Game theory is central to understanding human behavior and relevant to all of the behavioral sciences - from biology and economics, to anthropology and political science. This title demonstrates, game theory alone cannot fully explain human behavior and should instead complement other key concepts championed by the behavioral disciplines.

Preface xi 1 Decision Theory and Human Behavior 1 1.1 Beliefs, Preferences, and Constraints 4 1.2 The Rationality of Time Inconsistency 9 1.3 Bayesian Rationality and Subjective Priors 12 1.4 Preferences Are State-Dependent 16 1.5 The Behavioral Revolution 18 2 Game Theory: Basic Concepts 33 2.1 The Extensive Form 33 2.2 The Normal Form 36 2.3 Nash Equilibrium 38 2.4 Correlated Equilibrium 47 3 Game Theory and Human Behavior 48 3.1 Behavioral Game Theory 49 3.2 Character Virtues 76 3.3 The Situational Character of Preferences 78 3.4 The Dark Side of Altruistic Cooperation 79 3.5 Norms of Cooperation: Cross-Cultural Variation 81 4 Rationalizability and Common Knowledge of Rationality 86 4.1 Dominated and Iteratedly Dominated Strategies 87 4.2 Epistemic Games 94 4.3 Rationalizable Strategies 98 4.4 Common Knowledge of Rationality 100 5 Extensive Form Rationalizability 106 5.1 Backward Induction and Dominated Strategies 106 5.2 CKR Fails off the Backward Induction Path 113 5.3 How to Play the Repeated Prisoner's Dilemma 114 5.4 Backward Induction and Extensive Form CKR 116 5.5 On the Inadmissibility of CKR 120 6 The Logical Antinomies of Knowledge 123 6.1 The Pitfalls of Na..ive Epistemic Logic 123 6.2 The Common Knowledge of Logicality Paradox 124 6.3 The Surprise Examination 125 6.4 The Modal Logic of Knowledge 126 6.5 A Truth That Cannot Be Known 128 7 The Mixing Problem: Purification and Conjectures 131 7.1 The Incoherence of Mixed Strategies 131 7.2 Purifying Mixed Strategies 133 7.3 A Reputational Model of Honesty and Corruption 135 7.4 Epistemic Games: Mixed Strategies as Conjectures 138 8 Bayesian Rationality and Social Epistemology 142 8.1 The Sexes: From Battle to Ballet 143 8.2 The Choreographer Trumps Backward Induction 144 8.3 Convention as Correlated Equilibrium 146 8.4 The Social Epistemology of Common Priors 149 8.5 The Social Epistemology of Common Knowledge 151 8.6 Social Norms 153 8.7 Game Theory and the Evolution of Norms 153 9 Common Knowledge and Nash Equilibrium 156 9.1 Nash Equilibrium in Two-Player Games 156 9.2 The Modal Logic of Common Knowledge 159 9.3 The Commonality of Knowledge 162 9.4 The Demise of Methodological Individualism 171 10 The Analytics of Human Sociality 174 10.1 Explaining Cooperation: An Overview 174 10.2 The Folk Theorem 178 10.3 Cooperation with Private Signaling 186 10.4 One Cheer for the Folk Theorem 188 10.5 Altruistic Punishing in the Public Goods Game 190 10.6 The Failure of Models of Self-Regarding Cooperation 193 11 The Unification of the Behavioral Sciences 194 11.1 Gene-Culture Coevolution: The Biological Model 196 11.2 Biological and Cultural Dynamics 202 11.3 The Socio-Psychological Theory of Norms 204 11.4 Socialization and the Internalization of Norms 206 11.5 Varieties of Behavioral Modeling 207 11.6 Society as a Complex Adaptive System 215 11.7 The Behavioral Disciplines Can Be Unified 219 12 Summary 221 12.1 Game Theory 221 12.2 Commonality of Beliefs 221 12.3 The Limits of Rationality 222 12.4 Social Norms as Correlated Equilibria 222 12.5 Reason Is Bounded by Sociality, Not Irrationality 223 13 Table of Symbols 224 References 226 Subject Index 254 Author Index 258

"Gintis contributes importantly to a new insight gaining ascendancy: economy is about the unintended consequences of human sociality. This book is firmly in the revolutionary tradition of David Hume (Convention) and Adam Smith (Sympathy)."—Vernon L. Smith, Nobel Prize-winning economist

"Herbert Gintis makes a strong case that game theory—by predicting social norms—provides an essential tool for understanding human social behavior. More provocatively, Gintis suggests that humans have a genetic tendency to follow social norms even when it is to their disadvantage. These claims will be controversial—but they make for fascinating reading."—Eric S. Maskin, Nobel Laureate in Economics

"Recent findings in experimental economics have highlighted the need for a rigorous analytical theory of choice and strategic interaction for the social sciences that captures the unexpectedly wide variety of observed behaviors. In this exciting book, Gintis convincingly argues that an empirically informed game-theoretic approach goes a long way toward achieving this attractive goal."—Ernst Fehr, University of Zurich

"This brave and sweeping book deserves to be widely and carefully read."—Adam Brandenburger, New York University

"The Bounds of Reason makes a compelling case for game theory but at the same time warns readers that there is life beyond game theory and that all social science cannot be understood by this method alone. This splendid book makes skillful use of figures and algebra, and reads like a charm."—Kaushik Basu, Cornell University

"Excellent and stimulating, The Bounds of Reason is broad enough to encompass the central concepts and results in game theory, but discerning enough to omit peripheral developments. The book illustrates deep theoretical results using simple and entertaining examples, makes extensive use of agent-based models and simulation methods, and discusses thorny methodological issues with unusual clarity."—Rajiv Sethi, Barnard College, Columbia University