We generalize the concept of a cooperative non-transferable utility game by introducing a socially structured game. In a socially structured game every coalition of players can organize themselves according to one or more internal organizations to generate payoffs. Each admissible internal organization on a coalition yields a set of payoffs attainable by the members of this coalition. The strengths of the players within an internal organization depend on the structure of the internal organization and are represented by (...) an exogenously given power vector. More powerful players have the power to take away payoffs of the less powerful players as long as those latter players are not able to guarantee their payoffs by forming a different internal organization within some coalition in which they have more power.We introduce the socially stable core as a solution concept that contains those payoffs that are both stable in an economic sense, i.e., belong to the core of the underlying cooperative game, and stable in a social sense, i.e., payoffs are sustained by a collection of internal organizations of coalitions for which power is distributed over all players in a balanced way. The socially stable core is a subset and therefore a refinement of the core. We show by means of examples that in many cases the socially stable core is a very small subset of the core.We will state conditions for which the socially stable core is non-empty. In order to derive this result, we formulate a new intersection theorem that generalizes the KKMS intersection theorem. We also discuss the relationship between social stability and the wellknown concept of balancedness for NTU-games, a sufficient condition for non-emptiness of the core. In particular we give an example of a socially structured game that satisfies social stability and therefore has a non-empty core, but whose induced NTU-game does not satisfy balancedness in the general sense of Billera. (shrink)

Economics bases the choice theory on the mental experiment that introduces the choice correspondence, which associates to every set of possible actions the subset of preferred actions. If some conditions are satisfied, then the choice correspondence implies a binary preference ordering on actions and an ordinal utility function. This approach applies both to decisions under certainty and decisions under uncertainty. The preference ordering depends on the consequence of actions. Under certainty, there is only one consequence to every action, while, under (...) uncertainty, many consequences are possible, associated with the states of the world. These consequences are represented by the action itself, the states of the world, and the corresponding outcomes. Current theories consider only outcomes, but some theories include state dependent preference. Preference for the action itself is not considered, but it might be relevant. The rationality of the theory is a different question from the rationality of the decision-maker. Moreover, the rationality of the theory may imply the rationality of a preference ordering, but this does not require the rationality of the decision-maker. It is only assumed that he/she behaves according to the calculation made by the theorist. The rationality of the preference ordering requires the rationality of the preference on outcomes, of the expectations on the events, and of their connection with the preference ordering on actions. The normative relevance of rational preferences is removed by the introduction of many alternative rational theories, which justify contrasting behaviors in identical situations. (shrink)

In this paper, we provide a detailed review of previous classifications of 2 × 2 games and suggest a mathematically simple way to classify the symmetric 2 × 2 games based on a decomposition of the payoff matrix into a cooperative and a zero-sum part. We argue that differences in the interaction between the parts is what makes games interesting in different ways. Our claim is supported by evolutionary computer experiments and findings in previous literature. In addition, we provide a (...) method for using a stereographic projection to create a compact 2-d representation of the game space. (shrink)

Both economists and psychologists are interested in understanding decision making under uncertainty. Yet, they rely on different concepts to analyse human behaviour: economists use economic preference parameters rooted in utility theory, while psychologists use personality traits to describe responses to uncertain situations. Using a large sample of university students, this study examines and contrasts five economic preference parameters and six psychological personality traits that are commonly used to study individuals’ attitudes towards uncertainty. A novelty of this paper is including both (...) the economic concept of ambiguity aversion as well as the personality trait of ambiguity intolerance. We find that standard economic preference measures based on incentivized choice tasks seem to capture rather different characteristics than psychological personality traits. In contrast, economic preference measures obtained from self-assessment questions appear more related to personality traits, especially ambiguity intolerance. (shrink)

This study analyses the sensitivity of public goods contributions through the lens of psychological motives. We report the results of a public goods experiment in which subjects were induced with the motives of care and anger through autobiographical recall. Subjects’ preferences, beliefs, and perceptions under each motive are compared with those of subjects experiencing a neutral autobiographical recall control condition. We find, but only for those subjects with the highest comprehension of the game, that care elicits significantly higher contributions (...) than anger, with the control treatment in between. This positive influence of the care motive on unconditional giving is accounted for partly by preferences for giving and partly by beliefs concerning greater contributions by others. Anger also affects attention to own and other’s payoffs and perceptions of the game’s incentive structure. (shrink)

This paper provides evidence for the following novel insights: (1) People’s economic decisions depend on their psychological motives, which are shaped predictably by the social context. (2) In particular, the social context influences people’s other-regarding preferences, their beliefs and their perceptions. (3) The influence of the social context on psychological motives can be measured experimentally by priming two antagonistic motives—care and anger—in one player towards another by means of an observance or a violation of a fairness norm. (...) Using a mediation approach, we find that the care motive leads to higher levels of cooperation which are driven by more optimistic beliefs, a different perception of the game as well as by a shift towards more pro-social preferences. (shrink)

