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Basics of Game Theory 882 Views


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Description:

Okay, so this probably isn't going to help you master Pokemon Go, but game theory can be applied to all sorts of situations. Even stomping your older brother at Monopoly. His greedy reign as champion will be over soon. Soon...

Language:
English Language
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Transcript

00:06

By now, you're probably having recurring nightmares about rolling dice...

00:10

and flipping coins. But what if those dice and coins had minds of their own?

00:14

Well, in some casinos, maybe they do. But you have a mind of your...

00:18

own, so when it comes to making decisions and anticipating the decisions of others,

00:22

you can't just plug yourself into a calculator to coem up with a set of...

00:26

odds. Instead, you need to have a way to analyze what others want, how...

00:30

they're probably gonna attempt to get it, and what your optimal action...

00:34

is to make sure you get what you want instead. Because...

00:38

who cares about the other guy, really? Right. So...

00:42

say you and your friend go into a grocery store, and you both need to pick up...

00:46

milk, eggs, and twinkies. You decide to make it interesting. Whoever's the...

00:50

last one out of the store is a rotten egg, and has to eat one. Well, there's...

00:54

some things to consider here. The quickest path is twinkies first, eggs,

00:58

then milk, then to checkout. But this grocery store runs out of milk...

01:02

all the time, and both you and your friend know that, so maybe the best bet is to grab the milk...

01:06

first so your friend doesn't get the last one. Or is that his plan and you...

01:10

should just stick with option A? Well, the method behind making this sort of decision is...

01:14

called Game Theory, and it's the branch of math that deals with picking...

01:18

outcomes when there are multiple factors at play, each with a different...

01:22

goal. Like, when you and your friends are playing monopoly, or flag football.

01:26

Or, well, any sort of game. Which is where it gets the name "Game Theory."

01:30

Totally didn't see that coming, right? Game Theory wouldn't be of much use...

01:34

if all it did was help you win at Risk. Fortunately, there are some much...

01:38

bigger-scale games out there, like economics, psychology, politics.

01:42

You may not be placing a pawn on "Start," and rolling a die,

01:46

but you are trying to win something. And Game Theory can help you do it,

01:50

by telling you the ideal moves to make that will benefit you and hurt others.

01:54

That's pretty cutthroat, but you really hate to lose, right? Let's say...

01:58

you and your friend Larry are back-to-back, and playing a game in which you have...

02:02

to guess whether Larry is smiling or frowning. Well,

02:06

if you guess that he's smiling and he is, you get five bucks. If you guess that he's smiling...

02:10

when he's actually frowning, you have to pay him a dollar. If you guess that Larry's...

02:14

frowning, when he's actually smiling, you lose four dollars. And if he's frowning...

02:19

and you guess correctly, he'll give you seven dollars.

02:23

Got all that straight? Well, since there's no way to know whether Larry's smiling or frowning,

02:27

you'll want to figure out which guesses earn you the most money. Game Theory...

02:31

allows us to set up a chart to organize all these outcomes, which will help...

02:35

us develop the best guessing strategy for you, and the best smiling...

02:39

or frowning strategy for Larry. As you can see, Game Theory, despite the name, is...

02:43

still math. It uses all kinds of numbers and equations and matrices...

02:47

to show the strategies that should be used to maximize our advantage...

02:51

and minimize our opponent's. Aww, and you thought we were just gonna have fun.

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