Tuesday, October 5, 2010

Game Theory

Can social interactions be quantified mathematically, in an elegant equation that can help guide human beings? This is the question that game theory tries to answer. Like all science, game theory is an exercise in trying to explain reality. An intriguing concept if one really understands what it means. The most famous proponent of this theory won a Nobel Prize and his life was a subject of a famous Hollywood movie. But the brilliant scientist was also confined in a mental institution and classified as a paranoid schizophrenic. Does it mean that game theory is really a lot of hogwash and trying to understand it may seriously cause you to be insane? Nowadays the application of game theory resides mostly in the military and economic realms – the remaining preserves of high minded egg heads.

Intriguingly, is it also something that can help guide one’s relationships? For instance, improving one’s interpersonal skills? One does not think so because one is always emotional but I guess it’s a framework where one can remove emotionalism and participate in any social situation as a form of a ‘game.’ This allows one to rise above the circumstances and think in terms of a chess match, where one needs to react or make decisions interactively as the situation unfolds. Usually one goes into meetings or social situation with the motivation of being the smart one around, of having all the answers, or being cool and collected and calm – all attempts to project whatever image one has in the mind. But game theory removes the ego and transforms the interactions into a ‘game’.

Game theory is often called strategy theory in some books. Perhaps it’s also a way to make decisions in the economic, political and military sphere. Can we say the game theory is the modern equivalent of medieval works like Sun Tzu’s ‘The Art of War’ or Niccolo Machiavelli’s ‘The Prince’? In some ways, perhaps in can also explain some of the questions raised in behavioral economics. What is needed is a simple explanation of game theory – a sort of ‘Game Theory for Dummies’. The topic can be translated to broader use like in debate and argumentation, cases argued in the Supreme Court and in improving social skills. So the trick is not to give a great and brilliantly argued speech for example, but to estimate the behavior of the other players in the game.

Game theory can possibly be used to explain historical episodes where great or infamous leaders make seemingly disastrous decisions but whose result seem to justify the chaos. For example, Mao Zhe Dong when he started the ‘Cultural Revolution.’  One cannot attempt to understand the reasoning behind such decisions, so instead one labels such actions as dictatorial or delusional or megalomania and so on. The reason is that the motives behind such decisions are not known so one uses the stereotype explanation existing during that period. Game theory provides a new alternative way of thinking and allows an opportunity to deconstruct history. For instance, was Mao a simple dictator or a sophisticated thinker instinctive applying game theory in his decisions?

It maybe silly but one can experiment by applying game theory at work, at home and other social situations.  But one needs to understand how it works. I just read a section on game theory that states that the sentence, ‘if all men are good, then society will be a better place’ can be proven to be a fallacy. If such is the case, the rationale for religion and morality no longer exists. Game theory is the new religion where one’s actions can only be guided by considering the actions of others not in convincing others of a noble goal. Perhaps this is the next level of evolution brought about by social networking and computer games and the Internet. It’s the mathematical proof of Charles Darwin’s theory of evolution where the survival of the fittest will prevail. In other words, it’s not one’s education or intelligence that one has but in the way one will survive against all the other animals or humans who are trying to survive as well. Applying game theory is a tool that can be used to be the fittest person in the room.

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