Good article. I have always wondered about practical use of Game Theory.

However, some Case Studies may help.

regards,
Peter

Thanks. I’m glad it was helpful.

Happy Holidays!

- Greg

Another lucid and thought provoking item. I’m about to embark on a complicated negotiating process with a possible partner although we have previously been competitors. This has helped me simplify and clarify my approach.

many thanks

Paul

Well, if I could boil it down to one point (which I can’t) I would say that the one thing to get right is credibility. Most os negotiation tactics will only be effective if the other side believes us.

I hope that helps.

Have a nice holiday.

- Greg

Thanks. That’s very kind of you.

- Greg

Another good article. Game theory is fascinating stuff, but just understanding it can be challenging sometimes. You were able to present the concepts in a relatively easy to understand way.

“The game theoretic models for the evolution of cooperation that could be reasonably applied … require the existence of some mechanism for detecting cheaters or otherwise excluding them from the benefits of cooperation. This is because the capacity to engage in social exchange could not have evolved in the first place unless the individuals involved could avoid being continually exploited by cheaters. But most models do not require the existence of a mechanism for detecting “altruists” individuals who follow the strategy of paying the required cost (thereby benefiting the other party), but not accepting from the other party the benefit to which this act entitles them. Indeed because individuals who were consistently altruistic would incur costs but receive no compensating benefits, under most plausible scenarios they would be selected out. From the perspective of deontic thinking, we would expect no difference in facilitation.”

“Wherever complex cooperation has been able to evolve, it is because cooperators have been able to capture the effects on others of their actions. As a result, self-interest has driven them to treat the other as self. A strong example that may not be immediately obvious is an economic market. The market will reward an individual who develops a new product that benefits others by satisfying their needs better than existing products. Selling the product enables the individual to capture the beneficial effects that the product has on others. In the limited areas where economic markets work effectively, individuals benefit in this way from actions that benefit others. Where the market enables individuals to capture the benefits of their effects on others, the market aligns the interests of individuals with the interests of others.

In contrast, where the barrier to the evolution of cooperation has not yet been overcome, cooperators do not capture the beneficial effects on others of their actions. For example, in our economic system, a person will not capture the benefits of providing food to people who are starving in an African famine. It would be far more profitable to invent an improved mousetrap. Or a new weapon of mass destruction. But when the barriers to cooperation in human society are overcome, and when all individuals capture in full their beneficial effects on others, the provision of food to the starving will be a lucrative way to make a living.”