Game theory is everywhere these days. After thrilling a whole generation of post-1970 economists, it is spreading like a bushfire through the social sciences. Two prominent game theorists, Robert Aumann and Oliver Hart, explain the attraction in the following way:
Game Theory may be viewed as a sort of umbrella or ‘unified field’ theory for the rational side of social science…[it] does not use different, ad hoc constructs…it develops methodologies that apply in principle to all interactive situations.
(Aumann and Hart, 1992)
Of course, you might say, two practitioners would say that, wouldn’t they. But the view is widely held, even among apparently disinterested parties. Jon Elster, for instance, a well-known social theorist with very diverse interests, remarks in a similar fashion:
if one accepts that interaction is the essence of social life, then… game theory provides solid microfoundations for the study of social structure and social change.
In many respects this enthusiasm is not difficult to understand. Game theory was probably born with the publication of The Theory of Games and Economic Behaviour by John von Neumann and Oskar Morgenstern (first published in 1944 with second and third editions in 1947 and 1953). They defined a game as any interaction between agents that is governed by a set of rules specifying the possible moves for each participant and a set of outcomes for each possible combination of moves. One is hard put to find an example of social phenomenon that cannot be so described. Thus a theory of games promises to apply to almost any social interaction where