Abstract
When I first met Reinhard Selten, I was a sleepless young student, double-degreeing in economics and computer science (which, studying in Bonn, basically meant that I was spending my days and nights studying applied mathematics). I knew Herbert Simon’s work well (but not Reinhard Selten’s) and I had planned to shake-up economic research by introducing macroeconomic models based on boundedly rational decision-makers.1 That was why I had to study computer science. I needed to learn how to write simulation software for my virtual economies. Things were going OK. The university had just received about 40 first generation IBM PCs and – being a second year computer science student – I was privileged to have courses learning to program in Pascal, Modula, ProLog, and other cool languages that I cannot recall. Then, looking for an interesting course in economics, I came across a seminar given by Reinhard Selten on “experimental industrial organization.” Frankly, I had absolutely no idea what this seminar would be like, but I was pleased by the announcement that “warned” participants that in this seminar they would have to “program a strategy” to run on a PC. The seminar started with a 2-week crash course to teach the participants how to program a duopoly strategy in Turbo Pascal. Clearly, there was no course in economics that was closer than this one to programming the boundedly rational agent simulations that I was so interested in. It was immediately clear to me that I must sign-up for this course.
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Notes
- 1.
Agent-based simulation economics actually has gained some ground in the mean time (see Tesfatsion 2001).
- 2.
The results of that strategy seminar were eventually published in Selten, Mitzkewitz, and Uhlich (1997). On page 541, the authors’ comment on my strategy as follows: “In fact, the participant who wrote a strategy with success rank 20 firmly believes that this approximative dynamic programming approach based on an estimated response function of the opponent can be improved to a degree which will make it superior to all final strategies in a tournament against them. We doubt that this is the case”.
- 3.
Reinhard Selten has been famously cited for saying: “Game theory is for proving theorems, not for playing games”. (Goeree and Holt 1999).
- 4.
Light rain is no issue for Reinhard Selten – not even, if it happens to fall in the Negev – simply because he always carries an umbrella. This obviously implies an extremely high risk-aversion parameter, which in fact may be in line with the extent of his early arrival time at train stations and airports. But, the extremely high risk-aversion parameter sharply contradicts Reinhard Selten’s choice of research topics. These choices seem often strongly risk-seeking and sometimes almost contrarian.
- 5.
Once, working on the last part of my Ph.D.-thesis, I was frustrated and I felt my time is running out with only a year left on the contract. So I went to get some advice from Reinhard Selten. I was optimistic, because usually talking to him solved all problems immediately. When I arrived at the meeting, the first thing that came to my mind was to mention that my time is running out. He was puzzled by my assessment of the situation and answered: “Well, you know, some things take time. My paper ‘… where 4 are Few and 6 are Many’ took me almost 10 years to write. So, in comparison, you still have some time.” (See Selten 1973.)
References
Goeree JK, Holt CA (1999) Stochastic game theory: for playing games, not just for doing theory. Proc Natl Acad Sci U S A 96:10564–10567
Kadmon R, Selten R, Shmida A (1991) Within-plant foraging behavior of bees and its relationship to nectar distribution in Anchusa strigosa. Isr J Bot 40:283–294
Sauermann H, Selten R (1959) Ein oligopolexperiment. Z Gesamte Staatswiss 115:427–471
Selten R (1967) Die Strategiemethode zur Erforschung des eingeschränkt rationalen Verhaltens im Rahmen eines Oligopolexperiments. In: Sauermann H (ed) Beiträge zur experimentellen Wirtschaftsforschung. J.C.B. Mohr, Tübingen, pp 136–168
Selten R (1973) A simple model of imperfect competition, where 4 are few and 6 are many. Int J Games Theory 2(3):141–201
Selten R, Mitzkewitz M, Uhlich GR(1997) Duopoly strategies programmed by experienced players. Econometrica 65(3):517–555
Tesfatsion L (2001) Introduction to the special issue on agent-based computational economics. J Econ Dyn Control 25(3/4):281–293
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Sadrieh, A. (2010). Reinhard Selten a Wanderer. In: Sadrieh, A., Ockenfels, A. (eds) The Selten School of Behavioral Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-13983-3_1
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