Showing posts from November, 2010

Prisoner's Dilemma: Game Theory for Noobs

The Prisoner's Dilemma is a fairly famous scenario in game theory. The dilemma occurs when two alleged criminals are captured by the authorities. Both suspects are handled by some tough customers in their own holding cells, but the police do not have enough evidence to put either of them away for good just yet. In order for either of the suspects to go to jail for a significant time, the other has to deliver testimony. The authorities are stuck between a rock and a hard place, so they come up with a plea bargain.

Should you take the plea bargain?
The plea bargain gives each captured suspect a few options:
Deliver testimony while your partner keeps silent, get out of jail free and leave your partner rotting in jail for a full decade.
Both keep silent. If your partner doesn't spill the beans, this is the best scenario for both of you as the police wouldn't have enough on you to put either of you away for good, but both of you would spend 6 months in prison.
Spill the beans, have …

Game Theory for Noobs

Game theory is not so much about Playstation as it is a science about strategy. The purpose of game theory is to determine the most rational course of action. Rational in this sense means the course of action that results in the highest amount of possible gain, or in the lowest amount of possible loss.

Christina Aguilera. She recently received her own Hollywood star. Not sure why, but it must mean she knows a thing or two about strategy.

John Nash is frequently associated with game theory. His tragic bout of schizophrenia is often abused to ridicule game theorists and to discredit the science of game theory, as is the case in the BBC documentary The Trap. However, John Nash was a fairly latecomer to the field as John von Neumann established the science in collaboration with Oskar Morgenstern with their book, Theory of Games and Economic Behaviour. This book reported a means to quantify the qualitative notions of expected utility, so in a way von Neumann and Morgenstern gave us mathema…