Social decision-making: The reality of game theory

There is an interesting article in the October 26th issue of Science titled “Social decision-making: insights from game theory and neuroscience.” The author describes three well-known games designed to test decision making. The Ultimatum Game is used to examine responses to fairness. Two players split a pot of money. One player proposes the split and the other chooses to accept it or not. If the offer is accepted, the split occurs. If not, no one gets a penny. If the players are motivated purely by self-interest, then the responder should always accept, even if the split isn’t fair, since she gets some money. However, in games with real people, the offer is usually a 50/50 split and any low offers are punished. For example, low offers of less than 20% are rejected half the time. This shows how our brains are wired to make decisions in a social context and you can speculate that our brains have evolved to maximize outcomes for our species as a whole. Two other games are also interesting: the Trust Game and the Prisoner’s Dilemma. In the trust game, a player (the investor) chooses to invest some of their money in the other player (trustee). Once invested, the money increases in value by some factor and the trustee can choose to return the money or not. If the trustee returns the money, both players benefit, however if the trustee doesn’t repay the investor, the investor loses their investment completely. The players interact only once during a game. The selfish idealized game theory player would never trust the trustee, therefore would never invest any money. However, again, with real players, the investor generally trusts the trustee and the trustee generally gives money back to the investor. The Prisoner’s Dilemma is similar, but both players simultaneously choose whether or not to trust each other. Again, game theory predicts mutual mistrust, but real players generally choose to trust each other. You could imagine using these types of games to evaluate how people will make decisions and then using the results to predict future decision-making by those people, or better yet, judging people’s decision making styles during a normal game. Maybe this is why James Bond always takes an opportunity to play cards with an opponent before doing battle with them!


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