Hidden Games: The Surprising Power of Game Theory to Explain Irrational Human Behavior

Two MIT economists show how game theory—the ultimate theory of rationality—explains irrational behavior

We like to think of ourselves as rational. This idea is the foundation for classical economic analysis of human behavior, including the awesome achievements of game theory. But as behavioral economics shows, most behavior doesn’t seem rational at all—which, unfortunately, to cast doubt on game theory’s real-world credibility.

In Hidden Games, Moshe Hoffman and Erez Yoeli find a surprising...