Rationalizability and Uncommon Knowledge

I never really understood the idea of “rationalizability” in game theory.  I don’t mean the technical definition, which consists of two parts:   1) players never knowingly choose what they believe to be the bad choice; 2) there is a common knowledge of “rationality.”  The first part is obvious enough, but the second part is an extremely restrictive belief.  It effectively presupposes that everyone shares the same knowledge of the universe and everyone knows that they do.  This seems rather problematic.

The truth is that “knowledge” is rarely common.  My pet example is that of evolutionary biology, which, at the level of the technical nitty gritty, is both quite complex and not really complete.  As  a “science,” that’s perfectly fine–but it is not something one should “believe” in (not that “science” is something anyone should ever “believe  in,” ever–that would run counter to the whole idea of “science” at its core.)  Quite frankly, nobody, except people who are specialists, really knows these well, nor, really, does anyone else need to know these things.  But, for the rest, belief in “evolution” or “creation,” stripped of most of its scientific content, winds up acting as the focal points–the “common knowledge,” but only for the members of a particular “tribe.”

The latest McClatchy poll provides a much more “relevant” divergence in the not-so-common knowledge these days:  65% of Clinton supporters think the country is on the “right” track, while only 5% of the Trump supporters do the same.  There is little common ground on the state of the economy and society among these tribes.  This is not grounded on a sort of “false consciousness,” in all likelihood, but very much on a solid “data”-based foundation, even if based on biased data.  Nobody really is capable of evaluating the state of the entire economy:  we might know the mean, perhaps the (mean) variance, and extrapolate, but those summary measures are limited.  Polarization ensures that the informativeness of the mean is limited (if the outcome is binary, the mean is effectively useless for predicting individual outcomes–i.e. totally useless unless you can draw multiple observations, and the number of observations you can draw is itself a form of normal good, an insurance, which would, somewhat ironically, contribute to the polarization.)  Without the shared notion of what is rational, grounded on the common perception of what is “real,” the underpinnings of “rationalizability” get taken out.  The “opponents” are reduced to the “irrational,” who are beyond understanding and “deplorable.”

This is not just a problem between supporters of Clinton and Trump, isolated in 2016.  This is a problem that afflicts everyone everywhere today.  Technology might have broken down the problem of physical and geographic barriers, but it also has facilitated raising barriers of will, interest, and inclination.  In the past, we could only deal with those whom we could “physically” interact with, i.e. those who were nearby.  We had to talk to our neighbors, because we had no choice, even if we didn’t necessarily like them–unless we didn’t want to talk, period, with its own implication.  Now, we don’t have to talk to our neighbors and still avoid the social isolation, by finding people whom we agree with–if not on  the specifics, at least on the topics of interest, i.e. those who agree on the liberal-conservative dimensionality of politics–online.  We become unaware of alternate “rationalities,” for we rarely encounter them.  Those who do not think as we do, who do not perceive the same “problems,” become alien to us, with whom we cannot even disagree with, for we do not even know what it is that they are saying.

This is problematic, in epistemological terms.  Hayek and Keynes were prescient in conceptualizing the problems of knowledge as the core question in understanding how people decide.  Many market fetishists, on the other hand, trashed their insights in the subsequent years by blithely assuming that people know what they want and decide accordingly.  Nowadays, people consign themselves to one ideology or the other only because they don’t like “the other guys.”  (Pew studies suggest that “leaners” are particularly motivated by the hostility to the other side.  They don’t especially know much of “their own side,” and to the degree that they do, they don’t like them much–but they sure do hate “the other guys.”)  Is this based on actual knowledge?  People do react much more reasonably (and “honestly”) when they are given delabeled choices.

I think this is the problem of knowledge in a technological society:  people know a lot of “labels,” and how to read them.  They know very little of what goes into the labels, and more important, the “variance” of the labels themselves–i.e. how wrong these labels are, on average.  In a sense, people know more, but conditional on what people think they “know,” they know much less.  (i.e. people “know” “evolution” is “right”–but not the science that goes into how evolution is supposed to work, and more important, the presently unanswered questions thereof.)  People know X are the bad guys in some conflict, not the particular details of that conflict beyond the Disney World version.  Given that these summaries are crude snapshots of just one aspect of the “whole truth,” it is entirely possible that they are all true, but diverge wildly–because they are not even measuring the same thing.  So to many HRC supporters, the economy is great, for the Trump supporters, the economy is horrible.  The truth is somewhere in between, with huge variances (i.e. a highly polarized and unequal economy)–i.e. the “mean” is useless.  Without a shared basis of knowledge, they cannot even disagree with each other on policy matters, beyond accusing each other of being out of touch or being deceitful or being irrational.

I don’t know if a shared set of “rituals” is necessary, but we do need some shared basic understanding of what and where we are, so that we can start talking, even if we wind up disagreeing, in the same dimension.  Let us agree, at least, if we are playing football or baseball, and make sure that everyone is on the same page.  (In this sense, I suppose the extreme libertarian-multiculturalism is a genuine danger, as it presupposes that everyone is entitled to their own knowledge, so that Peter Thiel can crosscheck the second baseman or whatever.)

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