Josh HaynesGame Theory Final

Game Theory Reflective Essay

(1) What did I think that Game Theory was all about when I first signed up for this

class; how far off was I? Or how correct was my preconception of what it was

all about?

Initially, I believed game theory would be purely strategy in games

and other simple occurrences. I did not anticipate the variety of contexts

game theory could be applied to in reality. My dad took a game theory class

while he was in college, and told me some of his favorite and least favorite

topics, but I really wasn’t sure what game theory was until the first day of

class. I knew it involved statistics and the use of strategy to obtain the best

possible outcome. That was pretty accurate, but game theory goes much

more in-depth than that. Game theory can be incorporated in almost any

decision: work, school, and even general life issues.

(2) What types of useful things did I expect game theory to help me to do? What did

I in fact learn that was useful? What did I think was not an attainable goal? Are

there any particular underlying assumptions of the game theory ideas we’ve

read that I find lacking, or particularly compelling?

At the beginning of the semester, I was unsure what to expect after I

signed up for this class. One of my other classes had been dropped, so I had

to scramble to fill out my schedule. I expected game theory to improve my

decision making process and lead to more rational thinking whenever I was

faced with a dilemma. One thing I learned throughout this course was how to

weigh the positives and negatives of potential outcomes to every decision. I

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also discovered that cops outside of their jurisdiction cannot pull you over,

which is a very useful tidbit of knowledge. I had my doubts that I would be

able to figure out the litigation models, but after some practice, I felt as if I

understood them rather well. However, I made a mistake on the midterm on

the litigation question that I did not really understand. I found the simple

game paradigms pretty compelling; they gave good descriptions of how

players can either work together to achieve the ideal goal, or work against

each other and achieve much less.

(3) Has this class shown me some usefulness for studying economics? Politics? The

law? How if at all may I be able to apply game theory in my own field?

As a psychology major, many of the concepts and terms we have

discussed in this class have carried over into my other courses. For example,

both the Prisoner’s Dilemma and the Tragedy of the Commons have been

discussed in my Social Psychology class. The unit covering conflict and peace

highlighted how people interact when attempting to reach their own

personal goals. Social traps are situations in which conflicting parties, by

each rationally pursuing their self-interests, become caught in mutually

destructive behaviors. This definition follows game theory’s principles of

rationality and self-interests. The group presenting Thinking Fast and Slow,

by Daniel Kahneman, also touched on a term I learned this semester in

psychology. They gave half the class positive information about airport

security, and the other half received negative information. Each half was then

asked to rate their comfort the airport security in general. This is known as

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priming, and can have a noticeable effect on outcomes and evaluations.

People will respond more favorably or negatively to a question depending on

how the priming has temporarily altered their perception.

(4) What things have I noticed during the course of the semester outside of class

that I look at differently now (maybe some strategic situations that you have

not noticed before, or that you reevaluate now)

One situation that I now look at a little bit differently is traffic. It is a

great example of the tragedy of the commons; a shared resource is being

used to excess by everyone. Drivers all want to get home as quickly as

possible, and the major roads usually make up the fastest route from work to

home or vice versa. Therefore, all the commuters hop on the interstate at the

same time leading to major delays for all the drivers at the same time. When

individuals look out for their personal goals, sometimes everyone can

collectively fail.

(5) Do I see the usefulness of recognizing how people respond to incentives?

Incentives can play a huge role in motivating and deterring people

from certain actions. This semester, my group and I read Nudge, by Richard

Thaler and Cass Sunstein, and the idea of nudges influencing people’s

decisions was the book’s primary premise. For example, in an effort to

convince people to contribute to and monitor their retirement accounts,

many companies offer matching programs for employees putting money into

their IRA or 401k accounts. These incentives nudge employees to save more

and spend less. Other incentives can lead people to make better long-term

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decisions for themselves; instead of thinking like Humans, they are nudged to

think like Econs. Personally, incentives can play a huge role in motivating me

to do something. Extra credit, free food, and money are all basic incentives I

work with sporadically, and I can see firsthand how they get me to act in a

specific manner.

(6) And finally a few more direct questions:

a. Do I think that the Prisoner’s Dilemma is a useful and central idea?

The Prisoner’s Dilemma epitomizes game theory. It consists of two

rational, intelligent players with complete information. They know it

is in their collective best interests to cooperate, but their individual

interests to talk and rat out the other player. This early example was

very useful in my understanding of game theory and how even

rational players can make ill-advised decisions while using game

theory.

b. Have I learned anything about how social planners balance societal

welfare? Any tricks that game theory teaches us for designing ways for

people to interact?

