Game on!

I've been reading a great book by two economics professors (Avinash Dixit from Princeton and Barry Nalebuff from Yale) called The Art of Strategy: A Game Theorist's Guide to Success in Business and Life.  It's an update to their earlier classic, Thinking Strategically.  I've also been listening to one of the Great Courses called "Games People Play: Game Theory in Life, Business, and Beyond", which is taught by Dr. Scott Stevens, and economics professor at James Madison University.  The two books and "Great Course" cover a number of topics in game theory which I would like to explore a little further.  

At its core, game theory is a branch of economics that deals with the science of strategic decision-making.  The mathematician John von Neumann and economist Oskar Morgenstern helped develop some of the important concepts of game theory in the early 1940's, with the mathematician John Nash (whose story was told in the 2001 movie, "A Beautiful Mind" starring Russell Crowe and Jennifer Connelly) building upon von Neumann's and Morgenstern's early work.  One of the most well-known problems in game theory is the so-called Prisoner's Dilemma (which I explained in my post, "Tit for Tat"), which was developed by scientists at the RAND Corporation in the 1950's.

While there are a number of different elements to every "game" (and these are not "games" in the everyday sense), the basic building blocks common to all are the players, their preferences, the available strategies (which depend upon their preferences), and how these strategies affect the outcome of the game itself.  Importantly, as I mentioned in the last post,("Pascal's Triangle"), understanding even just the basic elements of game theory will help leaders make better decisions.  So as I look to finish out calendar year 2022 (wow, that seems incredible!), I will spend some time on some of these basic elements of strategic decision-making using some more famous problems from game theory.