Game Theory
Meeting 4
Many competitive activities in life may be understood through the theory of games: Game Theory. Game Theory is all about strategies employed in various natural or artificial competitions. We will start with the classic Prisoner’s Dilemma, nicely described in this short video I recommend you view. This game is foundational, and the process for analyzing it can be applied to many other situations, ranging from international relations, traffic, economics, business, auctions, the stock market, evolution, politics, psychology and other aspects of life.
When a game is played repeatedly we find certain strategies find a natural equilibrium, wherein the players realize varying strategy does not improve their results. John Nash (played by Russell Crowe in the biopic A Beautiful Mind) won the 1994 Nobel Prize in Economics for establishing equilibrium theory. I suggest you view this short video describing how Nash Equilibrium works. Time permitting we will have some fun playing a few of these games in class.
