Game Theory Applications in the Real World — What are the limitations?
Website: https://www.jstor.org/stable/2938166
Game theory is a powerful concept in social reasoning and in predicting behaviors. This academic article goes into detail about the game theory applications in real life. It argues that while it provides a “plan of action”, real life does not always plan out like the model. Reality will oftentimes result in a different outcome. Game theory is useful in social conflict, but may not be the best representation of predictive behavior. According to the article, the interpretation of strategy is not always correlative to the way it is applied in natural settings. An equilibrium strategy may establish a good plan, but it is just that. It is important to be realistic and understand that this is a model of the perception of reality, not actual reality. A persistent concern with game theory modeling is defining, and accounting for every set of possible factors and variations that potentially could alter strategy or outcome. There will most likely always be some factor or variable that simply cannot be accounted for. From this perspective, the models act more as an art form than formulaic algorithms.
This connects to class in the sense that we have talked about game theory and equilibrium strategies. We have looked at scenarios for different types of games and situations, and we have developed strategies that make sense based on the context of the problem. It is important to consider that these scenarios are just that; scenarios. They are the picture-perfect problem with the right conditions to solve the problems according to the rules. But what actually happens in real life is out of our control and external factors can change the data and strategies, causing the rules to be inapplicable or varied to some degree. Especially in large population cases (a game between large populations), there is so much randomization and potentially so many various strategies that this situation could take on. At some point, there will be some behavior that does not go along with the model or a rule. One fixed model is not going to be able to represent all of this data. In game theory, the examples of real-life social phenomena have to be arguably realistic and provide a framework to build models that makes sense. Without that, it is difficult to actually apply these theories and models.