What is game theory?
If you have ever tried to haggle over a price, you may have unknowingly engaged in some of the logic employed in game theory.
The subject can be described as the mathematical study of strategy and decision-making in social situations.
The "game" is an attempt to model the decision-making process, those making the choices and what the outcomes might be.
It has huge applications, with everything from dating sites to economics.
The Nash Equilibrium, for which John Nash won his Nobel Prize, describes situations where it is of no benefit for players in a complex game to change strategy, even when they are aware of the others' strategy.
The US and USSR could be said to have been in such a position in the Cold War, knowing each other's position but still not starting a nuclear war.

 

 

WHAT IS SUCCESS?

There are two basic meanings of success:
1. You-Lose, and
2. I-Win.

You-Lose is the kind of success a boxer enjoys in an Olympic Champion title fight. For him to win the title – be Olympic Champion of the World – and collect the Gold Medal he has to see that the other fighter fails to win. This kind of situation is called, by games theorists, a ‘zero sum’ game and is where success for one player means failure for the other.

Backgammon is also a zero sum game as are Olympic sports and professional sporting competitions like cricket, football, basketball and baseball.

I-Win is more like what happens in life itself. At home (whether in a relationship between lovers or families), or at school, or at work, I can be successful by playing I-Win without anyone having to lose or fail.

  • I-Win can happen without my mate having to fail

  • I-Win can happen without my customer having to lose

  • I-Win can happen without my neighbour having to suffer

That is because in the ‘game of life’ there is always a third party which we will call The Banker.

When there is a banker who always pays out and collects after each encounter, two players can reciprocate and co-operate and laugh all the way to the bank. Mountain-climbing is a non-zero-sum game where I-Win can happen without my partner having to fail, or fall.

Blackjack at the casino is a non-zero-sum game and a novice player can always be spotted because they do not yet understand the difference between playing You-Lose and I-Win with their fellow players, against The Banker.

In a non-zero-sum game there are only consequences.

The Banker always pays and always collects according to how you play the game or, more precisely, according to which strategy you choose.

There are many strategies in the game of life and some succeed more than others but there is only ONE dominant strategy which ALWAYS succeeds in beating any other strategy. That’s why it is The #1 Law of Success and the one we’ll explore in this masterclass.

 

THE GAME

Here we explore a new zero sum game to mimic life and called The Game. Those who become skilled in this simplest of all games will become skilled in the #1 Law of Success which is more successful in life than any other strategy. In The Game the Banker makes the following payoffs:

  • NICE/NASTY: Banker Pays WINNER 1 million points.
  • NASTY/NICE: Banker Fines SUCKER 200,000 points.
  • NICE/NICE: Banker Pays Both 600,000 points as REWARD
  • NASTY/NASTY: Banker Fines Both 20,000 points as PUNISHMENT

We see how succeeding in life–survival & making a living–is largely a strategic matter. A matter of which is the better strategy to choose.

Success in life consists of how well we manage the unfolding series of encounters with others. How we manage our personal relationships. It is a pity that so very little attention is given to this on the school curriculum. How much more valuable and useful in life would a subject called ‘Personal Relationships’ be compared with other subjects, most of which information can be found on Wikipedia.

Personal relationship management in Game Theory is based on how we choose our strategy for each face-to-face encounter. In each encounter we can cooperate and be NICE or we can defect and be NASTY. We see examples of those who always play NASTY, others who always use NICE and still others whose strategy is a mix of NICE and NASTY.

We are introduced to the Rules of The Game and also to the risks and rewards of life which are represented by REWARDS and PUNISHMENTS: a series of points paid out or deducted as fines which the Banker always pays out after each encounter or round of the game. We are now ready to play and try out different strategies. With instant feedback from the Banker we soon see that there are always four inevitable outcomes which, in Game Theory, are called: The Winner, The Sucker, The Punishment and The Reward.

THE WINNER

TACTIC – AVOID THE TEMPTATION TO WIN
The Temptation to Win is one with which we are all familiar. Exemplified so well by Gordon Gecko in the movie Wall Street, this tactic is all about Victory. It’s the I-Win-You-Lose philosophy where for you to win the other loses; you beat the opponent, you conquer the adversary. “Greed is Good” is the motto of this strategy and in the Game it is the strategy where the other played NICE and you played NASTY.

He becomes the Sucker and you become the Winner. Your Temptation to Win has paid off and you collect the Banker’s highest payment, 1 million points. The Skase’s and Bond’s of the eighties were high profile players of the Temptation to Win strategy and the Adlers, Vizards, Pratts and Rineharts may be more recent examples.

