[FoRK] The Traveler's Dilemma

Stephen D. Williams <sdw at lig.net> on Thu May 24 13:07:07 PDT 2007

Aaron Burt wrote:
> On Wed, May 23, 2007 at 06:20:15PM -0400, Stephen D. Williams wrote:
>   
>> I really need to talk to this guy to either figure out his deficiencies 
>> or mine.  "In the years since I devised the game... this rejection of 
>> formal rationality and logic has a kind of meta-rationality attached to 
>> it."
>>     
>
> Took me a while, but what I got was that this is a good model for how
> some iterative strategies can ratchet you down the drain.
>
>   
>> Their "logic" that $2 is the rational choice is broken on several 
>> counts.  The goal is to maximize payoff, not to guarantee that you do 
>> better than the opponent. 
>>     
>
> Yabbut if you iterate a perfectly rational strategy, you get to $2.
> 1. Start at a price of $100.
> 2. Think, "The other person's gonna do that, too."
> 3. Think, "If I go to (price - 1), I'll end up with (price + 2)."
> 4. Goto 2.
>
> This resembles various social and corporate death-spirals.  (e.g.
> cycles of layoffs and underperformance, escalating parent-child power
> struggles.)  Folks can even compare iterations and realize they're going
> downhill, but they're trapped by the expected behavior of the other
> parties in the game.
>   
That only makes sense when each iteration is visible and tangible to the 
other player and is in reaction to actual turns at decisionmaking.  
Imagining that iteration and acting as if it happened to the limit 
already is not rational.  You can say "if we were taking turns, this is 
where we would end up", but that is only a data point for the situation 
you are actually in which is structurally different.

Again, the experiment didn't rule out the use of logic that would 
short-circuit this strategy even if you were in it.  Experienced 
business managers, workers, and parents recognize the death spiral and 
make moves to break free.  The proponents of the experiment seemed to 
theorize that those kinds of insights couldn't be present in their 
subjects, therefore Something-Weird-Is-Happening and people are not 
acting Rationally (TM).

sdw


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