Do you love games? I do. I have fond memories of family nights spent over board games and card games. I am also a member of the genuine video game generation: I witnessed the birth of the first Pokemon, not to mention LAN-parties, massive online gaming and the invention of ‘e-games’. For most of my life, I considered games to be a positive, fun experience. Then, I studied economics – and everything changed. I learned that games are supposed to be dead serious. They can turn you into an offender, or into a victim. They can be the essence of economy – and of war. But they can be, they don’t have to, if we resist these ideas. So let’s look at some of the dangers economics brings to the idea of games.
What’s a game to an economist? The shortest and most popular answer would lead us to the work of ‘game theorists’ such as John Nash. You might have heard about Nash through the blockbuster movie A Beautiful Mind. He was a gifted mathematician and won a Nobel prize for solving the prisoner’s dilemma. If you’re not familiar with that, you can look it up, but let me shortcut you to it’s base consequence: Nash showed that, when two people can’t be sure about each other’s behaviour, the dominant strategy would be to act egoistic. It’s an easy thought to follow: When you’re at risk of being exploited by someone else, it might be smarter to be the first to exploit them before they exploit you. If someone wins, the other one has to lose: It’s called a zero-sum game. Can you guess already why I wrote about ‘paranoia’ in the title?
Economists, and more so business teachers, love game theory. It can teach us about competition strategies and rational decision-making, and it can offer mathematical solutions, such as the Nash equilibrium. It’s even prominent in business ethics, because it tells us that we can’t expect people to behave morally when they’re in a prisoner’s dilemma. Remember: If you’re not the exploiter, you’ll be the exploited. Since we can’t expect people to willingly choose being a victim, the only rational way for business ethics would be thinking about institutional frameworks – create a world with as little prisoner’s dilemma-like situations as possible.
But this is where my paranoia-warning kicks in: Who is going to do that? Who is engaged in promoting institutional frameworks for a less competitive, less prisoner’s dilemma-like economy? By far and large, policy makers seem to believe in free markets and competition. If we push our morals away from individual ethics to institutional ethics, we would be prisoners alright – prisoners of our own paranoia. While waiting for a ‘better’, less competitive world, we would have to stick with the Nash-consequence and exploit others before they exploit us. Nash actually prove it mathematically: Right here, right now, noone can expect anyone to act morally.
However, I aggressively resist to accept that as a ‘truth’, and I have some academic arguments to do so. I argue that it is rather one way of many possible ways to look at human behaviour, and it’s a very bleak and paranoid way that we should not adopt. The arguments I want to give are
- methodogical (the way the prisoner’s dilemma is designed)
- biographical (the way Nash lived and worked)
- paradigmatical (the way we understand and practice economics as a science)
- and educational (the way we learn, teach and engage in meaning-making social interactions).
I wrote that I want to argue that the idea of the prisoner’s dilemma is not a ‘truth’. Methodogically speaking, it is ‘just’ an intellectual game, a very abstract model. Models try to help us understand certain aspects of reality. As such, a good model might tell something about truth, but it can’t be true by itself. Like a house built with Legos: The house itself can’t be true or wrong, but it might help us seeing the truth in some aspects of real life (like, if we don’t add windows to our Lego house, it will be quite dark inside – that’s a ‘true’ aspect of real life). So how can we evaluate the prisoner’s dilemma and the Nash equilibrium for real life? First of all, when we assess models, we have to ask about their design – about their assumptions, their intensions and their architecture. If you review the prisoner’s dilemma, you will see that there are two very restrictive assumptions needed to make it work:
- The two people in this model are prisoners. They cannot leave the game and are forced to choose between only two options.
- The two prisoners cannot talk to each other, the model just doesn’t allow any communication.
Now let’s evaluate this for economics: How many real life economic situations are like that? Insignificantly few, I argue. There’s almost always a chance just to leave the game. Often, it is the only moral (and rational!) decision to just say ‘no’ to a certain business practice. Yes, business can be fierce sometimes and competition might demand some roughhousing. But that doesn’t come close to a prison situation: It’s still individual choices of staying in the ‘game’ or doing something else. Even a real life prisoner would have the ultimate option to quit, by choosing suicide. Suicide rates in many developed economies prove this sad reality. Please, I certainly don’t want to argue for suicide at all. I am, however, pointing out that the option of ‘leaving the game’ is much more realistic than its exclusion from the model.
