Many people think that mainstream economics is failing in its job of telling us how the economy works and what can be done to address economic problems. Why do more and more people seem to be struggling to get by when the world is getting richer and richer. And there’s unemployment – why should people be out of work in our capitalist society when supposedly capitalists make their money by employing them? That question has never been answered to my satisfaction.
So we need something new in economics. Lots of people have come up with ideas, but, in my mind, too many of them are saying “Give me the power and I’ll set things to rights”. The idea of central control of the economy is hardly a new idea! Instead we need to find out what it is that mainstream economics is currently missing.
My candidate for this is bluffing. Whenever we take part in an economic transaction, we don’t think in terms of dealing with a machine. We think what the other person is thinking. If you want to start a business then you need a convincing story about your product in order to get investors and early adopters. If your story isn’t quite accurate, then maybe you can use the money you get in to fix the problems. So a bit of bluffing is crucial to the working of the economy. Likewise if you are applying for a job then you will want to show that your educational qualifications mean that you can do it well. But the education you received may well have been more about fitting you to apply for jobs rather than teaching you what you will need to do when you get them . Doesn’t that count as a bit of bluffing.
In this blog I intend to look into how to fit bluffing into economics, and the benefits that understanding this will bring.
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Featured
Economics, and where bluffing comes into it.
In the introduction to this blog I pointed out that for many people the need for new ideas in economics leads them to come up with a very old idea. If they were in charge they would set things to rights. The trouble with this is that it tends to assume that the behaviour of… Read more
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Poker and the Nash equilibrium
When bluffing is mentioned, the example that springs to mind for most people will be the game of poker. Bluffing is seen as a very human trait, it is hard to think that a machine would be good at it. An AI might win at chess by being able to analyse a position in huge… Read more
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Bluffonomics 