Opinions

 

 

Is game theory dead?

By Siavash Rokni

Siavash
Rokni

     

Cie theory was invented by John
von Neumann and Oskar Morgenstern
in 1944. Its original purpose was to
mathematically analyze poker games by
looking the games as complex “systems”
in which each player tried to predict in
advance what the other players would

do. The “game theory” would thus
mathematically prove what the best
move for each player would be.
The RAND _ (Research
Development)
Corporation, invented
in 1946 and funded
by the United States

and

Air Force, was the
center for developing
American nuclear

strategies in the
Cold War. Because
the Cold War was a
virtual war, the RAND
Corporation had to
find a way to analyze
the data they received from the
military to predict possible military
outcomes. Game theory offered them
a rational way to face such virtual war.

In 1950, a mathematical genius from
the RAND Corporation, John Forbs Nash,
took game theory to the next level by
removing its limitations. Nash’s idea was
that in any non-corporative game with a
set amount of people, each player would
always face a set of pure choices where a
defined set of “payments” would always
follow each decision. He was famous

“The logic of game
theory does not
correlate with how
human beings
actually interact
with each other.”

in RAND for inventing a set of cruel
choice-based games, the most famous of
them being the “Prisoner’s Dilemma,”
where the only way to win was to betray
your opponent with shrewd self-interest.

Nash took game theory and tried to
apply it to all forms of human interactions
by making the fundamental assumption
that, like his fellow Cold War strategists,
all humans constantly watched and
monitored each other, adjusting their
strategies to get what they wanted.
Hence, Nash showed, by providing a set
of mathematical equations, that a system
driven by suspicion and self-interest can
lead to equilibrium where everyone’s
self-interests would be balanced against
each other’s. This idea became known as
the “Nash Equilibrium” and for it Nash
won the Nobel Economic Prize in 1994.

The very idea of individual freedom
is based on game theory. For the longest
time, one of the greatest
fears of political theorists
was that a society based
on self-interest would
lead to chaos. The Nash
equilibrium, by contrast,
single-headedly proved
thatasociety couldindeed
organized around
e idea of individual
freedom without leading
to chaos. However, the
price of such a society
would be a citizenry perpetually
suspicious and distrustful of each other.

In reality, the logic of game theory
does not correlate with how human
beings actually interact with each other.
When prisoner’s dilemma was tested
among RAND secretaries, none of them
employed the “rational” strategy of
betraying their opponent. Instead, they
trusted each other. Yet many prominent
economists, including Fredrick Von
Hayek and Milton Freedman, believed
that the only way for a society to live

 

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Game theory used here to predict outcomes to a game

of tic-tac-toe

freely was to go back to the old age
of free-markets, and let self-interest
create an autonomous balance among
the people. Politicians such as Margaret
Thatcher, Boris Yeltsin, Tony Blair, and
George W. Bush all sought to implement
such ideas to create a_ balanced
society, but sadly, they all failed.

Many scholars now oppose the
idea of using game theory to create
societal developments. Muhammad
Yunus, the Bangladeshi economist and
banker who won the 2006 Nobel Peace
Prize, successfully introduced a new
“microcredits” system based on trust
between banker and farmer in order to
create economic and social development
in Bangladesh. Ricardo Semler, the
CEO of Semco, an indoor environments

product manufacturer, similarly invented
a new system of management that let
his employees set their own hours and
wages, and choose their own preferable
technology for the tasks they needed
to do. Though such practices were in
marked opposition to organizational and
incentive systems of game theory, Semco
ended up increasing its revenue from $35
million to $212 million in just six years.

These men have shown that it
is possible to invent new methods of
societal development that are not based
on the theory of self-interest. After all, as
Kurt Vonnegut once said, “the purpose of
human life, no matter who is controlling
it, is to love whoever is around to be
loved.”

 

 

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By Aimee Ouellette

Hie you ever had a really annoying roommate?
Of course you have—and so has most of the
population. One of the joys of horrible shared-living
experiences is the passive aggressive note. Notes like
“Please don’t use my shampoo! Thanks So Much,
Love Roberta,” may seem cheerful, but everyone
who has ever had a roommate, or lived in a dorm, or
shared an office kitchen, knows that what Roberta
really means is “If you use my shampoo again, I will
cut you.” There is an ironic simplicity in passive
aggressive notes, and, as always, it’s much funnier

Www.pPassiveagg ressivenotes.com
Where passive aggression is the new group hug

when the note is on someone else’s fridge door. This
is why www.passiveaggressivenotes.com is such a
successful website; it is a blog that posts photos, sent in
by loyal readers, to document the passive-aggressive
tiffs happening all around the world. Reading the site
is the ultimate schadenfreude, and if you can’t get off
on someone else’s bad-roommate misery because it
reminds you too much of your own, why don’t you
whip out your camera phone and start recording
your own sticky note misery? Face it—if you’re not
laughing, your roommate has already won.