Games and Fan: A Game Text Theory - Essay Example

GPP Final Project. Game theory involves a study of a manner in which the interaction strategies in economic agents give out outcomes in regard to the preferences or rather utilities of the given agents. This implies that game theory involves mathematical conflict models and cooperation between rational intelligence makers of decision. This is a theory that is used in political science, economics, logic, biology, and psychology. It is also known as the social situations theory as defined by different type of economists. The game theory is not only relevant to games such as a bridge or poker but also vital to the interaction of different individuals. The theory is divided into two key branches. These include noncooperative and cooperative game theories (Binmore 27). A cooperative theory is one in which the players have the potential of coming up with commitments that are binding. Noncooperative theory involves the interaction of intelligence individuals with one another in an attempt to achieve their set objectives and goals. Apart from this, the game theory of economies involves other. These includes general equilibrium theory, decision theory, and design mechanism theory. This paper explores the understanding of the basic game theory concepts and understanding of the game theory analysis. Game Theory Application. The decision theory involves a situation known as a one person game against the nature. The theory focuses on preference and belief formation. One form of decision theory that is mostly used shows out that risky alternative preference could be described by maximizing the value that is expected of utility value function (Binmore 30). Utility, in this case, may depend on different types of things like the money income. The theory of probability is normally used so as to represent the outcome uncertainty and the law of Bayes are used frequently in modeling the manner in which information that is new is utilized in the revision of beliefs. This theory in normally used in the analysis of decision, where it displays the best way of acquiring information before one comes up with a decision. General equilibrium represents a game theory branch, which is specialized, and deals with not only the production but also the trade. This theory is characterized by a large number of individual producers and consumers. It is mostly used in the analysis of microeconomics policies of the broad base like tax or monetary policy. This implies that, the theory is used in finance especially in the analysis of stock markets, studying exchange rates, interest and different prices. The political economy has become a mixture of game theory and equilibrium theory. In this respect, the private economy sector is affected by the theory of general equilibrium. The behavior of voting and the government incentive is analyzed by utility of the game theory. In this theory, the issues that are normally studied include the trade policy, tax policy, and the international agreement of trade like that of the European Union. In addition to this, mechanism design is a theory which is slightly different from the game theory. This is so because it inquires about the consequences of various rule types whereas game theory assumes the game rules as they have been outlined. However, mechanism design is dependent on the game theory (Binmore 41). The different questions that have been addressed by this theory include the compensation design and the agreement of wedges that spread risks effectively while ensuring that the incentives are maintained, and the auction design maximize so as to achieve the other objectives. Game theory involves a mathematically applied method thus used in different animal and human behaviors. This theory was developed in the field of economics so as to explain out the behaviors of economists like firm behaviors, consumers, and markets. The application of the game theory into the field of social sciences made the application of the game theory to expand and be applied to psychology, sociology, and political behaviors. The game theory, therefore, can be applied in a number of disciplines. One example of the application of this theory is in an instructive example in which the game is described by highlighting the players who take part in the game. To each player, the alternative choices that are available for each player are listed down. For a game that involves two players, the first player actions would make up the row and the second player actions would form the columns for the given matrix. The matrix entities are made up of about two numbers, which have a, representation of the utility or the payoff to the second and the first player. One game that is well known is referred to as the prisoner’s game dilemma. In this respect, two players play a partner within a crime in which the police has captured them. The suspects are placed inside the cell and given the chance to make a confession concerning the crime. This game could be represented by a payoffs matrix in table 1. Table 1: Payoffs matrix.   Confess Not confess Not confess -4,10. 5,5. Confess 1,1. 10,-4. In this game, higher numbers have more utility than the lower numbers. If no suspect makes a confession, then they have to be released free thus splitting the proceedings for their crime. This is represented by about five utility units for the suspects. On the other hand, if only one prisoner makes a confession while the other fails to confess, then the prisoner who makes the confession gives a testimony concerning the other in exchange for freedom thus obtains the whole ten utility units which is a representation of a high utility. The prisoner who failed to confess is taken to the prison thus obtaining 4 utility units which is a representation of a low utility. Whenever all the prisoners make a confession, they would be given a term that is reduced, and convicted. This means that, each of them would be given one utility unit which is a representation of a low unit utility. In this regard, this would be preferably better than a situation when one prisoner makes a confession, but not as pleasant as the situation of going free. This is quite a fascinating theory of a game for many reasons. It represents