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Modeling Rational Agents

From Interwar Economics to Early Modern Game Theory Nicola Giocoli, Assistant Professor, Department of Economics, University of Pisa, Italy
The book explores the evolution, through the first half of the 20th century, of the key neoclassical concept of rationality. The analysis begins with the development of modern decision theory, covers the interwar debates over the role of perfect foresight and analyses the first game-theoretic solution concepts of von Neumann and Nash.
Extent: 480 pp
Hardback Price: $196.00 Web: $176.40
Publication Date: 2003
ISBN: 978 1 84064 868 3
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The book explores the evolution, through the first half of the 20th century, of the key neoclassical concept of rationality. The analysis begins with the development of modern decision theory, covers the interwar debates over the role of perfect foresight and analyses the first game-theoretic solution concepts of von Neumann and Nash.

The author's proposition is that the notion of rationality suffered a profound transformation that reduced it to a formal property of consistency. Such a transformation paralleled that of neoclassical economics as a whole from a discipline dealing with real economic processes to one investigating issues of logical consistency between mathematical relationships.

Modeling Rational Agents will be of great interest to scholars of the history of economic thought and method, as well as all those working in the field of game and decision theory.
‘The fame of Modeling Rational Agents precedes it. Nicola Giocoli’s book won the Best Monograph prize, 2004, from the European Society for the History of Economic Thought. . . It does not disappoint the expectations thus aroused. Giocoli’s account is powerful and fascinating, and elegantly presented.’
– Andy Denis, Economics and Philosophy

‘The History of Economics Society has honored this study with the Joseph Dorfman Award. Reading this insightful and thought-provoking book produces ample proof that both the donor and the recipient should be congratulated for this choice.’
– Hansjörg Klausinger, History of Economic Ideas

‘. . . highly recommended to all those interested in the evolution of scientific ideas in the 20th century.’
– Solomon Marcus, Mathematical Reviews

‘Giocoli’s book is an impressive tour de force that relies on extensive and expansive literatures. It should be required reading for anyone desiring a new perspective on the history of economics in the previous century.’
– Esther-Mirjam Sent, EH.Net

‘Nicola Giocoli’s fascinating and important study is a worthy recipient of the Joseph Dorfman Award of the History of Economics Society. Giocoli brilliantly recounts the strange story of the first three decades of game theory. Attributing the delayed acceptance of game theory to the difference between Nash equilibrium and the concept of rationality held by mainstream neoclassical economists at the end of the Second World War, Giocoli investigates the shift in economics from rationality as maximization to rationality as consistency. This transformation resulted in an discipline of economics with much to say about the existence and properties of economic equilibria, but, Giocoli argues, little or nothing to say about the meaningfulness of these equilibria for the analysis of real economic systems. This book is a must for anyone seeking to understand the postwar transformations of economic theory!’
– Robert Dimand, Brock University, Canada

‘Something strange happened to economics in the decade after World War II: it embraced general equilibrium theory, adopted game theory, then lost interest in it, and finally took up game theory again with redoubled enthusiasm. A number of commentators (myself included) have tried to explain this peculiar yes-no-yes history but none more profoundly, more persuasively, than Nicola Giocoli. This is simply the history of post-war economic thought.’
– The late Mark Blaug, formerly of the University of London and University of Buckingham, UK
Contents: 1. Introduction: Two Images of Economics 2. The Escape from Psychology 3. The Escape from Perfect Foresight 4. Von Neumann and Morgenstern’s Game Theory 5. Nash’s Game Theory 6. Conclusion: The Fall and Rise of Modern Game Theory References Index