameworks.

Question 2

intro to the difference economic games

Answer 2

Economic games, such as the prisoners dilemma, public goods game and the ultimatum game provide CONTROLLED EXPERIMENTAL SETTINGS in order to study cooperation by SIMULATING real life decision making scenarios.

COLMAN, 2023 ELUCIDATES how game theory, a mathematical framework for analysing strategic interactions, provides insight into the rational behaviour of individuals in competitive and cooperative settings.

Question 3

prisoners dilemma

Answer 3

• illustrates the tension between individual self-interest and collective cooperation.
• players face a dilemma where mutual cooperation leads to the highest payoff, but individual incentives often lead to defection, leading to suboptimal outcomes.
• through interactions of the game and variations in strategy, researchers can. gain insight into the factors influencing cooperation SUCH AS TRUST, RECIPROCITY AND PUNISHMENT MECHANISMS.
• a rational player would never chose the dominant strategy, BUT HUMANS ARE IRATIONAL.

Question 4

public goods game

Answer 4

• examines COLLECTIVE ACTION DILEMMAS
• individuals contribute to a common pool resource with the option to free-ride or cooperate
• cooperation diminishes when the contribution exceeds the perceived benefit, HIGHLIGHTING THE ROLE OF SOCIAL NORMS AND INCENTIVES IN SUSTAINING COOPERATION (and in favour of hamiltons rule)
• (game theory models such as the theory of repeated games and evolutionary game theory provide a theoretical frameworks to analyse the emergence and stability of cooperative strategies over time).

Question 5

critical analysis point 1

Answer 5

• their applicability is subject to certain limitations and criticisms.
• experimental settings may oversimplify real world complexities. too simple - leads to discrepancies between lab findings and naturalistic behaviour.
• artificiality of economic games may fail to capture contextual factors SUCH AS SOCIAL NORMS, CULTURAL AND INDIVIDUAL DIFFERENCES AND ENVIRONMENTAL CONDITIONS which significantly impact cooperation.

Question 6

critical analysis point 2

Answer 6

• assumption of rationality inherent in game theory models - does not fully capture the bounded rationality and cognitive biases exhibited by individuals in decision making processes.
• BEHAVIOURAL ECONOMICS CRITIQUES THE RATIONAL ACTOR MODEL BY INCORPORATING INSIGHTS FROM PSYCHOLOGY NEUROSCIENCE TO BETTER UNDERSTAND DEVIATIONS FROM RATIONAL BEHAVIOUR.
• prospect theory for instance, elucidates how individuals’ risk preferences and loss aversion influence cooperation strategies in certain environments.

Question 7

Ultimatum game

Answer 7

• classic experimental paradigm in game theory that investigates the dynamics fairness, reciprocity and bargaining behaviour
• proposer given a sum of money and must propose a division of this sum between them and the receiver. Receiver can either accept or deny this offer, if receiver accepts then split amount, if rejects then no one gets anything.
• From a purely rational perspective the receiver should accept any offer cos its better than nowt, however many studies have found that receiver rejects any offers they deem as unfair, particularly if proportion is skewed towards giver (THALER, 1988)