You Don’t Need to Be Good at Math to Apply Game Theory
Life really is a game. The person who does not understand this will suffer. The shortest path to winning the game of life is Harrison’s Applied Game Theory.
Not being particularly strong in mathematics as a younger person, I was stumped as to how I might apply game theory to my own life. I was surprised to discover at that though most game theorists study mathematics and Nash equilibriums etc.., not all do. I also learned that there are many game theory experts who question the strict adherence to equilibrium concepts at all, as well as the value of the mathematical models that have traditionally been seen as essential to the effective application of classic game theory.
Jon Von Neumann’s original work on game theory has been expanded and refined extensively over the decades and GT has been widely recognized as an important tool in many fields. The Nobel Memorial Prize in Economic Sciences went to game theorist Jean Tirole in 2014 and eleven game-theorists have now won the economics Nobel Prize. John Maynard Smith was awarded the Crafoord Prize for his application of GT to biology. This prize is considered equal to the Nobel Prize and usually awarded to mathematicians. GT was explicitly applied in the development of Artificial Intelligence in the 1950s, and to biology in the 1970s. Now in the 21st century, it has seeped into our culture through poker, on-line video games, competitive, reality television shows like “Survivor” and “Big Brother” and sports; so much so that it influenced the presidential election of 2016. In addition, many game theorists actually predicted that Donald Trump would win based on the fact that he used a traditional zero-sum strategy in his campaign. Who knows whether this was done with intention or intuitively. Game theory continues to be refined to this day and simple newspaper and magazine articles and newsfeeds on the Internet have begun to refer to game theory” and “game thinking” in their headlines.
Dr. von Neumann’s work was revolutionary because it proposed that as with any concept in economics, and in life, the assumption that most people act rationally or at least in ways that they perceive to be rational. Von Neumann’s original idea was to use mathematics to map out this rational thinking. Limitations in the available mathematical frameworks initially made the theory applicable only under special and limited conditions. As the framework for Game Thinking deepened and became more generalized this was no longer an obstacle. Since the late 1970s, it can be said, that game theory has become the most important and useful tool available for analyzing situations and human interactions. Anyone seeking to gain the greatest benefit at the lowest possible cost no matter how great the challenges or obstacles may be needs to apply game theory to their decision-making process.
In addition to rational thinking, Von Neumann’s theory also included the “assumption of maximization”. That is to say that it is assumed that a rational player within any game will strive to maximize their payoffs in that game. The idea of rationality has usually been applied to competitive environments especially in investor behavior and in military based scenarios. Now with smart devices and social networking, it is more important than ever.
Within the umbrella of Game theory, or as it is often called “Classical Mathematical Game Theory,” games are generally classified by certain criteria. We have discussed some of these already. Games, for instance, may be described as Nash Equilibrium, Sequential, Perfect Information, Zero-sum, or a combination of these criteria.
As we begin to develop strategies and generally explore gameplay we soon realize that there are specific game strategies and game problems that arise more than others. Some samples of games studied by students of classic mathematical game theory include Battle of the Sexes*; Blotto*; Cake Cutting*; Centipede*; Nash Bargaining Game*; Peace War Game*; Diner’s Dilemma*, and many others. Let’s use Diner’s Dilemma as an example of a classic game theory approach to a practical life situation.
Put your thinking cap on for it’s time to explore some of these games. Let’s begin with the Unscrupulous Diner’s Dilemma (or just Diner’s Dilemma). This is known as an n-player prisoner’s dilemma. An n-player game* is a game which is well defined for any number of players. Let me make it simple. The situation imagined here is that several individuals go out to eat, and before ordering, all agree to divide the check equally between all of them. Each person must now choose whether to order the expensive or inexpensive dish. It is presupposed that the expensive dish is not only better than the cheaper but also that it is better enough to warrant paying the difference compared to eating alone. Each individual may reason that the expense he or she adds to his or her bill by ordering the more expensive item is very small, and thus the improved dining experience is worth the money. However, imagine what happens if each individual reasons this way? They would all end up paying for the cost of the more expensive meal, which, by assumption, is worse for everyone than ordering and paying for the cheaper meal. What is one to do? Understanding the subtle variables in the game will affect the decision each diner makes. Where HAGT comes into play in ways that classical mathematical game theory usually does not is that the focus is less on mathematical specificity and more on bringing into play factors seldom addressed in classic mathematically-based game theory, including the emotional agenda of the each individual as well as his or her, mental clarity, biases, spiritual intention, intuitive capabilities, life mission, delegation skills, ability to create strategic relationships, ability to leverage these in relation to each other, and even skills in bartering these things for power and influence. I do not wish to diminish the importance of classical mathematical game theory here. Still, the goal in the Diner’s Dilemma is to get the best meal at the lowest possible cost. To do this successfully will require more than mathematical knowledge. If you wish to explore this concept in greater depth I highly recommend the website GameTheory.net.
As with all theories, GT has many components and many differing points of view on how it can be most effectively applied. To this day, debates continue over the appropriateness of particular equilibrium concepts, the appropriateness of equilibrium altogether, and more, generally speaking, the usefulness of rigid mathematical models more generally.
Listen here as Lewis explain the RealUGuru Project and how we can give up unnecessary struggle through visionary thinking in this insightful interview with award-winning journalist Phyllis Haynes about the RealUGuru Project
Lewis Harrison founder of the RealUGuru Project Think Tank is a master lifehacker, writer, mentor, success and wealth coach, content-rich, motivational speaker, and an entrepreneur specializing in problem solving and strategizing based on game thinking, applied game theory and Game Thinking.
He is the author of over twenty-two books published in five languages.
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If you are interested in business success in the 21st Century in the arts or in any other endeavor you need to study with Lewis Harrison. Begin by reading Lewis’ books.
If you are an entrepreneur you will want to begin with his books on game theory and business success. Here are two basic ones to start with:
The offerings on RealUGuru.com focus on the application of applied game thinking, gamification, decision science, positive psychology, happiness, and visionary thinking to solve basic, complex and extreme problems. He is the creator of a free course on business success and human potential.
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