Abstract
The last of the three chapters on consequences for the decision sciences looks at strategic and economic decisions, a vast part of the chapter being dedicated to a certain simultaneous market entry game. That game turns out to be interesting from the perspective of the multiverse because it is characterized by multiple Nash equilibria and hence by substantial uncertainty on the side of the players as to what strategy to choose (Rapoport 1995). In the literature, some of the experimental findings in those games have jestingly been called ‘magic’ (Kahneman 1988), because it is hard to make sense of players’ coordination success in those games. The chapter will show that part of the ‘magic,’ e.g., part of the experimental findings by Rapoport (1995), becomes reasonable when applying a clustered-minds multiverse perspective, and that those findings are informative in turn for the development of the theory of the clustered-minds multiverse – by helping to better understand the clustering by individuals. Experiments on other market entry situations (i.e., Camerer and Lovallo 1999) as well as games against computers will also be analyzed through the lens of the multiverse.
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Notes
- 1.
Decision scientists would often call those types of decision situations ‘games against nature,’ but I find this phrasing unpleasant and inappropriate, given that mankind—in light of climate change etc.—might actually be seen as playing games against nature in a quite literal sense.
- 2.
This type of game also allows abstracting from a real-options structure that would otherwise have to be taken into account or the equally complex issue of dynamic equilibria within the multiverse.
- 3.
Others have tried to clarify what is going on in those experiments using ‘classical’ means (including different experiments, other statistics etc.), however, with mixed success. It is beyond the scope of this book to go into those papers and results, here.
- 4.
In fact, due to the large possible payoffs, respondents were paid out based on the payoff achieved in one of the rounds in Rapoport (1995), only. That round was, however, selected randomly after all experimental trials had been completed.
- 5.
The two pure strategies in this situation are ‘enter’ and ‘do not enter.’ Mixed strategies would in contrast specify a probability distribution between the two (one of the two strategies would be ‘drawn’ rather than selected)—see below.
- 6.
The latter case is special because the ‘next’ player is indifferent between entering and not entering.
- 7.
An explanation as to how to calculate the specific probability is beyond the scope of this book. This also applies to the discussion as to how those random draws could exactly be understood/interpreted.
- 8.
Indeed, Rapoport repeated this experiment, with some weeks in between the first and second and the second and third ‘block,’ with the same subjects (participants in a Ph.D. class). So, in total, he collected data from 60 trials (with only very few no shows in the second and third block). The data from the three blocks differed with respect to the overall entry, compared to capacity. But they did not differ with respect to what I am interested in, here. Therefore, I concentrate on the analysis of the data in the first block, i.e., restrict the analysis to the first 20 trials.
- 9.
It is a bit unusual in the decision sciences (including effectuation) to have an aspiration level (e.g., a minimum payoff) and a maximization criterion applied to the same output dimension. However, in the multiverse such an assumption appears reasonable since different realities are to be ‘covered’ by consciousness.
- 10.
I do not need to prove this formally, here, a simple ‘verbal proof’ clearly suffices. Indeed, the cases of one player being alone as well as sharing this market with one or two other players pertains to both c = 3 and c = 10. All additional cases such as sharing the market with 3, 4, 5 etc. other players only exist with c = 10.
- 11.
Staying in one reality cluster supposes that the memories of the participating versions are consistent. Violations of this consistency (“You remember us having had an entry of 5 with that capacity, and you tell me that you were one of the entrants; but I remember an entry by only one person, and that was me”) are a problem. (At least we do not normally experience them.) Although I excluded consciousness reallocations from the considerations in this chapter, Box 6.3 with its considerations on memory and ‘quantum brainwash’ are relevant, here.
- 12.
In fact, the situation is even more complex. There are different versions of Rapoport getting different measurement outcomes, and we (I as the author, you as the reader) share a reality with a certain version of Rapoport that generated this type of results. Given the complexity of this thought, I opted for using a simplified version of reality in the text.
- 13.
In a way, Rapoport (1995) is speculating along similar lines, but he struggles with the fact that this explanation is not convincing in a singular reality.
- 14.
It is clear that parallel realities must lead to parallel markets, side-by-side with many other things such as parallel New York Cities, parallel Berlins and parallel Notre Dame Churches.
- 15.
This implies that I suppose that computers have no consciousness; this might be debated, but not within the scope of this book. Also, it could still be that humans attach meaning to their interaction with computers. I am not going to explore this point here either.
- 16.
There was some strange pattern occurring in first trials as well as kept promises. People disliked the human-like computers (face, voice) and clearly preferred the treatment were the computer just sent text messages. I would like to argue that this might be due to the text communication actually being more natural somehow than an artificial face or voice. Only looking at the text communication treatment, the difference between computer and person as counterparts became quite small but did not completely disappear.
- 17.
Unfortunately, the authors were precise only with respect to the trust game. In a trust game, one player goes ahead with transferring an amount of money to a second player, and that player may reciprocate by returning part of the transferred amount that will in turn be multiplied with a certain factor. The game seemed to have been played in a simplified version. Details on the other two games are totally missing. It might be speculated that the mutual interest game has been some form of a prisoner’s dilemma game, but one cannot be sure.
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Schade, C.D. (2018). Games and Markets. In: Free Will and Consciousness in the Multiverse. Springer, Cham. https://doi.org/10.1007/978-3-030-03583-9_10
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