A book by Bruce Bueno De Mesquita< read all 1 reviews
The Predictioneer’s Game is a very readable treatise on game theory. Game theory is basically a mathematical model that predicts human behavior (and that of nations) with one simple underlying theory: humans will always do what is in their best interest, usually defined as economic interest.
As a result, the actions of people and nations can often be predicted using mathematical models, and are often highly accurate. Of course your assumptions and data have to be correct, but for the most part the author demonstrates how his version of game theory has worked extremely well in his career.
The best aspect of this book is it is highly readable, and believe it or not, the author has a great sense of humor. He also uses plenty of real life and understandable examples. Ever see the cop shows were they drag two suspects into separate rooms and grill them and tell both person is flipping on them? The best outcome for both is to keep their mouth shut and they both get off scot free. The problem is they do not know what the other is doing so if they assume the other is pointing the finger at them, they better be pointing a finger right back. In that case, maybe they both get punished, but possibly not as severely. But if they keep their trap shut and hope the other person doesn’t squeal but they do, then they are getting sent up the river for a long time while their partner in crime is getting off with a lighter punishment. Thus the dilemma and why the tactic works so well. If you calculate what’s the best thing to do in that situation, you are going to sing like a canary and blame it all on the other person.
This book is full of readable, real examples like this that discuss how to predict human behavior and sometimes get the best outcome, or at least the outcome one is looking for.
The drawback is, other than the great example of how to buy a car at the beginning of the book, there is little practical, everyday application to the approach.
Otherwise, this is worthwhile book for people who want to understand how future behaviors can be predicted and how game theory is used not just in international relations, but in a variety of applications.
What did you think of this review?
Revealing the origins of game theory and the advances made by John Nash, the Nobel Prize-winning scientist perhaps best known from A Beautiful Mind, Bueno de Mesquita details the controversial and cold-eyed system of calculation that he has since created, one that allows individuals to think strategically about what their opponents want, how much they want it, and how they might react to every move. From there, Bueno de Mesquita games such events as the North Korean disarmament talks and the Middle East peace process and recalls, among other cases, how he correctly predicted which corporate clients of the Arthur Andersen accounting firm were most likely engaged in fraudulent activity (hint: one of them started with an E). And looking as ever to the future, Bueno de Mesquita also demonstrates how game theory can provide successful strategies to combat both global warming...