Tuesday, July 20, 2010

The Strategy of Game Theory

Game Theory is an interesting branch of mathematician wherein mathematicians create simulations that pit different strategies against each other. Game Theory as a discipline was popularized by John von Neumann and John Nash in the 1950s.

Wikipedia traces the history to James Waldegrave in 1713. I found this odd as people have been talking about the interaction of strategies since antiquity.

It turns out that the strategies of free market economics and a Constitutionally limited government of the United States fair quite well for society as a whole. The ideologies of Hegel and Marx work well for people who want to consolidate power for the benefit of a ruling elite.

It is extremely interesting to see how different game strategies play out in simulations. People can learn a lot from game theory.

Unfortunately, big problems arise when people start trying to apply game theory directly to economic or political problems. When people try to apply strategies from game theory directly to the problems the day, they inadvertently end up adopting the principles of game theory as the underlying foundation of society. The underlying principles of game theory end up leading many to adopt the destructive view that life is a game where one must dominate or perish.

Game theory has been extremely popular for a full half century. Ideas from game theory appear to be at the heart of many of the destructive ideas in Wall Street and DC.

Although it is valuable to test the principles at the foundation of our society with game theory, it is dangerous to make game theory itself the foundation of a civilization.

For a society to thrive, the principles at the base of society need to be stronger than that of a simply strategy used in a mathematical model.

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