Behavioral Game Theory

Standard economic theory takes a very deterministic view of the world in that we solve for a unique equilibrium and expect that to describe what will happen. Game theory offers an alternative perspective in that most games have multiple equilibria and there is no reason to suppose that one of these equilibria is any more likely to describe what will happen than another.               For a long while the existence of multiple equilibria was seen as a 'problem'; surely the objective of economics was to say what would happen and not what might happen? Experimental economics, however, has shown that multiple equilibria are not so much a problem as a reflection on reality. When we observe two seemingly identical groups of people we often find they end up doing very different things. For instance, one group might end up cooperating and other not cooperating.              Another way of looking at the multiple equilibrium problem is to say that small, hidden, seemingly irrelev