5. Invisible hand: Hesitation between the Non-cooperation and the Cooperation
This section is largely duplicated from
Yang (
2023,
2024). Let us first review the representation of the Nash equilibrium in non-cooperative game theory (
Osborne and Rubinstein, 1994). The basic syntactic structure of non-cooperative games is quite simple. Consider
players, where each player
has a set of possible actions
. Each player establishes a total preference
relation, denoted as
. It is important to note that in individual decision theory, a decision maker’s preference relation is based on their own set of possible actions. In contrast, in game theory the preference relation of any player can only be established based on what is referred to as the set of action profiles. Considering the possible action sets of all players
, the Cartesian product can be expressed as:
In this context, each
-tuple
is referred to as a situation. In other words, a specified game constitutes a set of situations, and each player must establish their own total preference relation over this set of situations. That is to say, for all players
, each must establish their own
on
. Once the syntactic structure of non-cooperative games is understood, it is not difficult to grasp its key meta-property, namely the well-known Nash equilibrium. It is important to note that the language of Nash equilibrium requires a separate characterization for each player. Therefore, to reformulate the expression for the
-tuple, we have:
Here,
. The Nash equilibrium is a specific scenario
, namely that of
such that for each player
, and for any
,
, it holds that:
The concept of the Nash equilibrium requires some thoughtful interpretation in mathematical terms. In simple terms, it suggests that in a non-cooperative game, each player loses, but all lose equally. It is important to note that the language used to characterize the definition of the Nash equilibrium captures the actions of any individual and the set of actions of all other individuals in the same situation. It is representative of the separation approach, a typical technique in mathematics for characterizing fixed-point problems.
The foundational theoretical framework of the theory of competition in cognitive science remains the Nash framework. Within this framework, a strict mathematical distinction is made between non-cooperative and cooperative games, and the overarching meta-properties of both, namely the Nash equilibrium and the Nash solution, respectively. However, a significant body of behavioral game theory research (
Camerer, 2003) highlights a phenomenon where players oscillate between non-cooperative and cooperative games, which can be termed as
fluctuations. For instance, the classic prisoner’s dilemma, presented in nearly all game theory textbooks, is originally designed as a non-cooperative game. However, altering the game’s conditions—such as increasing the duration of rewards and penalties or allowing repeated play—can lead players to shift from a non-cooperative state to a cooperative one. Note that this phenomenon is exactly as Adam
Smith (
1776) characterized as the free market, which supposes to be governed by the so-called
invisible hand. The main purpose of this paper is to find this invisible hand governing the perfectly competitive AI-agent society.
These behavioral fluctuations are directly observable and as such are classic examples of fluctuations. The fluctuations identified by behavioral game theory in empirical studies cannot be adequately explained within the standard Nash framework of game theory (
Osborne and Rubinstein, 1994). The underlying causes and corresponding theoretical explanations must be sought in the realm of individual decision-making theory.
To construct a unified theory that decomposes a game problem into decision-making problems for each player, it is essential to translate the formalism of game theory into the formalism of decision-making theory. This requires some technical adjustments. When game theory is cast to address a specific player , a situation can be rewritten as . We will now make a further revision, transforming into . The rewritten resembles a function, which is not conventionally within the scope of game theory; however, this is a critical step in bridging the gap between the formalism of game theory and the formalism of decision theory. We will see why this is the case shortly.
The book by Leonard
Savage (
1972) is recognized as the seminal work in contemporary axiomatic decision-making theory. Below, we will use Savage’s formalism (1972) to characterize the structure of decision-making problems. A decision-making problem is represented as a triplet
, where
is a set of action functions,
is a set of states, and
is a set of outcomes. For a given action function
and an environmental state
, we have
,
. It is important to note that for a specific state
, the value of
is unique. Therefore, in any non-ambiguous context,
can be omitted. For any two action functions
, we define a preference relation
, indicating the preference of
over
. Now, note by comparison that
from the previous paragraph and
here are structurally similar. We can treat
in the former as the action function
in the latter,
as the state variable
, and thus transform
into
.
Fluctuations of AI society originate, in the strictest sense, from the reasoning processes of AI-agents. These reasoning processes are purely within the mind, difficult to observe directly, and are subject to various individual differences. These details fall within the domain of mental decision logic, and what follows is a brief explanation.
Let us first examine language conversion and predicate relationships. Previously, we translated
in the formalism of game theory into
in the formalism of decision-making theory. Next, we will convert the formalism of decision-making theory into that of reasoning theory (
Mendelson, 2015). This involves treating action functions as predicates and state variables as logical variables. That is to say, we transform
into
. At this stage, it is no longer necessary to reference the indices
that originate from game theory and traverse across the individual players. Reasoning is a purely mental process, and the mind is embodied in individuals. Predicates can represent certain unitary properties or n-ary relations.
The first advantage of this predicate technique is that it allows the editing of an option set for a classic decision problem or an action function set for a Savage decision problem. A decision maker may be disinterested in a particular option or unwilling to pursue a certain action function, leading them to abandon that option or action. In other words, the decision maker can establish predicate relationships between options of interest or actions they are willing to take. This represents the most direct logical step in editing a decision problem, carrying significant psychological and cognitive implications.