www.lesswrong.com/posts/zk6TiByFRyjETpTAj/economic-efficiency-often-undermines-s...
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They therefore rule out adversarial dynamics like credible threats (and following through on commitments more generally).
This overstates what economics excludes. Standard economic game theory explicitly analyzes credible threats, promises, commitment, deterrence, and other adversarial strategic dynamics.
Full reasoning
This sentence is incorrect because a major part of modern economics—game theory—is specifically built to study strategic interaction under conflict, including credible threats and commitment.
Two straightforward counterexamples from mainstream economics sources:
- The IMF’s Finance & Development explainer says that game theory analyzes behavior when decisions must take into account the potential actions of opponents and describes its use for nuclear deterrence, retaliation, bargaining, and asymmetric information.
- Econlib’s economics encyclopedia entry on Game Theory says: “A player can use threats and promises…” and then explicitly adds: “To succeed, the threats and promises must be credible. … Game theory studies several ways to enhance credibility.”
So while some simple economic models assume one-shot rational action without commitment devices, it is false to say that economic frameworks therefore rule out credible threats or follow-through on commitments. Those are standard topics inside economics, especially in game theory, bargaining theory, industrial organization, and political economy.
2 sources
- Strategic Thinking
Game theory analyzes behavior when decisions must take into account the potential actions of opponents... Schelling showed that the power to retaliate is a more effective deterrent than the ability to withstand an attack.
- Game Theory - Econlib
A player can use threats and promises to alter other players' expectations... To succeed, the threats and promises must be credible... Game theory studies several ways to enhance credibility.