Publisher: Asian Economic and Social Society

ISSN: 2225-4226
Volume 3 No. 3 March 2013.

The Game Theory, Morality and the Game of Life

Amaresh Das and Biruk Alemayehu (College of Business,

Southern University at New Orleans, New Orleans, USA)

Citation: Amaresh Das and Biruk Alemayehu (2013) The Game Theory, Morality and the (Game
of Life), Journal of Asian Business Strategy, Vol. 3, No. 3, pp. 39-47.

Corresponding author
 The Game Theory, Morality and the ...

The Game Theory, Morality and the Game of Life

Abstract

Game theory as long as it is a study of interdependent rational

choice, can be used to explain, to predict and evaluate human
Author(s) behavior in contexts where the outcome of action depends on
what other agents choose to do. Game theory can be made
Amaresh Das and Biruk relevant to ethics and can be used in moral and political
Alemayehu philosophy, including economics, business and public policy
College of Business, Southern areas.
University at New Orleans, New
Orleans, USA

Keywords: Interpersonal, Comparison of utility, Pareto inefficiency, Maxi-min strategy

Introduction they usually seek to understand morality with

the aim of ascertaining what we should do or
One of the most common objections to an what we are obligated to do. It is morality as a
economists policy suggestions, whether in the guide to action and to life and that is the
classroom or in Washington, is That would principal interest of the moral philosopher.
not be fair! The economists usual response is Morality here is normative - a source of
that fairness is very important, but it is the guidance. There is a difference between
business of philosophers, not economists as if determining the function of morality and
philosophy had nothing to do with it. But, determining whether a particular set of norms
economists do have something to say to and practices are, in fact, the ones we should
philosophers about fairness and that game follow.
theory, in particular, is important if we are to
understand what lies at the root of being Escape from solipsism is a necessary first step
human. This is not as far-fetched as it may for ethics and game theory asks how people
sound. make decisions in light of their opinions about
how other people will behave. This goes
Game theory is often used to identify the directly to the question of what we humans
functions of morality. Can one, in fact, take have in common with each other. From such a
this functionalist approach? Yes, morality is beginning we can move by small steps to the
supposed to correct problems of threatening question. First, say, who will buy the next
what economists call Pareto- inefficiencyi round of drinks and eventually, whether the
that would be the result of unfettered rich should pay taxes to subsidize the poor?
individual rational action. On the functionalist Economists can learn a good deal of
account the moral agent then seems ipso facto philosophy from it and in the same way
to be irrational. This then begs the question philosophers can also learn from the question
why be moral? It can be used to describe the a good deal of game theory. Some of the
problem(s) that would occur in the absence of prevailing philosophic concepts that have to
morality and inferences about the remedial or be discarded in the context are Kants
the ameliorative function of morality can, categorical imperatives, Benthams
therefore, be drawn from this description.. interpersonal comparison of utility, and
Functionalism precludes the answer. Rawls principle of maintaining the welfare of
Functionalism appears to seek explanations of the least well off.
the emergence and persistence of moral
norms and practice. Moral theorists are not Moral Philosophy: How can Kant, Bentham
really interested in such explanations. Rather, and Rawls help?

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Journal of Asian Business Strategy, 3(3): 39-47