In this paper, we analyse higher-order risky choices by the representative cumulative prospect theory (CPT) decision maker from three alternative reference points. These are the status quo, average payout and maxmin. The choice tasks we consider in our analysis include binary risks, and are the ones employed in the experimental literature on higher order risk preferences. We demonstrate that the choices made by the representative subject depend on the reference point. If the reference point is the status quo and the (...) lottery choices exhibit symmetric risk, we demonstrate that there is no third order reflection effect of lottery choices but there is a fourth order reflection effect. When the average payout is the reference point, we demonstrate that any third or fourth order lottery choice is possible dependent upon the lottery payoffs. However, under the assumption of maxmin reference point, the risky choices are prudent and temperate. In addition to these results, our analysis reveals that the representative CPT subject can choose combinations of second with third and fourth order risky options that differ from those in other major models of decision under risk. We contrast our theoretical predictions with the empirical results reported in the literature on higher order risk preferences and are able to reconcile some conflicting experimental evidence. (shrink)

We study stable strategy profiles in a pure exchange game of bads, where each player dumps his or her bads such as garbage onto someone else. Hirai et al. (Mathematical Social Sciences 51(2):162–170, 2006) show that cycle dumping, in which each player follows an ordering and dumps his or her bads onto the next player, is a strong Nash equilibrium and that self-disposal is $$\alpha $$ -stable for some initial distributions of bads. In this paper, we show that (...) a strategy profile of bullying, in which all players dump their bads onto a single player, becomes $$\alpha $$ -stable for every exchange game of bads. We also provide a necessary and sufficient condition for a strategy profile to be $$\alpha $$ -stable in an exchange game of bads. In addition, we show that repeating an exchange after the first exchange makes self-disposal stationary. (shrink)

No-arbitrage is the fundamental principle of economic rationality which unifies normative decision theory, game theory, and market theory. In economic environments where money is available as a medium of measurement and exchange, no-arbitrage is synonymous with subjective expected utility maximization in personal decisions, competitive equilibria in capital markets and exchange economies, and correlated equilibria in noncooperative games. The arbitrage principle directly characterizes rationality at the market level; the appearance of deliberate optimization by individual agents is a consequence of their (...) adaptation to the market. Concepts of equilibrium behavior in games and markets can thus be reconciled with the ideas that individual rationality is bounded, that agents use evolutionarily-shaped decision rules rather than numerical optimization algorithms, and that personal probabilities and utilities are inseparable and to some extent indeterminate. Risk-neutral probability distributions, interpretable as products of probabilities and marginal utilities, play a central role as observable quantities in economic systems. (shrink)

Canonical economic agents act so as to maximize a single, representative, utility function. However, there is accumulating evidence that heterogeneity in thought processes may be an important determinant of individual behavior. This paper investigates the implications of a vector-valued generalization of the Expected Utility paradigm, which permits agents either to deliberate as per Homo economics, or to act impulsively. This generalized decision theory is applied to explain the crowding-out effect, irrational educational investment decisions, persistent social inequalities, the pervasive influence (...) of non-cognitive ability on socio-economic outcomes, and the dynamic relationships between non-cognitive ability, cognitive ability, and behavioral biases. These results suggest that the generalized decision theory warrants further investigation. (shrink)

This volume reflects the ‘philosophy of science in practice’ approach and takes a fresh look at traditional philosophical problems in the context of natural, social, and health research. Inspired by the work of Nancy Cartwright that shows how the practices and apparatuses of science help us to understand science and to build theories in the philosophy of science, this volume critically examines the philosophical concepts of evidence, laws, causation, and models and their roles in the process of scientific reasoning. (...) Each chapter is an important one in the philosophy of science, while the volume as a whole deals with these philosophical concepts in a unified way in the context of actual scientific practice. This volume thus aims to contribute to this new direction in the philosophy of science.​. (shrink)

The article aims to demonstrate that the nudge theory suffers from three main weaknesses stemming from its theoretical dependence on behavioural economics. The first two weaknesses endanger the paternalistic goal, whereas the third does not justify the libertarian attribute. The first weakness lies in the incomplete realistic characterisation of behavioural economics theory that is the central theoretical pillar of Nudge theory. The second weakness is even more relevant. The normative model of behavioural economics is neoclassical rationality. It can be applied (...) to choices in conditions of risk, when it is possible to forecast the probability of the outcomes of one’s choices. On the contrary the real life problems are inside a complex and uncertain environment. In an uncertain environment the neoclassical algorithms are no longer valid, in that they postulate the knowledge of the probability of the outputs. Thus errors and bias, as observed in behavioural economics, are not such in many instances, but they are instead adaptive and therefore rational responses to the context of decision-making. Therefore nudge theory that pursues the normative paternalistic objective of neutralising the bias and judgement errors discovered by behavioural economics and putting paternalistically the citizen on the right track, is in fact proceeding in the wrong direction. The last weakness concerns an assumption of Nudge theory about the duality of mind. System 1 represents the intuitive mind, while System 2 corresponds to the analytical one. System 1 tends to make decisions quickly and unconsciously, while System 2 follows a slow and conscious process. Biases and judgement errors are mainly generated by System 1. However, System 2 may later intervene to correct them. From this premise, the Nudge theory affirms its libertarian character. In this paper I will argue that the dualism of the mind would not entail the reversibility of some nudges, particularly of default states. In this way the fundamental pillar is weakened to justify the libertarian character of the nudge theory. (shrink)

