Oracles

Abstract

This article uses rational choice theory to analyze oracles: media for divining answers to questions about the unknown. I develop a simple theory of oracles with rational agents. My theory explains oracles as institutional solutions to “low-grade” interpersonal conflicts—petty grievances and frustrations resulting from perceptions or feelings of personal offense—that government is unable to resolve. Oracles secure correlated equilibrium in situations where, without them, individuals would be stuck in a suboptimal world of simple mixed-strategy equilibrium. By randomizing strategies about how to behave in situations of low-grade conflict and coordinating individuals’ choices across that randomization, oracles resolve low-grade conflict efficiently. To investigate my theory I consider a society of persons who rely exclusively on oracles to decide how to behave in situations of low-grade conflict: the Azande of Africa. Using the equivalent of a “Magic 8 Ball” to resolve such conflict improves Zande welfare.

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