Is Life (or at least socio-economic aspects of it) just Spin and Games?

Abstract: The enterprise of trying to explain different social and economic phenomena using concepts and ideas drawn from physics has a long history. Statistical mechanics, in particular, has been often seen as most likely to provide the means to achieve this, because it provides a lucid and concrete framework for describing the collective behavior of systems comprising large numbers of interacting entities. Several physicists have, in recent years, attempted to use such tools to throw light on the mechanisms underlying a plethora of socio-economic phenomena. These endeavors have led them to develop a community identity - with their academic enterprise being dubbed as "econophysics" by some. However, the emergence of this field has also exposed several academic fault-lines. Social scientists often regard physics-inspired models, such as those involving spins coupled to each other, as over-simplifications of empirical phenomena. At the same time, while models of rational agents who strategically make choices based on complete information so as to maximize their utility are commonly used in economics, many physicists consider them to be caricatures of reality. We show here that while these contrasting approaches may seem irreconcilable there are in fact many parallels and analogies between them. In addition, we suggest that a new formulation of statistical mechanics may be necessary to permit a complete mapping of the game-theoretic formalism to a statistical physics framework. This may indeed turn out to be the most significant contribution of econophysics.