This article contributes to the debate around the abilities of large language models such as GPT-3, dealing with: firstly, evaluating how well GPT does in the Turing Test, secondly the limits of such models, especially their tendency to generate falsehoods, and thirdly the social consequences of the problems these models have with truth-telling. We start by formalising the recently proposed notion of reversible questions, which Floridi & Chiriatti propose allow one to ‘identify the nature of the source of their (...) answers’, as a probabilistic measure based on Item Response Theory from psychometrics. Following a critical assessment of the methodology which led previous scholars to dismiss GPT’s abilities, we argue against claims that GPT-3 completely lacks semantic ability. Using ideas of compression, priming, distributional semantics and semantic webs we offer our own theory of the limits of large language models like GPT-3, and argue that GPT can competently engage in various semantic tasks. The real reason GPT’s answers seem senseless being that truth-telling is not amongst them. We claim that these kinds of models cannot be forced into producing only true continuation, but rather to maximise their objective function they strategize to be plausible instead of truthful. This, we moreover claim, can hijack our intuitive capacity to evaluate the accuracy of its outputs. Finally, we show how this analysis predicts that a widespread adoption of language generators as tools for writing could result in permanent pollution of our informational ecosystem with massive amounts of very plausible but often untrue texts. (shrink)

Value-sensitive design theorists propose that a range of values that should inform how future social robots are engineered. This article explores a new value: digital well-being, and proposes that the next generation of social robots should be designed to facilitate this value in those who use or come into contact with these machines. To do this, I explore how the morphology of social robots is closely connected to digital well-being. I argue that a key decision is whether (...) social robots are designed as embodied or disembodied. After exploring the merits of both approaches, I conclude that, on balance, there are persuasive reasons why disembodied social robots may well fare better with respect to the value of digital well-being. (shrink)

There is a great deal of literature on matching, theoretical, and empirical, concerning stable assignments and mechanisms that achieve them. The starting point of this study is an interesting question about assignment procedures: given a situation where some agents (the senior workers) on one side have a priority status, which changes the classical theory. The core of game may not be stable. We prove the existence of a quasi stable constrained core. This constrained core may not be a lattice (...) but it is a finite and disjoint union of complete lattices that check the properties of the core’s classical assignment game. We study the manipulability questions that derive. (shrink)

In this paper, a problem for utility theory - that it would have an agent who was compelled to play “Russian Roulette’ with one revolver or another, to pay as much to have a six-shooter with four bullets relieved of one bullet before playing with it, as he would be willing to pay to have a six-shooter with two bullets emptied - is reviewed. A less demanding Bayesian theory is described, that would have an agent maximize expected values of possible (...) total consequence of his actions. And utility theory is located within that theory as valid for agents who satisfy certain formal conditions, that is, for agents who are, in terms of that more general theory, indifferent to certain dimensions of ‘risk’. Raiffa- and Savage-style arguments for its more general validity are then resisted. Addenda are concerned with implications for game theory, and relations between ‘utilities’ and ‘values’. (shrink)

This paper presents four theorems that connect continuity postulates in mathematical economics to solvability axioms in mathematical psychology, and ranks them under alternative supplementary assumptions. Theorem 1 connects notions of continuity (full, separate, Wold, weak Wold, Archimedean, mixture) with those of solvability (restricted, unrestricted) under the completeness and transitivity of a binary relation. Theorem 2 uses the primitive notion of a separately continuous function to answer the question when an analogous property on a relation is fully continuous. Theorem 3 provides (...) a portmanteau theorem on the equivalence between restricted solvability and various notions of continuity under weak monotonicity. Finally, Theorem 4 presents a variant of Theorem 3 that follows Theorem 1 in dispensing with the dimensionality requirement and in providing partial equivalences between solvability and continuity notions. These theorems are motivated for their potential use in representation theorems. (shrink)

The paper first summarizes the author's decision-theoretical model of moral behavior, in order to compare the moral implications of the act-utilitarian and of the rule-utilitarian versions of utilitarian theory. This model is then applied to three voting examples. It is argued that the moral behavior of act-utilitarian individuals will have the nature of a noncooperative game, played in the extensive mode, and involving action-by-action maximization of social utility by each player. In contrast, the moral behavior of rule-utilitarian individuals (...) will have the nature of a cooperative game, played in the normal mode, and involving a firm commitment by each player to a specific moral strategy (viz. to the strategy selected by the rule-utilitarian choice criterion) — even if some individual actions prescribed by this strategy, when considered in isolation, should fail to maximize social utility. The most important advantage that rule utilitarianism as an ethical theory has over act utilitarianism lies in its ability to give full recognition to the moral and social importance of individual rights and personal obligations. It is easy to verify that action-by-action maximization of social utility, as required by act utilitarianism, would destroy these rights and obligations. In contrast, rule utilitarianism can fully recognize the moral validity of these rights and obligations precisely because of its commitment to an overall moral strategy, independent of action-by-action social-utility maximization. The paper ends with a discussion of the voter's paradox problem. The conventional theory of rational behavior cannot avoid the paradoxical conclusion that, in any large electorate, voting is always an irrational activity because one's own individual vote is extremely unlikely to make any difference to the outcome of any election. But it can be shown that, by using the principles of rule-utilitarian theory, this paradox can easily be resolved and that, in actual fact, voting, even in large electorates, may be perfectly rational action. More generally, the example of rule utilitarianism shows what an important role the concept of a rational commitment can play in the analysis of rational behavior. (shrink)

