Behavioral game theory
Behavioral game theory seeks to examine how people's strategic decision-making behaviour is shaped by social preferences, social utility and other psychological factors. Behavioral game theory analyzes interactive strategic decisions and behavior using the methods of game theory, experimental economics, and experimental psychology. Experiments include testing deviations from typical simplifications of economic theory such as the independence axiom and neglect of altruism, fairness, and framing effects. As a research program, the subject is a development of the last three decades. Traditional game theory is a critical principle of economic theory, and assumes that people's strategic decisions are shaped by rationality, selfishness and utility maximisation. It focuses on the mathematical structure of equilibria, and tends to use basic rational choice theory and utility maximization as the primary principles within economic models. In contrast to traditional game theory, behavioral game theory examines how actual human behavior tends to deviate from standard predictions and models. In order to more accurately understand these deviations and determine the factors and conditions involved in strategic decision making, behavioural game theory aims to create new models that incorporate psychological principles. Studies of behavioral game theory demonstrate that choices are not always rational and do not always represent the utility maximizing choice. Behavioral game theory largely utilises empirical and theoretical research to understand human behaviour. It also uses laboratory and field experiments, as well as modeling – both theoretical and computational. Recently, methods from machine learning have been applied in work at the intersection of economics, psychology, and computer science to improve both prediction and understanding of behavior in games. (Wikipedia).
