The Role of Emotions in Game theory and Rationality
Source: http://www.sscnet.ucla.edu/polisci/faculty/boneill/emotions.html
The primary ideals that make up game theory lie around the basic economic fact that human beings make decisions rationally. In many situations this is true, that is why game theory exists. Unfortunately, game theory does not take into account the psychology and human emotion that goes into making rational decisions. Every decision we make has some variable degree of emotion that dictates why we make a given decision. In many cases when making a decision that does not have many emotional consequences, people are rational and make decisions that directly correlate to game theory. However, as the stakes get higher and the consequences become a lot more emotionally grounded, the decisions we make matter a little less on rational decision making and more about how we feel about the outcome. Human beings are social creatures so we inherently cannot solely make rational decisions without thinking a little bit about how it will affect the other people involved, especially if the decision involves people who matter a lot to that person.
One of the core features of Game Theory for decision making is the fact that all pros and cons are laid out in a very logical manner with every cost and benefit taken into account. The payoffs for a given decision are always compared against another decision in a manner that is rational. This is how a person comes up with a dominant strategy for a given game. In many cases, however, games can be very time sensitive and utilizing a strategic and logical approach to a decision can be very time-consuming. The logical part of our brain can be very easily overloaded making it difficult for us to make quick rational decisions that weigh every pro and con. That is why many of the decisions we make as human beings rely on our emotions, “gut-feelings”. If we “believe” a decision is the correct one without truly weighing all the pros and cons, then that decision can be made much more quickly. This has its repercussions as it is completely left up to chance and the dominant strategy in the situation could or could not be achieved. However, the benefit of these impulsive decisions is the fact that many of them are made to better off other people and are also done very quickly.
Understanding the effects of emotions and human psychology for decision making can really impact the way that game theory predicts the way that people make decisions and play games. The intersection of the fields of economics and psychology is incredible important when it comes to determining the way that people make rational and emotional decisions. This intersection truly defines the duality of the human mind (rationality and emotionality). This duality can be directly transferred over to how we make decisions and determine how to play the game.