Game theory is one of my favorite concepts I have learned in Economics and the reason I chose to write about this topic this week. We talked in class about "A Beautiful Mind" which is what my high school economics teacher used to explain game theory to us. This is when I fell in love with econ. This was the first class that I felt I could really use random theories or concepts from class for real life. And that feeling continues until this day.
After reading these readings, the one I enjoyed the most was about "Classical Game Theory and the Missile Crisis." I enjoyed this article because it was a new way at looking at game theory. I have usually seen examples with producers gaining money, vigilantes getting a criminal sentence, or countries worrying about their GDP. I thought it was interesting to see how they placed values on withdrawing of their missiles or maintenance of their missiles. Furthermore, I thought the Chicken idea was a good way to look at this too. The fact that they said that these decisions are not made at the same time was something that I agreed with, but always just assumed that they have to make it because that's how Game Theory worked. I like how they took that decision making into account. Finally, I thought that the Theory of Moves was a little more interesting because it calculated different outcomes rather than just what game theory showed. The analysis of the numerous of cases just made me think a lot more about how game theory could be changed or pushed to new directions.
While I am not an economics major, I have studied a minimal amount of game theory in economics classes mainly in respect the amount of money producers will gain for certain decisions. I always found it very intriguing. I had never studied game theory past that though. Theory of Moves, for me, was an interesting concept. Predicting not only immediate consequences but the consequences of counter-moves and moves in response to those moves, I believe, could prove valuable in many disciplines of study and areas of life. I think game theory can prove to be very beneficial in predicting outcomes. It is amazing that game theory can be applied to so many differing situations and concepts such as war, the Bible, and economics.
ReplyDeleteI like game theory as well! I disagree about the fact that these decisions were not made at the same time. While it might be true here, I think the idea that decisions happen sequentially is extremely weak, and I am interested in more complex game that take simultaneous decisions into account. Another think that I think would be interesting is the examinations of the knowledge available to the players and how that may change the game. For Instance, Cuba had ready to shoot missiles on it during the time of the missile crisis, which the American government didn't know until the 90's.
ReplyDeleteGame theory actually gives me a headache. For my software engineering class last semester, Dr. Wierman made us create a software that simulates game theory in which over time, the computer will improve it's strategy over time. I am not still sure how it works, but it made me realize how game theory is applied in many different fields such as economics, political science, etc.
ReplyDeleteGame Theory sounds like an interesting topic. One example that I thought was very well done was the "If We Were All Better People The World Would Be A Better Place" example in the "What is Game Theory" website. Prior to reading it, I thought that intuitively, that statement would be true, though upon reading it, it looks as though it isn't as glorious as it appears. Does this mean that world peace isn't a good thing? Also, I wish I knew more about game theory, I for one, would like to know how all of the values are assigned.
ReplyDeletePhilip, this the thing I found to be the most interesting aspect about game theory that we read. If everyone is truly altruist, it would cause the world to become a worse off then what it could be. I find it interesting that in order for our world to continually grow and be better we have to have those people who are just , for lack of better word, dicks. This really just contradicts what I thought. I thought if everyone is altruist and good then we would help each other raise the bar. However, I guess in order to raise the bar we need those enemies to fight against. Someone who we can unite against, and to me that is an accurate reflection of real life. For instance, in world war 2 we united as a country against the evils of the Nazis, and it raised the bar in our nations overall effectiveness and utility. So maybe life is that balance between good and evil, the ying and yang that wax and wan against each other in constant struggle for equilibrium.
DeleteI... umm.... hm..
DeleteMaybe I'm not understanding this whole idea correctly, but I ended up having several issues with game theory - or at the very least with how Levine describes game theory.
Right off the bat I'll point out that I have no idea what he meant by adding pride as a strategy into the prisoners' game - pride is a possession, one which most people have a lot of whether they know it or not.. it isn't some strategy most people can choose to pursue and so I completely failed to understand what he meant by adding all that -- so if anyone who does get it would like to tell me, that would be nice :)
More specific to your posts, Philip and Jared, would be how this game theory relates to the actual world. Here, too, I'm afraid my opinion of it is less than positive, especially when Levine attempts to globally introduce altruism into the theory.
The conclusion that the world would not be a better place if we were all better people is only true insomuch as it derives itself from the utility ratings of the matrix - utility ratings that (in addition to being extremely subjective) only apply to their utility to the individual. What this particular game is actually saying is that, in a world where people care more about each other according to certain parameters, it is less beneficial for the individual to be a better person. Basically, all that it's saying is there is less of a personal gain to be had from being good.
The problem with that model is that the act of being good in itself has nothing to do with personal gain. Ideologically, it is in fact impossible to incorporate true altruism into a theory that premises acts of "rational" individuals because the very definition of rational decisions here are self-serving.
As you mentioned (but for some reason disagreed with), a world in which everyone is altruist will indeed "raise the bar" - the bar by which goodness is judged and measured. While the individual's subjective perceptions of relative discrepancies from that good will be more or less the same as described along a normal distribution, the base magnitude of the bar itself will have risen and the world will indeed technically be a better place; the only difference is that nobody would notice.
Although I've studied math for the past ~3.5 years at Creighton, game theory is relatively new to me. Before this class, I knew very little, if anything, about game theory, especially in the context of international conflict. The authors, I think are correct in claiming that the world would be a better place if people acted according to the dictates of game theory. This would begin, of course, with more people understanding game theory, and how to apply it to common "prototype" problems and situations. Game theory, I think, quantifies (depending on whether cardinal or ordinal rankings are used) the positive consequences of altruism and it quantifies the potential negative consequences of lack of altruism and / or selfishness. Relating to the Cuban Missile Crisis, setting up possible outcomes and ranking them according to their utility for either the Americans or the Soviets could allow either side to see where the most universally beneficial outcome would lie. I think it is also interesting, as Bram discusses, that game theory, particularly the advancements made by Nash, can show how stable equilibrium can be reached and how certain outcomes can be unstable. The Soviet withdrawal and U.S. blockade, for instance, although a "compromise," would be unstable, and could not be considered a stable equilibrium.
ReplyDeleteOn a side note, some applications of game theory remind me of optimization techniques often taught in introductory calculus class. Optimization (achieved by finding max and mins of functions using derivatives) is a "tug-of-war" between two variables, just as game theory is a "tug-of-war" between two players, each playing for maximal benefit. Just as optimization is usually found in some compromise between two opposing goals, so does game theory allow for a sort of optimization or mutual benefit via compromise.