In Theory and Practice Kant sets out his social Apologists of the Benthams interpersonal
contract justification of a civil state. The comparison of utility have argued that
categorical imperative is the central comparability of mental states such as utility is
philosophical concept in the moral philosophy never possible but believes, however, that
of Immanuel Kant. It may be defined as a way human beings are able to make some
of evaluating motivations for action. Kants interpersonal comparisons of utility because
categorical imperative denotes an absolute, they share some common backgrounds,
unconditional requirement that asserts its cultural experiences, etc. In the example cited
authority in all circumstances, both required by Sen (1976), it should be possible to say that
and justified as an end in itself. It is best Emperor Nero's gain from burning Rome was
known in its first formulation: outweighed by the loss incurred by the rest of
the Romans. Sen, Harsanyi and others thus
Act only according to that maxim whereby argue that at least partial comparability of
you can, at the same time, will that it should utility is possible, and social-choice theory
become a universal law. proceeds under that assumption. Sen proposes,
however, that comparability need not be
Kant expressed extreme dissatisfaction with partial. Under Sen's theory of informational
the popular moral philosophy of his day, broadening, even complete interpersonal
believing that it could never surpass the level comparison of utility would lead to socially
of hypothetical imperativesii: a utilitarian says suboptimal choices because mental states are
that murder is wrong because it does not malleable. A starving peasant may have a
maximize good for those involved, but this is particularly sunny disposition and thereby
irrelevant to people who are concerned only derive high utility from a small income. This
with maximizing the positive outcome for fact should not nullify, however, his claim to
themselves. Consequently, Kant argued that compensation or equality in the realm of social
hypothetical moral systems cannot persuade choice.
moral action or be regarded as bases for moral
judgments against others, because the Social decisions should accordingly be based
imperatives on which they are based rely too on malleable factors. Sen proposes
heavily on subjective considerations. He interpersonal comparisons based on a wide
presented a deontological system, based on the range of data. His theory is concerned with
demands of the categorical imperative as an access to advantage, viewed as an individual's
alternative. According to Kant, access to goods that satisfy basic needs (e.g.
An original contract by means of which a civil food), freedoms (in the labor market, for
and thus completely lawful constitution and instance), and capabilities. We can proceed to
Commonwealth can alone be established. make social choices based on real variables,
[does not have to be assumed to] actually exist and thereby address actual position, and access
as a fact..Such an assumption would mean to advantage. Most importantly, Sen's method
that we would first have to prove from history of informational broadening allows social
that some nation, whose rights and obligations choice theory to escape the objections of those
aver been passed down to us, did in fact like Robbins, which looked as though they
perform such a [contract] and handed down would permanently harm social choice
some authentic record in legal instrument, theory.iv
orally or in writing before we could regard
ourselves as bound by pre-existing civil According to Harsanyi (1977), social
constitution. preferences are established on conditions that
personal preferences are corrected and
One of the first major challenges to Kant's censored by an Impartial Observer. Goodwin
reasoning came from the French philosopher (1986) points out this issue and proposes an
Benjamin Constant who asserted that since alternative, thanks to laundering preferences;
truth telling must be universal according to it consists in encouraging individuals to
Kant's theories, one must (if asked) tell a modify their preferences to launder them.
known murderer the location of his preyiii. Goodwin emphasizes that in a social context

40
 The Game Theory, Morality and the ...

individuals are ready to correct their family one is born into) shouldn't determine
preferences by themselves. They will express one's life chances or opportunities. Rawls'
only their public-oriented, ethical preferences claim that departures from equality of what he
while suppressing their private-oriented ones. calls primary goods "things which a rational
It brings us back to Sens (1976) resolution man wants whatever else he wants" are
in which he maintains there is a differences justified only to the extent that they improve
between individual preferring a social state to the lot of those who are worst-off under that
another and an individual wanting his/her distribution in comparison with the previous,
preferences be taken into account in social equal, distribution. Rawls is also keying on an
choice. Sen for the first time introduced the intuition that a person does not morally
concept into the social preference choice deserve their in born talents; thus that one is
theoretical framework with a condition of not entitled to all the benefits they could
liberalism and the notion of decisiveness: possibly receive from them; hence, at least one
individuals must be decisive their of the criteria which could provide an
preferences must be acknowledged by society alternative to equality in assessing the justice
over some pairs of social states, which of distributions is eliminated. His position is at
belong to their private sphere. Sen shows that least in some sense egalitarian with a proviso
the condition of liberalism and a weak Pareto that equality is not to be achieved by
principle lead to an impossibility of a Paretian worsening the position of the least advantaged.
liberal. But, Sens formal analysis has no need An important consequence here, however, are
to distinguish between decisive pairs that those inequalities can actually be just on
enable an individual to take decisions that are Rawls' view, as long as they are to the benefit
personal to him/her and those that are not. v of the least well off?
The Kantian ideal of a hypothetical contract as
the moral foundation for a liberal conception Rawls holds that his principles of justice
of justice has been further developed by John should be chosen in the original position
Rawls in his A Theory of Justice. Rawls like because persons so situated would find it
Kant argues that reasonable to try to secure for themselves the
highest minimum payoff. In effect they would
Principles of justice are the principles that want to follow the conservative dictates of the
free and rational persons who are concerned to maximin strategy and maximize the
advance their own interests would accept in an minimum payoff. Rawls describes his
initial position of equality. reasoning as follows:

According to Rawls, the principles of justice Now looking at the situation from the
that would be derived in the original position standpoint of one person selected arbitrarily,
are the following there is no way for him to win special
advantages for himself. Nor, on the other
A special conception of justice with a hand, are there grounds for his acquiescing in
principle of equal political liberty, a principle special disadvantages. Since it is not
of equal opportunity and a principle requiring reasonable for him to expect more than an
that the distribution of economic goods works equal share in the division of social goods and
to the greatest advantage of the least since it is not rational for him to agree to less,
advantaged. the sensible thing for him to do is to
acknowledge as the first principle of justice
A general conception of justice with a one requiring equal distribution.
principle requiring that the distribution of all
social goods works to the general advantage of Some egalitarian critics have raised concerns
the least advantaged. over Rawls' emphasis on primary social
goods. For instance, Sen has argued that we
Rawls principle of maximizing the welfare of should attend not only to the distribution of
the least well-off rests heavily on the claim primary goods, but also how effectively
that morally arbitrary factors (for example, the people are able to use those goods to pursue

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Journal of Asian Business Strategy, 3(3): 39-47

their ends. In a related vein one wonders why agents have come to an agreement, they will
health care shouldn't be treated as a primary comply with it. The task of the theorist is to
good, and some of Rawls subsequent work has consider the bargaining area and determine
addressed this question, arguing for a right to which outcome would satisfy a number of
health care within a broadly Rawlsian reasonable requirements of a rational outcome
framework. of the negotiations. Things such as the names
of the parties concerned should not matter for
Taking Lessons from Moral Theory the result, whereas their preferences do
We can use tools from game theory to build matters. vi
them back up. The categorical imperative
cannot be justified by the argument that if An axiomatic theory of the games that endows
everybody behaved Kantian way, where players with degrees of belief would provide
would we be? But reciprocity in repeated axioms, specifying players probabilistic belief
games may rescue something very like it. and a formal model of such theory is pretty
Interpersonal comparison of utility is complex. Recently some have presented many
disdained in modern welfare economics but simpler and manageable axiomatic theories
evolutionary biology shoe why people should that employs (weak or strong) knowledge
be able to know each others levels of operator. In these cases, in order to maximize
happiness. Rawls principle is hard to justify as ones expected payoff at a node, a player has
the outcome of rational decisions in his to know what to expect at following nodes,
original position but perhaps it can be revived which is the same as saying that the player has
using the idea of multiple equilibria in games. to know that the following players act
How is this all to be done? rationally. From the point of view computing
equilibrium all the theories are equivalent.
We can begin with the game of life in which They differ however, in the way that handles
we live our lives maximizing utility by our deviation. Criteria of choice among them
choice of behavior towards other people. might thus be the extent of the revisions that a
Societies are organized around conventions deviation inducesvii. This intuition is the
and we can think of these as equilibria of the driving force of the so-called Nash (1950)
game of life. Not love and duty but reciprocity program.
is the cement of society. A number of different
conventions are possible equilibria and some This program aims at evaluating axiomatic
equilibria are preferable to others. Once a solutions by checking whether the outcome of
convention is established, we all obey it from a negotiation game leads to the same outcome.
self interest as a Nash equilibrium. Roughly The success of the Nash program is crucial for
we can distinguish two strategies. First, there the plausibility of the classic axiomatic
are those who will model morality as the result theories of the Social contractviii, ix. In deciding
of one-time choice of a very large collection which equilibria are fair, we should look to an
of agents, the moral community. Secondly, imaginary game of morals identical to the
there may be those who will approach game of life except that at any point a player
morality as the result of a series of repeated can call for a return behind the veil of
small-scale interactions. Here morality is ignorance to reshuffle everyones position in
interpreted as the outcome of bargaining society knowing, however, that someone
process. This is an old idea in moral and else might then call for another reshuffling. A
political philosophy: it is the idea of social fair outcome is a fixed point in the game of
contract. morals, a set of conventions from which no
one would appeal. How can we be sure that
Within the bargaining theory, there may be there is always one unique solution or are
two approaches that seek to answer the bargaining problems to some extent
question posed here. First, there is the underdetermined? The plurality of bargaining
traditional axiomatic approach as developed in solution concepts that are discussed in
the context of cooperative games. The bargaining theory is a bad omen in this regard.
axiomatic approach assumes that once rational There are reasons to doubt that the game-

