Practical Game Theory
Source: http://www.economist.com/node/21527025
The link above leads to an impressive article focused mostly on Game Theory found in the Economist. The article introduces game theory as a powerful branch of mathematics capable of producing amazingly accurate predictions of human action on everything from choosing where to live to political changes on an international scale.
While a simplistic explanation of game theory, the article provides a lot of interesting applications for it in the real world. These range from analyzing the true value of items in auctions, something we’re now becoming very intimate with in class, predicting diplomatic repercussions to military maneuvers, and mediating disputes on the international level. I was particularly intrigued by the last application as the article directly referenced the Israeli-Palestinian Stalemate as being potentially “solved” by game theory software! The idea expressed by the article is that negotiators could secretly give their true value of everything in the negotiation allowing the computer to come up with the compromise most beneficial to everyone. In class terms, instead of the game settling on a potential dangerous Nash Equilibrium not advantageous to either side, the computer could come up with the most efficient solution to the problem.
While that application is optimistic enough as it is, Bruce Bueno de Mesquita, an academic at New York University, believes game theory software could eventually evolve to the point where war would become essentially obsolete. Instead belligerent nations could simply calculate who would win and create deal then and there. Though, if one can develop software sophisticated enough to obsolete war, one has to wonder what else it might decide to obsolete next…