Showing posts with label Game Theory. Show all posts
Showing posts with label Game Theory. Show all posts

Wednesday, October 6, 2010

Game Theory in Dating


John Nash, the Nobel Prize winning economist who expanded the literature of game theory, adding the notion of equilibrium to the original work of John von Neumann. In the Hollywood movie, John Nash played by Russell Crowe formalized his theories based on a social problem – dating his female college mates. If the movie is to be believed, he needed a strategy to date girls. So his game theory was fed by his social awkwardness as he needed a way to successfully date girls. I believe his ideas were successful in getting more dates. So game theory has every day social applications, not only in high level endeavors like planning for nuclear strikes or in high level negotiations. In You Tube, there is even a video in using game theory to get a raise.

It’s a good framework to analyze every day situations. It removes the emotional content inherent in interpersonal relationships. One transcends the normal ego-related reaction and instead goes above to a higher objective level. It’s the level of a ‘game’ similar to sports like chess, basketball and so on. Without the ego, thinking is calm and controlled - with an emphasis on strategy instead of getting ahead over one’s ‘enemy’. It’s not really a strategy of getting an upper hand but deciding on a course of action following your opponent’s choice. A good example was the tobacco companies’ decision to follow the government’s request to stop tobacco advertising. It is the famous prisoner’s dilemma where staying silent is not the best option (even if it’s the best return) and, instead, confesses to the police and gets a lesser prison sentence.

The decision is made based on the reaction of the other party. From this perspective, it is making a decision based on getting the better deal for all. So the basis of the decision is not constructed in isolation but in how the others react. The benefit may not be as great as you would have wanted but based on the best outcome considering the reaction of the other party. Applied to dating, I believe the movie suggests asking the 2nd or 3rd best looking girl (or guy) rather than the best looking one. The best looking girl (or guy) will likely get a lot of offers from other suitors and the chances of John Nash succeeding is remote. At the other end of the scale, choosing the least attractive girl (or guy) may provide the best result but not the best return to the suitor.

It’s a wise course of action but for some folks who have an intuitive sense of game theory, perhaps like the Chinese who have centuries of experience, it would seem like common sense.  Game theory is a way to create a dynamic technique to reach a wise decision. It’s been around for some time but not well understood in its day to day application. Today, one has a sense to raise one’s thinking and decision making skills into a higher level. New technology is changing the landscape of everyday life. It’s a new world that one has to adapt to. It’s an incentive to change one’s mode of thought when faced with a changing world. It reminds one of the changing landscapes like in the movie ‘Inception’ – with buildings crumbling or folding upwards to the sky, shorelines collapsing or gravity suddenly suspended that one walks on ceiling or walls – but still working towards a goal and changing tactics as the situation changes.

It’s a way of acting or making decisions in a fluid situation. Perhaps it is like playing multi-level chess. Game theory give one a foundation for thinking – like kindergarten – and one should scale up to more difficult problems as one lives his life. One always wondered about the decisions of people like Henry Kissinger or Mao or Deng – who seem to follow the beat of a different drum when making decisions. Reading their works or biographies one detects a high level of strategic thought that is beyond the layman. Perhaps game theory is a way to match wits with grand thinkers or strategists. It’s no longer a matter of following one’s values or beliefs or gut reaction in making strategic choices but following a mechanism that incorporates the situational reality. Hence, one is playing a game with other players.

Monday, October 4, 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.