In experimental economics one can confront a “don’t!”, as in “do not deceive your participants!”, as well as a “do!”, as in “incentivize choice making!”. Neither exists in experimental psychology. Further controversies exist in data collection methods, e.g., play strategy (vector) method in game experiments, and how to guarantee external and internal validity by describing experimental scenarios by field-related vignettes or by abstract, often formal, rules as it is used in decision and game theory. We emphasize that differences (...) between the experimental methodology of the two disciplines are minor rather than substantial and suggest that such differences should be resolved, as much as possible, through empirical research. Rather than focusing on familiar debates, we suggest to substitute the revealed-motive approach in experimental economics by designs whose data not only inform about choice, but also about the reasoning dynamics. (shrink)

Several philosophers have expressed concerns with some recent uses of the term ‘cognition’. Underlying a number of these concerns are claims that cognition is only located in the brain and that no compelling case has been made to use ‘cognition’ in any way other than as a cause of behavior that is representational in nature. These concerns center on two primary misapprehensions: First, that some adherents of dynamical cognitive science think DCS implies the thesis of extended cognition and the rejection (...) of representation, and second, that cognition is mistakenly equated with behavior. We make three points in response to these claims: First, there is no thoroughly entrenched conception of cognition as distinct from behavior that is being illegitimately disregarded. Second, we present Shapiro’s exposition of dynamical systems theory as revealing a misunderstanding of the way that dynamical models are used in explanations of cognition and related phenomena. Accordingly, a proper conception of DCS’s methods facilitates an appreciation of extended cognition as a legitimate phenomenon of scientific investigation. Finally, we demonstrate that practicing cognitive scientists and psychologists are far more pluralistic in the phenomena they apply ‘cognition’ to than is suggested by some. At the heart of our disagreement with these concerned folks is that although we think it likely that some cognitive phenomena are representational, non-extended, and only in-between the ears, we also think there are good conceptual and empirical reasons to believe that many cognitive phenomena are non-representational, extended, and not confined to the brain. (shrink)

The Battle of the Sexes game, which captures both coordination and conflict problems, has been applied to a wide range of situations. We show that, by reducing distributional conflict and enhancing coordination, turn taking supported by a “turn taking with independent randomizations” strategy allows players to engage in intertemporal sharing of the gain from cooperation. Using this insight, we decompose the benefit from turn taking into conflict-mitigating and coordination-enhancing components. Our analysis suggests that an equilibrium measure of the “degree (...) of intertemporal conflict” provides an intuitive way to understand the sources of welfare gain from turn taking in the repeated Battle of the Sexes game. We find that when this equilibrium measure is lower, players behave less aggressively and the welfare gain from turn taking is higher. (shrink)

The Bertrand oligopoly situation with Shubik’s demand functions is modeled as a cooperative transferable utility game in $$\beta$$ -characteristic function form. To achieve this, two sequential optimization problems are solved to describe the worth of each coalition in the associated Bertrand oligopoly transferable utility game. First, we show that these games are convex, indicating strong incentives for large-scale cooperation between firms. Second, the Shapley value of these games is fully determined by applying the linearity to a decomposition that (...) involves the difference between two convex games and two non-essential games. (shrink)

Psychological observations are by now well integrated into economics, especially in the theory of finance, as can also be seen in the Nobel Prize awarded to Thaler. On the contrary, Simon’s attempt to reforge economic theory on the paradigm of bounded rationality failed. Starting from the birth of the neoclassical paradigm, we’ll describe the attempt to give it psychological foundations with a direct measurement of utility, then the axiomatic turn of the paradigm and its first anomalies. We’ll then sum up (...) the debate on rationality, taking place in the group of economists led by Simon, which brought to the rational expectations hypothesis. Finally, we’ll discuss the development of behavioral economics and its progressive acceptance in economic theory. This historical reconstruction allows us to understand the actual hard core of the neoclassical paradigm and the growing need of the paradigm for practical flexibility that determines how to choose arguments, methods and evidence that can be useful to its development, including psychological ones. (shrink)

This paper investigates the existence of pure strategy Nash equilibria in discontinuous and nonquasiconcave games. We introduce a new notion of continuity, called weakly continuous security, which is weaker than the most known weak notions of continuity, including the surrogate point secure of SSYM game of Carbonell-Nicolau and Mclean (Econ Theory, 2018a), the continuous security of Barelli and Meneghel (Econometrica 81:813–824, 2013), C-security of McLennan et al. (Econometrica 79:1643–1664 2011), generalized weakly transfer continuity of Nessah (Economics 47:659–662, 2011), generalized (...) better-reply security of Carmona (Econ Theory 48:1–4, 2011), Barelli and Soza (On the existence of Nash equilibria in discontinuous and qualitative games, 2009), Barelli and Meneghel (Econometrica 81:813–824, 2013), lower single deviation property of Reny (Further results on the existence of Nash equilibria in discontinuous games. University of Chicago, 2009), better-reply security of Reny (Econometrica 67:1029–1056, 1999) and the results of Prokopovych (Econ Theory 48:5–16, 2011, Econ Theory 53:383–402, 2013) and Carmona (J Econ Theory 144:1333–1340, 2009). We show that a compact, convex and weakly continuous secure Hausdorff locally convex topological vector space game has a pure strategy Nash equilibrium. Moreover, it holds in a large class of discontinuous games. (shrink)

