Economics, Literature and Scepticism

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I am a PhD student in Economics. I am originally from South Africa and plan to return there after my PhD. I completed my M. Comm in Economics and my MA In Creative Writing (Poetry) at the University of Cape Town, where I worked as a lecturer before starting my PhD.

Monday, July 26, 2010

Books for Game Theory

Posted by Simon Halliday | Monday, July 26, 2010 | Category: , , , , | 3 comments

Today, at the University of Cape Town, I began to teach an undergraduate course in game theory.  The course is a broad-based introduction to game theory for students across the university's faculties: from humanities, to commerce, to engineering and the built environment.  We instruct with the textbook Games of Strategy (3rd ed) by Dixit, Reiley and Skeath.  The book is a good, broad-based and intuitive introduction to game theory, with mathematical formalisation that is accessible to the majority of students who have done basic calculus.  However, producing problem sets is difficult year-on-year as many of the problems are similar and students often share information across the university network.  I mean that literally: they share their solutions of old problem sets so that their friends can download the solutions and hand them in as 'their' solutions.

Consequently, in an attempt to expand the number of resources I have for problem sets, I have found a number of other books useful for finding additional problems, especially some problems outside of economics.  I have several goals for the course, one of which is to ensure that the students have many problems that they can work on in order to prepare for the mid-term test and the exam.  I have found a problem-oriented approach to work quite well and, as far as I understand it, research demonstrates that this is a good way to approach a course like introductory game theory. Nevertheless, I also hope to convey most of the intuitions in accessible and commonsensical situations.  I have lectured the course a few times before and I am looking forward to lecturing it again after this hiatus (the last time I lectured it was for the summer term in early 2007). 

Here is a list of the books I have found useful so far:
Binmore, Ken (2007) Playing for Real - Gets a bit complex for the course I will teach, but has some good examples that one can adapt quite easily for problem sets.  The book is an updated version of Binmore's earlier (1991) Fun and Games.
Miller, James (2003) Game Theory at Work: How to use game theory to outthink and outmaneuver your competition - written for the businessperson wanting to understand the basics of game theory, this book has many examples that can be adapted to create problem set questions.  The book could have been better edited and better conceived in parts, but it does give many typical problems in different settings that can be useful for someone producing problem sets.
McCarty Nolan and Adam Meirowitz (2007) Political Game Theory: An Introduction - this book has several basic examples with added complexity that make for good problem set questions.  Moreover, it has problem sets at the end of chapters that can be used quite easily for problem sets. The book itself is a bit too formal for the 2nd year course that I am teaching, but I think that it could probably be used quite easily in a higher level undergraduate or Honours-level course where the mathematical formalisation would not be a problem for students.
Rasmusen, Eric (2006) Games and Information: An Introduction to Game Theory - Rasmusen uses a number of definitions and approaches that I would not use when teaching game theory, nevertheless he has many interesting and fun examples in his textbook that can be put into problem sets for a course like mine.  Rasmusen also gets a bit too mathematical and caught up in definitions that I would not want to use. 
Romp, Graham (1997) Game Theory: Introduction and Applications is targeted at advanced undergraduate and early graduate students. Consequently, the book as a whole gets too complex for my course, but several of the examples in the introductory chapters as well as 'dumbed down' versions of the applications can make good problems for an introductory game theory course.  
Straffin, Philip D. (1996) Game Theory and Strategy is also a bit too mathematical for the needs of my course.  Nevertheless, it also has some good examples of zero sum and non-zero sum two-person games that can be easily introduced into an easier course.  The N-person games stuff is interesting, but too in depth for the way in which we approach games with many players. 
Gibbons, Robert (1992) Game Theory for Applied Economists is again too mathematical for the course I am teaching, but it has numerous examples and problems that can be adapted to an easier and more intuitively directed course. 

Overall, looking at all of these books has reinforced how Dixit, Reiley and Skeath is a great book for an introductory game theory course. Most of the books claim to be introductory, but aren't really, they're introductory if you've done sufficient calculus and economics, but not introductory in the sense that most second year students in an cross-faculty course would be able to deal with them. Instead they are pitched at an advanced undergraduate or introductory graduate level where there seems to be a lot of competition for that kind of book.  I'm surprised that more authors haven't tried to take the path that Dixit, Reiley and Skeath have by finding a less formal way to approach game theory and hook students into an area of study that has such potential, notwithstanding its flaws (see Hargreaves-Heap and Varoufakis' Game Theory: A Critical Introduction or some of the passages in Gintis's Game Theory Evolving). 

