What Use is Game Theory?
What follows is a passage from a "Freakonomics" column that Steve Levitt wrote in The New York Times a couple of years ago after Tom Schelling finally won the Nobel Prize.
"To my mind, [Thomas] Schelling represents the very best of game theory. He was a pioneer in the field, a man of ideas. Unfortunately for game theory, the simple ideas that are so alluring were quickly mined. What followed was less interesting. Modern game theory has become extremely mathematical, notation heavy, and removed from everyday life. Many of my colleagues would not agree with me, but I think game theory has failed to deliver on its enormous initial promise. I’m not the only one who feels this way. I was recently speaking with a prominent game theorist. He told me that if he knew what he knew and he were just getting started in the profession today, no way would he be a game theorist."I've italicized what I think is the interesting, unexamined part of the passage. What is game theory (or any other technique of formal modelling) good for in social science? I have views on the topic that are directly indebted to Tom Schelling's writings. They run counter to the canonical (and, I think, if not downright silly, surely unduly narrow) view of the matter among political scientists - namely that we use models to generate predictions/hypotheses that can be tested empirically. I don't want to go so far as to say that that view is not possible; but I do think social scientists very rarely actually approach in their practices. That by no means implies that models are useless. But it does raise the question underlying Levitt's complaint: "What, precisely, is the "promise" of game theory?"
According to Schelling: "A model is a tool." On this instrumental view a model is useful to the extent that it "gives us a head start in recognizing phenomena and the mechanisms that generate them and to know what to look for in the explanation of interesting phenomena." What is interesting, of course, depends on our purposes. And the causal mechanisms underlying recurrent social, economic, and political events (phenomena) are typically not directly observable. Hence we make models to help us depict and examine and talk about causal mechanisms. In that sense, especially when they have a catchy name, models provide "help in communicating."
Notice that Schelling straddles the divide between "realist" and "instrumentalist" views of social inquiry. In so doing he adopts a broadly pragmatist stance. A pragmatist treats models (like concepts and theories and principles and institutions and so forth) as instruments that we use for making our way around in the world. But she also rightly insists that there is a "real" world to be navigated and that that world consists, in part, of causal forces. So, like pragmatists, Schelling thinks of models as tools we use to navigate the real (natural and social) world. It is no surprise that he is not only a superb theorist, but intimately concerned with a range of crucially important policy issues.