42
 The Game Theory, Morality and the ...

theoretic approach to bargaining can really cognitive heuristics that have all the
help us predict the outcome of the negotiations characteristics of moral reasoning. xii
of rational agents. Both the axiomatic
approach and the non-cooperative game Regardless of the merits of the different
approach proceed from the assumption that approaches we have discussed here, there are
there is a unique, rational outcome of such some remarkable insights that the application
negotiations. While this may be plausible in of game theory offers to the moral theorist.
some situation, it is far from obvious that this There may be many games with multiple
is always the case. equilibria. This is especially the case with
iterated plays of particular games such as the
As a matter of fact in recent days, many, prisoners dilemma. One of the implications of
notably, Bicchieri (1990), Basu (1990), this fact is that insofar as these games are
proceed to distinguish between the game helpful representations or models of our social
theorists and the players own theory of the interactions, we have reason to expect such
game. The latter is theory that is sufficient for indeterminacy in the game of life. Also, game
each player to infer a certain sequence of theory makes it clear that in any sufficiently
moves, whereas the former is intended as a large population we can expect determinate
justification of such a sequence of moves. mixes of behavioral dispositions.
They then inquire what happens when a theory
of the game is augmented with information The big question then remains to be spelled
that a move outside the inferred solution has out big time is: whether everything that is
occurred. It is shown that a theory that is relevant for moral theory about the agent can
sufficient for the players to infer a solution be captured by the rather one-dimensional
and still remains consistent in the face of picture of rational man as proposed by
deviation must be modular. By this they different versions of prevailing game theory.
mean that players have distributed knowledge The agent is supposed to be completely
of it. Furthermore, whenever the theory of the characterized by his preference rankings over
game is group knowledge (common outcome and his beliefs at each stage of the
knowledge) among the players (i.e., it is the game. However, morally important
same at each node); a deviation from the distinctions e.g., between important
solution gives rise inconsistencies and, differences in character - have no place in this
therefore, forces a revision the theory at later characterization. What about many repeated
node. On the contrary, whenever a theory of prisoner dilemma games where it of course
the game is modular, a deviation from pays to have a reputation to be cooperative?
equilibrium play does not induce a revision of Ordinarily, reputation is generally believed
the theoryx and associated with a persons character. But
in a game theory, a reputation cans simply a
Insights from Game Theory history of the game that is, the outcome of
Game theory that regards morality as the players moves in similar games. There is a
intended result of a complex large scale relevant difference between the two cases.
bargaining process between fully informed One important feature that is missing here is,
and fully rational agents, one can move away call it, moral education (for the old-fashioned)
from all the established assumptions.xi By the or design (for the modern). In The Republic,
same token, an evolutionary game theorist Plato moves from trying to explain why
writing about ethics and morality have shown Glaucon should behave virtuously to how
that among not-so-fully rational agents many society could be redesigned to make future
of the norms of coordination and cooperation Glaucon behave virtuously. Economists do not
can emerge that are usually the object of want to make the transition from analyzing
inquiry of the more traditional moral theories, equilibria of the existing game to changing the
that is, evolutionary theorists can show that rules of the game. One of the game theorys
evolution favors not only the emergence of most profound lessons is that a player can
patterns of behavior that conform to moral benefit from new rules which reduce his pay-
standards but also favor the development of offs on out-of- equlibrium paths the pangs of

