Economics at your fingertips  

Transaction Cost and the Theory of Games: The “Prisoners’ Dilemma” as an Example

Junhui Li ()
Additional contact information
Junhui Li: Foshan University, College of Economics and Management and Law, Foshan, PR China

Man and the Economy, 2020, vol. 7, issue 1, 16

Abstract: Since mathematician John von Neumann and economist Oskar Morgenstern introduced the theory of games as a branch of modern mathematics into Economics, it has become rather prevalent, and it is even thought to be able to rewrite the whole microeconomics, that is to say, replace the frame of economic theory found by Marshall in “Principles of Economics”. But this paper will show that there are two frauds in the “Prisoners’ Dilemma”, one of the classical models in the theory of games. One is the missing calculation of costs of “cooperative solution”, the other is invalidity of “cooperative solution” when adopted to explain the phenomenon in economy or business field, because of misleading by the wrong definition of Monopoly. Oligarchs cannot increase the monophonic degree, even if they cooperate or collide to decrease the productions. But the fundamental problem of the prisoners’ dilemma lies in ad hoc theory. There are transaction costs in cooperation, which is the key constraint. Some special ways (such as repeated game) to decrease transaction costs in special cases are not key factors. This problem exists in all models of the theory of games, so it is its Achilles’ heel.

Keywords: The theory of games; prisoners’ dilemma; transaction cost; virtual economy; ad hoc theory (search for similar items in EconPapers)
JEL-codes: C71 C72 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

Access Statistics for this article

Man and the Economy is currently edited by Ning Wang

More articles in Man and the Economy from De Gruyter
Bibliographic data for series maintained by Peter Golla ().

Page updated 2020-09-19
Handle: RePEc:bpj:maneco:v:7:y:2020:i:1:p:16:n:4