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How does game theory determine the world?

2015-07-23 Vicigo

I claim that most problems in this world can be understood by applying game theory. Maybe some of you asked yourself this trivial question, when you were a child and without any prejudices: Why are there wars? Who wants them?

Silly question, of course. Nobody wants war (only a small minority of masochists), but yet we have war in a modern world full of smart, good people that solve incredible problems.

The answer is game theory. Game theory is simple: You have actors, you have rules, you have goals. And you don't play together. Just like in the real world. But what is the outcome? Everyone should reach their goals as good as possible, and best would be, what is best for all.

But this is not how games work. The rules will force the outcome towards the "Nash Equilibrium" - depending on the game, this equilibrium could be bad for all the players. This is possible, when actors get rewarded for playing against the others. The country with the first military strike gets rewarded, all actors play war, and everybody loses, because they will find themselves at the "Nash Equilibrium".

It is not that simple, but not that difficult either: Countries are actors that have goals, and there are rules. Find out how the game works, and you will win the Nobel Peace Prize.

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