#von neumann

An important foundation for the experimental economics is the 1944 publication of von Neumann and Morgenstern, “Theory of Games and Economic Behavior” ( Princeton, 1944, p. 86). Accordingly it is held that human choices can be ascertained from game-like experiments. The problem with all this that game is not the real world. According to Mises,

The immediate aim in playing a game is to defeat the partner according to the rules of the game. This is a peculiar and special case of acting. Most actions do not aim at anybody’s defeat or loss. They aim at an improvement in conditions. It can happen that this improvement is attained at some other men’s expense. But this is certainly not always the case. It is, to put it mildly, certainly not the case within the regular operation of a social system based on the division of labor.

There is not the slightest analogy between playing games and the conduct of business within a market society. The card player wins money by outsmarting his antagonist. The businessman makes money by supplying customers with goods they want to acquire. There may exist an analogy between the strategy of a card player and that of a bluffer. There is no need to investigate this problem. He who interprets the conduct of business as trickery is on the wrong path.7