Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Tuesday, May 17, 2005

Advice for Game Theorists

Some time ago, Tyler Cowen linked to this interview with Thomas Schelling. In one part of the interview, Schelling was asked his opinion of modern game theory. He replied,

I would like to make the following broad claims: Economists who know some game theory are much better equipped to handle a lot of important questions than those who don't. But economists who are game theorists tend to be more interested in the mathematics aspect of the discipline than the social sciences aspect. Some economists of the latter group are good at using their theoretical work to examine policy issues. Still, many – and I think this is especially true of young game theorists – tend to think that what will make them famous is their mathematical sophistication, and integrating game theory with behavioral observations somehow will detract from the rigor of their work.
What he said.

I have attended far too many job interviews and recruiting seminars in which the candidate had a superb grasp of mathematically sophisticated game theory but little or no interest in integrating the models with any behavioural observations. The results were uninteresting.

At the same time, I have often argued that it is impossible to understand and appreciate the richness of modern economics without a basic grasp of game theory.
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