On Rationality in The Traveler’s Dilemma

Abstract

Kaushik Basu presents the Traveler’s Dilemma (TD) as a challenge to Game Theory. This challenge has been experimentally investigated. When faced with Basu’s version of the TD, participants (including experts in game theory) behave in
the way Basu suggests. However, a little change in the game turns out to reverse participants’ choices. The question is, then, whether it is possible to provide an account of the main empirical findings as consequences of rational choices (i.e., to
rationalize them). There are several proposals in the literature but none of them provides a satisfactory account for why experts in game theory playing against each other usually reject the only undominated option of the TD. The goal of this article is to suggest an alternative proposal that fixes this problem.