Thursday, September 8, 2011

A Bit About Game Theory

While I'm watching the first NFL game of the season, I have also had time to read this story in the Economist about game theory. Has nothing to do with the football game, but the new NFL kickoff rule, which now leads to about 6 straight minutes of no action, sure does give a fellow time to catch up on his reading. And remember, the ball is only in play for about 11 minutes during the 3+ hours the game is on.

I don't know much about Game Theory, but I am fascinated by it. It is soundly based on one of the few things economists know for sure, which is that incentives matter. Reading Bruce Bueno de Mesquita's (if his nickname isn't "Skeeter", then he has not hung out with the right people) book "The Predictioneer's Handbook" was a real eye-opener about how looking at incentives will tell you how something will turn out.

Game Theory models are being used in all sorts of places now give people an edge in negotiations, or just make them work more smoothly. Let's hope Obama hires one of these consultants before he allows the GOP to kick his ass again and lets the country get destroyed by the Tea Party!

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