Why You Should Care About Game Theory -It can provide the best choices in everyday decision making.
It seems that we’re only now coming to terms with the new reality that technology has wrought. And while there’s plenty to debate regarding the pros and cons, the one thing that cannot be argued is that there’s just more. More movies, music, books, apps, articles, independent restaurants, hipster eateries. And, as is the case whenever there’s more quantity, a smaller percentage of it registers as quality. As director Jason Woliner put it, it’s a “waterfall of garbage,” and, more often than not, we’re drowning.
But there is a way to navigate this new era of Too Many Choices. The answers can be found in game theory.
Despite a heady term that calls to mind algebraic equations requiring chalkboard walls that lift up to reveal entire second sets of chalkboard walls, game theory’s a relatively easy concept: It’s using math, rather than your intuition, to make decisions. It’s Moneyball, not just peering from a distance and saying, “Looks like an athlete to me.”
“From the outside it seems bizarre that a Congressional bill about water will contain a rider about prostitution or birth control, but once you recognize that what’s taking place is multi-issue bargaining and it’s advantageous to the parties, it makes sense.”
Game theory’s roots go back to the 1700s, but it wasn’t until John von Neumann and Oskar Morgenstern met at Princeton and co-wrote the 1944 paper “Theory of Games and Economic Behavior” that it became what it is today. Among their findings was that the best strategy in a “zero-sum game”—that is, when the winner of the contest gets everything—isn’t to maximize gains, but instead to minimize losses. Using the concept, von Neumann developed the infamous nuclear proliferation strategy of Mutually Assured Destruction, perfectly abbreviated to MAD, and pushed for the expansion of arms in retaliation to Russia’s proliferation. The “winner” of the nuclear apocalypse, then, would be left with a smoldering carcass of a planet, making the game far less compelling to play. The other two famed examples of game theory-driven thought exercises are The Monty Hall Problem and The Prisoner’s Dilemma. You can read about the former and all of its complexities here, but for sanity’s sake, I’m sticking to the latter.
The Prisoner’s Dilemma: You and your partner are caught by police and separated into two interrogation rooms. You can remain silent or confess. However, your decision isn’t the only one to consider, as your partner’s also deciding whether to keep mum or spill the beans. There are four possible outcomes:
- If both you and your partner stay silent, you each serve one year in prison.
- If you both confess, you each get three years.
- If you confess and your partner remains silent, you’ll walk and your partner serves 10 years.
- If you stay silent and your partner confesses, they’ll walk and you’ll get the decade behind bars.