Barry Nalebuff and Problems in Game Theory
Barry Nalebuff is the Milton Steinbach Professor of Management at the Yale School of Management. Professor Nalebuff has written on a wide variety of subjects ranging from strategy to pricing, bidding to bargaining, and innovation to incentives. He is an expert on game theory and has written extensively on its application for managers. His most recent book, The Art of Strategy, is an update of the best-selling Thinking Strategically, which explains the fundamentals of game theory using real world examples.
Professor Nalebuff's work on strategy focuses on the fundamental duality in business—the conflict between cooperating to create a pie and competing to divide it up—which he presents in Co-opetition. His book, Why Not?, focuses on providing a framework for problem solving and ingenuity. His work on product bundling was featured in the European Union's investigation of the proposed GE-Honeywell merger.
Question: What are some problems with game theory?
Barry Nalebuff: It’s easy to create a strong man to attack game theory and if you literally think that the payoffs that you’ve written down are completely right, and that the other player and all the players are identical, you will come up with a really stupid answer that is misleading. I think is a poor application of game theory.
That’s also why we called the book “The Art of Strategy.” There is a science behind it, but sometimes it uses a dialogue. It’s providing a common language so that we understand the reason why we think somebody is going to take the strategy is because they see all of these different options playing out on this way, do you agree with that?
Whereas our conclusion falls from our assumptions, so now we can understand do we have a common set of assumptions.
But this article points out something else that I think is even more important: that this multiple levels of game theory and I’d like to think of as [IB] META game theories, or it’s not just about solving a particular game, it’s about making sure you’re playing the right game.
So, how do you go back designing a game? And you can think about that, you could change the rules of the game. You can change the players in the game. You can change the payoffs in the game. You can link one game to another game. So you need to understand some game theory to figure out when I’m doing my game design. Are these changes likely to help me or likely to hurt me? And I think in the end I’m not going to be so precise to say it’s going to be 7.365% improvement, but it’s a good idea to link between negotiations or it isn’t a good idea to link between negotiations. And that’s the level at which I think we can be very helpful.
Recorded on: Oct 2, 2008
It’s not just about solving a particular game, it’s about making sure you’re playing the right game, according to Barry Nalebuff.
Swiss researchers identify new dangers of modern cocaine.
- Cocaine cut with anti-worming adulterant levamisole may cause brain damage.
- Levamisole can thin out the prefrontal cortex and affect cognitive skills.
- Government health programs should encourage testing of cocaine for purity.
A study on flies may hold the key to future addiction treatments.
- A new study suggests that drinking alcohol can affect how memories are stored away as good or bad.
- This may have drastic implications for how addiction is caused and how people recall intoxication.
- The findings may one day lead to a new form of treatment for those suffering from addiction.
Civil discourse has fallen to an all time low.
The question that the American populace needs to ask itself now is: how do we fix it?
Discursive fundamentals need to be taught to preserve free expression
In their findings the authors state:
to stop attempted speeches — raise issues of just how committed college students are to
upholding First Amendment ideals.
Most college students do not condone more aggressive actions to squelch speech, like
violence and shouting down speakers, although there are some who do. However, students
do support many policies or actions that place limits on speech, including free speech zones,
speech codes and campus prohibitions on hate speech, suggesting that their commitment
to free speech has limits. As one example, barely a majority think handing out literature on
controversial issues is "always acceptable."
Talking politics at Thanksgiving dinner
- Progressive Activists: younger, highly engaged, secular, cosmopolitan, angry.
- Traditional Liberals: older, retired, open to compromise, rational, cautious.
- Passive Liberals: unhappy, insecure, distrustful, disillusioned.
- Politically Disengaged: young, low income, distrustful, detached, patriotic, conspiratorial
- Moderates: engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
- Traditional Conservatives: religious, middle class, patriotic, moralistic.
- Devoted Conservatives: white, retired, highly engaged, uncompromising,
It's interesting to note the authors found that:
"Tribe membership shows strong reliability in predicting views across different political topics."
Here are some statistics on differing viewpoints according to political party:
- 51% of staunch liberals say it's "morally acceptable" to punch Nazis.
- 53% of Republicans favor stripping U.S. citizenship from people who burn the American flag.
- 65% of Republicans say NFL players should be fired if they refuse to stand for the anthem.
- 58% of Democrats say employers should punish employees for offensive Facebook posts.
- 47% of Republicans favor bans on building new mosques.
Here are some guidelines for civic discourse that might come in handy:
- Practice inclusion and listen to who you're speaking to.
Civic discourse in the divisive age
dangerously tribal, fueled by a culture of outrage and taking offense. For the combatants,
the other side can no longer be tolerated, and no price is too high to defeat them.
These tensions are poisoning personal relationships, consuming our politics and
putting our democracy in peril.
Once a country has become tribalized, debates about contested issues from
immigration and trade to economic management, climate change and national security,
become shaped by larger tribal identities. Policy debate gives way to tribal conflicts.
Polarization and tribalism are self-reinforcing and will likely continue to accelerate.
The work of rebuilding our fragmented society needs to start now. It extends from
re-connecting people across the lines of division in local communities all the way to
building a renewed sense of national identity: a bigger story of us."
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