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RobinHanson comments on The continued misuse of the Prisoner's Dilemma - Less Wrong
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You aren't saying anything here that Hamermesh isn't well aware of. He is teaching models, and models are simplifications of the world.
He's aware that the mechanism by which Ashley won (being a lucky liar) is not the reason markets prevent collusion?
Then why is he teaching that as a demonstration of why markets prevent collusion? Kind of a strange way to go about it, don't you think?
The celebratory tone of the Freakanomics post is also pretty inexplicable. Why is he so happy that one student out of eight bid $0.05, when the model that he's teaching supposedly predicts that everyone bid $17.50? Either his model is horribly wrong, or the students haven't learned anything, or both...
Maybe this professor just doesn't spend much effort on his blog posts. Take a look at http://freakonomics.blogs.nytimes.com/2009/09/21/why-my-students-dont-get-rebates where he uses the phrase "Pareto improvement" in a completely wrong way. Anyone who doesn't already know what it means will be misled, and those who do will be confused.
Robin, when do you go from "using a model" to committing the ludic fallacy? I would really be interested in a post that attempts to better define where this line is.