Game theory : How game theory will solve the problems of the Euro Bloc and stop Iranian nukes

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A collection of fables and proverbs

Game theory fascinates me. It addresses the roots of human thought in strategic situations. However, the use of concepts from natural language, together with the use of ostensibly “scientific” tools,  tempt people to turn to game theory for answers to questions such as: How should a system of justice be built? Should a state maintain a system of nuclear deterrence? Which coalition should be formed in a parliamentary regime? Nearly every book on game theory begins with the sentence: “Game theory is relevant to …” and is followed by an endless list of fields, such as nuclear strategy, financial markets, the world of butterflies and flowers, and intimate situations between men and women. Articles citing game theory as a source for resolving the world’s problems are frequently published in the daily press. But after nearly forty years of engaging in this field, I have yet to find even a single application of game theory in my daily life.

Some of the arguments for using game theory do nothing more than attach labels to real-life situations. For example, some contend that the Euro Bloc crisis is like the games called Prisoner’s Dilemma, Chicken or Diner’s Dilemma. The crisis indeed includes characteristics that are reminiscent of each of these situations. But such statements include nothing more profound than saying that the euro crisis is like a Greek tragedy. While the comparison to a Greek tragedy is seen as an emotional statement by detached intellectuals, the assignment of a label from the vocabulary of game theory is, for some reason, accepted as a scientific truth.

In my view, game theory is a collection of fables and proverbs. Implementing a model from game theory is just as likely as implementing a fable. A good fable enables us to see a situation in life from a new angle and perhaps influence our action or judgment one day. But it would be absurd to say that “The Emperor’s New Clothes” predicts the path of Berlusconi …

More “useful” than any of its models

There is a similarity between the practical status of game theory and that of logic. It is doubtful whether a logician would be of help to a judge who is trying to ascertain the truth. I would not recommend replacing judges with philosophers or mathematicians. Similarly, I would not appoint a game theorist to be a strategic advisor.

The search for the practical meaning of game theory derives from the perception that academic teaching and research directly benefit society. This is not my worldview. Research universities, particularly in the fields of the humanities and social sciences, are part of a cultural fabric. Culture is gauged by how interesting and challenging it is, and not by the benefit it brings. I believe that game theory is part of the culture that ponders the way we think. This is an ideal that can be achieved in many ways – literature, art, brain research and yes, game theory too. If someone also finds a practical use for game theory, that would be great. But in my view, universities are supposed to be “God’s little acre,” where society fosters what is interesting, intriguing, aesthetic and intellectually challenging, and not necessarily what is directly beneficial.

And incidentally, during the past decade, the book and film A Beautiful Mind contributed to the popularity of game theory, even though they (fortunately) did not purport to explain it. (A Beautiful Mind tells the story of John Nash, for whom the central concept of game theory – Nash equilibrium – is named.) However, the author Sylvia Nasar and the director Ron Howard succeeded in another mission: They turned the public’s attention to the inferior status of the mentally ill and gave hope to those who are struggling with mental illness. In this way, they made game theory more “useful” than any of its models.

Remember the title of the article? I tricked you. I was not sure that the title “Why game theory doesn’t solve the problems of the Euro Bloc and won’t stop Iranian nukes” would entice you to read the article, so I acted strategically and attached a misleading title. I did not get the idea for doing so from game theory.

Ariel Rubinstein

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