Moral Calculations: Game Theory, Logic, And Human Frailty

Everyone has gotten into situations where they devoted way too much effort to something not worth the commitment, because the cost of giving up was worse. Why do we act this way? More important, how can we recognize these traps before we're in too deep? In this fascinating book, Mero shows how John von Neumann's game theory lets us understand how such dilemmas arise, and how to act rationally and ethically when they do. There really is a mathematics of ethical behavior, and this book is the ideal guide to it.

Are people ever rational? Consider this: You auction off a one-dollar bill to the highest bidder, but you set the rules so that the second highest bidder also has to pay the amount of his last bid, even though he gets nothing. Would people ever enter such an auction? Not only do they, but according to Martin Shubik, the game's inventor, the average winning bid (for a dollar, remember) is $3.40. Many winners report that they bid so high only because their opponent "went completely crazy." This game lies at the intersection of three subjects of eternal fascination: human psychology, morality, and John von Neumann's game theory. Hungarian game-theorist Laszlo Mero introduces us to the basics of game theory, including such concepts as zero-sum games, Prisoner's Dilemma and the origins of altruism; shows how game theory is applicable to fields ranging from physics to politics; and explores the role of rational thinking in the context of many different kinds of thinking. This fascinating, urbane book will interest everyone who wonders what mathematics can tell us about the human condition.