Bob Murphy Show Ep. 467 Haman and Murphy Discuss the Weaknesses of Game Theory
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Nov 27, 2025 In this discussion, Adam Haman, a keen commentator on economics and game theory, joins Bob Murphy to critique formal game theory. They explore the historical evolution of game theory and its applications in biology and computer science. Adam illustrates the complexities of strategies with real-life examples like poker. The duo addresses the disconnect between human behavior and game theory predictions, emphasizing fairness in decision-making. They also examine the limits of game theory in real-world scenarios, challenging conventional wisdom around cooperation and defection.
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What Game Theory Actually Studies
- Game theory studies strategic interaction where each player's payoff depends on others' choices rather than taking prices as given.
- This shifts modeling from individual optimization to predicting beliefs and responses to others' strategies.
Origins: Von Neumann To Nash
- Bob recounts von Neumann and Nash founding modern game theory and extending it beyond zero-sum games.
- Nash introduced mixed strategies to guarantee equilibrium existence in broader games.
Equilibrium Can Be Non‑Credible
- The ultimatum game shows Nash equilibria can be non-credible and counterintuitive when modeling real human responses.
- Refinements like subgame perfection eliminate non-credible threats but can predict extreme offers that humans reject.
