Game Theory is applicable to my life????
https://www.businessinsider.com/how-to-use-game-theory-to-your-benefit-2012-4#to-make-money-in-the-markets-3
Often times we learn things in class that we feel will never apply to our lives but Game theory is not one of these things. Although Game theory can be used to analyze larger situations, it can also be used to improve our daily lives and end up with the best possible outcome in mundane situations. This article shows 7 ways Game theory applications that we can take advantage of in our lives: salary negotiations, buying a car, making money in markets, real estate, fantasy sports, poker, and auctions. These situations are applicable because in class we learned that Game theory helps navigate situations where a person’s decision/outcome depends not only on their own decision but also on the decisions of another player or participant. This could apply to actual games like soccer or could apply to less obvious situations like the prisoner’s dilemma and the ones previously listed. Game theory occurs in a lot of seemingly normal situations because people still always strive to find a solution to a problem that will benefit them most. The two dilemmas I want to focus on from the article are the real estate negotiations and fantasy sports.
According to the article, the best play for real estate is “You can keep your original offer, withdraw your offer, or offer a higher price. Since the winner on the bid will probably have to overbid in order to win, the latter choice is necessary in order to win.” This was taught to us in class during the lecture about auctions. In this situation, it is ideal to bid exactly the number more that will help you win. The article mentions that if someone outbids you even after this, then there’s nothing more to do because you’ve played the best possible scenario. The article subtly hints that Game theory will not always work.
Another application of Game theory is fantasy sports. Fantasy sports involves more than just two players which is different from what we’ve learned and experienced in class. The article states that “N-player games cannot be ‘solved’ the same way as 2-player games can…but in game theory, there is usually a ‘minimax’ solution to zero-sum games. Also known as a Nash equilibrium, the minimax solution is the strategy with the maximum assured minimum gain for a player.” This is similar to the Nash equilibrium that we talked about in class where the players each get their maximum output. In this situation, the “players” are the team members and the best scenario is the Nash equilibrium of the players values.
This article explains several everyday situations where Game theory may be applicable. However, it mentions scenarios where there’s more to “winning” than just a theoretical approach. For example in the buying a car situation, there’s an aspect of being clever in the way you speak and talk. Even in actual games, there’s a strategy of intimidation. These things can also help in securing the best possible outcome of a situation.