The Game Theory of MAD

http://www.news24.com/Columnists/ClemSunter/Nuclear-game-theory-Time-for-a-review-20140506

Mutually assured destruction, ironically, has become the keystone factor of world peace. Jon Von Neumann, a US Hungarian mathematician coined the term mutually assured destruction, or MAD, as a way to describe the arms race that is nuclear warfare. Simply put, neither of two parties will be the first to strike with nuclear weapons knowing full well that their opponent has a second strike capability. In this sense, neither party will become an aggressor when the costs are more than the gains (the costs being nuclear warfare and fallout domestically.) Peace this way is achieved not through diplomacy but instead the desire to minimize losses. And ironically enough, choosing NOT to take part in war is most beneficial to every party in a nuclear game.
In the article, author Clem Sunter discusses the state of the nuclear game now in the 21st century. He compares this game to chess, in which each players nuclear policies are dictated by other players decisions. Funny enough, MAD dictates that no country will use a nuclear weapon while other countries own them as well, but even so the best response to the threat of nuclear warfare is to be prepared with nuclear weapons (to ensure the threat of MAD). The notorious alleged decommissioning (but not destruction) of 17,000 nuclear warheads can also be seen as a game move to be underestimated by opponents; “Secrecy means outsiders have no idea of the latest technical advances in attack or defence systems.”  By recalling the 1996 Russian “Tsar Bomber”, the worlds most powerful use of a nuclear weapon before or since, Sunter recognizes whether or not MAD is still applicable today. When considering how the damage capacity of nuclear bombs have increased 1000x over, is it possible that someone can overpower the checks and balances of MAD? Do terrorists fear MAD or encourage it? The nuclear game is definitely changing globally and the only combatant to the rise of violence is the spread of knowledge.

The Game Theory That’s Destroying the Video Game Industry

The video game industry is a highly competitive field where the few giant firms do battle and the little companies try to break into the arena once in a while. A failure of one video game behemoth is the Nintendo Wii U, Nintendo’s newest console, which has become the shining example of the recent failure of the video gaming world. More specifically, it has become an example where mostly all players largely shun the product. Considering the record breaking sales previous console the Wii had, could Nintendo have predicted this happening? According to The Game Theorists YouTube channel, Nintendo was trying to restless gaming fans that pined over new and innovated games, but ended up going against the grain, so to speak; modern gamers actually do not want new games, contrary to what gamers themselves say.

Nintendo, when developing its Wii U console, considered the amazing amount of criticism from the gaming community that begged for new games and new gaming methods; sick of the same re-hashed titles and sequels, gamers wanted innovation. Many of gaming articles, even today, exclaim this desire from gamers and praise the few gems that find their way into the public’s eye (Minecraft, Stanley’s Parable, etc.) But when one looks at the sales records of these new games, they fail to compare to the records that recycled and updated games hold. Games like Call of Duty and Assassins Creed are just a couple of the mega-franchise games that are released almost yearly and consistently outsell their predecessors. These games sell units in the millions while the Wii U and more innovative games can barely get off the shelves. Because of this, The Game Theorists claim that gamers are all “liars, pretty little liars…. “, furthering that “(gamers) dont know what they want… they take to Twitter and social media to gripe about the same games being made over and over but continue to buy those very same games!” It’s this disconnect that is what many think is killing Nintendo. While they have always been about the true fun of games, Nintendo is sorely misunderstanding the game that is being played in the multi-billion dollar industry they used to hold a lions share of. While Nintendo is trying to understand their own fan base and reach out to casual and alternative gamers, they aren’t playing the best strategy in todays sort of market. Nintendo infamously rejects many franchise brands that are not Nintendo originals, rather to focus on their in house products. This choice has left consumers to purchase other consoles from different gaming firms that offer the franchise games they are used to playing and purchasing every year. While gamers might not understand how to maximize their utility, Nintendo is most definitely not understanding the current industry they are slowly losing out on.

