Michael Chwe's papers and books
Here are abstracts of my book manuscript, working papers, and
published papers, ordered roughly from newest to oldest. If
the download doesn't work, please let
me know. Of course, any comments or suggestions are much
Jane Austen, Game Theorist
This book was published by Princeton University Press
in April 2013 (first
chapter). More information, including reviews and
interviews, is available at the website janeaustengametheorist.com.
Game theory—the study of how people make choices while interacting
with others—is one of the most popular technical approaches in
social science today. But as Michael Chwe reveals in his
insightful new book, Jane Austen explored game theory's core ideas
in her six novels roughly two hundred years ago. Jane Austen,
Game Theorist shows how this beloved writer theorized choice and
preferences, prized strategic thinking, argued that jointly
strategizing with a partner is the surest foundation for intimacy,
and analyzed why superiors are often strategically clueless about
inferiors. With a diverse range of literature and folktales,
this book illustrates the wide relevance of game theory and how,
fundamentally, we are all strategic thinkers.
Although game theory's mathematical development began in the Cold
War 1950s, Chwe finds that game theory has earlier subversive
historical roots in Austen's novels and in "folk game theory"
traditions, including African-American folktales. Chwe makes
the case that these literary forebears are game theory's true
scientific predecessors. He considers how Austen in particular
analyzed "cluelessness"—the conspicuous absence of strategic
thinking-and how her sharp observations apply to a variety of
situations, including U.S. military blunders in Iraq and Vietnam.
Jane Austen, Game Theorist brings together the study of literature
and social science in an original and surprising way.
Incentive Compatibility Implies Signed
You can download this paper in manuscript form (the file is i.pdf).
When a person's payoff depends on both her action and probabilistic
events, the action she chooses and her payoff can be understood as
random variables. This paper shows that incentive
compatibility implies that when a person chooses among two actions,
conditional on these two actions, her action is nonnegatively
correlated with the payoff difference between the two actions.
This simple and robust result has implications in a wide variety of
contexts, including individual choice under uncertainty, strategic
form games, and incomplete information games. Incentive
compatibility constraints have an immediate "statistical"
Anonymous Procedures for Condorcet's
Model: Robustness, Nonmonotonicity, and Optimality
This paper appeared in the Quarterly Journal of Political Science
(2010) 5: 45-70.
In Condorcet's model of information aggregation, a group of people
decides among two alternatives a and b, with each person getting an
independent bit of evidence about which alternative is objectively
superior. I consider anonymous procedures, in which the
group's decision depends only on the number of people who report a
or b, not their identities. A procedure is called incentive
compatible for a person if she wants to report truthfully given that
others report truthfully. I show that if an anonymous
procedure is incentive compatible for both a person who is
significantly biased toward a and a person who is significantly
biased toward b, then it is incentive compatible for any person,
regardless of his preferences and prior beliefs; also, if it is not
trivial, it must be nonmonotonic, with an additional report for a
sometimes decreasing the probability the group chooses a. I
define the "supermajority penalty" (SP) procedure and show
that when there are significant biases in both directions, the
SP procedure is the optimal anonymous incentive compatible procedure
from the point of view of an unbiased person.
You can download this paper (the file is bias.pdf).
Rational Choice and the Humanities:
Excerpts and Folktales
I compare Beatrice and Benedick in William Shakespeare’s Much Ado About Nothing with
Richard and Harrison in Richard Wright’s Black Boy. I use this comparison to
introduce the reader to game theory and to address some common
criticisms, for example that rational choice theory assumes selfish
and market-oriented individuals. I then look at some trickster
folktales from the African-American tradition, such as the
well-known Brer Rabbit and the Tar Baby tale, and argue that these
folktales can be understood as early primers in game-theoretic
reasoning, long before game theory took mathematical shape in the
1950s. I discuss some common misperceptions which come up in
controversies over rational choice theory and how game theory and
the humanities might interestingly interact. This paper was
written for the Rational
Choice Theory and the Humanities conference at Stanford in
April 2005, organized by David Palumbo-Liu.
