Game Theory: The Study of Choices

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Decisions, Decisions
     Decisions are hard. Yet life is full of them. Did you know that there is a branch of science and philosophy that analyzes decision-making? It’s called Game Theory, and it’s the study of choices. Sounds simple, right? It’s fascinating: Game Theorists use very basic examples and situations to explain some of our weirdest behaviour.
     Today, you’ll be reading about some scenarios specialists use to explain and predict what we do—each of us, everyday and internationally. These imaginary situations are simple but have big implications. Put yourself in these situations as you read them, and prepare to make some tough choices. The most important thing is to ask yourself: What would I do? And, more importantly, why?

The Prisoner’s Dilemma
     Here’s a situation. Imagine you and a friend are caught for a minor crime. The police separate you and want to convict you both for a more serious crime, but need a confession. It doesn’t matter if you or your friend committed a bigger crime. What’s important is that the police want either of you to admit that your partner has committed such a crime.
     If neither of you implicates the other, each of you will get only 1 year in jail, which is the punishment for your minor crime. But if you rat out your friend, you will go free and your friend will land 3 years in jail. Or, if your friend betrays you and you stay silent, the opposite will happen: you will face 3 years in jail and your friend will go free. Lastly, if both of you convict each other, you will each face 2 years in jail. So, isolated in a cell, you have this choice: convict your friend or stay silent. What do you choose?
     If you are looking at the best interests of both you and your friend, then the most advantageous solution is that no one talks. Each of you does only a year in jail and no one betrays anyone. But the equation changes if you care only about your own interests. Yep, that’s the tricky part: it’s mathematically proven that it is always better if you talk, as long as you only care about yourself. If you talk while your other friend doesn’t, you have zero jail time: zero punishment. If you talk when your other friend talks, you still face less time than if you stay quiet: 2 years instead of 3.
     You might feel cheated with this “mathematical solution.” But the odds are you make decisions with this very same logic every day. The implications of this example are huge. Let’s look at an international example: pollution control. Each country today has a choice: invest in new, environment-friendly energy sources, or continue investing in current, mostly polluting technology. If each country invests in new energy sources, we will very rapidly create alternatives to the pollutants we have today. It’s also to everyone’s benefit to reduce pollution: the world can become a better and cleaner place.
     Well, that’s true if everyone does it. If only a few countries invest in new energy sources, the countries with old energy sources will have an easy time—they have no risk investments. They can dominate the market while “environmentally conscious” countries spend resources on their new solutions and essentially lose out for the present. Of course, if no countries invest in new energy sources, no countries take economic risks—but pollution gets worse and worse. In today’s world economy, governments are worried about making high-risk investments, especially if that means losing out to countries that don’t seem to care about pollution or the environment. So, even though there is solution that’s best for everybody, individually, countries more often choose what is in their own best immediate interests.
     The take-home lesson is this: in any situation, there is often an option that benefits everybody and an option that benefits only you. Do people make the choice of improving the world? Or do people just look out for themselves? In both the “Prisoner’s Dilemma” and the pollution investment examples above, we can see that the easy decision is the way people often go.

The Chicken Game
     This game is even simpler. You and your friend have a bet to see who is crazier and more courageous. Each of you get into a car at opposite ends of a street and drive toward each other at top speed. The first of you to swerve is the chicken. If your friend swerves and you keep driving straight, you are the winner. If neither of you swerve, you have a terrible crash.
     People play this game in a hundred varieties every day. Maybe you’ve been in a situation that resembles this next example. You and a friend are enjoying a day off, driving around the city. While you’re both talking about places you would like to visit, he gives you an idea: “Why don’t we just go to the airport and board a plane right now?” You are excited enough that you say “yes” and, without packing anything, you head to the airport with only the clothes on your back, your passport, and your credit card. You are in the departure line en route to a strange country. Suddenly, you have second thoughts. Do you say anything? Or do you think your friend—who is also leaving his job and life on a whim—will cave first and tell you he is scared?
     There is less of a clean solution here. If you realize that you cannot go on this trip—for whatever reason—you may not have to become “the chicken,” as long as you know your friend will chicken out first. You can still seem like the cool one and not have to risk everything. But, if your friend is the more courageous one, and you really can’t afford to go on this trip, you better speak up—or else you’ll find yourself on the plane!
     We often play these games with our friends and our egos. We may not mention that we have agreed to something that is not in our best interests. The same thing happens internationally in times of war or political tension. For example, during the Cold War, neither Russia nor the United States were willing to break off hostilities. But the alternative was as dangerous as the two cars racing toward each other: mutually assured destruction.

Discussion Questions

1. Do you agree with the mathematical solution to the Prisoner’s Dilemma? What would you do if you were one of those prisoners?
2. Do you find you often make decisions in your own best interests or in the best interests of others?
3. In your opinion, are people selfish? Or do only certain situations highlight this?
4. Have you ever found yourself in a “chicken” situation? If yes, what was it? If not, what do you imagine you would do?
5. Having read this article, do you think its examples are accurate?

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