Necessity and sufficiency are the building blocks of all successful explanations. Yet despite their importance, these notions have been conceptually underdeveloped and inconsistently applied in explainable artificial intelligence, a fast-growing research area that is so far lacking in firm theoretical foundations. In this article, an expanded version of a paper originally presented at the 37th Conference on Uncertainty in Artificial Intelligence, we attempt to fill this gap. Building on work in logic, probability, and causality, we establish the central role of (...) necessity and sufficiency in XAI, unifying seemingly disparate methods in a single formal framework. We propose a novel formulation of these concepts, and demonstrate its advantages over leading alternatives. We present a sound and complete algorithm for computing explanatory factors with respect to a given context and set of agentive preferences, allowing users to identify necessary and sufficient conditions for desired outcomes at minimal cost. Experiments on real and simulated data confirm our method’s competitive performance against state of the art XAI tools on a diverse array of tasks. (shrink)

The principle of differential marginality (Casajus in Theory and Decis 71(2):163-–174) for cooperative games is a very appealing property that requires equal productivity differentials to translate into equal payoff differentials. In this paper we apply this property to axiomatic characterizations of values. We show that differential marginality implies additivity and symmetry under certain conditions. Based on this result, we propose new characterizations of the equal division and the equal surplus division values. Finally, we characterize two classes of convex combinations of (...) values, i.e., α\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$\alpha$$\end{document}-egalitarian Shapley values and α\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$\alpha$$\end{document}-equal surplus division values, by employing differential marginality and establishing the uniqueness of these values on inessential games. (shrink)

Accountability is present in many types of social relations; for example, the accountability of elected representatives to voters is the key characteristic of representative democracy. We distinguish between two institutional mechanisms of accountability, i.e., opportunity to punish and requirement of a justification, and examine the separate and combined effects of these mechanisms on individual behavior. For this purpose, we designed a decision-making experiment where subjects engage in a three-player trust game with two senders and one responder. We ask (...) whether holding the responder accountable increases senders’ and responders’ contributions in a trust game. When restricting the analysis to the first round, the requirement of justification seems to have a positive impact on senders’ contributions. When the game is played repeatedly, the experience of previous rounds dominates the results and significant treatment effects are no longer seen. We also find that responders tend to justify their choices in terms of reciprocity, which is in line with observed behavior. Moreover, the treatment combining punishment and justification hinders justifications that appeal to pure self-interest. (shrink)

The article discusses the process of “conceptual borrowing”, according to which, when a new discipline emerges, it develops its technical vocabulary also by appropriating terms from other neighbouring disciplines. The phenomenon is likened to Carl Schmitt’s observation that modern political concepts have theological roots. The authors argue that, through extensive conceptual borrowing, AI has ended up describing computers anthropomorphically, as computational brains with psychological properties, while brain and cognitive sciences have ended up describing brains and minds computationally and informationally, as (...) biological computers. The crosswiring between the technical languages of these disciplines is not merely metaphorical but can lead to confusion, and damaging assumptions and consequences. The article ends on an optimistic note about the self-adjusting nature of technical meanings in language and the ability to leave misleading conceptual baggage behind when confronted with advancement in understanding and factual knowledge. (shrink)

Scientific theories of consciousness identify its contents with the spatiotemporal structure of neural population activity. We follow up on this approach by stating and motivating Dynamical Emergence Theory, which defines the amount and structure of experience in terms of the intrinsic topology and geometry of a physical system’s collective dynamics. Specifically, we posit that distinct perceptual states correspond to coarse-grained macrostates reflecting an optimal partitioning of the system’s state space—a notion that aligns with several ideas and results from computational neuroscience (...) and cognitive psychology. We relate DET to existing work, offer predictions for empirical studies, and outline future research directions. (shrink)

In this article, I focus on the role of computer simulations as exploratory strategies. I begin by establishing the non-theory-driven nature of simulations. This refers to their ability to characterize phenomena without relying on a predefined conceptual framework that is provided by an implemented mathematical model. Drawing on Steinle’s notion of exploratory experimentation and Gelfert’s work on exploratory models, I present three exploratory strategies for computer simulations: (1) starting points and continuation of scientific inquiry, (2) varying the parameters, and (3) (...) scientific prototyping. (shrink)

Artificial agents are progressively becoming more present in everyday-life situations and more sophisticated in their interaction affordances. In some specific cases, like Google Duplex, GPT-3 bots or Deep Mind’s AlphaGo Zero, their capabilities reach or exceed human levels. The use contexts of everyday life necessitate making such agents understandable by laypeople. At the same time, displaying human levels of social behavior has kindled the debate over the adoption of Dennett’s ‘intentional stance’. By means of a comparative analysis of the (...) literature on robots and virtual agents, we defend the thesis that approaching these artificial agents ‘as if’ they had intentions and forms of social, goal-oriented rationality is the only way to deal with their complexity on a daily base. Specifically, we claim that this is the only viable strategy for non-expert users to understand, predict and perhaps learn from artificial agents’ behavior in everyday social contexts. Furthermore, we argue that as long as agents are transparent about their design principles and functionality, attributing intentions to their actions is not only essential, but also ethical. Additionally, we propose design guidelines inspired by the debate over the adoption of the intentional stance. (shrink)

