Two Game Theorists Win the Nobel Prize for Economics

[bemildred]

An American and an American Israeli were awarded the Nobel Memorial Prize in Economic Sciences on Monday for fostering the understanding of conflict and cooperation — in matters such as nuclear arms races, trade battles or price wars.

Thomas C. Schelling, 84, an emeritus professor at the University of Maryland and Harvard University, and Robert J. Aumann, 75, an emeritus professor at Hebrew University of Jerusalem, used "game theory" as a way to explain social, political and business interactions.

--

Schelling, a political economist, and Aumann, a mathematician, took different approaches in trying to explain why sometimes it was in the best long-term interest of players to foster cooperation rather than confrontation.

For example, two countries that trade together could find themselves in conflict over a specific product. Traditional power politics would argue that one country should force the other to bow to its will.

LA Times

[leveymg]

1. Would someone out there familiar with game theory give us a primer.

What are the undelying assumptions about human decision-making, and what are the implications for politics, beyond mutual cooperation toward divergent ends?

In application, has this been a progressive or conservative school of thought?

[skids]

2. See the movie "A Beautiful Mind."

It's worth the watch.

[bemildred]

4. Not my forte, but:

What are the undelying assumptions about human decision-making?

Rational pursuit of maximum "return", which entails the idea that
returns can be quantified or ordered somehow.

what are the implications for politics?

Well, lots of those, and economics. The one I like best is that
unilateral, unswerving aggressiveness is a losing strategy, long
term. Competition is expensive and aggressive behavior tends to
induce coalitions to resist it. There is power in cooperative and
altruistic behavior, faithfully carried out.

has this been a progressive or conservative school of thought?

I wouldn't think those labels would apply. I don't believe this
sort of investigation is popular with wingnuts and the like though.

[BillZBubb]

5. Others have answered concerning game theory itself.

Game theory provides a very sound scientific basis for much of liberalism. It uses some of the assumptions of conservatism (ie, that individuals seek to maximize their personal return), and comes to the not so startling conclusion (for us progressive types anyway) that greed is bad. Consistent aggression is bad. Bad in the sense that those attributes don't really lead to an optimal return and are almost always counterproductive.

The best policy relationship in most two party situations is what is called tit-for-tat. You behave, I behave. You get nasty, I get nasty. You share, I share, etc.

A very bad long term policy is "I'm taking all I can now and if you don't like it too bad." (Republicanism)

But the worst policy is "Do whatever you want, I won't quit trying to be nice." (Democratic leadership?!)

[Realityhack]

9. "assumptions of conservatism" would I beleive...

actualy be the basis of econmics in this case.

ie. Rational actor theorey.

[BillZBubb]

11. Rational actor AND other things.

Efficient markets fail under game theory. Rational actor also fails, in that game players (and economic actors) often don't act rationally. There are other conservative assumptions as well--like greed is good, aggression is the best course of action, etc, that fall by the wayside.

[VegasWolf]

12. Exactly. It is the irrational actors like bushco* that cause everything

to fall apart.

[brainshrub]

18. What are these strategies called?

What is the name of the strategy where: "I'm taking all I can now and if you don't like it too bad."

and

"Do whatever you want, I won't quit trying to be nice."

[daleo]

8. There is a well known book, called Game Theory

It is a nice treatment, using accessible mathematics (no more than high school algebra). It is by Morton Davis, published by Dover. It is well worth reading if you are interested in the subject.

[dave29]

3. wikipedia link

http://en.wikipedia.org/wiki/Game_theory

[Runcible Spoon]

6. sounds like Bourdieu and Giddens with math.

hmm. Interesting but scarcely what I'd consider groundbreaking. Also don't think it would hold up cross-culturally..too much of that maximization of individual goals flavor to it.

[Realityhack]

10. Maximization of indiv. goals holds up cross cuturaly...

Its the basis of rational actor theory.

What changes even from person to person is WHAT you are attempting to maximize.

One person might be more concerned with maximizing monitary gain while another might be more concerned with maximizing emotional good feeling (emotional gain).

In fact game theory would be used to study what happened when those two people interacted in diffrent cercumstances.

[Runcible Spoon]

13. as an anthropologist,

I don't buy it for a second. There is a huge body of literature since the 19th C that gives all sorts of conflicting theories about collective vs. individual agency. Nobody has sufficiently come up with a universal theory of action. There is no way in hell you can sell me the theory that individual-centered models are universal in all cultures...

[MildyRules]

7. Well done to both!

[hunter]

14. The premise that humans are "rational" is false.

We are mammals and behave in typically mammalian ways.

Human Beings are little more than Chimpanzee version 2.01. We are the Crap-Cadillac model of a Chevrolet, with lot's of chrome, and tail fins and frilly doo-dahs (especially in our mental systems) that are easily broken.

In the grand evolutionary scheme of things we will probably be a failure. Most creatures -- many more than 99.9% -- become extinct.

My hobby is evolutionary biology, and I have always been keenly interested in game theory. The problem is that when you apply game theory to human behavior, and especially when you base public policy on game theory, you enter a hall of mirrors from which it is very difficult to escape.

It is more straightforward to look at humans and their societies from the standpoint of natural selection. I would tend to pay more attention to biologist Jared Diamond's "Guns, Germs, and Steel: The Fates of Human Societies" than the convoluted self-referential mathematics of the game theorists.

The fundamental problem of game theory is that it is always possible to step outside of the game. In a simple game of chess or poker you can always shoot your opponent dead, as was explored in Orson Scott Card's Ender's Game, but usually a very well defined game is shattered by a surprise...

The dinosaurs never see the asteroid coming.

[bemildred]

15. Individuals you can argue about.

Some people seem to be somewhat "rational", although it
doesn't do to push the point.

Human societies are not much smarter than ant colonies
from what I can see.

At this point, I think it all depends on the weather.

[brainshrub]

16. God damn-it. I can't see the story. I hate registration!

Why do papers think that registration gives them any useful information they can sell? @#$% it.

I "registered" and it still doesn't work.

[hunter]

17. There are worse things...

"This dark side of Tom Schelling is also the dark side of social science—the brash assumption that neat theories not only reflect the real world but can change it as well, and in ways that can be precisely measured. And it's a legacy that can be detected all too clearly in our current imbroglio in Iraq."

http://slate.msn.com/id/2127862/