"On the real-world irrelevance of game theory"

One point Professor Syll raises just by posting this is: If, as the behavioral economists are showing, Homo Economicus is a fiction, that people aren't rational actors at all, how on earth can rationality be the basis of game theory and still have any relevance?

From Lars Syll, Jan. 6, beginning with a quote from the "Conclusions" chapter of Hartmut Kliemt's "Philosophy and  Economics I: Methods and Models":

It has been argued that some ascription of rationality plays a crucial role in particular in game theoretic modeling from a participant’s point of view. However, ascribing some kind of ideal reasoning process symmetrically to all players in the game, it becomes very unclear whether we as analysts can truly adopt a participant’s attitude to such an idealized interaction. After all, we are as a matter of fact only boundedly rational and not perfectly rational beings ourselves …

According to the way we normally use the common knowledge assumption along with that of symmetrically rational, and, for that matter, perfectly rational individuals, each and every individual is assumed to reason the same way about the game. We in effect have reduced the problem of reasoning in an interactive situation to the reasoning of a representative ideal individual who knows the game in full and shares this knowledge by virtue of the common knowledge assumption with each and every other participant. The game theorist and the participants in the game are in the same situation. Everybody comes exactly to the same conclusions as everybody else when thinking about the game before the specific play of the game starts....

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