Rationally Constructing the
Dimensions of the Political Sphere
Social construction poses a challenge to rational choice
theory. Rational choice models posit individuals whose
identities and interests are already defined, while the point of
social construction is that identities and interests are themselves
the result of social processes. This paper uses a
game-theoretic model to show that the issue of social construction
can in some form arise even in the stark conceptual world of
completely rational and asocialized actors. The paper suggests
that it is possible that there are "hidden'' issues, dimensions of
political activity which can be politicized but are not because no
individual wants to politicize them. People have diverse
preferences on these issues, but they play no role in political
expression or decision making, and in fact are not visible to the
outside observer. Individuals here do not "keep quiet'' out of
social conditioning, conformity, or an inability to conceive of a
different political reality, but because they are well aware that
politicizing new issues has potentially risky real effects.
People who do try to expand the domain of political activity are
people whom the currently understood dimensions of political
activity place in a minority. To create a new majority on a
new dimension, it is not a matter of changing people's preferences
but of creating "class consciousness,'' so that people know that
others feel the same way they do. The preferences which people
use when voting, and their identity as majority or minority, are
determined by constraints in people's knowledge of each other.
These constraints are not exogenous but actively and rationally
constructed by people through communication.
Rational Ritual: Culture, Coordination,
and Common Knowledge
How do political ceremonies help establish authority? How can
a public declaration have political consequences even when it says
something that everyone already knows? Why do ritual songs and
speech typically involve lots of repetition? Why were
circular forms considered ideal for public festivals during the
French revolution? Why was the advertising during the Barbara
Walters television interview of Monica Lewinsky dominated by
Internet companies? Why are advertisers willing to pay more
per viewer to buy commercial time on the most popular television
programs? Why are close friendships important for collective
action even though people typically "reach'' many more people
through casual acquaintances? How is the "panopticon'' prison
design also a ritual structure? In what sense is everyone
separately reading their own copy of the morning newspaper a
ritual? How is historical experience a resource for collective
action? How do rituals and media events help create social
identity? This book (essentially a more in-depth version of
the "Culture, Circles, and Commercials" paper below) tries to answer
these and other questions with a single argument, trying to find a
common thread among a variety of cultural and social practices
usually thought disparate.
Communication and Coordination in
This paper appeared in the Review of Economic Studies
(2000) 67: 1-16.
Here people playing a general coordination game use a communication
network to let each other know their willingness to
participate. We obtain an exact characterization of which
networks make coordination possible: we define a "minimal dependence
network'' of a coordination game, and show that coordination is
possible if and only if the communication network contains a minimal
dependence network. Coordination games can be understood as
placing people into a hierarchy of social roles or "stages'':
"initial adopters,'' then "followers,'' and so on down to "late
adopters.'' We show that a communication network helps
coordination in exactly two ways: by informing each stage about
earlier stages, and by creating common knowledge within each
stage. We then consider two examples: first we show that
"low dimensional'' networks can be better for coordination even
though they have far fewer links than "high dimensional'' networks;
second we show that wide dispersion of "insurgents,'' people
predisposed toward participation, can be good for coordination but
too much dispersion can be bad.
You can download this paper (the file is s.pdf).
Figure 3 in this paper has an error, as explained by Kris de
Jaegher, to whom I am indebted.
Structure and Strategy in Collective
This paper considers both structural and strategic influences on
collective action. Each person in a group wants to participate
only if the total number participating is at least her threshold;
people use a social network to communicate their thresholds.
People are strategically rational in that they are completely
rational and also take into account that others are completely
rational. In several examples, I show that strategic
rationality itself has structural implications otherwise not
discernible. Results include: cliques form the common
knowledge crucial for collective action; dispersion of
"insurgents,'' people strongly predisposed toward collective action,
can be good for collective action but too much dispersion can be
bad; classic "bandwagon'' models overstate the fragility of
collective action. (This paper is a nontechnical "companion
piece" to "Communication and Coordination in Social Networks"
Believe the Hype: Solving Coordination
Problems with Television Advertising
You can download this paper in manuscript form (the file is h.pdf).
