Rationality and Society

This paper investigates strategic thinking in the fictional world of Edgar Allan Poe’s ‘The Purloined Letter’. This short story has been rightly celebrated for its explicit analysis of strategic reasoning in which players attempt to outwit one another, which involves accounting for how they are all attempting to outwit one another. I differ from previous analyses by examining how the actors can often be wrong in their explicit analysis and consider the strategic actions they take rather than those they claim to take. Using elementary game theory, I describe the five games (and suggest a sixth) that make up the strategic heart of the story. These include games of signalling, screening, negotiation, revenge and a unique game called the ‘pincer’. I consider how literary sources like ‘The Purloined Letter’ can provide insights into the applicability of strategic analysis in the ‘real world’.

On-side fighting – outright violence between armed groups aligned on the same side of a civil war’s master cleavage – represents a devastating breakdown in cooperation. Its humanitarian consequences are also grave. But it has been under-recognized empirically and therefore under-theorized by scholars to date. This article remedies the omission. Existing research can be extrapolated to produce candidate explanations, but these overlook spatial and temporal variation in on-side fighting within a war. I provide a theory that accounts for this ebb and flow. On-side fighting hinges on belligerents’ trade-offs between short-term survival and long-term political objectives. Enemy threats to survival underpin on-side cooperation; in their absence, belligerents can pursue political gains against on-side competitors. I evaluate this threat-absence theory using evidence from the ongoing Syrian Civil War’s first years. Fine-grained fatalities data capture fluctuating enemy threats to on-side groups’ survival and situate on-side fighting and its absence. Findings support threat-absence theory and contribute to research on warfighting and political competition in civil wars and to the study of coalition dynamics in other settings, including elections and legislatures.

We consider a principal-agent model with moral-hazard and asymmetric awareness and show how the heterogeneity of agents on their aversion to effort affects contract design. We discuss the optimal contract adopted when a principal is aware of all the impacts of an agent’s action, while agents ignore some of them. When a principal faces two types of agents, where one type is more effort-averse than the other, the equilibrium contract is shaped by agent proportions: it pools the agents, separates them, or excludes the more effort-averse agents from the contract. When efforts are observable, all the agents remain unaware, while when efforts are hidden, a principal increases the awareness of the agents to a level commensurate with the nature of the contract.

JEL Codes – D82; D83; D86

Is the act of making a decision a process or pulse? Critiques of rational choice theory and models often treat cognitive processes of preference ordering as part of the act of decision that should be incorporated into the models. The failure to account for human psychology, they argue, responds for RCT’s lack of predictability. However, this argument and the models of human mind, such as prospect theory, see decision as a process that begins at the cognitive considerations of preference ordering and extends up to the act of decision. In this paper, I argue that decision is analogous to a pulse rather than a process. I draw this analogy with the Dirac delta function, which in signal theory represents an unitary pulse. In the exact moment of making a decision, all preferences and contextual evaluations must have been already structured in the agent’s mind, otherwise she would not be capable of making the decision. Acknowledging the pulse-like nature of rational choice models allows modellers to eschew the incorporation of complex cognitive processes into their analyses, which has both theoretical and empirical implications to RCT’s representation of real-world phenomena.