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Copyright

Michael Richter; Ariel Rubinstein;

Published On

2024-11-13

Page Range

pp. 113–138

Language

  • English

Print Length

26 pages

5. A Comparison to Game Theory

Chapter of: No Prices No Games!: Four Economic Models(pp. 113–138)
In the final chapter, we compare this book's modeling approaches with each other and to those of standard Game Theory on two ``battlegrounds''.
The first is the matching economy. An even-sized population of agents must match into exclusive pairs (pairings). Each agent possesses a preference relation over potential mates.
The standard cooperative game theory solution concept for matching economies is ``pairwise stability''. Following Richter and Rubinstein (2024), we compare this concept with the jungle equilibrium, the Y-equilibrium and the status and initial status equilibrium concepts.
The second battleground is a ``political economy'' situation. A group of agents hold views on a political issue. Each agent chooses a position and has preferences only regarding the position he himself chooses (and not the choices of others). However, there is a need that a majority of agents choose the same position.
Traditionally, such a situation is modeled as a non-cooperative game and its Nash equilibria are calculated. Extending Richter and Rubinstein (2021), we compare this approach with the convex Y-equilibrium and the biased preferences equilibria.
On both battlegrounds, the new approaches lead to very different outcomes than the traditional ones.

Contributors

Michael Richter

(author)
https://orcid.org/0000-0002-5220-9995

Michael Richter is a professor of Economics at Baruch College, City University of New York and Royal Holloway, University of London. He is a graduate of the University of Chicago (BS, Math) and New York University (PhD, Economics). His research interests are in microeconomic theory, particularly decision theory, general equilibrium, and search. He lives in New York, with his wife and two kids. For other works, the author’s website is: http://www.mrichter.co/

Ariel Rubinstein

(author)
Emeritus in School of Economics at Tel Aviv University
Professor of Economics at New York University
https://orcid.org/0000-0003-1574-2659
https://arielrubinstein.org/

Ariel Rubinstein was born in Jerusalem and received his PhD from the Hebrew University in Jerusalem in 1979. Has been a Professor at the Hebrew University and at Princeton and currently is a Professor (Emeritus) at Tel Aviv University and a Professor of Economics at New York University. He has served as the President of the Econometric Society (2004). He is a foreign honorary member of the American Academy of Arts and Sciences and the American Economic Association, an Elected Fellow of the Israeli Academy of Sciences and Elected Corresponding Fellow of the British Academy. His 7 books reflect his research interests: Bargaining and Markets (with M. Osborne) (1990), A Course in Game Theory (with M. Osborne) (1994), Modeling Bounded Rationality (1998), Economics and Language (2000), Lecture Notes in Microeconomics (2005) and Models of Microeconomic Theory (with M.Osborne) (2020). His book Economic Fables (2012) presents his general views about Economic Theory. He created and manages the Atlas of Cafes (where one can think). All his books and articles are accessed through his homepage https://arielrubinstein.tau.ac.il.