Mr Smith, XVIII century’s great grand-father of modern economics, devised the power of the market as the main driver (anyone for the “invisible hand”?). As in “A Beautiful Mind” we can hear: “every man for himself”, because the own interest will tend to get the main group’s interest. Following Mr Nash’s intervention, in fact, prior group negotiation is needed in order to obtain individual interest (this is the basis for collaborative games which it was thought to be the foundations for cutting edge game theory, however, later on, John Nash demonstrated that it really was non-collaborative ones). Let’s watch it:
I think long time ago I tried to explain you the relationship between economics and psychology (further than me, an economist, marrying a psychologist). I recall the main argument was the rationality premise attached to orthodox economics was assumed as wrong (who’s ever seen an homo oeconomicus?). As I said, “orthodox”; that’s right, some people would say “bounded rationality”…, no!, even when you aren’t (apparently) a rational being, you are being one.
So, please let me introduce you to the last work coming from game theory, one of the areas where economists and psychologist better match. From an article from the Economist (Money isn’t everything), we can get the idea why we would “spite” (see this post at Punk Rock OR) to a miserable offer. The probable answer: too much testosterone, mates! (it’s the animal sense).
This week I’ve watched again the biographical movie “A Beautiful Mind“, based on the biography by Sylvia Nasar ([]).
I don’t know if you have watched as well, but in the movie, when he’s told he’s been awarded the Nobel (actually, The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel) he seems disapointed because of the nature of the prize being the “Nash Equilibrium” and not any of his other mathematical developments. Any idea?.
