Sir--I am a student in Mrs. Butterworth's first grade class at the Pablo Escobar Elementary School in Brawley, California. When I was in the boys' bathroom this morning, several fourth grade boys presented me with a two-choice, non-random-outcome, very asymmetrical proposition with respect to my lunch money. I was very uncertain of which econometric model I should use in evaluating my perceived utility of either going without lunch or getting a swirlie. However, I did manage to postpone my choice deadline by asking the boys their opinion of what was the distribution of outcomes among the age- and socioeconomic status- normalized cohort of students presented with this same choice before (their rather stunned silence was taken by me as an extension of my choice deadline until sometime later today). I would truly appreciate your advice and wisdom in directing me towards the correct mathematical model for the evaluation of both my perceived utility measurement and the analysis of the correct subgame strategy in each iteration of this choice, as I expect this morning's events to be repeated many times in the near future.
Yours, Buckminster W. Jack, Jr., Brawley, California
Dear Buckminster--You sound like what we economists would think of as typical little boy. Alas, the repeated game you describe would appear to have an infinite number of equillibria. But do not despair, young Buckminster. You need not calculate your opponents' best repsonse functions. You need not engage in empirical investigations. You need not scour Econometrica for the latest optimization techniques. I repeat, you do not need to calculate. All you need to do is to behave as though you had. That is all that is necessary, Buckminster. We economists do not believe you are capable of solving absurdly difficult mathematical problems in your head on the spur of the moment. No, we are not imbeciles! We are not so foolishly unrealistic! On the contrary, we argue only this: that you behave as if you had solved absurdly difficult mathematical problems in your head without ever having actually done so.
Thus, little Buckminster, I offer you this sage advice: Perform no calculations, but act as though you had already solved in your little first-grade brain all the problems that the finest minds in the world are only now beginning to work out. If you do this, you may well get your ass kicked, your money stolen, and your head stuffed in the toilet... but you will have been a very rational boy.