The chance of having the biggest possible payout attracts many people to this NICE/NASTY strategy called the Temptation to Win. It seems, intuitively, to be the best strategy and in Game Theory it’s called ALL NASTY or always play NASTY. If life consisted of only one round or one encounter, it would be the one to always use. But life is unfolding. There are many encounters and repeated rounds in the game of life. We see that this iteration of the game, its repetition, soon shows Temptation to be a flawed strategy with only short term gains and much greater long term losses.

WHY WINNERS ALWAYS END UP SUCKERS

All Winners eventually become Suckers and Suckers always suck. The reason for this is because ‘what goes around comes around’ and ‘those who live by the sword die by the sword’. If you are NASTY to me in this round, then you can be sure that I will be NASTY to you in the next round. This is how the Temptation strategy, which seemed so attractive in Round I, always becomes a problem to the Winner in later rounds when revenge is sweet and the other side gets their ‘payback time’.

In Game Theory, the sure knowledge that there will always be ‘payback time’ in future rounds of the game is called The Shadow of the Future.

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TIT IS COMING!

This Future Shadow is the key to The Game. The inevitability of the future consequences is the quintessence of this strategy. But not everyone can see longer term consequences, especially the young. Only those who have the wisdom to see the shadow can choose the better future in order to be in it. Only those who understand this inexorable cybernetic feedback feature of the game can have access to the most successful strategy of all which we call the #1 Law of Success.

The problem with the Temptation strategy is that its short term upside is soon diminished by the long term downside. This is why obsessed Winners eventually become losers.

THE SUCKER

The Sucker is the biggest loser of all in the Game. You become a Sucker when you play NICE and the other plays NASTY. You get ‘caught with your pants down’ and you’re ‘a sitting duck’. The Banker saves his biggest fine for the Sucker, a hefty 200,000 and it’s called the Sucker’s Payoff.

Yet, there are those who actually play a strategy called ALL NICE or ‘Always play NICE’. These Suckers always suck. They actually reward Temptation. They make it intelligent behaviour for the other to always play NASTY and collect their 1 million prize. In Darwinian evolution, Suckers are altruistic and help other members of the species to pass on their genes to the next generation always at their own expense. In biology, Suckers always suck, they die a Darwinian death.

THE BLIND SUCKER
In a sense, all Suckers are blind. That is, they are blind to consequences. They cannot see the Shadow of the Future. They fail to understand the impact of payback time. The greedy Sucker who gives her savings to the Get-Rich-Quick-Merchant is blind to the consequences. The Bloody Idiot (portrayed so effectively in TAC ads) who drinks then drives is a blind Sucker. The smoker who heeds the Marlboro man but not the Cancer Society is a blind Sucker. Blind Suckers who stay blind always end up losers.

THE RIGHTEOUS SUCKER
This is a fatal disease. Most Righteous Suckers die. They may die in battle or are put to death at the whim of their victorious Winners. They are conquered and crushed by their opponent. Many Righteous Suckers are suffering from PTV, the Plato Truth Virus. I have written in depth about PTV in Software for Your Brain.

PTV causes the host brain to believe that they are ‘uniquely right’, that they have a certain and absolute ‘truth’. Righteous Suckers have usually contracted PTV through any religious or political movement which claims to be the ‘True Religion’ or the ‘Right Majority’. They also are blind to the Shadow of the Future. Some become martyrs, others become dictators. All end up dead. Suckers always suck.

THE SAD SUCKER
We have all been Sad Suckers and hopefully we learn from the experience. The Sad Sucker played NICE and was tricked. The Sad Sucker played NICE on the understanding that the other was going to play NICE too. He was wrong. She was sucked in. Each reader will have his or her own bitter memories of childhood abandonment, broken trust, emotional betrayal. The young draftee who returns from Vietnam to find no welcoming parade, no grateful public is a Sad Sucker. The faithful wife who trusts her unfaithful husband is a Sad Sucker.

Children are often Suckers because they are so vulnerable and trusting. Whether they trust the pedophile who offers “to take them to mummy” yet is their mortal enemy or their older sister who always takes the bigger slice of cake, children are often suckers.

The important point about the Sad Sucker is to learn from the experience. Children grow up and become players in the Game of Life. They can then choose whatever strategy they wish. They don’t have to remain Sad Suckers and fortunately, most don’t.

THE PUNISHMENT

The Game always punishes winners. Whatever the outcome of today’s round there will always be future rounds to play and that’s where the Winners get punished. Because the game of life is unfolding it is a cybernetic or feedback loop.

There are many rounds of the game and each player has multiple encounters. There’s always a payback whether you call it karma or feedback or revenge or reprisal or reciprocation or retaliation. This brings us to the best strategy of all: tit4tat

HOW TO PUNISH WINNERS
Tit-for-tat means payback. The Dutch call it ‘dit vor dat’ and the French ‘tant pout tant’. Caesar called it ‘quid pro quo’. To Shylock it was a ‘pound of flesh’ and the Hebrews called it ‘an eye for an eye’. In the Game it is NASTY/NASTY. If you play NASTY then I’ll play NASTY, too. The Banker calls this The Punishment and both players are fined an inconvenient 20,000. But, wait a moment, how can this be the #1 Law of Success? Surely not! It seems very wrong and counter-intuitive.

