When we take religion at face value, we can describe it as a simple set of cultural beliefs to abide by. However, this basic definition is quickly transforming to encompass the tangible, animated, and human-like aspects of religion as well. In “The Darwinian Evolution of Religion,” Princeton University professor and author Michael Graziano compares the evolutionary path of religion to that of everyday species as described by Darwinism. Graziano claims that religions, like animals and humans, are constantly in a competition of survival of the fittest; all religions preach propagating themselves, keep their doctrines sacred and untouched, and promote community, solely in order to prevent themselves from dying out. If the mutated variations of religion that are produced from people’s unique understandings stay contained, they are eventually phased out. Only widespread beliefs reign, and these generalized “rules” of a particular religion usually emphasize strong devotion and depreciate the needs of the actual devotees.
This issue of satisfying the needs of the people devoted to a particular religion and satisfying the needs of the religion itself is referred to in Graziano’s article as an example of a Nash equilibrium and can be viewed from the perspective of game theory. In this game (with the aim of propagating religion), two players (religion and its people) each have a goal in mind and want the best for themselves: religion wants to be spread and loved by the people and the people want to love the religion and spread it. This is representative of a mutual best response, but there are some exceptions. Although religion wants to be loved and spread by the people, the reason for this is selfish- “religion can never be truly 100 percent in the service of the people because the evolutionary pressure on religion is to promote itself.”
This mutual best response can be achieved through two Nash equilibrium solutions to this game mentioned by Graziano, conservatism and liberalism. Both solutions achieve the ending goal of spreading religion, but they utilize mixed Nash equilibrium probabilities to get there. Conservatism emphasizes the strategy of punishment towards deviance from core beliefs, which in turn has a positive payoff of promoting accepted beliefs well but a negative payoff of deterring new recruits. On the other hand, liberalism places its large probability on the strategy of being relatively lenient and accepting, which has a positive payoff of attracting new recruits and a
negative payoff of not emphasizing devotion and structure enough to promote itself widely. Both conservatism and liberalism have different “p and q values,” if you will, which are assigned so that the amount religion spreads remains at equilibrium. It is interesting to see how economic
theory, which we usually associate with quantitative situations, can be applied to even something as subjective as theology and philosophy. It is wondrous that analogies like this can be made to even non-mathematical situations in order to effectively visualize the pros and cons of different strategies.
The recent government shutdown has affected many Americans, as certain Federal agencies are temporarily closed or suspended, giving many Federal employees a period of indefinite vacation time. For Hampton Roads, a metropolitan area in southeast Virginia that is home to the major United States Navy, Air Force, and Army bases, as well as NASA, this means a significant portion of daily commuters will be off the roads during peak traffic congestion hours. As the area considers several options to help alleviate heavy congestion on the roads during peak hours, this situation sets up an interesting scenario that can be studied to see the effects of decreased traffic flow through certain roadways.
As the city considers different strategies to improve traffic flow such as increased Bridge Tunnel tolls and constructing another roadway, transportation planners will get an inexpensive look at what method may work best. As discussed in Chapter 8 of the textbook, constructing an additional roadway may not always alleviate traffic problems. Braess’s Paradox shows that sometimes adding a roadway can lead to a worse travel time for everyone on the road. Traveling a new, speedy roadway can become everyone’s dominant strategy, and in return becomes even more congested than the previous scenario, causing slower travel times due to self-interested behavior.
One analyst believes that a reduction of just five to ten percent of traffic during rush hour times would greatly improve traffic flow through the Hampton Roads Bridge Tunnel. The next few days could give insight if this theory is correct and whether dissuading individual travel and promoting public transportation through higher tolls is a better or worse option than adding another roadway.
The article introduces the dollar‐bill auction as an “unpleasant economists’ party
game” that was invented by the game theorist Martin Shubik. As the name
suggests, the participants’ agree to auction one-dollar by placing bids, with one-cent increments. Just like a normal auction, the one-dollar bill goes to the highest
bidder, but what makes this auction interesting is that both the highest and
second-highest bidder has to pay.
As the article mentions, bids quickly rise close to a dollar and we reach a point
where the highest-bidder has bid 99 cents, and the “under-bidder” has bid 98
cents. The “under-bidder” is better off to increase his bid to a dollar and try to
win – since that is better than losing 98 cents.
Will the bid stop at one dollar? No!