When von Neumann's and Morgenstern's Theory of Games and Economic Behavior appeared in 1944, one thought that a complete theory of strategic social behavior had appeared out of nowhere. However, game theory has, to this very day, remained a fast-growing assemblage of models which have gradually been united in a new social theory - a theory that is far from being completed even after recent advances in game theory, as evidenced by the work of the three (...) Nobel Prize winners, John F. Nash, John C. Harsanyi, and Reinhard Selten. Two of them, Harsanyi and Selten, have contributed important articles to the present volume. This book leaves no doubt that the game-theoretical models are on the right track to becoming a respectable new theory, just like the great theories of the twentieth century originated from formerly separate models which merged in the course of decades. For social scientists, the age of great discover ies is not over. The recent advances of today's game theory surpass by far the results of traditional game theory. For example, modem game theory has a new empirical and social foundation, namely, societal experiences; this has changed its methods, its "rationality. " Morgenstern (I worked together with him for four years) dreamed of an encompassing theory of social behavior. With the inclusion of the concept of evolution in mathematical form, this dream will become true. Perhaps the new foundation will even lead to a new name, "conflict theory" instead of "game theory. (shrink)

Machine learning-based AI algorithms lack transparency. In this article, I offer an interpretation of AI’s explainability problem and highlight its ethical saliency. I try to make the case for the legal enforcement of a strong explainability requirement: human organizations which decide to automate decision-making should be legally obliged to demonstrate the capacity to explain and justify the algorithmic decisions that have an impact on the wellbeing, rights, and opportunities of those affected by the decisions. This legal duty can be derived (...) from the demands of Rawlsian public reason. In the second part of the paper, I try to show that the argument from the limitations of human cognition fails to get AI off the hook of public reason. Against a growing trend in AI ethics, my main argument is that the analogy between human minds and artificial neural networks fails because it suffers from an atomistic bias which makes it blind to the social and institutional dimension of human reasoning processes. I suggest that developing interpretive AI algorithms is not the only possible answer to the explainability problem; social and institutional answers are also available and in many cases more trustworthy than techno-scientific ones. (shrink)

The Turing Test is routinely understood as a behaviourist test for machine intelligence. Diane Proudfoot has argued for an alternative interpretation. According to Proudfoot, Turing’s claim that intelligence is what he calls ‘an emotional concept’ indicates that he conceived of intelligence in response-dependence terms. As she puts it: ‘Turing’s criterion for “thinking” is…: x is intelligent if in the actual world, in an unrestricted computer-imitates-human game, x appears intelligent to an average interrogator’. The role of the famous test is (...) thus to provide the conditions in which to examine the average interrogator’s responses. I shall argue that Proudfoot’s analysis falls short. The philosophical literature contains two main models of response-dependence, what I shall call the transparency model and the reference-fixing model. Proudfoot resists the thought that Turing might have endorsed one of these models to the exclusion of the other. But the details of her own analysis indicate that she is, in fact, committed to the claim that Turing’s account of intelligence is grounded in a transparency model, rather than a reference-fixing one. By contrast, I shall argue that while Turing did indeed conceive of intelligence in response-dependence terms, his account is grounded in a reference-fixing model, rather than a transparency one. This is fortunate, because, as an account of intelligence, the transparency model is arguably problematic in a way that the reference-fixing model isn’t. (shrink)

Language and thought share a unitary cognitive activity, addressed by an interpretative function. This interpretative effort reveals the assonance between the attribution of meaning to an utterance and the discovery of a solution via restructuring in insight problem solving. We suggest a view of complex integrated analytical thinking, which assumes that thinking processes information in different ways, depending on the characteristics of the tasks the subject has to solve, so that reasoning results in a stepwise, rule-based process or in a (...) widespread activity of search where implicit parallel processes are also involved. We investigated the interrelationship between language and thought in insight problem solving, in both its positive (Experiments 1 and 3) and its negative effects (Experiment 2). Our results are discussed in the light of the debate on dual processing theories. (shrink)

The proposed European Artificial Intelligence Act (AIA) is the first attempt to elaborate a general legal framework for AI carried out by any major global economy. As such, the AIA is likely to become a point of reference in the larger discourse on how AI systems can (and should) be regulated. In this article, we describe and discuss the two primary enforcement mechanisms proposed in the AIA: the _conformity assessments_ that providers of high-risk AI systems are expected to conduct, and (...) the _post-market monitoring plans_ that providers must establish to document the performance of high-risk AI systems throughout their lifetimes. We argue that the AIA can be interpreted as a proposal to establish a Europe-wide ecosystem for conducting AI auditing, albeit in other words. Our analysis offers two main contributions. First, by describing the enforcement mechanisms included in the AIA in terminology borrowed from existing literature on AI auditing, we help providers of AI systems understand how they can prove adherence to the requirements set out in the AIA in practice. Second, by examining the AIA from an auditing perspective, we seek to provide transferable lessons from previous research about how to refine further the regulatory approach outlined in the AIA. We conclude by highlighting seven aspects of the AIA where amendments (or simply clarifications) would be helpful. These include, above all, the need to translate vague concepts into verifiable criteria and to strengthen the institutional safeguards concerning conformity assessments based on internal checks. (shrink)

This paper has a twofold scope. The first one is to clarify and put in evidence the isomorphic character of two theories developed in quite different fields: on one side, threshold logic, on the other side, simple games. One of the main purposes in both theories is to determine when a simple game is representable as a weighted game, which allows a very compact and easily comprehensible representation. Deep results were found in threshold logic in the sixties and (...) seventies for this problem. However, game theory has taken the lead and some new results have been obtained for the problem in the past two decades. The second and main goal of this paper is to provide some new results on this problem and propose several open questions and conjectures for future research. The results we obtain depend on two significant parameters of the game: the number of types of equivalent players and the number of types of shift-minimal winning coalitions. (shrink)

