Economic Rockstar

Connecting Brilliant Minds in Economics and Finance

043: Herbert Gintis on Game Theory and the Multidisciplinary Approach to Understanding Human Behavior

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043: Herbert Gintis on Game Theory and the Multidisciplinary Approach to Understanding Human Behavior

Herbert Gintis is Emeritus Professor of Economics at University of Massachusetts and visiting Professor at Central European University.Herbert Gintis

He is known for his theoretical contributions to sociobiology, especially altruism, cooperation, epistemic game theory and gene-culture co-evolution.

Herbert has a B.A and M.A in Mathematics but switched his PhD program at Harvard from mathematics to economics.

Professor Gintis was part of a group of economists who developed their ideas on a new economics which encompassed issues of alienation of labor, racism, sexism, and imperialism.

Herbert has worked extensively with economist Samuel Bowles, writing their landmark book, Schooling in Capitalist America.

One of Herbert’s latest books The Bounds of Reason emphasises the unification of economic theory with sociobiology and other behavioral sciences which, in the words of Nobel Prize-winning economist, Vernon L. Smith, “is firmly in the revolutionary tradition of David Hume (Convention) and Adam Smith (Sympathy)”.

In the episode you will learn:

  • about the importance of trans-disciplinary research and the importance of collaboration with other disciplines.
  • why economics is not the only social science that explains human behavior.
  • how biology, economics and sociology explain the behaviour of humans in different ways and which discipline is correct?
  • about the Ultimatum Game and how it shows the cooperative and non-cooperative behaviour of humans.
  • about the morality of humans and how we reciprocate kindness with kindness and unkindness with unkindness.
  • why reciprocity makes humans so successful as a species.
  • why some species have a symbiotic relationship with other species which is not the same as reciprocity.
  • how we can fit all the human feelings together to form a multi-disciplinary approach to understanding human behavior.
  • why we always need a system to punish free-riders and non-cooperators.
  • how the future structure of the University can be seen at Arizona State University today.
  • why we need a new generation of thinkers and research centres who are trans-disciplinary.
  • what projects Professor Herbert Gintis is working on right now.
  • why morality controls politics and your vote will not make a difference.
  • how Herbert gets things done in terms of writing books and journal articles.
  • why Herbert did not like The Black Swan by Nassim Nicholas Taleb.
  • about Herbert’s disagreement with Nassim Nicholas Taleb.
  • why Herbert believes that macroeconomics is wrong and is in agreement with Taleb on that issue.
  • the goal of economic policy is not to predict but to put in place economic and social policies that prevent really bad outcomes.

Influencers:

Kenneth Arrow, John Maynard Keynes, Adam Smith and Albert Einstein.

Economics:

In this interview, Herbert mentions and discusses: Marx, rationality, game theory, rational actor model, experimental economics, prisoners dilemma, the ultimatum game, labor market, reciprocity and morality.

Economists:

In this interview, Herbert mentions and discusses: Vernon Smith, Samuel Bowles, Ernst Fehr, Kenneth Arrow and Nassim Nicholas Taleb.

On Math Being the Core Link to Multi-Disciplinary Knowledge:

“It’s really hard in the Behavioral Sciences to get too close to any one thinker because they’re all tainted by disciplinarianism. We need a new generation of thinkers who really think in all of these disciplines at the same time. As long as you can do the math. If you can’t do the math, you can’t do economics or you can’t do biology. If you can do the math, and you know statistics, there’s no reason why you shouldn’t know all of the fields. We need a generation of people who do that. The reason it’s possible now is the internet. Now, there’s no reason for disciplinary isolation. I think the next generation of behavioral scientists is going to much more broad”.

Arizona State: The Next Generation University… Today

Arizona State University is organised trans-disciplinarily. They don’t have traditional disciplines. They have subject areas depending on who asks questions and subject areas there from all sorts of disciplines. Herbert Gintis believes that’s what the future is going to be like, where you abandon the disciplines and add new research centres based on asking questions like climate change, cooperation, epidemiology, warfare, political structure, etc. And then you just hire people who can do that and talk to each other. It is exciting. It will happen. But it will take a long time because the whole organisation of the university is in terms of disciplines.

All of the real advances in the Behavioral Sciences fall in between the disciplines. It requires you do it all at the same time. it’s likely that at the forefront of change in the Behavioral Sciences will be funding organisations, governmental organisations like the NFF in the United States and the ESF in Europe. 

Quotes by Professor Gintis in Episode 043 of the Economic Rockstar Podcast:

Disciplines are almost like a feudal fiefdom. So it’s very hard to do trans-disciplinary research but that’s where all the real action is these days. Not only in behavioral science but in natural science – Herbert Gintis.

As far as I’m concerned, all of life is game theory. It’s the interaction of strategic interaction of individuals of all discipline species and types and races. So game theory comes first – Herbert Gintis.