Now the new “under-bidder” is in a position to lose 99 cents. However, note that
if he bids 1.01 dollars and wins he could reduce his possible loss from 99 cents to
just 1 cent. So the under-bidder always bounces back, and the auction will
continue until the players use up all their resources. In the case, one might not
want to take part in the auction at all, but that would lead to having a one-dollar
bill for taking! Shubik believed that the above was a paradox to which game
theory had no solution.
So what’s the best way out then? “Avoid situations which mimic the structure of
this game”. But is it really that easy to avoid such situations?
Unfortunately, it’s not that easy to avoid this. The crux of this problem is that
people always feel that they will be better off if they spend a bit more and
avoid a greater loss. The author highlights several real-world political/economic
scenarios where this principle is pertinent. A few of his examples are as follows:
- It is definitely better to write off Greece’s debt obligations, even to the
extent writing off the entire Greek economy for the sake of sustaining the
European economic integration.
- Similarly, bearing the costs to rescue Lehman during financial crisis
would have been far more preferable than bearing the costs of a global
financial economy collapse.
- We have situations where we give into demands of hijackers to save more
precious lives of humans.
- It’s always better to spend a bit more to complete a large-scale project that
has already exceeded the budget than to keep it incomplete.
Talking specifically about the Greek economic crisis, the author expresses
his opinion that the U.S. is in fact in a situation similar to a dollar-bid
auction and must do whatever it can for the sake of keeping the European
unity intact, and thus must stay in the auction for as long as it takes for
achieving the above.
It’s interesting to note that the winner in a dollar-bid auction sacrifices
bears a large cost to win the dollar-bill. Factually, both the highest bidder
and the second highest bidder lose, but the relative winner is who stays
the longest. Thus interestingly, in this case the winner is not always the
person who is rational. This is unusual and different from second‐price
auctions mentioned in class where one’s dominant strategy is to always
bid one’s true value and thus in a sense stay “rational”.
Relevance to Class: The above‐mentioned concepts relate to the class discussion
on Auctions (Chapter 9) and a bit on Game Theory (Chapter 6). It explores what
is the best bidding strategy for a person in a dollar-bid auction and analyzes the
various payoffs for each of his actions. Unlike second-price auctions where
bidding one’s true value is the dominant strategy, we learn how that is not
always the case for dollar‐bill auctions where being irrational and staying longer
might have a greater payoff.
In 2012, scientists wanted to test the outcomes of the Ultimatum Game on chimpanzees, to assess if humans were the only species capable of compassion and the desire to share. To accomplish this, the scientists set up an Ultimatum Game for the chimpanzees, in which they chose tokens that would be exchanged for food. When the one chimp offered the token to the second, the second chimp could either refuse the offer by not handing the token back to the experimenter, or accept the offer by handing it back to the experimenter. If the chimp accepted the offer, both chimps shared the food they earned, but if no offer was accepted, neither chimp received anything. Mirroring the results of human experiments, the chimpanzees were more likely to accept the offers during Ultimatum Games, when they knew they were working together for a mutual reward. However, during a Dictator Game, in which the chimp does not rely on another animal to receive an award, the chimps acted more selfishly. This also reflects human behavior, as in Dictator Games, humans are more inclined to propose an uneven split of money, when they know that they are not harming a person on the other end of the trade.
This experiment relates to our in-class discussion regarding game theory and dominant strategies. The Ultimatum Game is, as implied, a game, and requires the cooperation of both sides to reach the maximum payoff. The chimpanzees were capable of realizing that splitting the food was, in fact, a dominant strategy. The reason for this discovery could be twofold, as the researchers demonstrated. The chimps could have been acting out of pure empathy, as they realized that by accepting the offer and splitting the food, they were benefitting the other chimp. Conversely, they could have also been acting out of their own self-interest. Perhaps, the chimps recognized that if they refused the offer, then they themselves would not reap any reward from the game. Either explanation demonstrates that splitting the offer of food was always a best response, and therefore a dominant strategy.
The prisoner’s dilemma is an oft-studied example of game theory and strategy in social situations. The classical example involves two prisoners who have the options of confessing or keeping silent. While both prisoners are better off keeping silent, the dominant strategy and Nash equilibrium is for both of the prisoners to defect. An example payoff matrix might look like this:
where the numbers refers to years spent in prison. There are, however, a number of assumptions we place in this game: prisoners aren’t allowed to communicate, prisoners don’t hold any loyalty to each other (if they did, this would modify the payoffs of confessing), and that this is a one-shot game- there aren’t any opportunities for interaction between the prisoners or future retribution after the conclusion of the game.
