Archive for 7 March 2007
Is Game Theory in Trouble?
| Peter Klein |
Yes, say John Quiggin and Flavio Menezes, and it cannot be saved. Game theory, they write, “has failed to deliver on its original promise of generating sharp predictions of behavior in situations where neoclassical microeconomics has little to say. . . . Experience has shown that in most situations, it is possible to tell a game-theoretic story to fit almost any possible outcome.”
Taken cumulatively, the folk theorem, the Klemperer-Meyer analysis of oligopoly and the more general analysis of economic interactions presented here demonstrate that, given a description of an economic interaction and a feasible outcome consistent with individual rationality, a strategy space can be chosen for which the given outcome is a Nash equilibrium (under fairly weak conditions, the unique Nash equilibrium). Any symmetric outcome for a typical aggregative game can be represented as an Nash equilibrium for strategies defined by some strategic variable that may be interpreted as a function of price and quantity, and there is in general, no warrant for preferring any particular choice of strategic variable.
See the commentary and discussion here and a related exchange here. One possible response, which I haven’t seen raised in the discussion, is that even if game theory is not useful for prediction, it could be valuable for understanding. (Not everyone appreciates the distinction, however.)
TCE Workshop in Bergen, 15-16 November 2007
| Nicolai Foss |
In 2004, my colleagues at the Norwegian School of Economics and Business Administration, professors Sven Haugland and Svein Ulset, and I organized a “Nordic Workshop on Transaction Cost Economics in Business Administration.” Oliver Williamson and my co-blogger gave keynote speeches. The best papers, including a paper by Williamson, were published in a special issue of the Scandinavian Journal of Management in 2005.
With Professor Arne Nygaard, Sven Haugland and I now plan a new workshop, no longer “Nordic,” on the application of TCE in business administration. (more…)
Economists Try Open-Source Peer Review
| Peter Klein |
It didn’t work so well for Nature, but a new economics journal, e-conomics, is giving open-source peer review a try. The journal, associated with the Kiel Institute, “adopts a ‘Linux approach’ to publication, viewing research as a cooperative enterprise between authors, editors, referees and readers.” After a paper is submitted, it is posted on the journal’s site and registered readers are invited to comment and to rate other readers’ comments. Formal referee reports are also solicited and, when received, published on the site, along with author responses to the reader discussion and to the referees. If the paper is accepted, this history is preserved along with the final version of the paper, which remains freely available.
There are already some good submissions available for public review, including Oliver Williamson’s “Transaction Cost Economics: An Introduction,” a revised version of which will also constitute the introduction to the Elgar Companion to Transaction Cost Economics.
Organizations and Markets 
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