What are some such insights to be gained from the pirate example? What did we learn? How a set of "rational" computers might play out this scenario? How do we apply that to our decision making? These questions might seem obtuse or questioning the value of game theory, but I'm just having a hard time understanding what to take from it.
The real-life 40% is more a commentary of utility of money as opposed to decision making.
Only real-life humans make decisions though. If there is no implied utility of money then Bob might as well reject all offers. And it does seem that the only important question is "what would real humans do?" We can set up a simulation that strictly adheres to a simple set of rules and watch how it plays out, but what is that telling us?
> What are some such insights to be gained from the pirate example? What did we learn?
It's a logic puzzle. We learned that the intuitive solution of having the first proposal be "I don't want any money, I just want to live" is too conservative, and that there is a way better solution for the first pirate.
We didn't gain any deep insight in how to split money between real people, since those cases seldom involve pure, unemotional logic.
Game theory is often used as a guiding principle in human negotiations, but as you say, there is never a truly isolated system when it comes to people in real world situations. Good negotiators are cognizant of this.
The real-life 40% is more a commentary of utility of money as opposed to decision making.
Only real-life humans make decisions though. If there is no implied utility of money then Bob might as well reject all offers. And it does seem that the only important question is "what would real humans do?" We can set up a simulation that strictly adheres to a simple set of rules and watch how it plays out, but what is that telling us?