Overthinking

There are a few things about Game Theory that always tend to fall down when the models are tested with actual people being rational actors. In most cases, the players will act in "sub-optimal" ways. In Prisoner's Dilemma trials, people tend to keep quiet as opposed to ratting. In Centipede Game trials, players continue playing for several turns.

While there are certainly many reasons for this sort of behaviour, and many theses are written on the subject of limited rationality, non-perfect information, etc, I think a lot of this behaviour boils down to one thing: When making actual decisions, humans tend to not overthink. And really, that's what Game Theory is a lot of the time: Taking a situation where there are consequences and rewards for acting in certain ways and finding the optimal way to play. But humans just don't do that kind of overthinking when actually sitting down to play one of these games.

People who do such overthinking(they might rather think of it as being efficient) are always flabbergasted by amateurs and underthinkers who pull off an amazing move despite their inefficiency. Watch a professional poker player play an amateur and you'll see what I mean.

One of my favourite examples of where this kind of overthinking works against someone also comes from one of my favourite webcomics: The Order of the Stick. Specifically, this comic, where Redcloak the Goblin is interrogating O'Chul the Paladin.

Redcloak is making a terrible leap in his logic: That everyone thinks the same way he does, that everyone makes their decisions based on optimality. He even comments a couple comics later that "Apparently, [the paladins] reserved their efficiency for killing goblin women and children."

Redcloak is unable to comprehend that decisions are made for a whole host of reasons beyond simply greedy optimality; in this case, the decision was made as part of a final promise between friends.

So the moral of the story is: Don't overthink things. You should still think through your actions, prepare for contingencies, etc, but don't overdo it. Only Game Theorists and computers have time for that sort of math.