The utility function hypothesis expects to find sensible trade-offs being made, with bad decisions only being made when good information was unavailable or political pressure was stronger than the physical stakes.
Bad decisions can be made by organizations even when the individual are generally persuing their goals well. If you have time pressure and people disagree on what to do a meeting might go to 2AM with everybody understanding that people can only go home once a compromize is found. Then at 2AM one party makes a suggestion of a compromise and then somehow people agree on a bad policy with which both sides can live because they want to go home.
Yes; the test Zvi mentions seems like it actually tests “folks have utility functions and good coordination ability”. (Like, good ability to form binding contracts, or make trades.)
If the social substrate people are in makes it easy to form binding contracts, people won’t defect in prisoner dilemmas. Maybe I’m using the wrong words; I’m trying to agree with your point. I don’t mean “coordination ability” to be a property just of the individuals; it’s a property of them and their context.
Bad decisions can be made by organizations even when the individual are generally persuing their goals well. If you have time pressure and people disagree on what to do a meeting might go to 2AM with everybody understanding that people can only go home once a compromize is found. Then at 2AM one party makes a suggestion of a compromise and then somehow people agree on a bad policy with which both sides can live because they want to go home.
Yes; the test Zvi mentions seems like it actually tests “folks have utility functions and good coordination ability”. (Like, good ability to form binding contracts, or make trades.)
Good coordiantion ability alone is not enough when problems arrise because people defect in prisoner dilemmas.
If the social substrate people are in makes it easy to form binding contracts, people won’t defect in prisoner dilemmas. Maybe I’m using the wrong words; I’m trying to agree with your point. I don’t mean “coordination ability” to be a property just of the individuals; it’s a property of them and their context.