The knowledge representation and reasoning of both humans and artificial systems often involves conditionals. A conditional connects a consequence which holds given a precondition. It can be easily recognized in natural languages with certain key words, like “if” in English. A vast amount of literature in both fields, both artificial intelligence and psychology, deals with the questions of how such conditionals can be best represented and how these conditionals can model human reasoning. On the other hand, findings in the psychology (...) of reasoning, such as those in the Suppression Task, have led to a paradigm shift from the monotonicity assumptions in human inferences towards nonmonotonic reasoning. Nonmonotonic reasoning is sensitive for information change, that is, inferences are drawn cautiously such that retraction of previous information is not required with the addition of new information. While many formalisms of nonmonotonic reasoning have been proposed in the field of Artificial Intelligence, their capability to model properties of human reasoning has not yet been extensively investigated. In this paper, we analyzed systematically from both a formal and an empirical perspective the power of formal nonmonotonic systems to model possible explicit defeaters, as in the Suppression Task, and more implicit conditional rules that trigger nonmonotonic reasoning by the keywords in such rules. The results indicated that the classical evaluation for the correctness of inferences has to be extended in the three major aspects regarding the inference system, the knowledge base, and possible assumed exceptions for the rule. (shrink)

We examine collective decision-making in a jury voting game under the unanimity rule when voters have ambiguous beliefs. Unlike in existing studies (Ellis in Theoretical Economics 11:865–895, 2016; Fabrizi et al., in: AUT Economics Working Paper, 2021; Ryan in Theory and Decision 90:543–577, 2021), the locus of ambiguity is the likelihood function (signal precision) rather than the prior. This significantly alters the properties of symmetric equilibria. While prior ambiguity may induce multiple equilibria (Fabrizi et al., in: AUT Economics Working (...) Paper, 2021; Ryan in Theory and Decision 90:543–577, 2021) we show that, under likelihood ambiguity, there exists a unique non-trivial symmetric responsive equilibrium that takes the same form as in the absence of ambiguity (Feddersen and Pesendorfer in The American Political Science Review 92:23–35, 1998). Moreover, likelihood ambiguity partially offsets the pernicious effects of pivotality on decision quality: the frequency of Type I error (convicting the innocent) is typically lower than in the absence of ambiguity. (shrink)

While game theory has been transformative for decision making, the assumptions made can be overly restrictive in certain instances. In this work, we investigate some of the underlying assumptions of rationality, such as mutual consistency and best response, and consider ways to relax these assumptions using concepts from level-k reasoning and quantal response equilibrium (QRE) respectively. Specifically, we propose an information-theoretic two-parameter model called the quantal hierarchy model, which can relax both mutual consistency and best response while still approximating (...) level-k, QRE, or typical Nash equilibrium behavior in the limiting cases. The model is based on a recursive form of the variational free energy principle, representing higher-order reasoning as (pseudo) sequential decision-making in extensive-form game tree. This representation enables us to treat simultaneous games in a similar manner to sequential games, where reasoning resources deplete throughout the game-tree. Bounds in player processing abilities are captured as information costs, where future branches of reasoning are discounted, implying a hierarchy of players where lower-level players have fewer processing resources. We demonstrate the effectiveness of the quantal hierarchy model in several canonical economic games, both simultaneous and sequential, using out-of-sample modelling. (shrink)

Third-party punishment (TPP) has been shown to be an effective mechanism for maintaining human cooperation. However, it is puzzling how third-party punishment can be maintained, as punishers take on personal costs to punish defectors. Although there is evidence that punishers are preferred as partners because third-party punishment is regarded by bystanders as a costly signal of trustworthiness, other studies show that this signaling value of punishment can be severely attenuated because third-party helping is viewed as a stronger signal of trustworthiness (...) than third-party punishment. Third-party helpers donate their payoffs to victims of defection in games instead of punishing defectors as third-party punishers do. Then, under what circumstances can third-party punishment be maintained by costly signaling when helping is also present? We show that punishers are preferred over helpers by fourth-party individuals as their delegates to deter potential exploitation. This suggests that costly signaling can facilitate the maintenance of third-party punishment in partner choice with delegation interactions. (shrink)

We introduce possibilistic beliefs into strategic games, describing a player’s belief about his opponents’ strategies as the set of their strategies he regards as possible. We formulate possibilistic strategic games where each player has preferences over his own strategies conditional on his possibilistic belief about his opponents’ strategies. We define several solution concepts for possibilistic strategic games such as (strict) equilibria, rationalizable sets, iterated elimination of never-best responses, and iterated elimination of strictly dominated strategies, and we study their properties and (...) relationships. We develop a class of possibilistic strategic games called possibilistic supermodular games to relate supermodular games to possibilistic strategic games. Lastly, we discuss a direction of extending our possibilistic framework to games with incomplete information. (shrink)

This article addresses major arguments in the controversy about the “rationality” of moral behavior: can moral behavior be explained by rational choice theory (RCT)? The two positions discussed are the incentives thesis (norms are incentives as any other costs and benefits) and the autonomy thesis claiming that moral behavior has nothing to do with utility. The article analyses arguments for the autonomy thesis by J. Elster, A. Etzioni, and J. G. March and J. P. Olsen. Finally, the general claim is (...) discussed whether norm following and norm emergence are utility maximizing. The conclusion is that the autonomy thesis is not tenable if one applies a wide subjectivist, social psychological version of RCT that includes the assumption of “bounded rationality.” The autonomy thesis is only compatible with a narrow version of RCT that excludes internal outcomes and that refers to norms that do not have external outcomes. It is argued that such a narrow version is not capable of explaining many forms of behavior social scientists are interested in. (shrink)

