# Archives for game theory

### What Do King Solomon and David Lee Roth Have in Common? A New Freakonomics Radio Podcast

This week’s episode is called “What Do King Solomon and David Lee Roth Have in Common?” (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)

The gist? It isn’t easy to separate the guilty from the innocent — but a clever bit of game theory can help. The goal, as Steve Levitt puts it, is “to get the bad guys to come forward and tell you who they are.” It’s a trick that Levitt and Stephen Dubner , in their new book Think Like a Freak, call “teaching your garden to weed itself.”

In the episode you’ll hear what David Lee Roth and King Solomon have in common. Among the possibilities: Read More »

### A Game Theorist on Jeopardy

A game-theory nerd named Arthur Chu has been kicking butt on Jeopardy. From The Atlantic Wire:

Due to Arthur’s newfangled shenanigans, Wednesday’s Jeopardy ended in a rare tie. In Final Jeopardy, the leading contestant typically wagers \$1 more than double of the 2nd place contestant. If both answer correctly, then the person in the lead wins by that extra buck. But Arthur did not add the \$1, wagering enough so that if he and Carolyn both answered correctly, they would tie. And that’s exactly what happened, as both moved on to the next round. He made the same move on Tuesday, as well, though he was the only contestant to answer correctly. “Interesting wager,” host Alex Trebek condescended, after the tie.

While it seems strange, it’s actually the correct move to make, says The Final Wager blog, the brainchild of former Jeopardy winner Keith Williams that breaks down the proper mathematical wagering. Basically, the whole point of the game is to move on to the next round. Whether or not someone joins you is largely irrelevant. In addition, there’s a certain mind-game tactic that can make the trailing contestant bet an irrational number. While the numbers stand behind these ideas, Tuesday’s tie-targeting move was the first to do so all season, Williams said. “It’s really cool to see this happen,” he said. In fact, Arthur admitted to Williams that he got the idea from his videos.

### Fantasy Football For Econ Nerds

Christian Zimmerman of the Federal Reserve Bank of St. Louis has created the ultimate game for econ nerds: the RePEc Fantasy Economic league.  “The IDEAS fantasy league allows you to pretend you are at the helm of an economics department,” explains the league’s website. “Your goal is to improve its ranking relative to other departments in the league. You can do this by trading economists and by choosing which ones to activate in your roster.”  A Business Insider article explores optimal strategy:

“In real life when you build a department, you want to hire people that are prospects,” Zimmermann said. “In this fantasy league, it’s just the same. You really want to acquire people that are going to be doing well in the next 10 years.”

In other words, you want the sleeper picks. Ask yourself: Who is going to cost 1 util and then put out some game-changing working papers?

Edwards agrees that you have to look for the rising stars. “It’s a Moneyball type strategy,” he said. “Looking for undervalued economists and trying to invest, or trying to divest in overvalued economists.”

### Do Game-Theory-Playing Traffic Lights Reduce Congestion?

That is what the headline of this fascinating article says. Here is a quote from the news report:

In lay language,” [Samah] El-Tantawy said in a U of T news release, “the [traffic lights] act as a team of players cooperating to win a game — much like players in a soccer match, where each player endeavors to score, but at the same time considers the ultimate goal of the entire team which is winning the match.

According to the article, travel times were reduced by 26 percent, which is fantastic, and which is what matters.

This doesn’t, however, seem to have much to do with game theory. Game theory is about one of two things: strategic behavior or finding sustainable equilbria. But the traffic lights don’t care about their own private utility.  There is no sense in which they are actors at all, as traffic lights just do what you tell them to do.  In economic terms, there is a central planner who sets the rules which the traffic lights obey. This new scheme provides a new and better set of rules (which, again, I emphasize is great), but I don’t think game theory should get the credit!

(Related: see our “Jane Austen, Game Theorist” podcast.)

### Should We Stop Children From Learning to Cheat?

A Freakonomics Radio listener named Sandra Elsen writes:

Today, I went to my son’s kindergarten.  He attends the local International School (what the Realtor described as the “Hippy-Dippy” school, lol), in a semi-rural area, just outside of the city in a middle-class town.

There, I was asked to help them learn a new game. The concept was simple:  a six-sided block had three 1’s and three 2’s marked on each side.  They had to trace the number that was rolled on their worksheet.  Roll, trace.  Once five of one number was achieved, either the firetruck or the firefighter (pictured at the bottom of the sheet) “won.”  The teacher indicated it was a “race” to see which picture would win.

### Trust Among Thieves

A new paper by Federico Varese and Paolo Campana looks at police-intercepted phone data on the Italian and Russian mafia to study how criminals cooperate. In  “Cooperation in Criminal Organizations: Kinship and Violence as Credible Commitments” (abstract; PDF), they find that sharing information on violent acts increased cooperation. Varese writes to us in an email: “The idea is that criminals might trust each other more after they have shared compromising information on themselves and especially have used violence together, an insight from Thomas Schelling that we test and found to be correct.”

The abstract:

The paper argues that kinship ties and sharing information on violent acts can be interpreted as forms of ‘hostage-taking’ likely to increase cooperation among co-offenders. The paper tests this hypothesis among members of two criminal groups, a Camorra clan based just outside Naples, and a Russian Mafia group that moved to Romein the mid-1990s. The data consist of the transcripts of phone intercepts conducted on both groups by the Italian police over several months. After turning the data into a series of network matrices, we use Multivariate Quadratic Assignment Procedure to test the hypothesis. We conclude that the likelihood of cooperation is higher among members who have shared information about violent acts. Violence has a stronger effect than kinship in predicting tie formation and thus cooperation. When non-kinship-based mechanisms fostering cooperation exist, criminal groups are likely to resort to them.

### How Do Real Prisoners Play Prisoner’s Dilemma?

Economists Menusch Khadjavi and Andreas Lange recently published a paper on how real prisoners play the Prisoner’s Dilemma game:

We report insights into the behavior of prisoners in dilemma situations that so famously carry their name. We compare female inmates and students in a simultaneous and a sequential Prisoner’s Dilemma. In the simultaneous Prisoner’s Dilemma, the cooperation rate among inmates exceeds the rate of cooperating students. Relative to the simultaneous dilemma, cooperation among first-movers in the sequential Prisoner’s Dilemma increases for students, but not for inmates. Students and inmates behave identically as second movers. Hence, we find a similar and significant fraction of inmates and students to hold social preferences.

(HT: Marginal Revolution)

### “Jane Austen, Game Theorist”: A New Freakonomics Radio Podcast

Our latest podcast is called “Jane Austen, Game Theorist.” (You can download/subscribe at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript; it includes credits for the music you’ll hear in the episode.)

It is an episode about, yes, Jane Austen and game theory. To which you might say … wha?

Okay, a bit more explanation is necessary. Michael Chwe is an associate professor of political science at UCLA whose research centers on game theory and, as he puts it, “its applications to social movements and macroeconomics and violence — and this latest thing is about its applications maybe to literature.”

The literature in question? The novels of Jane Austen. Chwe discovered that Austen’s novels are full of strategic thinking, decision analysis, and other tools that would later come to be prized by game theorists like those as the RAND Corporation just after World War II. (They included some of the brightest minds of the time, including Kenneth J. ArrowLloyd S. ShapleyThomas Schelling, and John Nash.) And so Chwe wrote a book called Jane Austen, Game Theorist. Read More »