different situations that may be considered to be extremely beneficial. For instance, in the place of not confess and confess, the labeling could be strategies of behaving selfishly and strategies that lead to a common good. This would attract different circumstances that have been described by economists as problems of public goods. This game could also have a description of two alternative firms that are in competition, in a specific market. In this respect, the labels could involve the strategies of setting low price and strategies of setting a high price instead of confess and not confess as in the given matrix. In reality, it is always best for all the firms to set prices that are high. However, each individual firm should set prices that are low, even though the opposition may set out a price that is high. The next characteristic of this game involves displaying the behavior of an individual. Even though, a suspect may have a different belief concerning whatever their partner could do, the best thing for them to do has always been to make a confession. Whenever the partner in a different cell fails to confess, it would be possible for one to obtain 10 instead of five. If the other partner makes a confession, an individual may have a possibility of getting a 0ne instead is a negative 4 utility unit. Additionally, the individual pursuit sensitive behavior will make the players get only one utility unit, which is less than the five units that they could have obtained if they failed to confess. The conflict in between the common good and the individual goal pursuit is at the epicenter of different types of theoretical game problems. The next characteristic for this game involves the changing in a significant way whenever the game goes through a repetition or rather whenever the players have an interaction with other players in the future. When the game is done with, the suspects would be taken out of jail. The suspects would take part in some form of crime thus making the game start again. This means that, within the initial period, the players could have a thought of not confessing since if they do this, their partners may fail to make a confession in the following game. In the real sense, a conclusion of this kind is invalid because during the second game all the players would have to make a confession despite whatever occurred during the first game. On the other hand, a repetition would give room for a reward or a punishment for their behavior especially in the future. The game theorists have given out different theories that explain the intuition that whenever the game goes through a repetition, the suspects are expected to have ultimate cooperation. Another application of the game theory is in the field of political science. In this respect game, theory focuses on the areas that overlap such as political economy, war bargaining, public choice, positive theory of politics, fair division, and social theory choice. Research has shown out that, in all these areas, game theory players take the place of voters, politicians, states, and interests of individual group. In the model of Downsian, many politicians converge to preferred ideologies on a policy that is one dimensional (Binmore 37). This model shows out that different politicians or rather political candidates have a tendency of converging to preferred ideologies by the median voters whenever voters are informed fully and that voters remain to be ignorant rationally thus allowing the divergence of various candidates. A pleasant game theory explanation for peace that is democratic involves an open, democratic debate and public in which reliable and clear information regarding their intention is sent to other, different states. In this respect, it would be challenging to realize the intentions of leaders who are nondemocratic, the effect of concession, and whether the promises would be maintained. This implies that, there would be unwillingness and mistrust in making concessions whenever at least one party that is in dispute fails to be democratic. Apart from this, game theory is also applied in logic and computer science. Different types of logical theories have a game semantics basis (Binmore 46). Scientists have made use of games to make models of computations that are interactive. Game theory has a crucial role in the online algorithms. Specifically, the K-server problem is a technique for giving a proof of lower bounds in the complex computational of algorithms that are randomized. The internet emergence has precipitated the coming up of algorithms used to find out the game equilibrium, computational auctions, markets, peer-to-peer systems, information markets, and security. In philosophy, game theory gives out a common knowledge analysis and coordinating game play analysis. The theory gives challenge to the philosophers to have a thought of epistemology interaction. It gives out the meaning of many individuals having collective belief; effects of the gained knowledge for outcomes that are social based which arise from interactions of agents. There are different types of games this include: Cooperative and non cooperative games; asymmetric and symmetric games; non-zero-sum and zero-sum games; sequential and simultaneous games; imperfect and perfect information games; combinatorial games; infinitely long games; continuous and discrete games; differential games; population and many-player games; stochastic outcomes, and meta-games among others. The games that have been put in the study by the game theory includes bankruptcy, networks battle, gate barbarians, conscription, caveat emptor, coordination, evasion and escape, hawk versus dove, mutual assured destruction, market niche, majority rule, frog calling mates, mutual defence, prisoner’s dilemma, tragedy of common, ultimatum, small business subsidization, and coordination in video system. Game Theory Analysis. The game theory can be analyzed by making an assessment of one statement that if everyone were a better individual, the world could have been a place that is better. This could appear to be true since logically this takes into consideration the composition fallacy. Even if, the statement could apply to individual people, it may fail to apply to a group of people. Game