Books I'm not using:
Osborne and Rubinstein - A Course in Game Theory - Too much mathematics in an inaccessibly written way.  
Binmore, Ken - Game Theory: A Very Short Introduction - Though this is meant to be a book for the layperson and I thought I might get some useful examples from it, I got the sense that someone would have had to study a fair amount of economics to make head or tail of it.  Not useful.
Gibbons (1992) A Primer in Game Theory - Too mathematical and too brief, I'd use this for an advanced undergraduate course.
Gintis, Herbert (2009) Game Theory Evolving (2nd Edition) - More focused on evolutionary game theory, which I'd love to teach, but is outside the ambit of this course also requires more math than 2nd years will have. 

There are many other books that I haven't begun to look at or study, especially some of the more advanced Micro texts that would be unnecessary for a course such as this.  I also know that Dixit and Nalebuff have two good books - The Art of Strategy and Thinking Strategically - but I don't have those to hand and therefore did not want to comment on them.  

Thursday, July 15, 2010

Collective Secular Action: Protest

Posted by Simon Halliday | Thursday, July 15, 2010 | Category: , , , , | 5 comments

Since arriving in London, I'd been intending to meet up with fellow sceptics, humanists and affiliated people. It took a while, but I got around to doing some stuff.  I've been involved in three things in the past two weeks: the Protest The Pope march at London Pride 2010, a meet-up of the Central London Humanist Group last week, and a talk by Simon Perry (he of Quacklash fame) at the meeting of Westminster Sceptics on Monday night.  I'll blog about each of these in turn. Saturday 3 July, participating the the London Pride 2010 parade and march from Baker Street to Trafalgar Square, I joined the 'Protest the Pope' section in the walking group of the pride march.  We had a large placard stating that we 'Protest the Pope', the particular relevance of which for London Pride 2010 is the Pope's position on equality of sexual orientation, on 'biological differences' between people, on denying the freedom of choice to women, on Ratzinger's own criminal acts as a concealer of pedophilia in the church, etc.1 It must be noted that we were not out there to protest Catholicism or religion generally, but rather the particular positions that the pope has taken and on the ways in which he has affected government policy and pressured policy in the UK. march went well.  To choruses like "Say yes to condoms, say Nope to the Pope", we handed out fantastic stickers protesting the pope's state visit to the UK and pamphlets about the organisation.  [As a state visit an invitation extended by the British head of state to the head of state of the Vatican it will be paid for by the UK taxpayer and should cost upwards of 30 million pounds.2] We also protested the things mentioned in the paragraph above, in addition to abstinence only sex advice and more.   It was a pleasure to be involved in a well-organized march on behalf of the LGBT community, but also in support of a crusade in which I believe - trying to protest the power of religious leaders in secular societies.   

I hope that in the future I can participate in similar protests as part of the on-going movement toward a secular society in which separation between religions and the state is constitutionally protected and in which individuals are better educated about alternatives to religious morality, of which secular humanism is one I find particularly attractive. Specifically, I would like to see increased activity in South Africa, in the mode of what Michael Meadon, Jacques Rousseau, Tauriq Moosa, Angela Butterworth, and many others have been trying to promote as and how they can (I would link to more of you, but I just can't do it Captain).  I hope that it becomes more widespread and more formalised and I intend to do my bit when I return to South African.  Later in the week I'll comment briefly on my experience of the Central London Humanist Group and the Westminster Sceptics - all of it positive. 

End Notes
1. On this, yes, there are biological differences between men and women, for example,  I happen not to have particularly large breasts.  The point is that, for those things that 'count' there may be greater variation within one gender than between genders such that it is difficult to claim what is meant by 'a single biological difference' that is totally unaffected by culture or social context. It also isn't obvious that 'biological differences' imply anything about gay marriage commitments either, unless we tie it to 'consummation' that, for whatever reason, can only occur between a penis and a vagina.    
2. Notwithstanding the fact that the reason that the Vatican is itself treated as a sovereign state is because of a deal - the Lateran Accords - between the then pope, Pope Pius XI, the King of Italy, Victor Emmanuel III and the fascist Benito Mussolini. 'What?' I hear you say, "We're held to deals made by a monarch and a fascist?" Indeed we are. It's contract law, see. It made the Vatican a sovereign state, see. And we can't interfere with sovereignty in international law, see? The treaty was adopted into the Italian constitution in 1947, so some may say, "Ahah! Your grievances are irrelevant." But, I don't get how one country (Italy) can decide at one of its weakest points in history on the continued existence of a theocracy that affects the world internationally.  Granted, this happens all the time in the middle east, but I will support my position by saying I object to all theocracies, not just the Vatican. I do need to consider this more, but genuinely consider it to be a problem. 

