[For the audio version of this article refer here.] Game theory, the mathematical theory of games of strategy, was developed by John von Neumann in several successive stages in 1928 and 1940-41, according to his book “Theory of Games and Economic Behaviour” which he co-authored with Oskar Morgenstern.
Thanks for a great review. As a beginning doctoral student I did a study on the balance of power model of geopolitics contrasted with game theory as used for the nuclear confrontation between the Soviets and America. Your treatment of game theory is so much more nuanced and in depth. The win-win cooperative model embraces the consciousness or agency ability of the actors. It includes qualitative and self sacrificing impulses that may play a large part in the real world.
Apr 5, 2022·edited Apr 6, 2022Liked by Cynthia Chung
Years ago, at the Univ. of Michigan Mental Health Research Institute, Anatol Rapoport and his colleagues performed a series of experiments with student subjects on the Prisoner’s Dilemma game theory problem. Thus game theory indicates that only suboptimal solutions (for both parties) are present because they view themselves as antagonists. However, if both players cooperated they would get a better outcome. Rapoport enrolled many students to play this game, and found that most students did indeed reach the cooperative solution. It was only the economics students, who viewed the problem as a competitive problem, who obtained the suboptimal equilibrium solution. Maybe it is just the case we have to get policy makers to accept cooperation…. Keep economists as far away as possible from a policy making role!
The paragraph: "There are many problems with this, but the most unforgivable one is the assumption of a set, limited and unchanging reserve of resources available to the individual. In other words, the Austrian school of economy and von Neumann with them, consider Crusoe’s deserted island as the perfect case study for a limited resource, zero-sum game scenario." also identifies the fallacy of the Malthusian Dilemma, which has been used repeatedly to justify globalism’s lethal campaign for depopulation and planetary governance.
I love your writing, Ms Cheung, and I think you would be interested in Graeber and Wingrove's 'The Dawn of Everything.' Similar ideas applied to the evolution of humanity and society; it's like your stuff but applied to anthropology. I do think you'd find it interesting.
I enjoyed your clarity and coherence. I completed my PhD in behavioural strategy (a sub field of strategic management). One of the first things that attracted me to the topic was exactly the arguments made in your article - that human beings are not automatons; they are more interesting, they possess emotions, they have character weaknesses, they love, are pro-social, and sometimes lucky.... to name a few. A game theoretic perspective is based on cold positivistic rationalism. And assumes too much. Thanks again.
Why do you think putin and his party supported the pharma Covid bullshit? Also China, why? They don't give a shit about their people if they promote a lie. I give up on trusting any authority, fuck their chess games.
"The crux of the theory is that an individuals’ behaviour will always be motivated towards achieving an optimal outcome, which is determined by self-interest. An assumption made is that the players in such a game are rational, which translates to, “will strive to maximize their payoffs in the game”. In other words, it is assumed they are motivated by selfish self-interests."
It does not contain such words like "selfish" or "self-interest".
The discussion is about the payoffs or utilities of the players.
First, note that if someone has altruistic motives, these can be included in one's payoffs (utilities).
For example, if Aij are the utilities of the first player and Bij are the utilities of the second player, then the first player can be redefined as having the utilities
Cij = (Aij + Bij)/2
The linear combination of the utility functions is still a utility function.
Then, by maximizing one's utilities, one maximizes the summary payoffs of the players.
However, it is still a game theory.
The point of the game theory is not about everyone maxmizing one's own welfare.
The point of the game theory is, instead, the situations when the outcomes and payoffs of each player depend on the moves made by himself/herself and other players.
For example, in the case of static games, one has to maximize one's payoffs without knowing the moves of the other players.
We have got a typical game theoretical situation even if all the players are altruistic.
This is so because, in such a situation, they do not know the decisions of their partners.
Second.
It is true that von Neumann considered mainly the zero-sum games. In such games, the competition is maximal. One can achieve something only if the other one loses something.
However, von Neumann never claimed that the zero-sum games are the only possible games in life.
There are also so-called coordination games. In such games, everyone maximizes one's own payoffs, but it is possible to cooperate so that everyone's payoffs are greater. The only problem is about coordinating the actions of all players.
The classical text about such coordination games is
David Lewis, "Convention"
Thus, it seems to me that the author Cynthia Chung of the present article "The Curse of Game Theory: Why It’s in Your Self-Interest to Exit the Rules of the Game" has seriously misunderstood game theory.
However, I agree that game theory has been used as a tool to propagate individualism and egoism; also, that game theory does not explain everything.
Game theory is a useful tool, if you know how and when to use it.
TY. never thought much about game theory. now I am briefed. seems to me the 'rational man" assumption has pretty much been trashed by research in human errors in decision making. Thinking Fast and Slow is a central resource. but other errors: confirmation bias, normality bias, etc. all go against the rational man model. these concepts are the foundation of behavioral finance.
Interesting article. If you have one at the ready, I would greatly appreciate a quote for your assertion that Robinson Crusoe economics is a perfect example of a zero-sum scenario for the Austrian school. In all the references to it from Austrians I am aware of it is the exact opposite and in fact zero-sum thinking in economics is the great bug bear of the Austrian school.
Accepting that scarcity is the fundamental condition of life, not just human life, is not at all zero-sum thinking.
Thanks for a great review. As a beginning doctoral student I did a study on the balance of power model of geopolitics contrasted with game theory as used for the nuclear confrontation between the Soviets and America. Your treatment of game theory is so much more nuanced and in depth. The win-win cooperative model embraces the consciousness or agency ability of the actors. It includes qualitative and self sacrificing impulses that may play a large part in the real world.
