Economic Fables, Ariel Rubinstein, Open Book Publishers,
pp.253
Introduction
Economic Fables is part memoir, part description of a work
life that single-mindedly engaged with one of the most fascinating fields of
Economics- Game theory. Rubinstein began
his incessant engagement with this field since he was thirteen, learning the
importance of mathematical logic, the construction and importance of economic
models to explain reality and the most difficult variable that all game
theorists had to grapple with- human behaviour. Rationality is only one of the
many ways of understanding human choices and financial gain is only one of the
utilities humans consider while making decisions. While Game theory has had
wide implications in understanding and demystifying human decision making, it
is also important to separate the myths of what economics can perform from the
magic of the actual power of the discipline. In a way this book cautions us
from applying neat theories to reality with a caveat that the difficulty is not
capricious human behaviour that overrides rationality but the values that people
hold of which rationality is only one. In another way, this work is a generous
acknowledgement to those that went before Rubinstein- from John Nash to Amartya
Sen, Amos Tversky to Daniel Kahneman.
The
Idea of Models as Fables
The heart of the book is the idea of Economics as a kind of
story telling that helps us understand the world better. ‘In economic theory as
in Harry Potter, the Emperor of new clothes or the tales of King Solomon, we
amuse ourselves in imaginary worlds,’ explains the author. Rubinstein’s
somewhat eclectic introduction to the theory is responsible for this way of
thinking. Speaking of his earliest influences, he acknowledges a teacher whose
lucid mathematical proofs he devoured along with Sen’s Collective Choice and Social Welfare.
This simultaneous engagement prodded him to explore the
vistas of modelling with the traps that comes with uncritical attitude. He
elaborates that models might seem simplistic and even unrealistic, but it is
the only way ‘to clarify concepts, evaluate assessments, verify conclusion and
acquire insights.’ However, since the storytelling takes place in the house of
Mathematics, formal language can be both clarifying as well as clouding. The
meaning of clarity does not necessarily mean the idea of scientific temper.
Mixing up these two, the common perception is that whatever is modeled has
predictable value. Rubinstein cautions against this belief by illustrating
modeled examples to real world situations in economic crisis and geo-political
contentions.
Meeting
Nash
The most interesting part of this book is the implicit
references and vignettes on John Nash, the most important contributor to Game
theory in recent times. Rubinstein encounters Nash metaphorically all through
his academic life and finally one winter morning in 1994, the year Nash wins
the Nobel prize, actually strays into him. In this wonderful encounter, Nash is
revealed as an absorbed genius rambling through the Princeton landscape, always
surprised at the impact of his own work on others. The author ponders as he
teaches Game theory whether it would lead the students into self-centred
deviousness. In the last part of the book, the entire discipline is
prismatically analysed through interdisciplinary realm.
This book is written in simple yet provocative style and it
never fails to engage and amuse the reader. Economic conundrums are placed
before the reader with powerful illustrations. In the end, the book tries to
critique both the powers and limitations of the growing discipline that
Economics has become in the twenty first century.
