Does game theory apply to real life? It’s easy to fall into one of two errors:
- Thinking that human interactions can be precisely modeled by a 2×2 payout matrix, and being shocked by the vagaries of human psychology.
- Thinking that since humans aren’t rational game theory doesn’t apply to them, and being shocked when they follow incentives in predictable patterns after all.
Of course, human behavior is a combination of both elements: the mathematical structure of payoffs, incentives, and equilibria, the idiosyncrasies of culture, mood, and personality. Understanding both sides can be quite a superpower. I know people who made millions and bankrupted competitors by tweaking some small features of a public auction. This stuff is hard, but it works.
I took every available class on the math of game theory as an undergrad. Since then, I’ve been catching up on the squishy human part of the equation. There’s plenty of great research in this area, but the best way to learn about people is to observe them in their habitat. So when my friend Spencer told me that he’s organizing a live game theory party, I jumped at the opportunity.
I will break with tradition by not repeating the descriptions of common games that you’ve heard 100 times before, nor by deriving the rational strategies and equilibria. If you need to catch up on the math you can follow the links to Wikipedia etc. Weiterlesen