prisoner's dilemma

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pages: 503 words: 131,064

Liars and Outliers: How Security Holds Society Together by Bruce Schneier


airport security, barriers to entry, Berlin Wall, Bernie Madoff, Bernie Sanders, Brian Krebs, Broken windows theory, carried interest, Cass Sunstein, Chelsea Manning, commoditize, corporate governance, crack epidemic, credit crunch, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, desegregation, don't be evil, Double Irish / Dutch Sandwich, Douglas Hofstadter, experimental economics, Fall of the Berlin Wall, financial deregulation, George Akerlof, hydraulic fracturing, impulse control, income inequality, invention of agriculture, invention of gunpowder, iterative process, Jean Tirole, John Nash: game theory, joint-stock company, Julian Assange, mass incarceration, meta analysis, meta-analysis, microcredit, moral hazard, mutually assured destruction, Nate Silver, Network effects, Nick Leeson, offshore financial centre, patent troll, phenotype, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, RAND corporation, rent-seeking, RFID, Richard Thaler, risk tolerance, Ronald Coase, security theater, shareholder value, slashdot, statistical model, Steven Pinker, Stuxnet, technological singularity, The Market for Lemons, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, too big to fail, traffic fines, transaction costs, ultimatum game, UNCLOS, union organizing, Vernor Vinge, WikiLeaks, World Values Survey, Y2K, zero-sum game

If you assume the individuals can switch between strategies and you set the parameters right, the Hawk-Dove game is a Prisoner's Dilemma. When pairs of individuals interact, they each have the choice of cooperating (being a dove) or defecting (being a hawk). Both individuals know that cooperating is the best strategy for them as a pair, but that individually they're each better off being a hawk. Not every interaction between two people involves a Prisoner's Dilemma. Imagine two drivers who are both stuck because a tree is blocking the road. The tree is too heavy for one person to move on his own, but it can be moved if they work together. Here, there's no conflict. It is in both their selfish interest and their group interest to move the tree together. But Prisoner's Dilemmas are common, and once you're primed to notice them, you'll start seeing them everywhere.4 The basic Prisoner's Dilemma formula involves two people who must decide between their own self-interest and the interest of their two-person group.

If at least one of them shovels, both are freed; and two shovelers will get the job done much faster and more reliably than one. But unlike a Prisoner's Dilemma, it's in each driver's best interest to cooperate, even if the other defects.4 It turns out there are several different dilemmas5—generally called social dilemmas or coordination games—whose differences depend on the relative value of the various outcomes. Those nuances make a huge difference to game theorists, but are less important to everyday people. We make trade-offs based on what we want to do.6 When you look at the details of players' competing interests, motivations, and priorities, you often realize they might not be playing the same game. What might be a Prisoner's Dilemma for Alice could be a Snowdrift for Bob. What might be a Snowdrift for Alice might be a Stag Hunt for Bob.

Instead, we modify the game to eliminate the dilemma. Recall the two drivers stuck behind a fallen tree that neither one can move by himself. They're not in a Prisoner's Dilemma. They're not even in a Snowdrift Dilemma. In their situation, their selfish interest coincides with the group interest—they're going to move the tree and get on with their lives. The trick to solving societal dilemmas is make them look like that. That's what societal pressures do: they're how society puts its thumb on the scales. Solving societal dilemmas often means considering the people involved and their situations more broadly. The sealed-bag exchange is no longer a Prisoner's Dilemma if we assume the people involved have a sufficiently strong conscience. Alice might be thinking: “If I assume Bob will cooperate, I have two choices.

Governing the Commons: The Evolution of Institutions for Collective Action by Elinor Ostrom

agricultural Revolution, clean water, Gödel, Escher, Bach, land tenure, Pareto efficiency, principal–agent problem, prisoner's dilemma, profit maximization, RAND corporation, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs

., 23 Gal Oya irrigation scheme, Sri Lanka, 158, 167-73, 179-81, 189, 240n19, 241n25,n26 see also Sri Lanka irrigation systems Gal Oya left bank, see Gal Oya irrigation scheme Galanter, M., 219n16n19 games, 23, 217-18n2 "assignment", 47 assurance, 42, 47 Central Authoriry, 10-12f chicken, 47 commons dilemma, see commons, tragedy of detection/deterrence, 49 Hardin Herder, 4, 9-10, 39; see also prisoner's dilemma against nature, 12-13 noncooperative, 4 prisoner's dilemma, see prisoner's dilemma Self-Financed Contract-Enforcement, 15f, 17-18, 219n14,n17,n18 Gardner, R., 47, 55, 140, 220n20, 222-3n25,231n8,237n52, 244n20 Generalisimo Dam, 71, 73 Gilles, J. L., 63, 208 Glick, T. F., 71, 74-7, 225nl0, n13, 225­ 6nI4,226nI6,226-7n19,227n20 Godwin, R. K., 24, 217nl goods private theory of, 32-3 :blic, 32, 42, 45, 49, 221n5 (see also common pool resource); 274 Index provision of, see provision; theory 32-3 Gordon, H.

