Economic Fables: Game Theory, Rationality & Reality | Ariel Rubinstein

In this episode, Professor Ariel Rubinstein and I explore economic theory, game theory, bargaining, bounded rationality, decision-making, language, and the relationship between economic models and the real world. Professor Rubinstein explains his view of economic models as mathematical stories or fables that can illuminate aspects of human behaviour without necessarily providing accurate descriptions or predictions of reality. We discuss what makes an economic model valuable, different approaches to economic theory, rationality, equilibrium, repeated games, and how people make decisions when their time, attention, and cognitive abilities are limited. We also explore the role of language and framing in decision-making, how patience and alternative options affect bargaining, and the distinction between economic models based on voluntary agreement and those based on power. Finally, Professor Rubinstein discusses the limitations of economic theory, the dangers of treating mathematical models as unquestionable scientific truths, the importance of intellectual curiosity, and his continuing work on alternative approaches to understanding economic interactions.