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The article discusses hierarchical decision‐making within a rational‐choice framework. The interaction between Superior and Subordinate is assumed to be influenced by three types of uncertainty regarding preferences, choice and 'what happened'.A game‐theoretical analysis indicates that the Control Game may represent the decision situation of the superior and the subordinate actors, particularly when modelled as a one‐shot game with simultaneous moves. As this game has no Nash‐equilibrium, it is difficult to predict an outcome.A rather tentative empirical testing is performed. Using data from the budgetary process in the city of Oslo, it seems that the agencies do not exploit strategic opportunities to increase spending. This supports the theoretical presumption that it is rational bureaucratic self‐interest to comply with superior preferences, even under a non‐controlled decision situation.

One model of the Prisoner's Dilemma (R. C. Cunningham, 'Ethics & Game Theory: The Prisoner's Dilemma,' Papers on Non-Market Decision Making, 1967, 11-26) is applied to the withholding of farm products from the market. In recent yrs the Nat'l Farmer's Org (NFO) has attempted to augment farm prices & incomes by 'holding' actions, dramatized by dumping milk, burying hogs & burning grain. The NFO argued that if a sufficiently large number of farmers collusively restrict output, farm prices will rise & farmers will fare better individually. Only a few farmers were persuaded by this argument. It is shown that cooperative agri'al production withdrawals of the NFO have the attributes of a public good. Moreover, until the NFO offers private goods to an augmented & stabilized membership, it is unlikely that its lobbying activities will be effective. NFO efforts are analyzed as a form of Prisoner's Dilemma. It is seen that both price & game theory models predict the failure of collusive behavior which involves large numbers. In the game theory technique it is clear that the success of NFO boycotts is dependent on a sufficiently large number of farmers behaving irrationally. On the cost side each farmer (as a member of a large group) can refuse to support voluntarily the NFO's activity without reducing his opportunity to enjoy whatever benefits are forthcoming. No large org can support itself by providing a public good. It appears the NFO has only one alternative: it must build a large membership by providing private services to members only. Once it is very large & stable it can lobby effectively. But 'holding' actions will never be successful in effecting farm prices. M. Maxfield.

"According to the folklore of economics, game theory has failed. This paper argues that that is an incorrect interpretation of the game theory literature. When faced with a well-posed problem, game theory provides a solution. When faced with an ill-posed problem, game theory fails to provide a solution. This is, indeed, the best one can hope for from a method of analysis! Further, some suggestions are made for facing game theory with well-posed economic problems"--Federal Reserve Bank of Minneapolis web site