Game Theory - Descriptive, Normative or Prescriptive?
Game theory – descriptive, normative or prescriptive?
Going through life we often are surprised by the different ways how people think, make decisions and interact. We believe that most of us are rational human beans (to some extent) and, therefore, our decisions should be grounded in analysis of the situation, our experience and intuition. Therefore, the human mind can be seen as an incredibly complicated machine that runs series of theoretical simulations of possible situations (often subconsciously) to find the most optimal course of action, taking into consideration the possible strategies of others. When the decisions are important to us and the reasoning process is conscious, we engage in strategic thinking. It has always been tempting to develop a theory that would actually explain and predict the human interaction based on strategic thinking, therefore making the strategic decision making more effective to both parties and without risk to going into “worst case scenario”. Therefore ideally game theory should cover the questions how the decisions should be made in order to maximize the gains, what reasoning does it imply, how to make the best choice of strategy and what will the pay-offs be for both parties. What questions does game theory actually answer – this is how the topic of this essay might be rephrased. In this essay the discussion will be focused on the question whether game theory is a descriptive, normative or prescriptive theory. First, a brief explanation of different types of theories should be given as well as the definition of game theory and the development in this academic field of study as well as the practical applications. Then the standpoint of the author will be defined and supporting as well as contradicting arguments based on various academic articles will be presented and discussed. The last part of the essay will sum up the discussed ideas and draw the final conclusions and remarks. To start with the necessary in-depth
Going through life we often are surprised by the different ways how people think, make decisions and interact. We believe that most of us are rational human beans (to some extent) and, therefore, our decisions should be grounded in analysis of the situation, our experience and intuition. Therefore, the human mind can be seen as an incredibly complicated machine that runs series of theoretical simulations of possible situations (often subconsciously) to find the most optimal course of action, taking into consideration the possible strategies of others. When the decisions are important to us and the reasoning process is conscious, we engage in strategic thinking. It has always been tempting to develop a theory that would actually explain and predict the human interaction based on strategic thinking, therefore making the strategic decision making more effective to both parties and without risk to going into “worst case scenario”. Therefore ideally game theory should cover the questions how the decisions should be made in order to maximize the gains, what reasoning does it imply, how to make the best choice of strategy and what will the pay-offs be for both parties. What questions does game theory actually answer – this is how the topic of this essay might be rephrased. In this essay the discussion will be focused on the question whether game theory is a descriptive, normative or prescriptive theory. First, a brief explanation of different types of theories should be given as well as the definition of game theory and the development in this academic field of study as well as the practical applications. Then the standpoint of the author will be defined and supporting as well as contradicting arguments based on various academic articles will be presented and discussed. The last part of the essay will sum up the discussed ideas and draw the final conclusions and remarks. To start with the necessary in-depth
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