This paper looks at data on how advertisers choose network
television commercial slots. The main result is that
advertisers of "coordination problem'' or "social'' goods, in our
sample computers, beer, pizza, and wine, tend to advertise on more
popular shows and are willing to spend significantly more per viewer
than advertisers of other products such as batteries, deodorant, and
breakfast cereal. The explanation offered here is that for
technological reasons in the case of computers and social reasons in
the case of beer, pizza, and wine, a person's preference for these
goods increases in the number of other people who buy that
good. When a consumer sees a brand advertised on a popular
show, she not only learns about the brand, she learns that many
other people know about it also. Hence advertisers of social
goods are willing to pay a premium for slots on popular shows.
This has at least two implications. Coordination problems are
crucial in a wide variety of social contexts, from social movements
to technological change to macroeconomics. The result here
illustrates that people often solve coordination problems not by
adaptation or evolution, but by direct communication. Second,
the finding suggests another mechanism by which advertising can
affect people's decisions: here a commercial does not signal
anything about the product itself; all that is necessary is for a
person to know that other people are watching too.
Minority Voting Rights Can Maximize
This paper appeared in the American Political
Science Review (1999) 93: 85-97.
Recently, Lani Guinier argues against majority rule on fairness
grounds, both abstractly and in the specific context of the
representation of people of color in the United States. Since a
majority can always get its way, a minority has little power and
might not even participate in elections. Guinier suggests instead
procedures which might distribute power more evenly, including
"taking turns,'' in which the majority gets to decide more often,
but the minority gets to decide at least some of the time. Two
centuries earlier, however, Condorcet argued for majority rule on
the basis of efficient information aggregation: if each individual
has an equal chance of having the correct opinion, then majority
rule is most likely to select the better of two alternatives.
This paper takes Condorcet's information aggregation model and adds
voter heterogeneity: each voter has an idiosyncratic prior belief or
preference which is the objectively better alternative. The main
result is that given some prior beliefs, the best possible decision
procedure for the majority involves taking turns, in the
sense that with some probability the minority gets to decide even
when outvoted by the majority. In other words, even the welfare
criterion most favorable for the majority sometimes requires
"special'' minority voting power.
You can download this paper (the file is d.pdf).
The Reeded Edge and the Phillips Curve:
Money Neutrality, Common Knowledge, and Subjective Beliefs
This paper appeared in the Journal of
Economic Theory 87 (1999): 49-71.
This paper presents a simple two person auction model in which a
seller and buyer make bids in units of money; however, the value of
a unit of money, the rate at which money is redeemed into utility,
is uncertain. The model is flexible enough so that beliefs and the
kind of incomplete information can be specified freely, as if they
were policy variables rather than structural features of the
You can download this paper (the file is mm.pdf).
Money is defined to be neutral if it affects equilibrium
strategies only nominally. I show that money is neutral if and
only if its value is common knowledge in the game theoretic sense:
everyone knows what the value of a unit of money is, everyone
knows that everyone knows, and so on. In other words, the
informational requirements for neutrality are very strong: a
monetary revaluation can have real effects even if everyone knows
about it, for example. This suggests that monetary policy should
include institutions, such as communications media, which affect
people's knowledge about the knowledge of others. It also might
help understand how monetary policy can have persistent effects
and the meaning and efficacy of changing policy regimes.
The first example is an explanation of the marking of the edges
of coins in response to the problem of incremental shaving, or
"clipping.'' I argue that edge marking, which culminated in the
"reeded edge,'' made a coin's value not just certain but also
common knowledge, which maximizes total gains when the coin is
used in trade.
The second example is an interpretation of Friedman's (1968)
explanation of the Phillips curve in terms of subjective beliefs.
