Do People Play Nash Equilibrium? Lessons from Evolutionary Game Theory

Noncooperative game theory is built on 2 heroic assumptions: 1. maximization - every economic agent is a rational decision maker with a clear understanding of the world, and 2. consistency - the agent's understanding, in particular, expectations of other agents' behavior, is correct. A major challenge facing noncooperative game theorists today is that of providing a compelling justification for these 2 assumptions. It is argued that many of the traditional justifications are not compelling. But without such justification, the use of game theory in applications is problematic. The appropriate use of game theory requires understanding when its assumptions make sense and when they do not.