Cognitive Thrift 29 – Game Theory
Author(s): Scott Douglas Jacobsen and Rick Rosner
Publication (Outlet/Website): Cognitive Thrift
Publication Date (yyyy/mm/dd): 2017/07/15
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Scott Douglas Jacobsen: Game theory is the theory about the mathematical models of conflict and cooperation between intelligent and rational decision-makers. It does deal with a payoff matrix between two players. We talked about cognitive game theory, which implies something different.
Rick Rosner: Let’s clarify how game theory works a little, generally, in game theory, you lay a payoff matrix. Where you have a set of different decisions that you can make, and you have a set of different outcomes of things that can happen for each of those decisions, and then each of those outcomes is weighted probabilistically, and a value is assigned to each of those outcomes, and by calculating the entire matrix you hope to come to the optimum decision.
For a simple situation, we’ll do a simple situation: cross the street. Game theory of crossing the street, you have two possible decisions, cross the street or don’t cross the street. You have two possible. you have two possible decisions and two possible situations: red light or green light. And then for red light or green light, you have two possible outcomes.
Make it across safely, get killed, so – or get badly injured, whatever you want. So, the payoff matrix or the payoff for crossing the street successfully. The payoff is say 1.
Say that’s worth 1 abstract dollar, crossing the street unsuccessfully, not getting injured, the payoff is -5,000. it is much, much worse to not make it across the street than it is to make it across the street.
And then the probabilities for making it across the street, for red light, 1% successful/99% unsuccessful and, for green light, 99.0% successful/.1% unsuccessful. And you don’t need to plug in the math because it is a commonsensical thing.
You best strategy is to not cross the street on red and to cross the street on green because the negative payoffs for unsuccessfully crossing are really, really huge.
And you can use game theory to make decisions that aren’t so clear cut like you could do a John Nash decision. Do you hit on the blond girl that everybody is hitting on or do you hit on the brunette girl that is being ignored, or do you completely blow off that situation because that’s leftover from when John Nash was thinking about hitting on girls in the 1950s?
The best strategy there is to probably to post on a blog that you don’t hit on girls and hope you get to meet on girls by appearing to be enlightened.
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