Using a laboratory experiment, we examine whether voluntary sanctions induce subjects to coordinate more efficiently in a repeated minimum-effort game. While most groups first experience Pareto inferior coordination in a baseline treatment, the level of effort increases substantially once ex post sanctioning opportunities are introduced, that is, when one can assign costly punishment points to other group members to reduce their payoffs. We compare the effect of this voluntary punishment possibility with the effect of ex post costless communication, which (...) in contrast to the punishment treatment increases efforts only temporarily and fails to bring the players to higher payoff equilibria permanently. Our results indicate that decentralized sanctions can play an important role as a coordination device in Pareto-ranked coordination settings. They also suggest that the motivations behind voluntary sanctions may be more general than usually put forth in the literature on cooperation games. (shrink)

Economists’ conceptions about the “nature of the economic agent” are central to understanding their economic thinking, the phenomena that deserve their attention, the way they build models and theories—as well as the scope and relevance of those theories. Moreover, according to the “psychological” traits of the agent, the subsequent economic theory can accommodate (or not) certain economic phenomena. These claims certainly apply to Brian J. Loasby’s economics. The objective of this article is to survey and analyse Loasby’s reconstruction of economics (...) based on the revision of the psychological foundations of economic agent. We show the influence that George A. Kelly, Adam Smith, Alfred Marshall, Friedrich Hayek and Herbert Simon (among others) play in his work. According to Loasby, concepts such as uncertainty, motivation, imagination, and connecting principles, are central to explaining the growth and organization of knowledge, complexity, and the evolution of economic systems. (shrink)

In the spirit of Von Neumann and Morgenstern (Theory of games and economic behavior, Princeton University Press, Princeton, 1944), we introduce a notion of network stability. We study the structure of stable economic networks and their associated stable payoff allocations by analyzing the conditions under which complete networks and star networks (both with desirable property of inclusiveness) are stable. We also address conditions for existence and uniqueness of stable set of networks.

Statistical learning theory is often associated with the principle of Occam’s razor, which recommends a simplicity preference in inductive inference. This paper distills the core argument for simplicity obtainable from statistical learning theory, built on the theory’s central learning guarantee for the method of empirical risk minimization. This core “means-ends” argument is that a simpler hypothesis class or inductive model is better because it has better learning guarantees; however, these guarantees are model-relative and so the theoretical push towards simplicity is (...) checked by our prior knowledge. (shrink)

In two experiments, participants had to choose between a sure and a risky option. The sure option was presented either in a gain or a loss frame. Need was defined as a minimum score the participants had to reach. Moreover, choices were made under two different time constraints and with three different levels of induced need to be reached within a fixed number of trials. The two experiments differed with respect to the specific amounts to win and the need levels. (...) The $$2 \times 2 \times 3$$2×2×3 design was a within-subject design. Data were evaluated on an overall and on a group level, the latter based on participants’ stated risk preference and on revealed preferences using cluster analysis across subjects. Overall, the results showed riskier behavior when the choice options were presented as losses as compared to gains and when the induced need was highest. Time limits enhanced the framing effect. (shrink)

The comparison made by Ada Lovelace in 1843 between the Analytical Engine and the Jacquard loom is one of the well-known analogies between looms and computation machines. Given the fact that weaving – and textile production in general – is one of the oldest cultural techniques in human history, the question arises whether this was the first time that such a parallel was drawn. As this paper will show, centuries before Lovelace’s analogy, such a comparison was made by Gottfried Wilhelm (...) Leibniz. During the 17th century, Leibniz compared his calculating machines with another textile machine, the stocking frame, a machine which mechanized knitting and which was invented in 1589. During the following centuries, this machine was considered as a technological wonder and as a creation of God, and, during the last decades of the 17th century, Leibniz emphasized the need to consider it and other textile machines mathematically. What, then, were the reasons for the parallel drawn between this machine and Leibniz’s automatic computation machines? And what were the consequences of this analogy concerning the artisanal knowledge embedded in manual textile practices? (shrink)

Escalation of commitment causes people to continue a failing course of action. We study the role of construal level in such escalation of commitment. Consistent with the widely held view of construal level as a primed effect, we employed a commonly used prime for manipulating this construct in a laboratory experiment. Our findings revealed that the prime failed to produce statistically significant differences in construal level, which was measured using the Behavior Identification Form. Furthermore, there was no effect of the (...) prime on escalation of commitment, or on constructs that have previously been linked to construal level such as the perceived importance of feasibility considerations relative to desirability considerations, and the number of pros and cons that subjects can think of.Interestingly, however, subjects’ actual construal level scores on the BIF were found to significantly affect escalation. Specifically, our findings show that people with a low construal level are less willing to continue a failing project. This relation is mediated by the perceived importance of the feasibility of the project relative to its desirability. For people with a low construal level, the perceived importance of feasibility relative to desirability is higher, which in turn makes escalation of commitment less likely.Our findings are consistent with prior research suggesting that priming construal level may not always be effective. Thus, while construal level has typically been regarded as a state-like variable that can be primed, in this study, we show that construal level may also be considered as a trait. (shrink)