ABSTRACT
Game theory is very popular today and thus needs to be critically examined in terms of the hidden agenda as well as the visible agenda of neoclassical economics. This chapter discusses the visible agenda first. Specifically, it discusses the game theory methodology as an alternative to the typical calculus-based, partial equilibrium conception of maximization and then examines how maximization is employed within game theory. Game theory analysis typically does take something like the linear-programming approach in one fundamental way that does not involve any analytical complexities. Game theory literature is filled with references to rationality. The common knowledge assumption underlies all of game theory and much of economic theory. At a basic level, game theory separates games into two groups determined by whether prior commitments (including agreements, promises, threats) are enforceable. Maximization is just the modern version of the eighteenth-century rationality.