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Journal of Asian Business Strategy, 3(3): 39-47

conscience, for example. Game theorists International Journal of Game Theory, 5(2),
acknowledge that people in the original 33-44.
positions might choose a society in which Bicchieri, C. (1990). Rationality and
education alters their preferences but Coordination, Cambridge University Press
somehow ignores it. Incorporating knowledge Binmore, K. (1994). Playing Fair Game
or education into the framework of analysis is Theory and the Social Contract, 1, Cambridge,
crucial unless economic education improves MIT Press.
enough that can produce an entire society of Binmore, K. (2005). Natural Justice: New
citizens who understand the importance of York, Oxford University Press
playing fair instead of having to take it on Rubinstein, A. (1982). Perfect Equilibrium in
faith. a Bargaining Model. Econometrica, 50(1), 97-
109.
Conclusion Gauthier, D. (1967). Morality and Advantage,
Philosophical Review, 76(4), 460-475.
Economists who use game theory in their Goodwin, R. E. (1986). Laundering
work may be functionalists, contractarians, or Preferences in Elster and Hylland (eds),
even evolutionary theorists. All these Foundations of Social Choice Theory, 75-101,
approaches represent different combination of Cambridge University Press, Cambridge.
game theory and ethics. The contractarians Gibbard, A. (1974). A Pareto-consistent
with their emphasis on fully rational agents Libertarian Claim. Journal of Economic
and bargaining represent a more traditional Theory, 7(1), 388- 410.
use of game theory. The new evolutionary Harsanyi, J. C. (1977). Behavior and
approach, on the other hand, with its emphasis Bargaining Equilibrium in Games and Social
on bounded rational agents and repeated Situations, Cambridge University Press,
interactions, is a new arrival with a certain Cambridge.
promise. What is needed however is a kind of Harsanyi, J. C. (1955). Cardinal Welfare,
synthesis of these approaches. Game theory in Individualistic Ethics and Interpersonal
economics, as well as in other public policy Comparisons of Utility. Journal of
areas tends to suggest that people are honest Political Economy, 63(2), 309-321.
only to the extent that they have economic Hirofumi, U. (1999). Global Warming as a
incentives for doing that. This is purely a cooperative game. Environmental Economics
homo economics assumption which is not all and Policy Studies, 2(1), 80-95.
true and which must have to confront reality. Rawls, J. (1971). A Theory of Justice,
Again, no society is viable without some Cambridge, Harvard University Press.
norms or rules of conduct or a knowledge Skyrms, B. (1996). Evolution of the Social
operator where strictly economic incentives Contract, Cambridge, Cambridge University
may not be present or when a man may not be Press.
able to shine as a rational fool. Preferences Skyrms, B. (2004). The Stag Hunt and the
as rankings have to be supplanted by some Evolution of Social Structure, Cambridge,
richer concepts involving culture, education or Cambridge University Press
commitment that may be at variance with the Sen, A. (1976). Liberty, Unanimity and
structure of all traditional game theories. The Rights. Economica, 4, 217-245.
traditional game theory with its emphasis on Sen, A. (1977). Rational Fools, A Critique of
fully rational agents and bargaining can be said the behavioral Foundations of Economic
to have been overburdened with extra Theory. Philosophy and Public Affairs, 6(4),
structure. 317-344.
Verbeek, B. (2007). The Authority of Norms.
References American Philosophical Quarterly, 44(3),
Basu, K. (1990). On the Non-existence of a 245-258.
Rationalty Definition for Extensive Games,

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 The Game Theory, Morality and the ...

Notes
i
Even if moral norms and practices serve to bring about Pareto-superior outcomes not realizable through
uncoordinated individual rational action, no explanation of the existence and persistence of morality are
provided unless it is shown that this function somehow motivates human action or in some other way is
causally effective in bringing about mutually beneficial outcomes.

ii
Hypothetical imperatives apply to someone dependent on them having certain ends:
if I wish to quench my thirst, I must drink something;
If I wish to acquire knowledge, I must learn.

iii
Kant denied that such an inference indicates any weakness in his premises: not lying to the murderer is
required because moral actions do not derive their worth from the expected consequences. He claimed that
because lying to the murderer would treat him as a mere means to another end, the lie denies the rationality of
another person, and therefore denies the possibility of there being free rational action at all. This lie results in a
contradiction in conceivability and therefore the lie is in conflict with duty.