Breaking Bad is (or more accurately, was) a critically acclaimed and highly successful television series detailing the story of a meth king pin. A number of elements from game theory are applicable throughout the series, including its own version of the prisoner’s dilemma. In the episode “Hazard Pay”, 9 former (low-ranking) employees with knowledge of the protagonist’s involvement have been arrested on lesser charges and incarcerated in hopes they will reveal information on both each other their former higher-ups. The DEA offers each of them the classical dilemma deal- confess on the others and receive reduced sentences, or keep silent and hope the others don’t confess their own involvement.
The first assumption needed for this game to work (no contact between prisoners) are only loosely kept- prisoners aren’t allowed contact with each other (as they are separated by different sections and facilities), but are all represented by the same lawyer who is able to relay information to them. The second assumption is broken (inability for outside reward/retribution) as each of the prisoners are compensated “hazard pay” for their silence. In addition, each prisoner is highly aware that to confess invites danger upon themselves and their families, as the previous enforcer of the operation has not been incarcerated. Thus the payoff for the prisoners might look something like this:
where there exists positive payoffs from keeping silent (receiving compensation) and reduced payoffs for confessing (external threats, loss of pay). Although there is no dominant strategy in the way this game is set up, the mixed equilibrium leads to keeping silent being the most probably option played.
However, in the later episode “Gliding Over All”, the means for distributing “hazard pay” is halted by the DEA and the previous enforcer killed. With the removal of outside rewards and retributions, the situation more closely fits the model of the prisoner’s dilemma, with payoffs similar to the first matrix. This is later demonstrated to be true as we witness one prisoner attempt to strike a plea bargain with the DEA. The protagonist is also aware of this strategy as well- in the time it takes the DEA to find the prisoner willing to sell information at the lowest price (reflecting the concepts of markets and auctions in class), he has all of them murdered before they can reveal anything.
Both episodes are available online (but on a subscription basis). The free synopses can be read at:
In addition, this website discussed other elements of game theory throughout the show:
Phired Up is an organization that focuses on the social connections that make organizations grow and function efficiently. Phired Up emphasizes “values based, relationship driven growth” in order to increase the chance of bringing in new members that will fit into your organization. My personal experience with Phired Up comes through my interaction with Phired Up as a consulting service for fraternity recruitment on Cornell campus. I was able to meet with a Phired Up representative and talk to him about the best way to increase the strength of the fraternal recruitment efforts here at Cornell. During my meeting, I was told that the traditional view of fraternal recruitment as a purely party based environment will not lead to members who bring the proper values to the organization. Phired Up emphasized that personal relationships and one-on-one activities are the key to ensuring a large volume of high quality new members in any organization.
The game-plan that they presented was to go out and just meet a large volume of people. Initially, meet more people than you intend to bring in to your organization. The purpose for this would be to have a large list of potential people who may join your organization, depending on whether they match the culture of your organization. Phired Up emphasizes an approach that brings in quality in quantity. To recruit 20 members that fit your organization’s culture, you must meet about 500 people or more. Then personal activities with these people is the focus of the process. Schedule one-on-one events with these people, and develop a substantial enough relationship so that you know whether they value the same things that you and your organization value. After determining which of the prospective new member’s values match your values, then introduce these people to the people in your organization. Since the values of all of these people are similar, your targets would be more than happy to join you in your organization. This creates a substantial bond that allows your organization to grow.
Looking back on this meeting, I can see that Phired Up focuses on the principal of strong triadic closure in order to attract new members to organizations. The large volume of initial contacts is simply to extend your network to as many people as possible, thus increasing your connections. More
connections to you will increase the chance of strong connections, and connections to people you already know. One-on-one activities are a way to create a strong connection with a new person. This strong connection that you gain allows the potential new member of your organization to be a candidate
for strong triadic closing, assuming that you have strong connections to other members in your organization. This is why they can claim that their method will allow for a higher number of compatible people who want to be part of your organization. It almost goes without saying that if you are friends with people they will be interested in what you do and who you are friends with. Growing and organization and recruiting new members that will add value to your organization is one of the greatest challenges that any group faces, and Phired Up approaches this in such a way that matches one
of the first topics that we have learned.