Human success is not based on selfishness. It’s based on our ability to cooperate – Herbert Gintis.

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“The real enemy of understanding humans is the notion that we’re all selfish. It’s just not true – Herbert Gintis

To do creative work, you have to have time. Once you have time, you get a lot of work done – Herbert Gintis.

“What I like to do most in the world is to read and write. That’s what I do” – Herbert Gintis.

“I did not like The Black Swan at all. It made fun of science. It made fun of statistics. It capitalised on a unique event, the financial crisis of 2008, and he used it to say economics is a bunch of crap. I think that’s just a bad mistake and I had some run-ins with him on the web. He thinks that science is about prediction. Now prediction is important but that’s not what science is about. It’s about expectation” – Herbert Gintis.

Projects Herbert Gintis is Working on Right Now:

Non-consequential behaviour in politics: 

“People participate politically even when they don’t make any difference. In all English-speaking countries, no election with more then 40,000 voters has ever been won by one vote. Meaning that no individual has ever made a difference in a political booth. Political structures are moral structures and they don’t necessarily reflect particular self-interest concerns” – Herbert Gintis.

Resources:

  • Herbert created his own word processor and uses LaTex for mathematical equations.
  • The Web.
  • Evernote
  • Scrivener

Recommended Books:

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008: Robbie Butler on Using Sports to Teach Entry-Level Economics

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008: Robbie Butler on Using Sports to Teach Entry-Level Economics

Robbie Butler is a lecturer of economics at University College Cork in Ireland. He combines his love of sports with economics to explain many economic concepts. He lectures on a multitude of modules, such as Microeconomics, Macroeconomics, Growth Economics and Corporate Strategy.  Robbie received his PhD from University of Hertfordshire in England, is published in a number of internationally renowned academic journals and is a regular economics contributor on media. Robbie’s primary passion is in sports, namely football (soccer) and he has a Junior International cap for Ireland. Robbie managed to bridge his passion for sports with his career in economics and, along with his brother David and other colleagues, created and runs the popular website www.sportseconomics.org.

Economic Themes:

In this interview, Robbie mentions and discusses: economic growth, institutional economics, the logic of collective action in society, the rise and decline of nations, sports economics, theory of Multiple Intelligence, incentives, game theory, the volunteers dilemma, decision-making, competition, government funding, laissez-faire and sabermetrics.

Economists and Economic Schools:

In this interview, Robbie mentions: Professor Geoffrey Hodgeson, Mancur Olson, David Kahneman, Stefan Szymanski, Ignacio Palacios-Huerta, Jadrian Wooten, Rodney Fort, Brad Humphreys, Seamus Coffey, John Considine, David, Butler, Declan Jordan and John Eakins.

Robbie’s Influencers:

His PhD supervisor/mentor Professor Geoffrey Hodgeson who recently established the World Institutional Network for Interdisciplinary Research (WINIR), the works of Mancur Olson, Stefan Szymanski, Rodney Fort and Brad Humphreys.

Find Out:

  • who lectured Robbie as an undergrad. Hint: He’s the host of this show!
  • how Robbie’s use of sports in explaining economics grew from fun and a personal interest into something that has grown and evolved into something quite serious.
  • how playing football at a highly competitive level has allowed Robbie view economics in quite a unique way.
  • how this unique view has given Robbie an ability to delve into economics with many sports analogies and examples in which students can relate.
  • how having played sports competitively has given Robbie a level of respect and credibility when using sports-related themes in economics.
  • the importance of working with like-minded people and how it makes life so much easier.
  • why a coffee break with colleagues can have the most intellectually-stimulating conversations bursting with ideas.
  • a great tip before publishing a blog post when working with others who share the same website – it cuts out the use of Google Docs, Dropbox, etc.
  • how working with a sibling makes the feedback on your work more critical and raw – something that could help with perfecting the right article.
  • about the Theory of Multiple Intelligence by  Harvard educationalist Howard Gardner – we have 8 ways of learning.
  • how sports can be used as “a lens to the economic world” that empowers the student when learning and understanding economic theory.
  • how a change to the rules of a football/soccer game in the Caribbean between Barbados and Granada created incentives that reflects the behaviour of rational economic agent.
  • how watching the Simpsons can expose us to economic theory with its many parodies.
  • why Robbie believes that the English Premier League is in trouble and has all the hallmarks of a bubble.
  • how the different economic structures of the US (free market) and Europe (socialist) are reversed when it comes to the economic model of sports.
  • how the debt/GDP ratio imposed on EU countries is similar to the debt/income rules imposed on football clubs.
  • why big clubs may be willing to break the spending rules of the game despite the imposition of monetary fines.
  • about the use of metrics by Billy Bean’s Oakland A’s and how a ‘mediocre’ team could beat the cash-rich New York Yankees and Boston Red Sox.

