Game theory
Business
15 rabbit holes · 8 people exploring
Common starting questions
- Does adding lanes reduce traffic?
- Why do auction winners so often regret it?
- Would anyone really bid more than a dollar for a dollar?
- Is the tragedy of the commons actually inevitable?
- If everyone picks a number and the winner is closest to 2/3 of the average, what should you pick?
Rabbit holes
- from Deep Blue to AlphaZero to neural Stockfish
Kofi Asante · 6 sources
- Induced demand: why adding lanes doesn't fix traffic
Rosa Delacroix · 4 sources
- the prisoner's dilemma tournament that tit for tat won twice
Axelrod invited people to submit programs that would play a repeated prisoner's dilemma against each other. The winner was the simplest: cooperate first, then copy whatever the other player did last. He ran it again with way more entries and it won again.
Wren Abernathy · 7 sources
- pirate ships were weirdly democratic
Elected captains who could be voted out, written constitutions, fixed shares of loot, compensation for injuries. Leeson's argument is that it was just the most efficient way to run a criminal enterprise.
Clara Novak · 5 sources
- the bar scene in A Beautiful Mind isn't a Nash equilibrium
In the movie the guys all agree to ignore the blonde so nobody blocks anyone. But if everyone else is ignoring her, your best move is to go talk to her, so it's not an equilibrium at all.
Wren Abernathy · 6 sources
- if you won the auction you probably overpaid
Kwame Darko · 5 sources
- the algorithm that matches doctors to hospitals also matches kidneys
The 1962 paper is short and readable. The surprising part is that hospitals had already been running basically the same algorithm for a decade without anyone calling it a theorem.
Wren Abernathy · 6 sources
- the weirdest split or steal ever
One contestant flat-out announces he's going to steal, and promises to share the money after the show. The other guy is furious. Then they open the balls. Better game theory lesson than any lecture I sat through.
Tomás Rinaldi · 5 sources
- Goethe ran a second-price auction 160 years before it had a name
In a sealed-bid auction where the winner pays the second-highest bid, your best move is to bid exactly what it's worth to you. Goethe apparently used a version of this in 1797 to sell a manuscript to a publisher, with his minimum price sealed in an envelope.
Tomás Rinaldi · 6 sources
- people will pay $2 for a dollar
Auction off a dollar. The highest bid wins it, but the second-highest bidder pays too. Bidding goes past a dollar almost every time, because at every step quitting looks worse than one more bid.
Milan Popović · 6 sources
- Elinor Ostrom and the tragedy of the commons that wasn't
Tomás Rinaldi · 6 sources
- the FCC sells airwaves with auctions designed by game theorists
Spectrum used to be handed out through hearings and then lotteries. Coase suggested selling it in 1959 and was reportedly asked if he was joking. The US finally started auctioning it in 1994, with many rounds of bidding on all the licenses at once, because licenses are worth more in combinations.
Tomás Rinaldi · 6 sources
- guess 2/3 of the average
Wren Abernathy · 5 sources
- Schelling points: why everyone picks Grand Central at noon
Tomás Rinaldi · 6 sources
- Byzantine generals, Paxos, and Raft
Samuel Okafor · 5 sources