Monday, June 13, 2011

Rock, Paper, Scissors by Len Fisher

In which we are introduced to everyday examples and applications of game theory.

Rock, Paper Scissors is an interesting introduction to game theory for newbies, and a fascinating look at examples and applications for those familiar with the elements of game theory. Congratulations, Len Fisher, you are now on my list of authors whose every word I want to read! I really, really enjoyed this book. So much so that I finished it within two days which, for those of you keeping score at home, is pretty unusual for me! This book made me pine for college where my "job" was to go to class and learn this stuff.

Game theory is the study of strategic decisions in situations where the results of strategies depend on other participants' strategies. It's probably a lot more interesting and relevant than I made it sound just there. The most famous example of game theory is referred to as the prisoner's dilemma. The prisoner's dilemma is a hypothetical situation in which two conspirators are arrested for a crime they probably committed. Each prisoner is questioned separately and offered the same deal. Both prisoners are asked to confess. If neither does, they will end up with a certain sentence when convicted, say one year. If both confess, they will both receive longer sentences of three years. If one prisoner confesses while the other does not, the confessor will go free while the prisoner who refuses will serve 12 years. So if prisoner A thinks that prisoner B will confess or stay silent, either way it's in his interest to confess. Same with prisoner B. So, with all else being equal, both prisoners will confess. While this is a positive outcome for the prosecutors, both prisoners would have done better if both had cooperated and refused to confess! Thus, the dilemma. The prisoners dilemma can be extrapolated and applied in all kinds of areas to explain steroid use, arms races, marketing... the possibilities are endless.

Game theory is everywhere, as this book demonstrates, from the game of rock, paper, scissors to international conflicts. Fisher describes personally conducting dubiously scientific but undoubtedly amusing experiments related to game theory at weddings, kids' parties, airports, and buses. Seriously, upon reading about his experiment regarding optimal cake distribution at a friend's wedding I wished a little that this guy could come to my wedding. OK, it's true, I am an economics nerd and I would totally inflict game theory experiments on my friends!

Game theory is also very applicable in nature, specifically evolutionary biology. I love these examples! It's super interesting to me to see how animals' behavior, evolved to pass on their genes, mirrors economics. Love it! Fisher even manages to bring up flatulent fish. For more game theory in biology, read The Selfish Gene, by Richard Dawkins.

If you are really easily offended in regards to religion, please just skip this paragraph!! I have to bring religion into everything. It's in my brain to analyze religion in the terms of everything I read or see. So I guess it was inevitable that this book would make me wonder if game theory could help explain the origins of religion. Game theory says that a powerful third party can lead to better outcomes for participants. For example, in the prisoners' dilemma explained above, both prisoners would be better off if they cooperated and refused to confess than if the equilibrium outcome occurred and they both confessed. The presence of a third party, such as a gang boss who would punish them for ratting out on their co-conspirator by confessing, could thus improve the outcomes for the prisoners! So then, if in some ancient culture there was no concept of god or post mortem punishment and rewards it might be in the population's interest to invent a gang boss in the sky to encourage cooperation and better outcomes. Just a thought.

Len Fisher sounds like a really interesting person who I would love to meet even if I suspect he would be performing experiments in my head! From childhood anecdotes in this book it sounds inevitable that he would be a game theorist. His parents made interactions with his siblings into impromptu game theory story problems for them to work out optimal solutions. Brilliant! There are definitely bits of this book that could be pure parenting advice.

My big complaint about Rock, Paper, Scissors was the chapter attempting to relate quantum mechanics to game theory. I have very little understanding of quantum mechanics, and an inability to believe any of the preposterous claims science makes about it! I just keep telling myself that my inability to understand it does not make it any less true. This chapter still seemed like a stretch. Despite my ignorance, I seriously doubt that quantum mechanics are relevant to game theory! I just sort of wish this section had been left out. Maybe I should attempt to actually learn more about quantum mechanics, if I even could.

I would recommend this book to anyone interested in economics, biology, politics, or strategy. It is a widely applicable book that is relevant to all different levels of familiarity with the subject matter. It should entertain and edify someone totally unaware of game theory and flesh out almost anyone's knowledge of the subject. I think this book would make a nice present for a kid entering business college or an economics undergraduate program. It's very relevant and entertaining.

5/5 stars.

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