It’s no secret that Israel and Iran aren’t exactly the best of friends. In recent years, the two countries have been increasingly at odds due to Iran’s nuclear program. Israel sees the nuclear program as a major threat to its existence, a sentiment compounded by former President of Iran Ahmadinejad’s harsh rhetoric towards Israel and Iran’s funding and support of Hamas and Hezbollah. Iran, though, views Israel’s threats and actions against the nuclear program as warmongering. Iran has asserted that its nuclear program is peaceful and only directed towards development of nuclear energy, while Israel believes that it is being used to develop nuclear weapons.
Meanwhile, the United States has close diplomatic and military ties with Israel, while Iran-U.S. ties have been extremely strained since the 1979 Iranian Revolution; the U.S. has imposed sanctions on Iran and the countries have been engaged in cyberwarfare. With the election of Rouhani, a moderate, in Iran earlier this year, though, Iran and the U.S. (and U.N.) have been inching towards a thawing of relations and potentially an easing of sanctions and threats. However, Netanyahu has decried Iran’s attempts to warm up to the West, declaring Rouhani a “wolf in sheep’s clothing” that is continuing to build nuclear weapons, and reiterating that the only acceptable solution is one that fully dismantles Iran’s nuclear program, or a military strike.
Although it may be oversimplifying a complex geopolitical situation to do so, the three countries can be described as a three-way network with positive and negative relationships, as described in chapter 5 of the course book. Right now, the network is such that there is a positive relationship between the U.S. and Israel, and negative relationships between Iran and each of these countries. From the point of view of structural balance, this network is balanced; the U.S. and Israel are allies, and they each have a common enemy in Iran. This type of network might help explain why Israel is against any sort of rapprochement between Iran and Israel. Let’s say that Iran and the United States reconcile enough for their relationship to be reclassified as positive. The resulting network is structurally unbalanced; hence, the statements by Israel against rapprochement represent internal forces to drive the network back towards the balanced state of the U.S. and Israel being united against Iran. Interestingly, the other situation that could result is one in which the internal forces in the unbalanced network drive Israel to establish a positive relationship and form a network with new, but balanced, social relationships between the three countries. However, a positive relationship between Israel and Iran would be much more difficult to establish due to their tensions and fundamental differences in governmental structure (Israel being a Zionist democratic state, Iran being an Islamic theocratic republic). Thus, with the possible easing of tensions between Iran and U.S., turmoil in the relationships between the Israel, Iran, and the U.S. could result.
As a result of the poor state of the United States economy, foreclosed houses are a common sight in almost every town. When a mortgage is not paid, the house is put up for auction by the bank in the hopes of regaining some of their losses. However, some conspirators have devised a plan to take most of the auction money for themselves, leaving the bank with an unpaid loan and a handful of cash worth a fraction of the house’s actual value.
Here’s how it works. A group of auction goers get together beforehand and agree to send one person to the auction. This sole bidder wins the auction for much less than the actual value of the house. Then, the group has a private auction between themselves. The winning bidder pays what he would have paid at auction, but the entire group splits the difference between the winning bid at the private auction and the winning bid at the official bank auction. For example, if the bidder wins the house for $10,000 from the bank auction and the winning bid of the private auction is $200,000, the conspirators sell the house to the $200,000 bidder in the private auction, give $10,000 back to the bidder, and split $190,000 among themselves.
This method of “bid rigging” allows the group of bidders to temporarily forgo traditional auction game theory. While the bank auction would normally be an ascending bid auction with each bidder’s dominant strategy to remain active until his value is reached (as seen in Chapter 9), the bidder sent by the group is virtually guaranteed to win the auction for much less than his value without competition.
Here is the question: Why is joining the group more attractive than being a single rogue bidder? Say there are four people interested in bidding on the house. Three of the people are part of a group and the other person can either join the group or be a lone bidder. As shown in the table below, if the single player joins the group, bids his value, and wins the private auction, he pays (value/4) less than he would have paid if he won the bank auction on his own. If the single player loses the auction but joins the group he gets one fourth of the difference between the private auction’s winning bid and the winning bid in the bank’s official auction. However, if he loses the official auction on his own, he gets nothing. As discussed in Chapter 6, a player’s dominant strategy is one that is a best response to every strategy of the other player. In both cases, the player’s best response is to join the group and bid his value, so this is his dominant strategy.
