Game Theory: Winning the Game of Life

are you the type of person to analyze every second of the interaction you just had with someone for hours on end or are you normal either way you probably don't think all that hard about every single detail of the decisions you make in social situations but believe it or not there's an entire scientific field that applies to social situations and decision making we're talking about game theory game theory can be used to analyze both economic and social situations it's essentially the science of strategy and just like the reality it is trying to model game theory can get really complicated and yes although game theory is relevant to games as we typically understand them such as poker most research and game theory focuses on how groups of people interact let's first define what a game is so what exactly is a game it sounds like a stupid question like who doesn't know what a game is but games in the field of game theory are a slightly different concept to what you might expect when it comes to game theoretic analysis the game constitutes any interaction between multiple people where each person's payoff is affected by the decision made by others let's apply this definition of a game to a couple of games is sudoku a game well in the traditional sense sure but in game theory no sudoku is not a game sudoku is not a game because how you decide to complete the puzzle doesn't affect any other player there is after all only one player in the game you what about tic-tac-toe is that a game two players can play the game and each box that is filled by one of the players affects the other player winning requires both players to respond optimally to what the other player is doing so yes it is a game you could also have a situation where two shop owners choose from a finite number of positions where to strategically place their shops for maximum profit they are each affected by what the other person does since they may be opting for the same market and there's certainly a win-lose situation here so even though placing your shop may not sound like much of a game in the eyes of game theorists it certainly is game theory is the study of games like these and game theories try to model games in a way that makes them easy to understand and analyze i say easy but a lot of games can end up having pretty similar properties or reoccurring patterns and more often than not things can get pretty complicated game theory has two main focuses cooperative games and non-cooperative games most game theory models involve five conditions it goes something like this first each player has two or more choices or sequence of choices think of these like typical moves in a game like moving a chess piece second all possible combinations of decisions or plays result in a clear outcome basically you can win or lose third it's clear how you can win or lose and participants will gain or lose something depending on the outcome fourth the players know the rules of the game as well as the payoffs of other players meaning everyone is aware of what is desirable to the other players as well and fifth the players are rationable and sensible people rational here means strictly that when they're faced with two alternatives they'll choose the option that provides the greatest benefits while players know the rules and their opponents options they don't know their opponent's actual decisions in advance so players must choose options based on assumptions of what their opponents might choose some game theory scenarios are zero-sum games meaning one player's win is another's loss and vice versa others however allow mutual gains and losses these games can involve multiple strategies you can try to minimize the maximum losses another player can cause and make decisions based on probable outcomes this all really just sounds a bit confusing so here just let me show you if life is indeed a game then the first rule is to be skeptical of other people's suggestions as we said if it's a game someone else is going to be competing so there's definitely going to be competition and sabotage perhaps a straightforward and well-known example is the prisoner's dilemma the game goes like this two criminals are caught red-handed and are arrested each has two choices they can each either stay quiet or testify against their friend upon arrest they are each separated and offered a deal testify against your friend and will let you off the hook easy with one year in prison and give the other person 10 years if both stay quiet the cops can't really prove the more serious charges and both criminals would spend only 2 years behind bars if they both testify against each other however then both would get 5-year prison sentences at first glance keeping quiet seems like the best strategy if they both did this they would both be out after just two years but right before they're about to testify one of the two thinks to himself what if i stay quiet and the other guy rats me out without knowing what the other person is actually going to decide it's a reasonable worry to have the smartest solution to this would be to react in a way that is beneficial regardless of what the other person does a nash equilibrium is actually a state in which no one person can improve given what the others are doing this means you're picking the best response to a particular strategy from your opponent a quick analysis of the prisoner's dilemma reveals they would both most likely testify which is the nash equilibrium for this problem this is because regardless of what the other person does testifying will lead to a maximum sentence of 5 years with the potential for a 1 year sentence meanwhile if you don't testify you could end up with a 10-year term it's easily the safest thing to do considering neither party knows what the other is going to do even though both criminals are better off if they just stayed quiet here the individual incentive wins over group interest testifying is a better option because you know that you'll be in trouble if you stay quiet but your friend testifies but if you can think of that your friend can too so he knows you're likely going to testify given that it's the safer option for you and you know he's likely going to testify too for the same reason and you know that he knows that you're likely going to testify you see the loop that's forming these types of problems are examples of non-cooperative games which means the two prisoners can't convey their intentions to each other if they were able to talk to each other however we would be in a cooperative setting and that would affect the likelihood of certain outcomes as you can imagine for example it'd become much easier for them to agree beforehand that they're both just