NOT REVENGE BUT CONSEQUENCES

If at first you think tit4tat is all about revenge, look more deeply, more strategically. It’s not. In both The Game and in real life this is the best strategy of all yet it is one which has a very poor reputation because it is so widely misunderstood. tit4tat is often considered childish at best and uncharitable, even heartless, at worst. But tit4tat is NOT about revenge. It is NOT just about ‘an eye for an eye’. It’s much more than that. It is all about the Shadow of the Future. It’s about consequences. You might even say it’s about the management of karma.

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tit4tat it is the fairest strategy of all and, as it turns out, the most successful strategy in life and, therefore, the only one which qualifies as the #1 Law of Success.

In Game Theory, t4t or the tit4tat strategy is also called the NICE Strategy and has two basic rules:
1 Always play NICE first, then
2 Always match the other’s play thereafter.

In other words, you start by playing NICE then whatever move the other plays, you match it. If he plays NASTY then so do you. If she plays NICE, you play NICE. You never cheat and you never waver.

There are several outcomes for those who use this strategy. Obviously, you always punish Winners. Whenever a Winner plays NASTY you ALWAYS play NASTY, you ALWAYS punish NASTY with matching NASTY. That’s what is meant by ‘an eye for a eye’ but there’s more to Tit-for-Tat than just returning NASTY with NASTY. Tit-for-Tat also means you ALWAYS return NICE with NICE!

This always leads to NICE/NICE. The Winner soon realises that to play NASTY will immediately produce the same retaliation so that he is virtually playing NASTY on himself. To win the 1 million, he has to achieve NASTY/NICE and he now understands that, in Tit-for-Tat, he never can. In Tit-for-Tat there are only two possible outcomes, NASTY/NASTY, the Punishment which will cost him 20,000 every time. Or, NICE/NICE.

This paradox is the nut of the masterclass and takes a little getting used to. The members must fully come to grips with this insight: that tit4tat or an eye for an eye always ends up leading to NICE/NICE.

It is hard for the Western mind to grasp simply because we have been taught that ‘turn the other cheek’ is the better strategy. It isn’t. Turn the other cheek always leads to NICE/NASTY because if one is always going to be NICE then the other is rewarded more for being NASTY than for being NICE.

THE REWARD

Always reward NICE. NICE/NICE is called The Reward in Game theory. NICE/NICE is when both players play NICE and the Banker pays out his second highest payment of 600,000 to each player. It’s not a million but it’s a very nice reward. Only tit4tat/t4t can produce this outcome. If the players are intelligent and are not Suckers who are blind to the Shadow of the Future then there is nothing to stop them playing NICE/NICE in every round of the game and picking up their Reward of 600,000 points every time. This is the I-Win-You-Win philosophy and ALWAYS scores the highest points. t4t is the ultimate strategy and those that ALWAYS play t4t, or NICE/NICE, will ALWAYS be successful in life. Win/Win is the #1 Law of Success.

HOW TO REWARD NICE GUYS
Tit-for-Tat is how you reward a nice guy. When he or she plays NICE you always play NICE. You NEVER play NASTY. You NEVER yield to the Temptation to Win the million. You build trust and you ALWAYS both succeed.

In selling, the traditional American model, which I have called oldsell is the Temptation strategy. Close the sale and win! Contrast this with the newsell model which is based on the relationship of trust built up by the NICE/NICE strategy. The Chinese use this model (Confucian) and have been much more successful at selling for a much longer period of time than Americans.

CONCLUSION: t4t IS THE #1 LAW OF SUCCESS

This masterclass offers participants a unique strategy called t4t. t4t is the #1 Law of Success. t4t is a counter-intuitive but very powerful strategy to help you to succeed in the unfolding Game of Life. Whenever you decide to use the tit4tat strategy you:

  • Always REWARD NICE tit4tat – (NICE/NICE)
  • Always PUNISH NASTY tit4tat – (NASTY/NASTY)
  • Always avoid the TEMPTATION to WIN – (NICE/NASTY)
  • Always avoid the SUCKER’S PAYOFF- (NASTY/NICE).

 

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(These notes are from The Advanced Strategy Masterclass with Dr Michael Hewitt-Gleeson © 2014).

A world utterly reliant on science will need all children to have a reasonable grasp of the subject. So, why are we failing to inspire them?

This article is by Professor Ian Chubb​ who is Chief Scientist of Australia.

