[godelski]

The study gets much more complex after you past the basics

  > People are irrational actors

I think you misunderstand, but I don't blame you. "Rational actor" would mean something else in normal language. In game theory it does not mean that they are smart or even reasonable. It means they have some logic which can be tracked or quantified.

An irrational actor is one who is logically incoherent. I don't mean illogical, I mean something closer to incomprehensible.

Maybe an example helps. Let's say our actor expresses that they want to live and is trying to get to work. An irrational action would be for them to pick up a gun, point it at their head, and fire under the condition that they are fully aware that this will kill them. But instead, if the actor believes shooting themself will teleport themselves to work, then it is a rational decision.

Or another example, an actor trying to win a game of chess knowingly marches their king into a capture position. But instead if they were unaware that such a move leads to a checkmate, then they're still rational.

An irrational actor has a logic that cannot be understood. It's not about the quality of their logic, it's about the existence. Even an actor acting probabilistically has some logic, as we can quantify it (using a density function).

Basically an irrational actor is one who knowingly undermines their own goals. It's a very narrow definition. Irrational actors are logically incoherent. So

[nrclark]

Understood. Even in keeping with your definition - people are irrational actors. We make incomprehensible choices all the time, with no real reason at the moment of decision. Then our brains backfill and rationalize later.

Keep in mind that our brains are made of meat that talks to itself via chemical reactions. Brains are not digital computers, and are very much an analog thing. Brains can and do make actual mistakes all the time. Like straight up "this computed incorrectly" or "there was a transmission error" kinds of mistakes.

Humans are not rational actors, and never have been. That's why economic theory so frequently fails to predict behavior in spectacular ways.

[godelski]

  > people are irrational actors. We make incomprehensible choices all the time

Can you give an example?

I want to make it very clear to make sure we're on the same page. There is a difference between "incomprehensible" and "not understood." As an example of this difference, a neural network isn't a black box because we can't understand it, it is because we don't understand it. It's why in my examples I tried to make it very clear that the actions depended on what the actor thought would happen. Suicide cults like Wako are considered rational in this sense, even if from the outside it seems incomprehensible that someone thinking that killing themselves would beam them up into a spaceship disguised as a comet and the alien soul harvesters would reward them for doing so. The "rationality" is that __a__ logic exists, not that there is a good logic or even reasonable one.

  > Even in keeping with your definition

Not *my* definition