However, since the government has become aware of this auction scam technique,
entering the group could also earn you a date in court.
Joseph Heinrich’s academic article, Does Culture Matter in Economic Behavior?, analyzes the economic concept of the ultimatum game amongst the Machiguenga, a secluded group of people living in the Peruvian Amazon. The Machiguenga are an ethnic group whose relatives date back to the 15th century. Their livelihood is based on agriculture, as well as hunting and gathering. They live a very simple life, without much contact with the Western world. However, they often purchase Western goods and medicine.
Heinrich tests the outcome of the ultimatum game on the Machiguenga people in this academic paper. The game involves two people trying to split up a sum of money. The first person proposes how to divide the money between the two participants. The second person can accept or reject the deal that is offered to him. If the second person rejects the deal, both participants receive no money. If the second person accepts the deal, then each person receives their share based on the original proposal.
In testing the outcome of this economic game, Heinrich performed the experiment on a group of the Machiguenga people and on graduate students attending the University of California, Los Angeles to act as a control group. He presented people with a sum of money and asked them to propose a split of the money with another person. In each group, the person proposing the split knew the second person was a part of their community, but they did not know the second person’s identity. The results for each group differed significantly. On average, the Machiguenga people offered 26% of the money to the second person and the second person almost always accepted offers that were less than 20% of the money. For the UCLA graduate students, the average offer was 48% of the money and no proposed offers were less than 20% of the money.
Theoretically, the second person receiving the proposal should accept any deal that is offered to them. If they do not, they would walk away with no money. However, numerous studies have shown that people usually offer a relatively fair split of the money to another person. Additionally, studies have shown that people usually reject low offers. In this study, the Machiguenga “seemed to feel it was just bad luck that they were responders” instead of “viewing themselves as being screwed.” In contrast, the UCLA graduate students said they would reject “unfair offers.”
In lecture, we learned that people tend to reject offers that they deem are low and unfair in the ultimatum game, and that this has been proved through numerous studies over the years. We did not go in depth about the few anomalies to these studies and why different outcomes to the ultimatum game can occur. In this case, the Machiguenga are not influenced by industrialized culture. Therefore, they have different ideals and beliefs than the UCLA graduate
students. Specifically, they have different perceptions on fairness, and this greatly affected how each group played the ultimatum game. As this study has shown, cultural beliefs and perceptions can play a role in the outcome of the ultimatum game and affect economic behavior.
There is no doubt that Apple has changed considerably since the death of Steve Jobs. Barring the marketing and product development strategies of Apple, the company’s approach towards investors has taken a significant twist. During Jobs’ reign at Apple, any shareholder of Apple stocks was to expect little or no return from the company. The reason why, in Jobs’ point of view, is simple: Apple should use the cash available to them in order to invest on new projects. New CEO, Tim Cook, has turned things around. Looking to find means of starting on a positive note, Cook has made it well known that he intends to give back to his investors. It is presumed that this plan seeks to provide incentives for many more individuals to invest in Apple Inc.
From my own perspective, I believe that this is a smart move by Tim Cook. Most of the hype that surrounded the company revolved around Steve Jobs’ ability to think outside the box- or, much like his campaign: “Think Different”. Knowing that this same approach is risky and would render little results without Jobs, Cook opted to provide investors with financial incentives to buy Apple shares. Furthermore, this idea can relate to Game Theory. Cook is faced with two possible choices, pay back a decent amount to his investors or pay them back little money. On the other hand, the investors either opt to invest in Apple or not.
The Game Theory matrix for Cook’s strategy is very different than that of Jobs. Jobs was able to satisfy investors without giving them much money. Cook, however, has not been able to kickstart Apple as much (in spite of Apple being one of the most valuable companies, its momentum has steadily decreased). While Jobs to have people buy Apple shares because of the continuous increase in its share price, Cook has relied on paying investors back to provide incentives for them to invest. Thus, it can be said that, if investors were to buy Apple shares when Cook returns little or no money, they would “lose” (Apple stock prices reached its peak in late 2012 and have dropped since). As a result, there exists an equilibrium when Apple pays its investors and Apple receives money. It will be interesting to see if Apple will continue to take on this approach. If it does, then it may indicate the company’s lack of success rather than its benevolence towards investors.
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