Tag Archives: Game Theory

The Strategy of Conflict by Thomas Schelling

Summary

  1. On the strategy of pure conflict – the zero-sum games – game theory has yielded important insight and advice. But on the strategy of action where conflict is mixed with mutual dependence – the non-zero sum games involved in wars and threats of war, strikes, negotiations, criminal deterrence, class war, race war, price war, and blackmail; maneuvering in bureaucracy or in a traffic jam; and the coercion of one’s own children – traditional game theory has not yielded comparable insight or advice. These are the “games” in which, though the element of conflict provides the dramatic interest, mutual dependence is part of the logical structure and demands some kind of collaboration or mutual accommodation – tacit, if not explicit – even if only in the avoidance of mutual disaster…This independence of expectations is precisely what distinguishes a game of strategy from a game of chance or a game of skill. In the pure-coordination game the interests are convergent; in a pure-conflict game the interests are divergent; but in neither case can a choice of action be made wisely without regard to the dependence of the outcome on the mutual expectations of the players.

Key Takeaways

  1. Aka the theory of interdependent decisions. How do your decisions and the decisions of those you are working, competing, coordinating with impact each other?
  2. Sometimes it is rational to be irrational
  3. Bargaining – each party is guided by what they expect the other party will accept. The coordination of expectations is analogues to the coordination of behavior when communication is cut off
    1. All about knowing, setting, understanding expectations.  Coordination of expectations is the name of the game
    2. Tit for tat with forgiveness, quick retaliation, clear expectations
  4. The voluntary surrender of freedom is very powerful
  5. Transfer of power to a third party is powerful – “I’m sorry, the board said I can only go up to $50,000. My hands are tied.”
  6. Prediction with shared interests – finding some clue, some focal point, some key that is mutually recognized as the key becomes the key. The chance of this happening are greater than the bare logic of abstract random probabilities would ever suggest.
  7. Early steps to increase success – keep lines of communication open, find mediators with prior understanding, a competitor who is willing to partake in these steps
  8. Trust is often achieved simply by the continuity of the relation between parties and the recognition by each that what he might gain by cheating in a given instance is outweighed by the value of the tradition of trust that makes possible a long sequence of future agreement. By the same token, “trust” may be achieved for a single discontinuous instance, if it can be divided into a succession of increments
    1. Play iterated games whenever possible. If one-off, find a way to try to divide it into a succession of increments
  9. Many interesting game tactics and game situations depend on the structure of communication, particularly asymmetries in communication and unilateral options to initiate communication or to destroy it. Threats are no good if they cannot be communicated to the persons for whom they are intended; extortion requires a means of conveying the alternatives to the intended victims
  10. If the essence of a game o strategy is the dependence of each person’s proper choice of action on what he expects the other to do, it may be useful to define a “strategic move” as follows: A strategic move is one that influences the other person’s choice, in a manner favorable to oneself, by affecting the other person’s expectations on how one’s self will behave. One constrains the partner’s choice by constraining one’s own behavior. The object is to set up for one’s self and communicate persuasively to the other player a mode of behavior (including conditional responses to the other’s behavior) that leaves the other a simple maximization problem whose solution for him is the optimum for one’s self, and to destroy the other’s ability to do the same…Hardly anything epitomizes strategic behavior in the mixed-motive game so much as the advantage of being able to adopt a mode of behavior that the other party will take for granted…In the mixed-motive game, one is interested in conveying the truth about his own behavior – if, indeed, he has succeeded in constraining his own behavior along lines that, when anticipated, win.

What I got out of it

  1. In non-zero sum games, the name of the game is to coordinate expectations, tit for tat with forgiveness, quick retaliation when expectations are broken

Non-Zero: The Logic of Human Destiny by Robert Wright

Summary

  1. The tendencies of basic biological, social and technological evolutions can be explained in scientific, physical terms. Directionality seems to be imputed and the author argues that Non-Zero Sum games has been the driving force for biological life. The core of biological and human history can be traced back to more numerous, larger, more elaborate, more interdependent forms of NZS games being played. “Non-Zero Sumness” can be thought of as the tendency which gives time its directionality, helping explain how NZS was likely to lead to complex life forms and technology which further enriched how these life forms interacted 

Key Takeaways

  1. Game theory was developed by von Neumann. Zero sum games are games in which one person’s win means another person’s loss (sports) whereas Non-Zero sum games aren’t necessarily negative for one party. The authors argue that NZS games are a driving force for the world has been shaped. NZS games can be win/win, win/lose, lose/win, or lose/lose
  2. Human history has shown that technological advancements allow for richer and more widespread NZS thinking and actions to occur, and social structures evolve from these interactions to more fully capitalize on these positive sum interactions, increasing social complexity and depth. NZS is not always win/win, but it trends in that direction and this causes people to become more embedded in webs of mutual interdependence. 
  3. Hunting large prey requires coordination which spurs altruism, reciprocity, social complexity, and positive sum games. “The best place to store your excess food is somebody else’s stomach.”
  4. The author argues that population density is the overriding factor in predicting technological evolution and social complexity in a group of people
  5. A quick summary of NZS would be the extent to which outcomes are shared, also known as skin in the game
  6. Writing builds trust in a society (lenders don’t have to worry about debtors cheating them and vice versa, etc.) which helps streamline much of life and leads to positive sum outcomes
  7. Increasing NZS leads to a more interconnected and codependent world where you not only care about your local neighbors but also the global community as trade commerce and ideas seamlessly transfer from one area to another
  8. Increasing seamlessness in travel, commerce, communication, mostly driven by improvements in technology lead to new areas and opportunities for NZS, and how open and willing countries are to adopt the new technology and drive it’s future success and ability to capitalize on these positive sum games.
  9. Technology, freedom, and increasing wealth seem to be inherently and intimately intertwined 
  10. NZS is responsible for reciprocal altruism love has evolution selected for those who could cooperate with each other and survive and this helped in hard times when others with chip in to pay back your favor
  11. Time’s arrow does not necessarily point towards complexity but competition, survival, and natural selection push species to become more adapted and more complex in their thinking and behavior just in order to survive. If there was no competition and no threat of being eaten, animals don’t naturally just become more complex. Positive feedback at play
  12. Natural selection beautifully fills in open inches
  13. Truly valuable traits evolve independently. For example eyesight and reciprocal altruism evolved in multiple times and species. These are prime behaviors that have helped species survive for eons and are traits that we can bank on

What I got out of it

  1. Really interesting idea that non-zero games, technological advancement, win/win have spurred evolution towards complexity in behavior