theory, therefore, provides an understanding to the meaning of being a better people and the meaning of the world as a better place thus giving a room for proving and disapproving this statement (Binmore 49). This statement is false as represented by the prisoner’s Dilemma variation. If we start with the prisoner’s Dilemma variation game, one may refer to this as the pride game. Proud Not confess Confess Proud 4.0, 4.0 5.4, 3.6 1.2, 0.0 Not confess 3.6, 5.4 5.0, 5.0 -4.0, 10.0 Confess 0.0, 1.2 10.0, -4.0 1.0, 1.0 This is a game similar to the prisoner’s dilemma game with the addition of strategies that are new like being proud. A person who is proud will always fail to give a confession unless in a retaliation against an opponent who is like a rat. This means that if one stands to be proud and the partner makes a confession, he or she can get 1.2, since they both made a confession and he could tolerate the humiliation. The partner would get a zero since he would be humiliated before his partner’s pride. Whenever both players are proud, none of them makes a confession. The players would get a four since their pride is a result of humiliation rather than a five which is a value considered to be slightly high that the players could get if they failed to confess. In this respect, the first player could obtain 3.6 utility of units instead of 4, and the second player gets 5.4 due to his price on the first player’s humiliations. The prisoner’s Dilemma original equilibrium of confession fails to be the pride game’s equilibrium since if one player thinks that the second player would confess, and then he may prefer to remain proud in humiliation of the second player instead of making a confession. The idea of an individual being a better person could be taken to imply that humans are generous or altruistic to others. Particularly one can imagine that since he is generous and care for other individuals, should place values for utility that he received in the game. In this regard, it is not for equilibrium for one to proud. All the players get a chance of going through each other’s pride. The key role of the game theory is always to understand the reason why people considered as responsible, may change the world to be a place considered as worse by getting to know the equilibrium balance. In this regard, whenever all individuals become caring with nothing else happening then the world would be better. On the other hand, if everyone becomes caring then everyone would have a wish of changing their behavior. When this is directed into the daily life, when everyone was altruistic, it would be prudent for everyone to forget and forgive the behavior that is considered to be criminal. This means that the criminal behavior is extremely complicated (Binmore 54). Criminals who are altruistic would choose to be associated with minimum crimes. Since a crime should not be severely punished, more individuals would incline to taking part in crimes. More crimes would certainly make the world be the worst place. Game theory is also applied in personal relationships. For example, two individuals may attempt to approach each other at a conference or a party. Whenever one of them asks out the other, they would take the invitation. This is even to the fact that, after the talk of the two individuals, they would disperse to different ways. This is so since it has always been beneficial in different situations that any individual would be patient until the other individual makes the initial move. This would make them avoid rejection. When all the individuals in the party hold to this mindset, there will be an irrational outcome of each person coming out of the party alone (Binmore 60). In this case, the most beneficial option for everyone would be that all individuals present in the party ask out all the individuals that they would prefer. This would make each individual get a pair that is his best match. However, this would require the cooperation of all individuals in the party, which could fail to happen in reality thus making the people leave the party alone or rather without their best match. This is one of the fundamental social flaw relationships in the current world. In the context of psychology, during conflict compromise comes about due to an execution delay denial or avoidance (Binmore 74). The connection between the game theory and the neoclassical economics is always considered to be irrational. This is so because the economics of neoclassical relies on the assumption that humans are ration in their choices. This assumption is that each individual would try to maximize her profits, rewards, incomes or benefits when he goes through the daily activities. This hypothesis plays a double purpose role during the study of allocating resources by narrowing the possibility range. It also gives out an evaluation criteria of the economic system efficiency. Whenever a system leads to a reward reduction which comes to some individuals with no compensation rewards, then something could have gone amiss. A clear example of this hypothesis is pollution, fisheries overexploitation, and inadequacy of resources. In economics that are neoclassical, individuals who are rational goes through specialized institutional systems like money, property right, and markets that are highly competitive. These are some of options that individuals may take in the maximization of rewards. The key implication of this is that an individual would fail to consider the interaction with other people. He would only consider his own situation within the market leading to problems, and limit the game theory. The goal of game theory is to solve problems of this kind, provide the economic theory and behavior strategies whenever individuals have a direct interaction instead of through a market. Game theory is a metaphor representing serious human interactions within the society. The theory gives solutions to serious interactions through the use of a game metaphor. In this case, choices of the participants are always a strategy choice. The outcome for any interaction relies on the type of strategies that have been chosen by the subjects. Work cited. Binmore, Kennedy. Games and fan: A game text theory. New York: Simon and Schuster press.2004. Read More