In terms of years in a penitentiary, the strategic problem might be reduced" to the following: Prisoner 2 Prisoner 1 Not confess Confess Not confes... 1 year each Confess 3 months for prisoner 1 10 years for prisoner 2 10 years for prisoner 1 3 months for prisoner 2 8 years each R. Kenneth Godwin and W. Bruce Shepard (1979), Richard Kimber (1981), Michael Taylor (1987), and others have shown that commons dilemmas are not always prisoner's dilemma (PD) games. Dawes (1973, 1975) was one of the first scholars to show the similarity of structure. 2 Hardin's model easily translates into the prisoner's dilemma structure. Many problems related to the use of common-pool resources (CPRs) do not easily 217 Notes to pp. 7-11 3 4 5 6 7 8 9 10 translate. Simple games such as "chicken" and "assurance" games are better representations of some situations (M. Taylor 1987). More complex games involving several moves and lacking dominant strategies for the players are better able to capture many of the problems involved in managing CPRs.

Washington, D.C.: Council of State Policy and Planning Agencies. Smith, V. L. 1969. On Models of Commercial Fishing. Journal of Political Econ­ omy 77:181-98. Snidal, D. 1979. Public Goods, Property Rights, and Political Organizations. In­ ternational Studies Quarterly 23:532-66. Snidal, D. 1985. Coordination Versus Prisoner's Dilemma: Implications for In­ ternational Cooperation and Regimes. American Political Science Review 79:923-47. Sobel, J. H. 1985. Utility Maximizers in Iterated Prisoner's Dilemmas. In Para­ doxes of Rationality and Cooperation, eds. R. Campbell and L. Sowden, pp. 306-19. Vancouver: University of British Columbia Press. Speck, F. G., and W. S. Hadlock. 1946. A Report on Tribunal Boundaries and Hunting Areas of the Malecite Indians of New Brunswick. American Anthro­ pologist 48:355-74.

pages: 365 words: 117,713

The Selfish Gene by Richard Dawkins


double helix, information retrieval, Necker cube, pattern recognition, phenotype, prisoner's dilemma, zero-sum game

It doesn't even matter how many of them are positive (payments) and how many of them, if any, are negative (fines). What matters, for the game to qualify as a true Prisoner's Dilemma, is their rank order. The Temptation to defect must be better than the Reward for mutual cooperation, which must be better than the Punishment for mutual defection, which must be better than the Sucker's payoff. (Strictly speaking, there is one further condition for the game to qualify as a true Prisoner's Dilemma: the average of the Temptation and the Sucker payoffs must not exceed the Reward. The reason for this additional condition will emerge later.) The four outcomes are summarized in the payoff matrix in Figure A. Figure A. Payoffs to me from various outcomes of the Prisoner's Dilemma game Now, why the 'dilemma'? To see this, look at the payoff matrix and imagine the thoughts that might go through my head as I play against you.

The only conditions are that nature should sometimes set up games of Prisoner's Dilemma, that the shadow of the future should be long, and that the games should be nonzero sum games. These conditions are certainly met, all round the living kingdoms. Nobody would ever claim that a bacterium was a conscious strategist, yet bacterial parasites are probably engaged in ceaseless games of Prisoner's Dilemma with their hosts and there is no reason why we should not attribute Axelrodian adjectives-forgiving, non-envious, and so on-to their strategies. Axelrod and Hamilton point out that normally harmless or beneficial bacteria can turn nasty, even causing lethal sepsis, in a person who is injured. A doctor might say that the person's 'natural resistance' is lowered by the injury. But perhaps the real reason is to do with games of Prisoner's Dilemma. Do the bacteria, perhaps, have something to gain, but usually keep themselves in check?

