This insight is part of the basis of "prospect theory, " one branch of behavioral economics.
By the 1980s game theory was considered a strain of economics.
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But prospect theory, a field of behavioral economics, tells us that people who have no good options tend to be risk-seeking, because the psychological cost of a bad outcome diminishes the fear of a worse outcome.
When it comes to welfare reform, questions of religious faith, political theory, economics and behavioural psychology all converge on the same basic issue.
But game-theory software can also work well outside the sphere of economics.
Tony Travers, of the London School of Economics, says London could in theory pay for the scheme itself, but that Britain's overly centralised tax system which gives town halls almost no freedom to raise money prevents it from doing so.
The results they are gathering will give them new insights into game theory, that little corner of mathematics where games and economics collide, and which can be found behind everything from corporate bargaining to the 1950s arms race.
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This ability to freely label government receipts and payments in alternative internally consistent manners renders the government's cash flows meaningless from the perspective of economic theory and is called the labeling problem in economics.
And although that may seem blindingly obvious to you now that you just read it, the entire edifice of Modern Portfolio Theory is based on ignoring the relationship between economics and finance.
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And in fact, the economics of the so-called modern monetary theory (MMT) school who are loudest on the consequences of a fiat money system are advocates of big government programs like a government job guarantee.
Had he lived, his theory of collective action might well have won him a Nobel prize in economics, though not a wholly uncontroversial one.
"He uses very rigorous game theory, " attests MIT economics professor Parag Pathak, the former student of Roth's who worked on the New York City match project.
And you would think that after the results of this experiment in trickle-down economics, after the results were made painfully clear, that the proponents of this theory might show some humility, might moderate their views a bit.
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The scholar John Quiggin published "Zombie Economics" as a way to grab reader attention about the ill state of current economic theory.
Economics is prone to conditions that call to mind chaos theory: Given time and a sequence of interacting elements, two seemingly similar situations can lead to very different outcomes.
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