Why game theory matters

by Andrew Sosanya | 1/31/17 2:00am

As humans, we do not always make the best decisions or act in the best interest of others. Our actions lead to friendship, conflict or even betrayal. What if our decision-making could be predicted? What if it could be written down in a matrix? Game theory can do just that.

Game theory is a framework to study the economic and social interactions among individuals, where individuals typically act in their own self-interest to maximize their pay-offs. Individuals’ decisions depend on the decisions of others, and game theory studies that interdependence.

Games can be designed using a mathematical model. One common model is a matrix, which can be as simple as representing a two-by-two game featuring two players interacting with each other or as complex as a 1000-by-1000 multiplayer game. Game theory can be used to predict all sorts of situations, even the outcomes of finally saying “I love you” to a significant other.

Government professor and quantitative social science program chair Michael Herron teaches Government 18, “Introduction to Game Theory.” Herron says that game theory is present in everyday life.

“The idea of cooperation and conflict exist everywhere,” Herron said.

“People who never take a game theory class never formally use game theory, but they use the intuition.”

Sometimes our instincts stemming from game theory lead to catastrophic decision-making. However, more often, this intuition serves us well and keeps the world moving.

Mathematics professor Feng Fu teaches Math 76.01, “Evolutionary Game Dynamics”. His research combines evolutionary game theory models with empirical data to improve our understanding of real-world cooperation problems, such as climate change, vaccine compliance and antibiotics overuse.

Fu works as part of research team led by the consulting company Gallup Inc and sponsored by the Defense Advanced Research Projects Agency, an agency of the U.S. Department of Defense. Alongside a team of researchers, Fu works on a Next Generation Social Sciences project related to the emergence of collective identities. With this team, Fu uses game theoretical models to study how terrorist groups act as collective identities on various social media platforms such as Twitter. This research includes exploration of “in-group bias” and “out-group hatred,” in which individuals in a group act favorably toward their conglomerates and discriminate against outsiders.

That’s not all — Fu’s research also uses evolutionary game theory dynamics to study super-bugs and multi-drug resistant bacteria that are the result of the overuse and misuse of antibiotics. The abuse of antibiotics is a classic example of “tragedy of the commons,” the theory that individuals acting in their own self-interest will deplete the shared resources of the collective. Fu explained how patients want to take the best possible drugs, but in doing so, make those drugs less effective. Within this context, game theory would recommend more stringent regulation of prescribing antibiotics within the health system.

Game theory is important because the decisions we collectively make impact society for better or for worse. It allows us to sort out the convoluted network of real-world cooperation and conflict and predict social dilemmas. These predictive models can be validated with empirical evidence. Fu says that game theory models are simple, yet have profound impacts on elucidating some of the most challenging problems, such as understanding human collaboration.

Climate change is one of the real-world issues that greatly benefits from applying game theory. The choices of turning off our lights, unplugging our devices and recycling all seem minuscule on an individual level, but on a collective scale, these sacrifices of personal convenience result in a bigger payoff in mitigating climate change.

“Climate change is a game we cannot afford to lose,” Fu said.

While theoretical models can predict rational decision-making, people aren’t always rational. We can learn a lot from knowing more about how our decisions affect others. Fu explained that the goal of evolutionary game theory is to promote cooperation between all parties—not only humans, but plants, animals and microbes as well.

“You never lose by being kind and generous,” Fu said. “We don’t want hate among us. We want love.”

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