Name: Behavioral Game Theory
ISBN: 9780691090399

Behavioral Game Theory

Game theory, the formalized study of strategy, began in the 1940s by asking how emotionless geniuses should play games, but ignored until recently how average people with emotions and limited foresight actually play games. This book marks the first substantial and authoritative effort to close this gap. Colin Camerer, one of the field's leading figures, uses psychological principles and hundreds of experiments to develop mathematical theories of reciprocity, limited strategizing, and learning, which help predict what real people and companies do in strategic situations. Unifying a wealth of information from ongoing studies in strategic behavior, he takes the experimental science of behavioral economics a major step forward. He does so in lucid, friendly prose. Behavioral game theory has three ingredients that come clearly into focus in this book: mathematical theories of how moral obligation and vengeance affect the way people bargain and trust each other a theory of how limits in the brain constrain the number of steps of "I think he thinks..." reasoning people naturally do and a theory of how people learn from experience to make better strategic decisions. Strategic interactions that can be explained by behavioral game theory include bargaining, games of bluffing as in sports and poker, strikes, how conventions help coordinate a joint activity, price competition and patent races, and building up reputations for trustworthiness or ruthlessness in business or life.

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rramadassSep 2026

This looks quite interesting; thanks for sharing.

A related concept is Jugaad - https://en.wikipedia.org/wiki/Jugaad Often interpreted as "good enough" with no connection to Quality at all. Even when the context/environment changes to afford better quality (both manufacturing and cost) quality is never pursued unless mandated by National/ISO standards etc.

One way to maybe understand this is through Robert Axelrod's books; The Evolution of Cooperation - https://en.wikipedia.org/wiki/The_Evolution_of_Cooperation and The Complexity of Cooperation - https://en.wikipedia.org/wiki/The_Complexity_of_Cooperation

But the actors are never fully rational, there is always a clique which manipulates/influences and therefore there is never a "fair" market. Human motivations and behaviour are always the key and so you need Behavioral Game Theory - https://en.wikipedia.org/wiki/Behavioral_game_theory (see book of the same name by Colin Camerer)

Finally, Nassim Taleb's ideas are also very relevant here. Markets work on "Trial and Error" and "Chance", there is no "fair/efficient invisible guiding hand" but only a guiding hand by cliques which have no "skin in the game" when it comes to downsides and "asymmetric risk" benefiting corporate capitalism. But the system as a whole functions because it is somewhat "Antifragile" i.e. the chaotic interactions and successes/failures within the system somehow strengthens the whole.

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rramadassJan 2026

Some good resources on Game Theory;

1) Game Theory: A Nontechnical Introduction by Morton Davis.

2) Behavioral Game Theory: Experiments in Strategic Interaction by Colin Camerer.

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rmbeardOct 2018

I suggest you read Camerer's Behavioral Game Theory or even a book on Evolutionary Game Theory, the former does take psychology into account and the latter allows for learning. A standard game theory book also consider imperfect information, e.g. Bayesian games. The most comprehensive game theory text is probably the one by Maschler and Solan.

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