Rational choice as a toolbox for the economist: an interview with Itzhak Gilboa

Abstract

Itzhak Gilboa (Tel Aviv, 1963) is currently professor of economics at the Eitan Berglas School of Economics at Tel-Aviv University and professor of economics and decision sciences at the Hautes Etudes Commerciales (HEC) in Paris. He earned undergraduate degrees in mathematics and in economics at Tel Aviv University, where he also obtained his MA and PhD in economics under the supervision of David Schmeidler. Before joining Tel Aviv University in 2004 and the HEC in 2008, Gilboa taught at the J. L. Kellogg Graduate School of Management at Northwestern University, the University of Pennsylvania, and Boston University.Gilboa's main area of interest is decision-making under uncertainty, focusing on the definition of probability, notions of rationality, non-Bayesian decision models, and related issues. He has published broadly in areas such as decision and game theory, microeconomics, philosophy, social choice theory, and applied mathematics. He has written over 90 articles in these fields. Gilboa has furthermore written a textbook entitled Rational choice (Gilboa 2010a), in which he lays out what he takes to be the main toolbox for studying and improving human decision-making. Additional books include A theory of case-based decisions (Gilboa and Schmeidler 2001), Theory of decision under uncertainty (Gilboa 2009), Making better decisions (Gilboa 2010b), and Case-based predictions (Gilboa and Schmeidler 2012).Professor Gilboa was interviewed by Catherine Herfeld at the department of economics of the University of Mainz (Germany) on July 13, 2013. In this interview, Gilboa lays out his perspective on the nature and purpose of the rational choice paradigm, discussing it in the context of recent philosophical questions about the advantages of axiomatization and its relation to empirical research, the usefulness of unrealistic assumptions, the future of neuroeconomics, the status of economics as a science, and his view of truth.CATHERINE HERFELD: Professor Gilboa, you are currently professor of economics and decision sciences at Hautes Etudes Commerciales de Paris. What, broadly speaking, are the decision sciences?ITZHAK GILBOA: 'Decision sciences' is a general term. As I understand it, 'decision sciences' refers to the field of decision in general. 'Decision sciences' encompasses decision theory, applied work, and experimental work. But the field of decision theory today is starting to undergo a process of 'disintegration'. I do not want this to sound bad. This happened to game theory about 15 years ago. Both in game theory and in decision theory there is a general paradigm that is extremely beautiful and extremely insightful, and which has a lot to say about almost everything. But this general paradigm is at some point exhausted, and you start having to commit yourself to a specific type of theory you work with. And then you might find out that the theory you work with is not as general as the paradigm.Could you illustrate this view with an example?For instance, consider game theory, which is not too far away from the field of decision sciences, where you have a general approach to human interaction. You can model a wide variety of situations: you identify players and strategies to begin with, and then you have some things to say about the interaction. For example, the concept of Nash equilibrium, or maybe even that of a perfect equilibrium, allows you to say something insightful about everything that can be modelled as interaction among decision makers. It could be the interaction between couples, like battle of the sexes; it could be the interaction between two countries; it could be the interaction between buyers and sellers in a market; or it could be the interaction between species, such as in hawk-dove games. Surprisingly, game theory can capture those different situations and can say something meaningful about each of them, which is fantastic. But at some point, when you start looking at refinements of, for example, Nash equilibrium, or dynamics that would or would not lead to Nash equilibrium, you would say: 'Wait a minute. …