It was Axelrod who coined the technical meaning of the word 'nice' to which I alluded in my opening paragraph. Axelrod, like many political scientists, economists, mathematicians and psychologists, was fascinated by a simple gambling game called Prisoner's Dilemma. It is so simple that I have known clever men misunderstand it completely, thinking that there must be more to it! But its simplicity is deceptive. Whole shelves in libraries are devoted to the ramifications of this beguiling game. Many influential people think it holds the key to strategic defence planning, and that we should study it to prevent a third world war. As a biologist, I agree with Axelrod and Hamilton that many wild animals and plants are engaged in ceaseless games of Prisoner's Dilemma, played out in evolutionary time. In its original, human, version, here is how the game is played. There is a 'banker', who adjudicates and pays out winnings to the two players.

pages: 377 words: 97,144

Singularity Rising: Surviving and Thriving in a Smarter, Richer, and More Dangerous World by James D. Miller


23andMe, affirmative action, Albert Einstein, artificial general intelligence, Asperger Syndrome, barriers to entry, brain emulation, cloud computing, cognitive bias, correlation does not imply causation, crowdsourcing, Daniel Kahneman / Amos Tversky, David Brooks, David Ricardo: comparative advantage, Deng Xiaoping,, feminist movement, Flynn Effect, friendly AI, hive mind, impulse control, indoor plumbing, invention of agriculture, Isaac Newton, John von Neumann, knowledge worker, Long Term Capital Management, low skilled workers, Netflix Prize, neurotypical, pattern recognition, Peter Thiel, phenotype, placebo effect, prisoner's dilemma, profit maximization, Ray Kurzweil, recommendation engine, reversible computing, Richard Feynman, Richard Feynman, Rodney Brooks, Silicon Valley, Singularitarianism, Skype, statistical model, Stephen Hawking, Steve Jobs, supervolcano, technological singularity, The Coming Technological Singularity, the scientific method, Thomas Malthus, transaction costs, Turing test, Vernor Vinge, Von Neumann architecture

Knowing the stakes, rival nations might go full throttle to win an ultra-AI race, even if they understood that haste could cause them to create a world-destroying ultra-intelligence. These rivals might realize the danger and desperately wish to come to an agreement to reduce the peril, but they might find that the logic of the widely used game theory paradox of the Prisoners’ Dilemma thwarts all cooperation efforts. Before we apply the Prisoners’ Dilemma to AI development, let’s see how police might use it. Pretend that you and your co-conspirator, Hal, have just been arrested for two crimes: murder and illegal weapons possession. The police found illegal weapons on both of you and could definitely succeed in sending the two of you to prison for a year. Although the police have correctly ascertained that you and Hal also committed murder, they can’t convict you unless at least one of you confesses.

Consequently, you confess because you realize that regardless of what Hal does you’re better off confessing. Since, however, Hal will also find it in his self-interest to confess, you will each probably spend twenty years in prison. The Prisoners’ Dilemma result seems crazy because it superficially appears that neither criminal would confess: after all, they are better off if neither confesses than if they both do. But neither party has the ability to ensure that both parties will remain silent. Consider the four possible outcomes of the Prisoners’ Dilemma game: WHO CONFESSES? YOUR PRISON SENTENCE 1. Just You 0 years 2. Neither 1 year 3. Both 20 years 4. Just Hal Life If Hal confesses, your actions determine whether your outcome will be (3) or (4), so you should confess to get (3) and avoid your worst possible outcome of (4).

Since nothing you do can ever move you from outcome (3) to (2), the fact that outcome (3) is a lot worse for you than outcome (2) shouldn’t influence your decision to confess. Militaries in an ultra-AI race might find themselves in a Prisoners’ Dilemma situation, especially if they believe that an intelligence explosion could turn a human-level seed AI into an ultra-AI. Imagine that both the US and Chinese militaries want to create a seed AI that will do their bidding after undergoing an intelligence explosion. To keep things simple, let’s assume that each military has the binary choice to proceed either slowly or quickly. Going slowly increases the time it will take to build a seed AI but reduces the likelihood that it will become unfriendly and destroy humanity. The United States and China might come to an agreement and decide that they will both go slowly. Unfortunately, the Prisoners’ Dilemma could stop the two countries from adhering to such a deal. If the United States knows that China will go slowly, it might wish to proceed quickly and accept the additional risk of destroying the world in return for having a much higher chance of being the first country to create an ultra-AI.

