What computer science can teach economics (2009)
&gt;Finally, he says, it may be that where the Nash equilibrium is hard to calculate, some approximation of it — where the players’ strategies are almost the best responses to their opponents’ strategies — might not be. In those cases, the approximate equilibrium could turn out to describe the behavior of real-world systems.<p>I often think about how death and pain affect economic decisions.  Someone who is poor and must be paid next week or start to go hungry, for example, makes much different economic decisions than someone who still needs to work to eat but has a cushion -- they can go several months without pay without risking starvation hunger.  Even though they are in similar danger over time periods that are not too different, the second groups act as if it is no danger at all.<p>So there is a time horizon dependency at the moment of decision.  I wonder how the complexity of the likelihood calculation affects the falloff rate of the death or pain variable?  I wonder if we are constantly making these rough approximations and have some intuitive sense of when the numbers get too fuzzy to be meaningful and at that point get ignored?<p>Does somebody know of any resources that may have dealt with the economics of desperation?