Years ago, at the Univ. of Michigan Mental Health Research Institute, Anatol Rapoport and his colleagues performed a series of experiments with student subjects on the Prisoner’s Dilemma game theory problem. Thus game theory indicates that only suboptimal solutions (for both parties) are present because they view themselves as antagonists. However, if both players cooperated they would get a better outcome. Rapoport enrolled many students to play this game, and found that most students did indeed reach the cooperative solution. It was only the economics students, who viewed the problem as a competitive problem, who obtained the suboptimal equilibrium solution. Maybe it is just the case we have to get policy makers to accept cooperation…. Keep economists as far away as possible from a policy making role!
Here is one more example of this:
https://www.lrb.co.uk/the-paper/v24/n21/donald-mackenzie/the-imagined-market
The paragraph: "There are many problems with this, but the most unforgivable one is the assumption of a set, limited and unchanging reserve of resources available to the individual. In other words, the Austrian school of economy and von Neumann with them, consider Crusoe’s deserted island as the perfect case study for a limited resource, zero-sum game scenario." also identifies the fallacy of the Malthusian Dilemma, which has been used repeatedly to justify globalism’s lethal campaign for depopulation and planetary governance.
I love your writing, Ms Cheung, and I think you would be interested in Graeber and Wingrove's 'The Dawn of Everything.' Similar ideas applied to the evolution of humanity and society; it's like your stuff but applied to anthropology. I do think you'd find it interesting.
I enjoyed your clarity and coherence. I completed my PhD in behavioural strategy (a sub field of strategic management). One of the first things that attracted me to the topic was exactly the arguments made in your article - that human beings are not automatons; they are more interesting, they possess emotions, they have character weaknesses, they love, are pro-social, and sometimes lucky.... to name a few. A game theoretic perspective is based on cold positivistic rationalism. And assumes too much. Thanks again.
Math gave us tons of bullshit dreamt up by the new "prophets" still lies just like major religion.
Virus theory and genetics https://drsambailey.com/2022/01/05/why-nobody-can-find-a-virus/
Quantum theory https://www.youtube.com/watch?v=Zm9tUVI6Ehk&list=PLkdAkAC4ItcHNLDIK9ORydQl_Ik6GJ0bD
Even the big bang is a handy to creationism.
Why do you think putin and his party supported the pharma Covid bullshit? Also China, why? They don't give a shit about their people if they promote a lie. I give up on trusting any authority, fuck their chess games.
GAME THEORY IS NOT ABOUT THE COMMUNITY OF EGOISTS
"The crux of the theory is that an individuals’ behaviour will always be motivated towards achieving an optimal outcome, which is determined by self-interest. An assumption made is that the players in such a game are rational, which translates to, “will strive to maximize their payoffs in the game”. In other words, it is assumed they are motivated by selfish self-interests."
Really?
"Theory of Games and Economic Behaviour"
ise here:
https://archive.org/details/in.ernet.dli.2015.215284/mode/2up
It does not contain such words like "selfish" or "self-interest".
The discussion is about the payoffs or utilities of the players.
First, note that if someone has altruistic motives, these can be included in one's payoffs (utilities).
For example, if Aij are the utilities of the first player and Bij are the utilities of the second player, then the first player can be redefined as having the utilities
Cij = (Aij + Bij)/2
The linear combination of the utility functions is still a utility function.
Then, by maximizing one's utilities, one maximizes the summary payoffs of the players.
However, it is still a game theory.
The point of the game theory is not about everyone maxmizing one's own welfare.
The point of the game theory is, instead, the situations when the outcomes and payoffs of each player depend on the moves made by himself/herself and other players.
For example, in the case of static games, one has to maximize one's payoffs without knowing the moves of the other players.
We have got a typical game theoretical situation even if all the players are altruistic.
This is so because, in such a situation, they do not know the decisions of their partners.
Second.
It is true that von Neumann considered mainly the zero-sum games. In such games, the competition is maximal. One can achieve something only if the other one loses something.
However, von Neumann never claimed that the zero-sum games are the only possible games in life.
There are also so-called coordination games. In such games, everyone maximizes one's own payoffs, but it is possible to cooperate so that everyone's payoffs are greater. The only problem is about coordinating the actions of all players.
The classical text about such coordination games is
David Lewis, "Convention"
Thus, it seems to me that the author Cynthia Chung of the present article "The Curse of Game Theory: Why It’s in Your Self-Interest to Exit the Rules of the Game" has seriously misunderstood game theory.
However, I agree that game theory has been used as a tool to propagate individualism and egoism; also, that game theory does not explain everything.
Game theory is a useful tool, if you know how and when to use it.
TY. never thought much about game theory. now I am briefed. seems to me the 'rational man" assumption has pretty much been trashed by research in human errors in decision making. Thinking Fast and Slow is a central resource. but other errors: confirmation bias, normality bias, etc. all go against the rational man model. these concepts are the foundation of behavioral finance.
Interesting article. If you have one at the ready, I would greatly appreciate a quote for your assertion that Robinson Crusoe economics is a perfect example of a zero-sum scenario for the Austrian school. In all the references to it from Austrians I am aware of it is the exact opposite and in fact zero-sum thinking in economics is the great bug bear of the Austrian school.
Accepting that scarcity is the fundamental condition of life, not just human life, is not at all zero-sum thinking.