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor by John Kay


Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, Berlin Wall, Big bang: deregulation of the City of London, California gold rush, complexity theory, computer age, constrained optimization, corporate governance, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Donald Trump, double entry bookkeeping, double helix, Edward Lloyd's coffeehouse, equity premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, financial innovation, Francis Fukuyama: the end of history, George Akerlof, George Gilder, greed is good, Gunnar Myrdal, haute couture, illegal immigration, income inequality, industrial cluster, information asymmetry, intangible asset, invention of the telephone, invention of the wheel, invisible hand, John Meriwether, John Nash: game theory, John von Neumann, Kenneth Arrow, Kevin Kelly, knowledge economy, labour market flexibility, late capitalism, light touch regulation, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, Pareto efficiency, Paul Samuelson,, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, Right to Buy, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, telemarketer, The Chicago School, The Death and Life of Great American Cities, The Market for Lemons, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Vilfredo Pareto, Washington Consensus, women in the workforce, yield curve, yield management

People often miss the force of the Prisoner's Dilemma when it is first explained to them. They think that self-regarding people will want to cooperate when they see the benefits of cooperation: the Prisoner's Dilemma arises only because the prisoners do not understand the consequences of their actions. But the paradox is much deeper. The self-interested benefits of cooperation are not enough to persuade self-interested people to achieve them. Even after the Prisoner's Dilemma has been explained, and both parties understand that they will go to gaol for seven years as a result, the self-regarding action is to confess. Indeed there is some evidence that people who understand the problem posed by the Prisoner's Dilemma are more likely to confess than people who don't. 10 The Prisoner's Dilemma explains why lighthouses will not be built.

In primitive societies, the leader of the tribe, a religious deity, or the combined authority ofboth might assume the role of enforcer. Today we use the civil and criminal law. Albert Tucker, who invented the story of the Prisoner's Dilemma, probably used that example precisely because criminals cannot invoke the courts to enforce nefarious agreements. But criminals often have their own enforcers. We talk of "honor among thieves": those outside the law create their own social institutions to handle the Prisoner's Dilemma. But there is also honor among the honest. The social and economic lives of hunters were linked. Shirking in the forest implied penalties around the campfire. Yet community enforcement has its own Prisoner's Dilemma. It is in the best interests of the group for everyone to penalize shirkers, but not necessarily in my individual interest. We must not only penalize shirkers, but people who fail to penalize shirkers.

There is a common economic interest in the enforcement of social norms. Contagious reputation-which is valuable in dealing with information asymmetry-also helps secure cooperation. The best strategy for a Prisoner's Dilemma changes if the game is repeated. The American political scientist Robert Axelrod organized tournaments between strategies for repeated Prisoner's Dilemma. 12 One simple strategy-tit for tat-proved successful. Tit for tat begins with cooperation, but defects-once-every time the other player defects. Tit for tat exemplifies common features of good strategies for Prisoner's Dilemmas. It is nice-it trusts people until proved wrong. It is responsive-it doesn't ignore what others do. But it is forgivingit allows occasional mistakes. We know that already. Tit for tat is part of our instincts and our Culture and Prosperity { 255} learned behavior.

pages: 226 words: 59,080

Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik


airline deregulation, Albert Einstein, bank run, barriers to entry, Bretton Woods, butterfly effect, capital controls, Carmen Reinhart, central bank independence, collective bargaining, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Donald Davies, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, Fellow of the Royal Society, financial deregulation, financial innovation, floating exchange rates, fudge factor, full employment, George Akerlof, Gini coefficient, Growth in a Time of Debt, income inequality, inflation targeting, informal economy, information asymmetry, invisible hand, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labor-force participation, liquidity trap, loss aversion, low skilled workers, market design, market fundamentalism, minimum wage unemployment, oil shock, open economy, Pareto efficiency, Paul Samuelson, price stability, prisoner's dilemma, profit maximization, quantitative easing, randomized controlled trial, rent control, rent-seeking, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, school vouchers, South Sea Bubble, spectrum auction, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, trade route, ultimatum game, University of East Anglia, unorthodox policies, Vilfredo Pareto, Washington Consensus, white flight

With the addition of a longish list of extra assumptions—on which, more later—this model also generates rather strong implications about how well markets work. In particular, a competitive market economy is efficient in the sense that it is impossible to improve one person’s well-being without reducing somebody else’s. (This is what economists call “Pareto efficiency.”) Consider now a very different model, called the “prisoners’ dilemma.” It has its origins in research by mathematicians, but it is a cornerstone of much contemporary work in economics. The way it is typically presented, two individuals face punishment if either of them makes a confession. Let’s frame it as an economics problem. Assume that two competing firms must decide whether to have a big advertising budget. Advertising would allow one firm to steal some of the other’s customers.