Advice:

On Learning and Teaching Economics:

“We all have to develop ourselves and our understanding”.

If you work hard, you get the returns – there are no shortcuts @RobbieButlerUCC

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On Research:

“Try and keep the material as current as you possibly can”.

Personal Habits:

  • Robbie, like all great educators, is always learning about the most optimal ways to teaching economics.
  • When working with a group who share the same website, it is best to leave each post unpublished as a draft so that your colleagues can give some critical advice or recommendations before being published.
  • Constantly updating the teaching material.

Takeaway:

On Hard Work:

“Hard work is everything. Nobody is born with an innate ability to do something. The harder you work, the easier things become. Thant applies to college, studying, sports and life in general” – Robbie Butler, UCC.

On the Value of Informal Meet-ups:

Some of our coffee meetings can be quite vicious, but it’s a good sounding board for ideas @RobbieButlerUCC

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On Ways of Learning:

“People develop their understanding of different concepts in different ways. Some people have very good spatial recognition and may not be good at logical reasoning. Other people are fantastic musicians or artists. some people are very good numerically. So, because we all learn in very different ways, we need to teach in such a way that tries to capture as many forms of multiple intelligence theory as we can. We use sports as a lens to the economic world”.

On Sports in Economics:

We use sport as a lens to the economic world – @RobbieButlerUCC

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On the Use of Data:

“When you’re teaching economics or doing research, data is key and lots of data in sport is collected for us. There are so many things we can analyse from an economic perspective using the lens of sport”.

Recommended Books:

Favorite Internet Resources:

Where To Find Robbie Butler:

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007: Ryan Blair – Gangster turned Millionaire on Decision-Making, Game Theory and Incentives

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Episode 007: Ryan Blair –  Gangster turned Millionaire on Decision-Making, Game Theory and Incentives

Ryan BlairRyan Blair is a serial entrepreneur but his path to becoming a millionaire is both unique and fascinating. From a middle-class family who lost it all, Ryan became a gang member and, at times, carried an AK-47. life changed for Ryan due to a strong work ethic and a will to succeed. He overcame great obstacles to achieve extraordinary success.

With six multi-million dollar companies by age 30, Ryan vowed to make his current company, ViSalus Sciences, be the first billion dollar company to come out of the Great Recession and to help many people along the way. He is a philanthropist and New York Times best selling author.

Economics and Finance Themes:

In this interview, Ryan Blair mentions and discusses: decision-making, incentives, rewards, compensation, leveraging, poverty, entrepreneurialism, economic systems, philanthropy, venture capitalists, investors, Game Theory, complementary goods and capital markets.

How being a gang member is similar to being a business person:

  • “A gang is an economic system. Similarities  exist between being an entrepreneur and a legitimate businessman and doing business as a gang member on the street”.
  • “A gang is simply illegal entrepreneurship. It has a management hierarchy. Generally a gang will have various revenue streams. It has a compensation system. There are incentives and rewards as a recruiting system to recruit new members. There’s replication that occurs as a business model. The gang will have different hubs and different cities and countries it operates in. There are so many similarities”.
  • “Game theory is simply the idea of a game of chicken. Sometimes you have to be willing to risk it all and a lot of the time you have to be willing to walk away from a deal”.

Ryan’s Influencers:

  • Bob Hunt: Ryan’s step-father. Find out what he taught Ryan.
  • John Wooden: basketball player and NCAA coach, author on leadership and winner of the Presidential Medal of Freedom.
  • John C. Maxwell: Expert on leadership and New York Times best-selling author.
  • Dale Brown: NCAA Hall of Fame basketball coach.

In this episode, you will learn:

  • what life was like for Ryan growing up with a violent, drug-addicted father and how his family lost everything.
  • how Ryan overcame this to teach people how to overcome their poor decisions or the decisions of their family or the environment they were born into.
  • what skeletons Ryan takes out of the closet (revealed in his book) giving us some insight in this podcast.
  • why people are shocked that he was in a gang but how people that he knew in the past are even more shocked by his appearance, level of education and his ability to articulate on subjects that he is passionate about.
  • how over-leveraging and keeping-up with the Jones’ fuelled by credit in the economic ‘good times’ can be destructive for some families.
  • how Ryan went from middle-class to poverty to multi-millionaire.
  • how Ryan went from earning minimum wage at 18 to earning 6 figures within 2 years.
  • how staring at a 60-year old prisoner became the defining moment that changed Ryan’s life-path.
  • how Ryan overcame dyslexia and ADD to create his own auditory learning system, something which the current educational system failed to do.
  • why Ryan believes that ‘vision’ is so important in your life.
  • how Ryan helps people facing life in adversity: Clue? – The creation of foundations and philanthropic work.
  • about Ryan’s work with autism.
  • about the importance of having mentors and having a life purpose.
  • why Ryan had the perfect attributes to be involved in gangs. [Ryan was forced into a gang because he was a young kid, influenceable and could be productive. He was an angry kid, got into a lot of fights and had something to prove to society].
  • how Ryan learnt powerful lessons from the boardroom on how to structure agreements.
  • how Ryan used the economic theory of Game Theory to get ahead in business and become the dominant player.
  • how Ryan applies mathematical techniques to get the result he’s looking for.
  • the meaning behind Ryan’s tattoos: ‘Carpe Diem’ and ‘8411’.
  • how a tragedy that befell Ryan’s mother has become a great learning experience and a way to develop and to value certain things in life.
  • how Ryan will help give his son a strong work ethic and an incentive to do whatever he wants to do.

