For those out of the loop, Game theory is the science of applying mathematics to collaboration, and determining the behaviour that lead to optimal outcomes in different situations. A heavy feature of these situations, known as games, is the interdependence of players, but you’ll often find that aspects of game theory can be broadly applied to any multi-party interaction from child-rearing to basketball.
In most games the actions of players can result in a variety of outcomes for others including positive sum (1,1), where both parties benefit, and negative sum (-1,-1), where parties suffer mutual harm. In zero-sum (1,0 or 0,1) games there is always a loser. One person’s gain leads directly to loss for another, and vice versa.
A basic understanding of game theory is important to better contextualise our actions, reactions and the way we view complex societal structures.
In every day life, even when we’re not cognisant of it, game theory surfaces regularly in our negotiation and collaboration tactics, as well interactions between friends and romantic candidates. When we decide what to do based on how others might benefit or lose, or based on past behaviour, that’s all part of game theory.✓
The Prisoner’s Dilemma
A conceptualisation you may be familiar with is the prisoners dilemma. Two criminals are arrested for a crime and held in separate chambers. Due to lack of conclusive evidence against either, each is given a series of options by the prosecutors office in return for a confession. The four deals are usually displayed in a 2x2 matrix.
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