Game Theory - Its Applications to Ethical Decision Making

Abstract The application of game theory according to Hargreaves-Heap and Varonfakis (1995) to understand human behaviour, and in particular ethical behaviour, is a valuable development, as game theory has gradually become one of the key frameworks to assist us in the understanding of social sciences. Esther (1982) and Aumann and Hart (1992) show that there are several studies that indicate the importance of a game theoretic framework in advancing our understanding of social behaviour and evolutionary sciences. Although the application of game theory in the above areas has largely been not formalised, its application in the fields of ethical conduct and human behaviour is at present developed in several respects with the gradual assistance of advances in related areas such as evolutionary biology and our understanding of group social behaviour. Game theory tends to be dominated by its assumptions concerning the non-rational nature of the dynamics existing within social structures and these processes are generally ignored or are sometimes difficult to model. Assumptions that are made concerning the cognitive abilities and beliefs about individuals are generally unrealistic, and this at times is the main criticism of game theoretic applications in our understanding of ethical behaviour. These are the lines followed by Solomon (1999) in his discussion on game theory when it is used to model scenarios in business ethics and in general in the business area. In particular, game theory tends to excessively emphasise the destructive obsession of the quantifiable outcomes and an artificial concept of competition. This modelling of competition is not exhaustive of human behaviour, but rather an oversimplification of the social dynamics in place in many different human contexts. The first objective of this paper is to offer a brief sketch of the historical developments that have taken place in game theory and some of its fundamental concepts through an analysis of the most important games that have found an application to the field of ethics. A second aim is that of providing the reader with a review of developments relating to evolutionary game theory that has deeply assisted our comprehension of ethical norms and their emergence in group behaviour. The final part of the paper will be dealing with some conclusive remarks from a methodological point of view on the main issues concerning applications of game theory to ethics.