iv
Additionally, since the seminal results of Arrow's impossibility theorem many positive results focusing on
the restriction of the domain of preferences of individuals have elucidated such topics as optimal voting. The
initial results emphasized the impossibility of satisfactorily providing a social choice function free of
dictatorship and inefficiency in the most general settings. Later results have found natural restrictions that can
accommodate many desirable properties.

v
Formally Sen makes no distinction between a man deciding whether to sleep in a prone or supine position
and a religious leader dictating whether one should do so. Gibbard (1974) investigates the issue: he uses a
Cartesian product structure to describe individual rights and points out the internal inconsistency caused by an
extended condition liberalism. This result is called Gibbards paradox (or Gibbards First Liberalist Claim).

vi
Harsanyi (1955), Rawls (1971) and Gauthier ((1967) (2008)) all have used axiomatic approaches to justify
this version. Gauthier not only uses bargaining theory to determine, as Rawls and Harsanyi sought to do, the
content of fundamental moral principles; he also tries to show that rational agents will act morally.

vii
Any theory of the game that employs a monotonic logic is sufficient for the players to infer a solution
becomes inconsistent when augmented with information that an off-equilibrium move has been played. In
order to preserve consistency a revision of the theory is in order. When revising a theory of the game, it
matters how much the players know i.e.it matters whether the theory is a common knowledge, group
knowledge, or distributed knowledge among players.

viii
Such theories regard morality as the result of (hypothetical) negotiations between ideally rational agents but
do not bother to spell out exactly how the parties reach the result. See Binmore (1994), Rubinstein (1982).
Consequently, if there is not at least the promise of such a detailed analysis, as is promised by the Nash
program, the result they present lacks plausibility.

ix
There are, of course, other issues, psychological and sociological. These complex issues underlying choice
have recently been forcefully brought out by a number of penetrating studies dealing with consumer decisions
and production decisions. It is very much an open question as to whether these behavioral characteristics can
be at all captured within the formal limits of consistent choice on which the maximization approach depends.
In this context I cannot resist the temptation of quoting a passage from a work by Sen (1977):

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Journal of Asian Business Strategy, 3(3): 39-47

A persons choices are considered rational in this approach (choice consistency approach) if and
only if these choices call all be explained in terms of some preference relation consistent with the
revealed preference definition, that is, if all his choices are explained as the choosing of most
preferred alternatives with respect to a postulated preferences relation. The rationale of this
approach seems to be based on the idea that the only way of understanding a persons real preference
is to examine his actual choices, and there is no choice independent way of understanding
someones attitudes towards alternatives.

x
An axiomatic theory of the game that endows players with degrees of belief would thus have to provide
axioms specifying players probabilistic beliefs, and a formal model for such a theory would be much more
complex and cumbersome than the kind of model we provide A much simpler and manageable axiomatic
theory of the game would a theory that employs a (weak or strong) knowledge operator. In this case, in order
to maximize ones expected payoff at a node a player has to know what to expect at following nodes, which is
tantamount to saying that the player has to know the following players act rationally

xi
W can illustrate, a la, Skyrms (2004) this as follows: Rousseau describes the state of nature as one that
resembles the so-called Stag Hunt: Imagine two hunters who can choose to hunt for hare. Their chance of
calculating a hare are not affected by the actions of others. However both prefer to have venison for dinner but
if they were to hunt for stag, they will only be successful if the other does so as well.

#2

stag hare

3 2

stag

3 0

#1

hare 0 2

2 2

Suppose #1 and #2 coordinate on ( Hare, Hare) This equilibrium is strictly Pareto-inferior to (stag, stag).
Whereas contraction choice would have it that (stag, stag) is the correct norm to settle upon, evolutionary
game theory teaches us that it is unlikely that the Pareto-efficiency equilibrium will be selected in a process of

46
 The Game Theory, Morality and the ...

repeated interactions. What is more the Pareto-efficient equilibrium is unstable: occasional deviations from
this equilibrium will lead the population as whole to coordinate on (hare, hare) rather than (stag, stag).

xii
See Skyrms (1996, 2004), Binmore (1994, 2005), Hirofumi (1999)

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Reproduced with permission of the copyright owner. Further reproduction prohibited without
permission.