CT asks What’s wrong with game theory? The argument is that game theory only truly works on regular / repeated strategies that are open to scrutiny and that most people don’t act that way. I’d suggest that most people act the way you expect - it is very rare to come across complete tossers or altruists (yes I know I don’t believe in the latter) in normal life. So some form of game theory can be useful to guide economic experiments, for example.
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The usual brickbat thrown at game theory appears to be that it depends on people behaving with rational self-interest.
While I agree with you that people mostly do behave rationally, people do behave irrationally under pressure, and the lessen from the markets appears to be that that is not necessarily a losing strategy.
It’s fun to watch that taken to extremes in popular economics these days, with all those “buck the market” “how to lose your first million” handbooks.
I’ll stick to my plodding rational self-interest, myself.
My take on The Wisdom of Crowds is that the aggregated market has better information on specific items than even expert individuals. However there must be a bell curve or something similar when you consider any one individual within the market. I guess it’s only when an individual is powerful enough to create or change a market (Mary Meeker, Henry Blodgett) that they can win regularly and consistently against the crowd. Without this, I believe (cynically) that the market is fairly random. Hence I don’t chance my arm in it other than with strong stewardship (such as fund managers, IFAs) from people who’s self-interest is vaguely caught up with my own.