I show that if the seller and buyer have different prior beliefs,
then monetary policy can improve total gains from trade, measured
objectively. A possible justification for monetary policy then is
that it can help "solve'' trading inefficiencies due to incomplete
information. I also find an "optimal'' level of inflation which
captures the intuition that low levels of inflation encourage
trade but high levels render money useless in trade.
Culture, Circles, and Commercials:
Publicity, Common Knowledge, and Social Coordination
This paper appeared in Rationality and Society
(1998) 10: 47-75.
This paper applies a game theoretic argument, that common knowledge
is necessary for "solving'' coordination problems, to a variety of
cultural practices. This argument helps in understanding how
cultural practices such as mass ceremonies constitute power, how
talking in inward-facing circles helps coordination, and why
"social'' goods tend to be advertised on popular and expensive
television shows. The main conclusion is that cultural
practices, usually understood in terms of "meaning'' or "content,''
must also be understood in terms of "publicity,'' or more precisely
common knowledge generation.
You can download this paper (the file is c.pdf).
Strategic Reliability of Communication
You can download this paper in manuscript form (the file
All methods of communication are to some degree unreliable, and one
way organizations deal with this unreliability is to form
communication networks. This paper offers a game theoretic analysis
of how an organization's choice of network depends both on the
available communications technology and the underlying strategic
situation the organization faces. For example, if the available
communication technology is very unreliable, the communication
protocol might involve lots of redundancy or reconfirmation.
Organizations for which miscoordination is disastrous, such as
military units or emergency rescue teams, would probably have
different communication protocols than organizations for which
miscoordination is just inconvenient.
Previous studies of network reliability do not model the
strategic situation and focus on "technical'' criteria such as the
probability that a message is successfully delivered. This paper's
"strategic reliability'' approach shows that when the underlying
strategic situation is considered, technical criteria are not
always appropriate. The paper develops a notation for modelling
communication devices and looks at the choice of optimal network
in three "coordinated attack" examples.
Farsighted Coalitional Stability
This paper appeared in the Journal of
Economic Theory (1994) 63: 299-325.
I define the largest consistent set, a solution concept which
applies to situations in which coalitions freely form but cannot
make binding contracts, act publicly, and are fully "farsighted" in
that a coalition considers the possibility that, once it acts,
another coalition might react, a third coalition might in turn
react, and so on, without limit. I establish weak nonemptiness
conditions and apply it to strategic and coalitional form games and
majority rule voting. I argue that it improves on the von
Neumann-Morgenstern stable set as it is usually defined but is
consistent with a generalization of the stable set as in the theory
of social situations.
You can download this paper (the file is lcs.pdf). The
software code (written in Mathematica) to solve for the largest
consistent set is available here.
Why Were Workers Whipped? Pain in a
This appeared in the Economic
Journal (1990) 100: 1109-1121.
Violence, which seems inherently irrational, and economics, which
calls itself the study of rational behavior, seem altogether
unrelated. But violence is often used in incentives---one
reason a person threatens to hurt another is to get that person to
do something. This paper uses a model to show that threatening
pain can be rational and that pain is inflicted on people who are
poor in the sense of having bad alternatives. The model
corrects a confusion in previous models of slavery and helps explain
why child and not adult labourers were beaten during the British
You can download this paper (the file is w.pdf).
The Discrete Bid First Price Auction
In a first price auction in which buyers can bid only multiples of
an increment and have uniformly distributed values, the expected
price is less than the continuous bid price.
An Attempt to Replicate the Spinning
Co-authored with Joseph L. Kirschvink, Karla A. Peterson, Paul
Filmer, and Brenda Roder. This appeared in Magnetite
Biomineralization and Magnetoreception in Organisms: A New
Biomagnetism, edited by Joseph L. Kirschvink, Douglas S.
Jones, and Bruce J. McFadden (1985). You can download this
paper (the file is k.pdf).
Replicating an experiment by Baker, we do not find evidence that
humans have a magnetic compass sense.