Intelligent escalation and the principle of relativity

TL;DR

This paper explores escalation in infinite games like auctions, highlighting how the distinction between intelligence and rationality affects decision-making and proposing the principle of relativity based on perspective.

Contribution

It introduces the principle of relativity, showing how rationality varies with perspective and analyzing escalation in simple infinite games with intelligent agents.

Findings

Escalation occurs in simple infinite games like the 0,1-game.

Rationality depends on the observer's perspective, inside or outside.

The principle of relativity explains perspective-dependent rationality.

Abstract

Escalation is the fact that in a game (for instance in an auction), the agents play forever. The $0,1$-game is an extremely simple infinite game with intelligent agents in which escalation arises. It shows at the light of research on cognitive psychology the difference between intelligence (algorithmic mind) and rationality (algorithmic and reflective mind) in decision processes. It also shows that depending on the point of view (inside or outside) the rationality of the agent may change which is proposed to be called the principle of relativity.