Advice:

  • Ryan’s life purpose goal: “I will measure my influence by the network of the people I can draw upon for inspiration and economic creation’ – Ryan Blair”.
  • Ryan’s Philosophy: “Success is about your beliefs, values, actions and skills. So if you work on all of these things you will be successful” – Ryan Blair”.
  • On Vision: “I use that method in my life and my conscious and subconscious has no choice but to pursue them because I really fall in love with the vision”.
  • On Failing: “I fail forward and try to draw from certain things or from my gang past or maybe perhaps an investment that I made that didn’t work out so well”.
  • On Getting the Best Deal: “If you’re not prepared to walk away [from the deal] and the other party knows that, then you’re gonna be out-negotiated in many cases or you simply won’t get the best result possible for you, your family and your shareholders, which is what’s most important in a business negotiation”.
  • On Learning: Because Ryan knew that he wanted to be an entrepreneur, it was easy for him to associate learning with growth as an entrepreneur.
  • On Opportunities: “Opportunity exists all around you. If you’re looking for it and if you train yourself in how to see it – start there. If I sat in my garden, I could possibly find an opportunity to become an entrepreneur and be successful”.
  • On Nutrition and Learning: “Have a breakfast in the morning before school so as to have a proper education. Nutrition is so important to learning and to growth in an individual”.

Personal Habits:

1. 

‘I’m an idealist. I like to make things as good as I possibly can’ – Ryan Blair

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2. Asking questions: “I ask a lot of questions of myself. Am I doing the right things? Am I making the right adjustments necessary for me to achieve the result that I want? I ask myself the question ‘Why not?”.

“If I want a vacation and I can’t afford one I then go ‘Why can’t I afford one and someone else can?’. Generally, there’s a reason for that. Maybe you haven’t properly saved or you don’t have enough income coming in. If I want a new car that I would really like to have and I can’t afford it, I’ll ask myself ‘Why not?’ and eventually I ask that question enough times then I got the new car or I got the vacation or I got the houses or I got the stuff that I wanted. Now I ask myself ‘Why can’t I have a billion dollar company?’ The answer is a multi-faceted one and it’s one that I will find a solution to and solve the problem”.

3. Making decisions: “Making the right decisions is harder to do because you can’t always have all the facts and all the information in front of you. I look back on a lot of my decisions, reflecting on them and say ‘Hey, maybe I didn’t make the right decision’, meaning there was another decision that would have been better”. A wrong decision could have been made because “I had the wrong facts or, perhaps, the wrong intentions or emotions in the decision-making process that made me fail to make the right decision”.

4. Evaluating decisions and making the necessary adjustments: “In life, you’re going to make some bad decisions, particularly in business because you don’t always have all the facts or you can’t predict the future or you don’t know how the economy might change or how capital markets might change”.

“If bad decisions are made, you’ve just got to assess it, understand it and make better decisions, and eventually you accumulate enough right decisions to where you’ve got success”.

The Golden Rule that Ryan Lives By:

“The Path is all Math” – “you’re reverse engineering or you’re finding the mathematical equation to get the result you’re looking for and that could be a result of fixing any deficiency in your life or to improve something. There’s generally a mathematical path to it and that could simply be the number of steps in the formula or the amount of time it takes for you to get the result that you’re looking for”.

‘Understanding the math behind things is very important’ – Ryan Blair

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‘The Path is all Math’ – Ryan Blair

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Takeaway:

  • Don’t let anyone steal your milk: a gang member lifestyle allowed Ryan to develop an innate ability to spot trouble in the boardroom and to fight his corner.
  • Be careful in deals that you do as an entrepreneur with venture capitalists or sophisticated investors. Ryan found himself in a situation where he had created value and wealth but faced not receiving any of it.
  • “Life can deal you a bad hand and if you sit at the table long enough and you play with the best strategy, you’ll end up getting a great result out of it. And I’m living proof of that”.
  • Attributes required to make multi-generational wealth: creativity and strong work ethic.

Recommended Books:

Favorite Internet Resource:

Where to Find Ryan Blair:

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