Nudge discussed the issue of how much influence should peoples’

lives have. The intro for the book was about an elementary school

cafeteria manager and how food should be presented. Should she

present it in a manner to get more children to eat healthier? Should

food be randomly presented from day to day? Or should the

presentation all be the same so kids pick what they want to eat

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without being nudged? These are issues with no right or wrong

answer, only differing opinions and judgments to be made. Nudge also

presented the case of Sweden giving people control of their social

security in a variety of different funds. The problem this created was

what sort of default package should be given, and how could people

be rewarded for their active monitoring of their future and

retirement.

c. What about the three classes on Behavioral economics and how people

actually make decisions - was this useful and interesting material to

learn?

The behavioral economics classes didn’t really help me understand

game theory much more than previous classes. I felt they may have

been more useful earlier in the semester to help figure out the

concepts a little better.

(7) Feel free to share any further observations about game theory you feel

appropriate; do you think this class was a useful contribution to your studies in

the university?

This class accentuated many of the concepts covered in some of the

psychology courses I took this semester. As I explained earlier, game theory

can share plenty of similar concepts with psychology, such as social traps and

priming. At first I thought the class would have more to do with my statistics

course than my psychology classes, but I was pleasantly surprised. This was

absolutely a positive contribution to my overall semester, though I would

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prefer starting and getting out a little earlier. Unfortunately, the communists

basically stop serving people by the time class begins.

(8) Any ideas we skipped over or covered too fast that you would like to have seen

in more depth? Anything you would have liked to see less of?

I wish we could have covered more real-life examples with actual

numbers attached to them. The litigation models were very useful for me,

especially since they had actual numbers with expected outcomes we could

calculate. Even the paradigm game forms were useful in understanding the

concept of game theory; which decision the opponent is most likely to make,

and what is the most probable outcome. The court cases sometimes led to

some confusion, mostly because I have almost no knowledge of courts and

the legal system. Perry stories could have gone a little more in-depth; they

often left the audience hanging with unresolved situations or other

cliffhangers.

(9) As we are in the middle of re-doing the class this would be very helpful for you

to spend some time detailing what you liked (learned from) and what types of

assignments or exercises made you think. Please reminisce and wax eloquent

about the following (in terms of your like/dislike and their usefulness/interest):

a. Individual Project #1

The first project was a chance to practice normal form games with

relation to our own personal issues. For example, I put a little more

thought behind my dilemma on how many hours I should work during

the semester. Despite my uncertainty surrounding many of the

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concepts, I feel I was able to adequately model and describe my

decision.

b. Individual Project #2

I put a little more thought and effort into the second project. We were

asked to move on to extensive form games and modeling, so I chose

the complex issue of housing for the next year. Although we never

actually got our scores, I presented mine in front of the class and was

given the opportunity to fix some of the errors I had made. I mapped

out the different stages and outcomes along the way, and included the

different players (and types of players) in my final write up.

c. The Rainmaker movie & questions

This film seemed to encompass many of the more difficult terms of

game theory. The class’s hour-long discussion on the ambulance

chasing portrayed in the movie showed me how game theory can be

taken into consideration in The Rainmaker. All in all, I believe I took

more away after watching this movie than The Absence of Malice .

d. Absence of Malice movie & questions

I felt The Absence of Malice was less useful in understanding game

theory than The Rainmaker. I occasionally struggled following the plot

twists, and didn’t feel the movie captured the more opaque aspects of

game theory like The Rainmaker was able to accomplish. Personally, it

seemed to cover basic morals and what going too far, especially in the

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media, can do instead of covering strategic interactions from opposing

rational players.

e. Midterm examination

Although the midterm was long, and a lot of typing, I felt pretty good

after finishing about my final product. I did a little worse than I was

anticipating, but I still did pretty well. The questions essentially

covered all the material we had learned throughout the semester so

far, and allowed reasonable opportunity to cover up uncertainty in

some aspects with proficiency in others. For example, I felt a bit shaky

on the questions in part one relating to the legal system; however, I

did well on the strictly dominated strategies question in part four and

the beginning pieces of the litigation model.

f. Behavioral economics book assignment

After reading Nudge, I got a better insight to how incentives and

motivators can alter people’s behaviors. Although working with

groups can end in disaster, our group was able to get everything done

in the least amount of time. The book we read had some ties with

game theory, namely how interactions between an individual and a

larger entity, such as a corporation or retirement fund, can have such

drastic outcomes and consequences depending on the nudges or

incentives used.

g. Mathematical solution methods gone over in class of games;

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The statistical methods, in which numbers and formulas were

involved, were very interesting to me. I took statistics last semester,

so many of the concepts were still fresh in my mind. I feel I grasped

the litigation models and other mathematical methods of game theory

relatively well.

h. Paradigms in games.

The prisoner’s dilemma and the stag hunt examples really helped me

understand the concept of game theory and how players interact.

They made me see how players will often make adverse decisions

while thinking rationally. Despite cooperation being in their best

interests, they act expecting betrayal and end up with a less desirable

outcome. Although these are pretty simple, they successfully show

different outcomes and rewards present in a variety of scenarios.

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