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People have (severely) bounded rationality and don't continue the induction to its logical conclusion. As proof simply see the 'guess 2/3rds of the average' ga
by smanek 17y ago
People have (severely) bounded rationality and don't continue the induction to its logical conclusion.
As proof simply see the 'guess 2/3rds of the average' game (http://en.wikipedia.org/wiki/Guess_2/3_of_the_average http://en.wikipedia.org/wiki/Guess_2/3_of_the_average).
As a quick summary: Put a bunch of people in a room and tell them to each guess a number from 0 to 100 - and whoever guesses 2/3rds of the average of everyone's number 'wins.'
Logically, no one should guess above 66 (since 2/3rds the average can't exceed 66 even if everyone guesses 100). Then, no one should guess above 44 since 2/3rd the average can't exceed 44 even if everyone guesses 66. Continue on, and the only logical move is for everyone to guess 0.
But, in real life, the winning guess is almost always around 20 (which implies most people only carry on the induction for 3 or 4 steps).
- Confusion 17y agoYour example proves nothing about the boundedness of the rationality of (most) humans. It tells you something about what people expect about other people: others are not expected to carry an argument to its logical conclusion. However, taking that knowledge, or educated guess, into account, makes '10' or '20' a fully rational guess, based on lack of complete data.