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But given the escalating uncertainty, banking on a rational outcome is a gamble.
Liquidation in this situation is the likely and rational outcome, with all its attendant conflicts, dislocations, and costs.
For infinite-horizon, two-player repeated games, I show that by using an appropriate sequence of punishments and rewards, a leader can induce sufficiently patient players to play any feasible, individually rational outcome.
"If the freely floated part of Dassault was in the driver's seat, a sale or merger of the defense business would be the economically rational outcome," said Mr. Aboulafia of the Teal Group.
That's when we should begin to see answers to key questions: How much time and creative thinking are he and President Obama willing to invest in a negotiated solution, the only rational outcome?
But in the case of Vietnam (and, by extension, Iraq) there is another explanation for the failure of accurate information to produce a single, rational outcome: the decision-makers are making value judgments about how important the goal is and how high a price they are willing to pay to achieve it.
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In fact, unlike most auctions, the eBay auction process is actually perfectly designed to allow rational outcomes.
It ensures that the set of NE in a RG is precisely the set of feasible and individually rational outcomes of the one-shot game [24, 25].
Second, bankruptcy judges are less likely to achieve rational outcomes compared with those from voluntary renegotiation between properly incentivized creditors and debtors.
Once the context of the game is specified, the rational outcomes are derived, given assumptions about how the players are making their choices and what they know and believe about how the others are choosing.
In cases of interactive governance, ideally, citizens, private organizations, and governors have the positive expectation that their joint effort will result in more rational outcomes and that there will be greater support by citizens of the decisions taken, especially in comparison with policy- and decision-making in an hierarchical-unicentric setting [10].
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com