Same is true for communication: It might be common practice for some businesses not to talk to their competitors, but it is neither compulsory nor wise to do so. Every progressive business person I know emphasizes the importance of communication and transparency for sustainable success. There’s even a branch of economics studying the dynamics of competition and cooperation in depth: It’s called co-opetition.
So why did Nash work with these strong restrictions? Why did he accept the prisoner’s dilemma as realistic enough to be insightful? Or, we should ask: For which aspects of reality might it be applicable, if not for economy? Biographically speaking, Nash might not have been interested in its application at all. As a mathematician, he was mainly interested in solving mathematical problems. He did not invent the prisoner’s dilemma, other game theorists discussed it long before him. Like a Sudoku fan motivated to solve that one super hard riddle, it was just another unsolved mystery drawing the attention of ambitious mathematicians at that time. Ideas for application came later, and this is where paranoia hits its extremum: In the cold war between USA and the Sovjet Union.
In the 1950’s, Nash and some colleagues did secret research projects for RAND, a think tank to consult with US military. Many still interpret the cold war as a prime example of a prisoner’s dilemma: Whoever backs off first accepts the role of victim, US and Sovjet representants would neither truly communicate nor decide to quit the game. But again, nothing forced them to behave that way – nothing but psychological factors: mutual fear, paranoia and the belief that people act rationally and can be computed just like the simple machines of the just rising computer age. In terms of the cold war, people and whole nations were often understood as mere computable androids – paranoid androids.
In English, the word ‘game’ can be used for what I described in the first lines: a fun and positive social pastime. But it can also be used for anything strategic and competitive, with no fun left. In the past, nobles went hunting for fun. The English language still uses the word ‘game’ for wild animals, too – the victims of upper class hunting. As understood by cold war social engineers, ‘game theory’ was not a ‘playing theory’ but a ‘hunting theory’. A hunt, though, is stressfull for both sides. That stressful feeling of being hunted or hunting something uncatchable, that’s paranoia. To end the biographical note: Look up Nash’s biography and realize when he started to develop symptoms of paranoid schizophrenia himself.
The ways in which we see and speak are the categories of our thinking. At the time of the cold war, for a mathematician working with threatful, competitive situations everyday, paranoia is a suitable (or rather, understandable) state of mind. But why should economists adopt it? I think that the current mainstream paradigm of economics is prone to paranoia for several reasons. One of those is the love for math: If there’s a sleek numerical solution, economists tend to love it and stop asking the more philosophical questions that initially lead to that solution. The mathematical power and the elegant simplicity of Nash’s equilibrium are kind of sexy. It’s something you can use to impress students, friends and business people within minutes. And it kind of ‘works’ – just like the cold war ‘worked’ – if you find two people who believe in it enough to willingly take up the role of being ‘prisoner’, not considering that they could always leave the game like I argued above. Actually, there are several other ‘games’ to choose. While most economists know Nash only for his work on non-cooperative games like the prisoner’s dilemma, he also worked on cooperative games! Moreover, there’s a whole branch of game theory concerned with cooperative games, and eventually, there’s much more to economics than game theory and math after all. Economics started out as a branch of philosophy, and I argue it still is. At the very least, it’s a social science, leading us to the last line of argument.
Whenever people engage in social interactions, there’s a potential to learn. We can teach each other about things we don’t know yet, we can exchange ideas and communicate our categories, in order to find a common language, a common way of going through life as groups. If a lecturer at university decides to teach the Nash eqilibrium in an economics course, he or she should be very aware of the restrictions and pitfalls of this model. I argued that it came from a troubled man in troubled times and it can be understood with some troubling consequences, underestimating the power of individual ethics, communication and the opportunity to leave games that are no fun. An educated person, however, should be able to do all this:
- Question the base assumptions of the ‘games’ being played;
- consider the historical and moral backgrounds of the categories and thinking models we use to make sense in our lives;
- and say ‘no’ to situations that cannot be solved without victimizing fellow humans – there is always a way of cooperation.
Sometimes, we don’t know those ways yet. But if we just keep thinking that a zero-sum game has to stay a zero-sum game forever, if we just accept victimization and exploitation instead of thinking about new alternative ways, we neglect the impressive history of humankind. This history, our history, is a long journey towards more and more cooperation, peace and wealth for everyone. The history of humankind is not a zero-sum game. Hopefully, it’s not a game at all, but a serious enterprise we can engage in as hopeful, creative human beings – not as paranoid androids.