Monday, July 12, 2010

Rationality v. Money-Maximising Self-Interest

Posted by Simon Halliday | Monday, July 12, 2010 | Category: , , , , | 1 comments

So I watched this talk of Dan Ariely's with BigThink (embedded below). He covered interesting topics as always. But he also brought up my 'pet hate' when people talk about rationality and self-interest and how they are often conflated when people talk about behavioural economics in the popular press. What's the point here: a rational actor maximises the payoff or utility that they gain from taking certain actions, that is consuming goods, engaging in certain activities, etc. A self-interested individual who maximises their money has rational preferences over money and is self-interested and will therefore engage in activities to maximise the amount of money that they have, calculating the costs and benefits in order to do so. But a rational individual who has other-regarding preferences - that is they care about how other people behave - an individual who does so rationally may give some money away, may behave trustingly, and may punish individuals she sees infringing what she may perceive to be social norms. Notice that such an individual remains rational, but her preferences are not the preferences of an entirely self-interested individual who only wants to increase the amount of money that she has.

Anyway, I feel the need to bring this up because far too many people talk about rationality and self-interest interchangeably when they are not. One of the problems we encounter, for example is that you could hypothetically have irrational individuals, some of whom are otherwise self-interested and some of whom are other-regarding. We might not be able to differentiate between these individuals if their irrationality is such that they behave in ways that do not maximise what we perceive to be their preferences. But we may still have rational actors who are self-interested (also called self-regarding), other-regarding or bits of both.  So when Ariely says that trust and punishment (vengeance) are irrational he is not actually defining the problem properly, or he's assuming that the preferences of being are in fact the preferences of someone who is an entirely self-interested money-maximising individual.  I believe that the evidence indicates that most people are not wholly money-maximising and only self-interested - their preferences are structured differently.  Consequently his rumpus about rationality is a poorly constructed problem about preferences and not a problem about rationality. 

Later he is asked about companies and irrationality.  He then talks about something 'making sense'.  Logic and rationality are not the same thing.  This is a sophomoric error.  He talks about focus groups being less useful than we think they are.  If this were irrational then it would mean that they do not help companies to make profit, because rational companies go about maximising profits (or maximising share prices or some other goal).   

Ariely finally nods his head to other-regarding or social preferences toward the end of the interview when he talks about 'society' and social norms, but places nowhere near enough emphasis on it given the power he attributes to 'irrationality' and the time, content and rhetoric he dedicates to 'irrationality'. Oh well... 

Otherwise, his commentary on reward-substitution, differences in time preferences and other phenomena is interesting and apposite.  I recommend that you take a look at the video and see what Ariely has to say, but make sure that you realise he's trying to package the talk more accessibly. 

Sunday, July 04, 2010

Cory Doctorow on Copyright

Posted by Simon Halliday | Sunday, July 04, 2010 | Category: , | 0 comments

I'd like to encourage people to take a look at the video embedded below, which is a talk by Cory Doctorow about copyright and democracy. If you don't know, Doctorow is co-editor of and a best-selling author. He makes many fascinating arguments about the problems of copyright creep, the democratic state, and the ways in which our lives could be monitored and affected by third parties that are allowed access to end-users' personal information. These third parties could be governments or, increasingly, they could be corporates. Consider the myriad possibilities for interactions between corporates and governments that if either or both had access to tons of information about us and could simultaneously have control over what is on our computers. We already know that this has happened with Amazon and the Kindle, with Apple and its apps, with Google and Android - the companies take stuff off the end users' device that they don't want there despite protests by the end users. Crazy stuff. Imagine that by a government too. Scary stuff. Consequently, I don't believe that the four horsemen of the infocalypse - terrorists, drug dealers, pedophiles, or organized crime - or copyright infringements constitute sufficient justification for attempts to monitor my and your internet activity and the applications we happen to have on our devices. Anyway, watch the video. It's illuminating.