Moral Calculations : Game Theory, Logic and Human Frailty

by Lazlo Mero

For crying out loud, NEVER play the dollar auction!

June 2001

In this book, Mero adds some flesh to game theory, explaining why so many people become entranced with how it sets up economic and social choices as toy puzzles, in which people are trying to get the best possible outcome.

In particular, he explains some of the more infamous non-zero-sum games: the dollar auction, in which a dollar bill is auctioned off, but with a twist - both the highest bidder and the second-highest bidder must pay their bids, but only the highest bidder gets the dollar; and the prisoner's dilemma (and its variants), in which cooperation is the best result for the 2 players combined, but there's the danger of being undermined by the other player and individually losing everything. The dollar auction is likened to an arms race (indeed, the U.S. won =that= particular dollar auction against the Soviets), where what is being bought is military supremacy between superpowers. The prisoner's dilemma can be likened to a situation like a lane closure on a busy highway: if one merges in turn, and everybody else does, traffic keeps flowing somewhat; however, if only one person zooms ahead and merges ahead of where they should in fairness, the traffic can still go on fine and that one zoomer gets a benefit over the other drivers. But if =everybody= tries to cut in line... traffic clog.

It is true that trying to extend game theory to morality is a tricky business, and as another reviewer has put it, the book gets downright embarrassing towards the end. However, I am a math teacher, and have used ideas from the book to put more =oomph= in my classes on game theory to gifted teenagers. There isn't much in the way of math in here, but plenty of rational thinking and can lead a little light on to why game theory research has led to the winning of a Nobel Prize in Economics (or two).

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Mary Pat Campbell, last updated 11 June 2001