Life is a Game!–Summer

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Why should we learn about game theory?

The most obvious reason for me is to become better at playing strategic games like chess and poker with extremely intelligent rational decision-makers (like people at Westtown). This is probably the most relatable reason because, to be honest, who doesn’t like games that can help us relax and learn at the same time? Game Theory helps me predict my opponent’s next move (or even next ten moves) and develop the best way to counter the attacks and maximize my chance of winning. With Game Theory I never have to depend solely on luck to win a game again as I used to!

Outside of playing games, game theory is extremely useful in many disciplines and fields I love. I came across game theory studying business decisions in oligopoly, which is a market dominated by a few enterprises whose decisions influence each other. What got me truly intrigued in game theory is its application in biology. Last year in Evolution adv. I discovered that common yet hard to grasp phenomena like altruism (animals sacrificing themselves to protect a group against predators) can be explained by a simple modified version of the payoff matrix (Tom has explained the concept of payoff matrix eloquently in his post last year). Outside of biology, variations of game theory can be applied to fields like political science, computer science, and psychology. I hope to further explore game theory applications in these fields this year and share my findings with you in later posts.

One last reason I chose game theory and think everyone should know about game theory is that it can be seen everywhere in everyone’s life. Life is really a game! Everyday we make decisions that will influence other people and are influenced by everyone around us. As long as we know what we and others around us want, game theory can help us achieve the goals in negotiation, bargaining, sports etc. One of the most interesting things about game theory for me is how it can be applied to explain phenomena at Westtown. For example, a common asked question is why do we have to have room inspections? The explanation using game theory is very simple. We assume that an average Westtown student appreciates a clean room and gains 1 unit of satisfaction and 2 extra units will result from gratitude if the roommate kindly cleaned up for the student. Yet, if they have to clean up the mess others make, -2 satisfaction will be gained from indignation. If the rooms remains messy, 0 satisfaction will be gained. We can demonstrate this situation with a payoff matrix:

I(left) / Roommate(top) Yes No
Yes 1, 1 -2, 3
No 3, -2 0, 0

From this matrix, we can see that no matter what “roommate” does, “I” will be better off not cleaning the room. With this kind of payoff, people are making a rational decision to not clean their rooms and would have a tendency to not clean. But if this situation continues, the rooms will become huge dumpsters. Game theory demonstrates the need for some kind of reinforced rule to reassure larger collective gain (students all clean their rooms), thus comes room inspection!

For the aforementioned reasons, I decided to take a game theory course through Open Yale Courses. My hope with this course and this blog is to explore different kinds of application of game theory in daily life and academic subjects and to share the information with the community using simple and understandable language. I will cover necessary concepts and definitions but will focus on applications around us.

Thanks for reading! See you next week!

Work Cited: Duronio, Ben. “7 Easy Ways to Use Game Theory to Make Your Life Better.” Business Insider, 4 Apr. 2012, http://www.businessinsider.com/how-to-use-game-theory-to-your-benefit-2012-4#. Accessed 10 Sept. 2017.                                    Images: Montenegro, Christian. Game Theory. The Economist, The Economist Newspaper, 3 Sept. 2011, http://www.economist.com/node/21527025. Accessed 10 Sept. 2017.                                                                                                            Foresman, Pearson Scott. From an Evolutionary Game Theory the Four Alternative Social Forms of Strategic Interaction. Wikipedia Commons, Mediawiki, 14 June 2012, commons.wikimedia.org/wiki/File:Game_Theory_Strategic_Social_Alternatives.jpg. Accessed 10 Sept. 2017.

2 thoughts on “Life is a Game!–Summer

  1. Susan Waterhouse

    I suppose there might be some luck in poker- which cards one is dealt, but maybe not in Chess- just how well your opponent knows how to play the game. So a question to think about might be when is luck a factor, and what can be predicted. That is, what are the limitations of the theory you learn?

    Reply
    1. Summer Cai Post author

      Hi T. Susan, I agree with you: Luck and uncertainties definitely components in most of the games studied in game theory, not just poker. For example, in an altruistic behavior in biology animals cannot predict if they can save themselves or not. Also, people are not always rational. I think the limits of game theory is it’s an idealistic model, not always accurately representing the reality in every aspect. Yet, game theory can limit the role of luck plays in the decision. For example, showing that it will be better for the animal’s chance of passing down its genes no matter if it by chance dies defending its herd will eliminate the role of luck in that particular situation.

      Reply

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