Tag Archives: game theory

What Axelrod and the Prisoner’s Dilemma Teaches about Human Nature

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We ran the Harvard Program on Negotiation case whose dull title (“Oil Pricing Exercise”) belies the fireworks that tend to erupt in a Prisoner’s Dilemma simulation. It was the first time that I have used this version and it seems to be an extended version of my preferred one hour version–with the benefit of drawing out the negotiations for up to three hours, although the students didn’t seem to take it as seriously as we hoped.

The case is historically exemplified by the Cuban Missile Crisis (another case that I run midway during the semester). A few of the key issues that always emerge in discussions and case debriefs include:

  • trust, and the dissolution of it as the exercise progresses
  • conflict styles and strategies
  • dealing with escalation (e.g., self-fulfilling prophecy, entrapment)
  • “defecting” (e.g., backstabbing–with its ethical and tactical implications)

In the case debriefing I read about Robert Axelrod at the Ford School (University of Michigan) who ran a computer simulations, which was something new that I hadn’t heard about previously.

In 1980, Robert Axelrod, professor of political science at the University of Michigan, held a tournament of various strategies for the prisoner’s dilemma. He invited a number of well-known game theorists to submit strategies to be run by computers. In the tournament, programs played games against each other and themselves repeatedly. Each strategy specified whether to cooperate or defect based on the previous moves of both the strategy and its opponent.

via CS.Stanford.edu

The result was Axlerod’s “Tit for Tat” strategy, recommended in the Harvard Case debriefing notes, which recommends choosing to cooperate initially and then follow the opponent’s previous move for the remainder of the game. Much was made of Axelrod’s computer simulation–even though his conclusions the source of ongoing discussion.

You can find critics. Ken Binmore, author of Playing Fair: Game Theory and the Social Contract, takes issue with any strategy that removes human proclivity for evil:

In brief, the simulation data on which Axelrod supposedly bases his conclusions about the evolution of norms is woefully inadequate, even if one thought that his Norms Game were a good representation of the Game of Life in which real norms actually evolve. One simply cannot get by without learning the underlying theory. Without any knowledge of the theory, one has no way of assessing the reliability of a simulation and hence no idea of how much confidence to repose in the conclusions that it suggests. It does not follow that the conclusions on norms and other issues which Axelrod offers in his Complexity of Cooperation are without value. He is, after all a clever man who knows the literature of his own subject very well. But I do not think one can escape the conclusion that the evidence from computer simulations that he offers in support of his ideas has only rhetorical value. His methodology may table some new conjectures that are worth exploring. But such conjectures can only be evaluated in a scientific manner by running properly controlled robustness tests that have been designed using a knowledge of the underlying theory.

via JASSS (book review)

Even so, Axelrod’s strategy has been useful and has attracted attention from evolutionary biology (Joshua Plotkin) and the guys at RadioLab, who wondered about altruism and global strategy. (Listen to the entire story, below, for an amusing retelling). The takeaway? We can see how an Old Testament, “eye for an eye” mentality came from biology and has an evolutionary (and mathematical) basis for understanding human experience.

https://www.wnyc.org/widgets/ondemand_player/radiolab/#file=%2Faudio%2Fxspf%2F104010%2F

The Khan Academy has its own version of a Prisoner’s Dilemma lecture, if you prefer an old-school refresher on the the MOOC lecture.

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California Conservation via Diplomacy

So imagine that you are Jerry Brown. (I know, kind of weird, huh?) How do you get Californians to conserve water? Much is being made about using sticks (instead of carrots) and even shaming via social media.  Perhaps the way to change behavior is to take a page out of the playbook used by diplomats and astute policymakers: urge cooperation and playing to our social side.

What does consistently work may be surprising: interventions based not on money, but on leveraging social concerns.

There are two ways to do this, both building on people’s desire for others to think highly of them. One is to make people’s cooperative (or selfish) choices more observable to others, like neighbors or co-workers. The second works in the opposite direction, providing people with information about how others around them are behaving (this is called a “descriptive social norm”).

via How to Get People to Pitch In – NYTimes.com.

And perhaps “conservation diplomacy” can become a thing?

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Game Theory Secrets for Parents – WSJ

Game theory is, in essence, the science of strategic thinking—a way of making the best decision possible based on the way you expect other people to act. It was once the domain of Nobel Prize-winning economists and big thinkers on geopolitics, but now parents are getting in on the act. Though game theory assumes, as a technical matter, that its players are rational, it applies just as well to not-always-rational children.

A key lesson in game theory, says Barry Nalebuff, a professor at the Yale School of Management, is to understand the perspective of the other players. It isn’t about what you would do in another person’s shoes, he says; it’s about what they would do in their shoes. “Good game theory,” he says, “appreciates the quirks and features that make us unique and takes us as we are.” The same could be said of good parenting.

via Game Theory Secrets for Parents – WSJ.

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Changing the Debt-Ceiling Game: the “hold-up problem”

We can’t find enough ways to rehash U.S. budget negotiations because there are so many useful lessons.  David McAdams, a Duke econ professor whose upcoming book on game theory looks promising, explains why the conservative threat of default weakens their hand:

In game theory, this sort of quandary has a name: “the holdup problem.” Holdup problems arise anytime you need to trust someone else to follow through on a commitment, whether in business, romance or politics. We solve the holdup problem in everyday life quite simply, by treating one another with good will, and that’s how politicians used to get the government’s business done as well. That’s gone now, unfortunately, but there are other solutions.

When a transaction isn’t happening because of a lack of trust, the affected parties can still often reach a deal by tying their own hands, limiting their ability to take advantage of the other side.

via Changing the Debt-Ceiling Game – NYTimes.com.

Changing the Debt-Ceiling Game - NYTimes.com

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