Why Cheating is Good for the Cheated

http://www.palatinate.org.uk/?p=45896

According to behavioral economics, most people are more than willing to punish third-party cheaters, as it as seen just. But according to Jessica Medhurst in her article “Why Cheating is good for the cheated”, it is seen that cheating has its own economic benefits but in interesting ways. Medhurst claims that in scenarios like Live Nation and scalp bots (computer programs that immediately buy out tickets), the interests of both the cheaters and firm can be in alignment. While these situations might create customer frustration, it creates instant economic benefit for the firm to turn around as investment; assuredly selling a portion of tickets allow LiveNation and TicketMaster to keep costs low and prices down. Consumer backlash is hard to avoid, but it is an economic cost to serve an economic benefit. Medhurst goes on to recount how Yahoo! CEO Scott Thompson was found to have a fraud Computer Science degree on his resume. she explains that “ this is likely because people understand that careers can be made on opportunities, and to a large degree the amount and quality of opportunities one arrives at is down to luck, or better explained as path dependency.” In this light, a cheater is applying game theory to justify their cheating, that the  structure of the game reveals the best strategy as cheating. This sort of game does not consider moral implications necessarily, but what is ethical when everyone is doing the same thing, as Medhurt further explains: “This is not to say that the exaggerators, or the ‘cheaters’ do not deserve to get the job or university place in question, but rather, they ‘cheat’ because they have to in order to get something that they know they deserve.” 

Though Medhurst’s explanation, cheating is a necessary evil when the game played is competitive enough to require it. Although some situations of cheating create absolute economic bads, some “cheating” is more so a form of bluffing that can create economic goods if the risk creates returns. While certainly cheating is never encouraged, it may equally be an unwritten rule that most competitive players abide by. More importantly, if the system is run by cheaters, there is no cheating. 

The Networks of Organized Crime

ttp://www.technologyreview.com/view/525826/economic-network-of-organized-crime-revealed/

 

Network theory has helped to expand the potential for economics as a tool to analyze and asses our real world. With given information, an economist can map and graph the structure, mobility flow, and influence of a network. In Italy, network theory has recently become a weapon against organized crime. Stefano Gurciullo of University College London has been collecting information in the business sector of Sicily, Italy; a town renown for the close association between business and the mafia. Network theory reveals the roles of each firm in the network, most importantly the individual power of a firm. With the information on the whole business sector, coupled with evidence supplied by the Italian Anit-mafia police, Gurciullo has been able to reveal the centralized corruption within the construction industry. The police evidence set the foundation for a claim against a group of construction firms, but the network mapping by Gurciullo illustrates the roles each firm played in the corrupt sub-network. “Sectors penetrated by organized crime show a higher than average Index of centrality and concentration, What’s more, the specific firms involved in organized crime tend to have a special place in the network.” In a network like this, success hinges on the communication and capability between firms; tracing the power flow of the network is key to understanding the relationship that exists within the network. A highly connective node is normally the most influential node in terms of centrality and access to scope; “At least one of the firms experiencing Mafioso infiltration possesses the highest nodal degree in the sector’s sub-network”, making evident that even corrupt firms need to be connected. 

 

There are limitations to this sort of research, for instance many corrupted firms may exist outside of the construction industry, creating a multi-industry network to large to make sense of. Another is that the research done on organized crime is limited, creating a mystery as to what patterns to look for in identifying corruption in a network. But for now, the current research by Gurciullo is already revealing parts to the puzzle of organized crime in Sicily. 

Marriage and the Art of Game Theory

When applied correctly, game theory can actually save you marriage – http://www.thedailybeast.com/articles/2012/06/13/marriage-and-the-art-of-game-theory.html
Or at least that’s what Daily Beast editor Paula Szuchman claims in her book It’s Not You, It’s the Dishes. In her book, Szuchman rationalizes how marriage is a game involving two players whom could make use of some basic economic theories to achieve a balanced relationship. “To cooperate or not to cooperate? To budge or stand your ground? To say ‘OK, fine’ or ‘not a chance’? These are questions married people find themselves asking with surprising frequency,” Szuchman explains. “The great thing about game theory is that it tackles situations in which you can’t have it all, but you’d like to at least achieve the best results possible.” In this context, Economics could be a useful tool in forging equilibrium between two spouses.

 

In a relationship, compromise is often the glue that holds everything together. According to popular game theory, the best choices for all parties are often a compromise on all parts, even when its not the maximum reward possible. Theoretically, game theory is an applicable tool towards building a successful relationship, but is there something unique to relationships that make them unpredictable and unable to be replicated? In most usages of game theory, the value of expected rewards are more quantitative when what determines a “good relationship” is quite subjective and abstract. Even more so, people probably act less rational in their relationships because of the passion and emotional ties that often control people. Game theory can indeed be applied to solve challenges like chores and scheduling to ensure an efficient system within the relationship, but otherwise preferences between people are often not as formulaic as most other economic scenarios.

 

But in theory, married couples seeking efficiency could look to game theory to help them achieve successful compromises where both spouses feel better off. This is of course given that each person values the same things equally. Whether or not this helps maintain a marriage or just make it streamlined is up for the individual to find out.

link: http://www.thedailybeast.com/articles/2012/06/13/marriage-and-the-art-of-game-theory.html