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It is impossible to say what the jobs of the future will be, but a sound understanding of science and mathematics are sure to be key.

1432004027730Every year we survey recent graduates and ask questions about their employment. And from those figures we are encouraged to draw big conclusions: about the quality of our universities, about the needs of our economy, about the value of different professions.

Why do we continue to do that? Why do we narrow our focus to the present employment profile for last year’s graduates, rather than grasp from other countries that the employment profile of the future will be different, and that it is time for our education system to prepare for that difference?

And why do we assume a system has “failed” if it lets science graduates become teachers, or managers, or bankers, or if it lets engineers become economists?

Much was said about science last week with the delivery of the federal budget and the opposition response; some people like some bits and not others. It is an important conversation.
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And I hope that we, like other countries, will question the direction in which we’re headed – with a little more imagination and ambition.

We could start in schools, where the workers of 2030, 2050, or maybe even 2070, have started to learn whatever we can teach them today.

For 20 years, we have presided over declining levels of participation in science and mathematics in years 11 and 12, and watched our students’ performance slip down the global ranks, while assuring ourselves that, with calculators, they’ll be all right.

But I think about the sort of jobs a child in school today might want to do in 10, 20, 50 years. And I wonder, which of those jobs will not require an understanding of science? How many will not need to know, at the very least, how science works, and how it might be applied in the workplace?

I’d say very few: in a world utterly reliant on science, most will need at least a reasonable level of scientific understanding. Our education system ought to provide it – to everyone.

Then I think about the issues confronting our country – from growing our economy, to protecting our environment, to providing us with food, to vaccinating our children. And I ask myself, which will not require science to find solutions?

I’d say none: they all require a conversation informed by evidence, and evidence interpreted with understanding. Our schools ought to equip all of our children to understand science, and inspire enough of our children with the passion to be scientists.

And then I think about all the other roles we might want science-trained people to perform, in a global economy founded on knowledge.

Which business will not need to harness technology, manage and utilise data, grasp complex financial arrangements, anticipate the changes of the future? Which industry would not be open to a person with an aptitude for science?

I’d say not many – and none with strong prospects for growth or even survival. And I would expect our schools would work with our universities, vocational training colleges and employers to put science-trained people in all manner of roles.

To do that, we need to look beyond the fossilised categories and expectations of the past and dare to think ahead.

Last month, the US National Bureau of Science released a paper examining its indicators for the science workforce. About 5 million Americans held positions that would traditionally be classified as “science and engineering”; but more than 16 million workers reported that their jobs required at least a bachelor’s degree level of science and engineering training. Many of these individuals worked in fields such as sales, marketing and management – reflecting, as the report noted, “the pervasiveness of technology throughout our economy”. The science workforce was not simply growing in importance: it was also growing in size and complexity.

The bureau concluded the “contradictory, confusing and often incomplete” picture of science in the economy stymied meaningful discussion of student pathways.

We could say the same thing about the conversation in Australia.

We could also think again about our perception of the skill sets developed through science degrees and vocational courses. In 2012, a study conducted for the Australian Council of Deans of Science asked more than 800 science graduates about their experience in the workforce. One in four worked in scientific or medical research; and 12 per cent worked in scientific or engineering industries. The rest had found jobs outside of science, across sectors including law, government, health, education, food, agriculture, mining and construction.

Regardless of where they were working, 97 per cent of the respondents said their scientific skills were useful in their work. They cited, in particular, their capacity to break down problems, work effectively in teams, question what they heard and adapt to shifting expectations about their roles. They saw themselves as workers well positioned for the changes they could see ahead.

It strikes me that we need people with these skills, and not just in lecture halls and laboratories. We need them in classrooms and corporate boardrooms as well.

We don’t all have to be scientists – and few would suggest that we all need specialist science training – but we certainly should not be discouraging those with a talent for science from making something of their abilities.

My message is simple. Let’s build the science education system we need to underpin the nation we want. Let’s give every child the foundation skills in science to be part of that stronger Australia. And let’s open our high achievers in science to new pathways and to the myriad roles we need them to play, wherever they fit in the workforce of the future.

Professor Ian Chubb​ is Chief Scientist of Australia.

It is imperative in science to doubt; it is absolutely necessary, for progress in science, to have uncertainty as a fundamental part of your inner nature.

To make progress in understanding, we must remain modest and allow that we do not know. Nothing is certain or proved beyond all doubt. You investigate for curiosity, because it is unknown, not because you know the answer. And as you develop more information in the sciences, it is not that you are finding out the truth, but that you are finding out that this or that is more or less likely.

That is, if we investigate further, we find that the statements of science are not of what is true and what is not true, but statements of what is known to different degrees of certainty.

Every one of the concepts of science is on a scale graduated somewhere between, but at neither end of, absolute falsity or absolute truth.