Hello all! I hope everything is going good. Last week I had to do some reading for research and I stumbled upon this really interesting MIT article about Game Theory. I hope you enjoy!
Using “prisoner’s dilemma” and many variations on it as his basic model, MIT Professor Erez Yoeli teases out, in every situation, the intricate web of influences, impressions, and half-lies by which we guide ourselves.
Main Ideas
Illuminating What We Don’t See: This book presents a direct challenge to our way of thinking about decision-making. It suggests that the real engines that drive our decisions aren’t obvious, but are the frameworks of game theory. In effect, it argues that many of our actions, especially those that seem strange, foolish, or flat-out irrational, are actually quite understandable when considered against the framework of this theory.
Game theory serves as the foundation for this book. It offers profound insights, not just into individual choice, but also into the essentially unfathomable muddle of coordination and competition involving individuals and groups. At its most basic level, game theory concerns itself with the incentives and disincentives that allow some solutions to a scenario and make other outcomes next to impossible.
While Game Theory is a versatile topic, ranging from math to econ to even public policy, it is not normally discussed about in a Behavioral Economics angle. From what I have experienced, this use of Game Theory is in a nascent phase, not normally discussed about in the terms of a relatively new field like that of BE.
With this in mind, the author analyzes a variety of situations to demonstrate the influence of game-theory principles on our decisions. They deal with some familiar settings, such as our work lives and our home lives. But they also investigate situations that are more commonly thought of as “games,” such as sports and other competitions. The book demonstrates that strategic thinking, understanding why we do what we do, and comprehending why others do what they do—all fundamentally solve the same problem. If you’re going to live among other people, you need to take them into account when you’re dealing with the familiar situations of daily life.
How Social Norms Come About: The author looks into how game theory can illuminate the emergence and evolution of social norms. In a situation where two or more people are interacting, each individual can make choices based on what rewards or penalties they think will be associated with those choices. They are likely to consider the reputational payoffs associated with different actions and to calculate which possible cooperation or defection strategies are best.
What does this mean for different fields? The Book’s analysis has immense reach, touching almost every major discipline one can think of. This is simply because, when we try to understand the influence of human affairs upon almost anything (which I think is the essence of most, if not all, social and some of the more serious nonsocial sciences), we cannot but help to think in terms of decisions. Decisions formed in an understandable way, whether good or bad, where the real influence of “how what works” is in understandable terms, are simply part of what we do when we try to understand almost anything!
Overall, wow. Game Theory has never been talked about in this sense which is novel in of itself. But what I like the most about this article is how it makes behavioral economics, the study of irrationality and social norms and their impact on contemporary society, to a new, mathematical light. Illuminating What We Don’t See is an interesting segway into what Game Theory can tell us about behaviors and their changing as a byproduct of social norms.
cognitivecents.com 
Leave a comment