The century of the broken contract

In reading Ostrom on game theory, a curious thing popped up. Communication negates a decent amount of experimental work. Communication allows for ethics, reciprocity and especially shame to buttress the bargaining situation, changing it indelibly. Once you allow prisoners to talk, they are going to find the best outcome. Some other problems also arise when considering game theory.

First, there is the obvious issue of bargaining. Who exactly bargains? Other than buying a car, it is rare. You can’t do it when you buy an apple. You can’t do it when you are buying furniture. In some metro areas, it is even unlikely when buying a house. Even if you wanted to bargain, you would be unable.

Second, there is the problem with framing. Games are embedded in life, but they do not supplant it. Games are asides to life. They interrupt, but not indefinitely. As Paul La Farge noted, to play is to admit impermanence. Thus, it is a bit odd to me to say that a player from the Soviet Union engaged in a game of nuclear deterrence is in fact a player engaged in a game of nuclear deterrence. When does this game stop? When do we tally our scores and see who wins? Or, when do we all go to the bar and bash on the Yankees? Games seem to connote ephemerality. They do not really matter in the long run. But seeing nuclear deterrence as a game seems to fly in the face of this.

Though I do understand its applicability, I am also not completely sure why games are predefined. Let us assume x means that we already agree to the rule x as a given. Put another way, we already assume that a certain rule is needed in order to play the game. Life is not the same in this regard. It is an open game if such a concept were intelligible. This is why we say, I am not playing your game. We are really saying, I am not playing by your rules. It is a point that is made more eloquently by A Wendt. “If society “forgets” what a university is, the powers and practices of professor and student cease to exist; if the United States and Soviet Union decide that they are no longer enemies, “the cold war is over.” It is collective meanings that constitute the structures which organize our actions.”

To put it economic terms, we have agreed to a conversational contract when we employ these terms. Near the end of class with Deirdre McCloskey tonight, she wondered if the 20th century was the century of the broken contract. In no particular order we have these broken contracts:

I am sure there are others, but it is still an interesting point to ponder – perhaps many of the contracts we relied upon in the past have been broken and yet trust continues.

First published Apr 5, 2011