Does Game Theory Work The Bargaining Challenge Ken Binmore by Ken Binmore 9780262026079, 0262026074 instant download after payment.

When Binmore began his experimental work in the 1980s, conventional wisdom held that game theory would not work in the laboratory, but Binmore and other pioneers established that game theory can often predict the behavior of experienced players very well in favorable laboratory settings. The case of human bargaining behavior is particularly challenging for game theory. Everyone agrees that human behavior in real-life bargaining situations is governed at least partly by considerations of fairness, but what happens in a laboratory when such fairness considerations supposedly conflict with game-theoretic predictions? Behavioral economists, who emphasize the importance of other-regarding or social preferences, sometimes argue that their findings threaten traditional game theory. Binmore disputes both their interpretations of their findings and their claims about what game theorists think it reasonable to predict.

Binmore's findings from two decades of game theory experiments have made a lasting contribution to economics. These papers—some co-authored with other leading economists, including Larry Samuelson, Avner Shaked, and John Sutton—show that game theory does indeed work in favorable laboratory environments, even in the challenging case of bargaining.