going to stay quiet on the contrary a coordination game is one in which everyone benefits from working together there's no incentive for either party to cheat since it will result in a worse outcome than if they just cooperated a good example is driving on the correct side of the road you win nothing by driving on the wrong side of the road but sometimes you lose without even playing the principal agent problem is when one person is allowed to make decisions on behalf of another person in this situation the first person is likely to prioritize their own interests and pursue their own goals and well yeah that's the basis of modern politics game theory can also be applied to biology though in fact its application in the field of biology has allowed biologists to answer a lot of questions about evolution which is remarkable since game theory was never designed for this for example it's helped scientists explain biological altruism where an organism acts in a way that is most favorable for the overall species even if that action is harmful to itself a bird might warn the rest of the group about the arrival of a predator doing so risks its own life since it essentially announces itself to the predator but this trait can later help that bird assuming it survives of course when other birds return the favor and worn it these concepts might help you anticipate some of the strategies others might be using to get one over on you but who really knows what they're thinking the concept of guessing others moves is what makes the game so tricky while each player is likely to be certain about only their own move they still have to speculate about other players decisions and more importantly other players conception of every other player's decisions essentially you are no longer making a decision based on what you think is right rather you're anticipating what your opponent thinks is right and simply reacting to it but then again your opponent is doing the same exact thing so who's really making the decision here whose mind is the actual decision being made in let's put it another way each player must know their own chance of coming out on top guess everyone else's chance and also guess what everyone else is guessing about their own chances of winning not only this but you also really need to be able to guess what other players are guessing about your guesses about them and now look we're confused again another problem is that although game theory has many benefits it would be impossible to properly apply it in all situations there will be times where rationality might not offer the right solutions or a mutual benefit might not be the most ideal outcome when you come up against these you have to not only recognize them but then also decide whether using game theory would be the most helpful way to deal with the situation by then the moment could already be gone the assumption that everyone is going to be rational a basic premise of game theory is also a really risky one humans can be extremely unpredictable and emotional and this makes the guessing work near impossible there's a ton of real-life examples that illustrate the basic concepts of game theory apple and samsung are involved in an endless game of advertising it's not like either company needs to advertise besides advertising can get extremely expensive so why not just forego this task all together and use the money for research and development if both companies did this then we'd probably have better phones by now but sure enough apple banks on the possibility of samsung advertising and gaining an edge over the market and samsung does the same and that possibility soon turns into a certainty you and i have all come to accept now this is an extremely simplistic example that bypasses many other variables but you see the basic concept another good everyday example can be found in the treatment of public goods and property if everyone decides to be good citizens and not litter society benefits as a whole but you're inevitably going to come up against one or more people who choose to essentially go rogue and behave selfishly by littering this leads to society as a whole bearing the cost of cleaning up all the while making not littering a less worthwhile decision after all if the road's already littered the work to not litter is that much less meaningful you can probably now see how applicable this is to other situations in life like every big important decision we're supposed to be fixing but more on that later as interesting as it is game theory can still only analyze simple situations with well-defined constraints and you must remember that any model is a subset of reality no matter how good it is it's essentially intellectual guesswork the bottom line we're all constantly in the game it's pretty impossible not to be our lives are endlessly and unavoidably impacted by the actions and decisions made by others so you might as well play the game the best you can and that interaction you spent hours analyzing after the other person has already long forgotten it maybe it's not such a bad thing after all we're just trying to win the game of life and the reason to win is so that you can be free of it game theory is complicated and i don't think it's something you're consistently aware of it takes time to truly understand and there's even more scenarios than just the ones i've mentioned that you'll encounter pretty often it has roots in mathematics statistics and probability if you're interested in things like this then brilliant is for you brilliant is a problem-solving site that helps you think more like a scientist and if you truly want to understand game theory they're here to help you with just that they guide you through problems and topics that are broken down into digestible sections they have entire sections of courses on mathematical thinking that cover things like logical reasoning something you'll need to be talented at if you're a true game theorist brilliant exists purely to help you train your skills if you head to brilliant.org aperture you can sign up and start learning today for free the first 200 of you to do so will also get 20 off a premium subscription which gives you access to every single course brilliant has to offer take a look through their stuff i promise there's something for you you're supporting yourself and my channel at the same time you

Channel: Aperture

Views: 887,210

Keywords: aperture, yt:cc=on, Game Theory: Winning the Game of Life, game theory, winning the game of life, what is game theory, game theory explained, science of strategy, economics, game theory economics, the prisoner's dilemma, how to win the game of life

Id: n3viX-IXfi0

Length: 12min 16sec (736 seconds)

Published: Wed Oct 07 2020