Thursday, September 12, 2013

Rock, Paper, Scissors -Game Theory in Everyday Life

[Author: Len Fisher; Publisher: Hay House; Hardcover: 288 pages ]
Game theory is the study of strategic decision making. 
It has been extensively used to explain many behavioral patterns in 
economics, political science, psychology and biology.
Even in our day to day life game theory can guide us towards effective strategies to use in situations of competition and conflict.

But this book explores the other side of the game theory that concerns  cooperation rather than conflicts, collaboration rather than competition.

Len Fisher, the author discusses how game theory can help us develop 
fresh strategies for cooperation.

The book begins with a chapter that explains Nash equilibrium concepts. 
Nash equilibrium is a situation created during  interaction among two or more parties where at least one party fares worse but from which it can't escape without faring  still worse. This happens when every party acts out of self-interest leading to many serious social dilemmas and problems. 

The next chapter discusses the ways to divide resources fairly using strategies as I Cut and You Choose and shows that we can't rely on external authorities or on our own sense of fairness to produce lasting cooperation. Rather we need to explore how  our own self-interest can be used to make the cooperation self-enforcing.

The third chapter uses game theory to examine how social dilemmas actually arise. Seven social dilemmas are discussed viz;  The Prisoner's Dilemma, The Tragedy of Commons, The Free Rider, Chicken, The Volunteer's Dilemma, The Battle of the Sexes and the Stag Hunt. 

The next four chapters deal with  strategies  for cooperation that include a variant of Rock, Paper, Scissors game, new methods of cooperative bargaining, methods for eliciting trust, and the use of tit-for-tat strategies. The author discusses how such strategies emerge and how to use them to promote cooperation rather than confrontation in the society. 

Then follows a chapter that investigates the possibility of  avoiding  social dilemmas by changing the game itself, either by introducing new players or by applying quantum theory concepts. 

In the last chapter author presents his personal top ten list of tips for effective strategies in different situations which are as follows.
  1. Stay if you win, shift if you loose
  2. Bring an extra player in
  3. Set up some form of reciprocity
  4. Restrict your own future options so that you will lose out if you defect on cooperation.
  5. Offer trust
  6. Create a situation that neither party can independently escape from without loss
  7. Use side payments to create and maintain cooperative conditions
  8. Be aware of the seven deadly dilemmas, and try to reorganize the benefits and costs to different players so that the dilemma disappears
  9. Divide goods, responsibilities, jobs, and penalties so that the result is envy-free
  10. Divide large groups into smaller ones 
I really liked the writing style of the author which is easy to understand, humorous and autobiographical (since many game theory examples are drawn from his personal life).
Some  alternate titles for this book could be "Game Theory for Dummies" or "Game Theory Without Tears"
I highly recommend this book to anyone who wants to know the basics of game theory in a quick and interesting manner.


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