The story of the hare and the tortoise imprints on your conscious mind the importance of steady, if slow, progress. The story becomes an interpretive shortcut, to be applied in a variety of similar settings. Pairing economic models with fables may seem to denigrate their “scientific” status. But part of their appeal is that they work in exactly the same way. A student exposed to the competitive supply-demand framework is left with an enduring respect for the power of markets. Once you work through the prisoners’ dilemma, you can never think of problems of cooperation in quite the same way. Even when the specific details of the models are forgotten, they remain templates for understanding and interpreting the world. The analogy is not missed by the profession’s best practitioners. In their self-reflective moments, they are ready to acknowledge that the abstract models they put to paper are essentially fables.

Each fable has a definite moral, but in totality, fables foster doubt and uncertainty. So we need to use judgment when selecting the fable that applies to a particular situation. Economic models require the same discernment. We’ve already seen how different models produce different conclusions. Self-interested behavior can result in both efficiency (the perfectly competitive market model) and waste (the prisoners’ dilemma model) depending on what we assume about background conditions. As with fables, good judgment is indispensable in selecting from the available menu of contending models. Luckily, evidence can provide some useful guidance for sifting across models, though the process remains more craft than science (see Chapter 3). Models as Experiments If the idea of models as fables does not appeal, you can think of them as lab experiments.

pages: 137 words: 36,231

Information: A Very Short Introduction by Luciano Floridi


agricultural Revolution, Albert Einstein, bioinformatics, carbon footprint, Claude Shannon: information theory, conceptual framework, double helix, Douglas Engelbart, Douglas Engelbart, George Akerlof, Gordon Gekko, industrial robot, information asymmetry, intangible asset, Internet of things, invention of writing, John Nash: game theory, John von Neumann, moral hazard, Nash equilibrium, Norbert Wiener, Pareto efficiency, phenotype, Pierre-Simon Laplace, prisoner's dilemma, RAND corporation, RFID, Thomas Bayes, Turing machine, Vilfredo Pareto

Typical examples include the rock-paperscissors game and the prisoner's dilemma. There is no need to describe the former but the latter is sufficiently complex to deserve some explanation. We owe the logical structure of the prisoner's dilemma to the Cold War. In 1950, RAND Corporation (Research ANd Development, a non-profit think tank initially formed to provide research and analysis to the US armed forces) was interested in game theory because of its possible applications to global nuclear strategy. Merrill Flood (born 1912) and Melvin Dresher (19111992) were both working at RAND and they devised a gametheoretic model of cooperation and conflict, which later Albert Tucker (1905-1995) reshaped and christened as the `prisoner's dilemma'. Here it is. Two suspects, A and B, are arrested, but with insufficient evidence for a full conviction.

I am very grateful to the Akademie der Wissenschaften in Gottingen, for the privilege of being elected Gauss Professor during the academic year 2008-9, and to the University of Hertfordshire, for having been generous with my teaching schedule while visiting Gottingen and completing this book. 1 A typical information life cycle 5 2 A map of information concepts 20 3 Analogue, digital, and binary data 24 4 Types of data/ information 30 5 Environmental data/ information 32 6 Information as semantic content 34 7 The mathematical theory of communication (MTC) 38 8 Communication model 39 9 Factual semantic information 49 10 Virtual information in natural deduction 57 11 Physical information 61 12 Maxwell's demon 64 13 Biological information 74 14 DNA and the genetic code 78 15 Genetic information 81 16 Abstract scheme of a neuron 83 17 Economic information 89 18 A simple application of Bayes' theorem 101 19 The 'External' R(esource) P(roduct) T(arget) Model 104 20 The 'Internal' R(esource) P(roduct) T(arget) Model 110 Table 1 The General Definition of Information (GDI) 21 Table 2 Decimal and binary notations of positive integers 27 Table 3 Example of binary encoding 28 Table 4 Environmental information 33 Table 5 Examples of communication devices and their information power 41 Table 6 The definition of factual semantic information 50 Table 7 The normal form of a typical prisoner's dilemma 94 The goal of this volume is to provide an outline of what information is, of its manifold nature, of the roles that it plays in several scientific contexts, and of the social and ethical issues raised by its growing importance. The outline is necessarily selective, or it would be neither very short nor introductory. My hope is that it will help the reader to make sense of the large variety of informational phenomena with which we deal on a daily basis, of their profound and fundamental importance, and hence of the information society in which we live.

If one testifies against (defects from) the other, and the other remains silent (cooperates), the defector will not be charged but the cooperator will receive the full ten-year sentence. If both cooperate, each will receive a one-year sentence for a minor charge. If both defect, each will receive only half of the full sentence, five years. A and B must choose to defect from, or cooperate with, each other. Note that neither A nor B can know what the other will do. This is why this classic version of the prisoner's dilemma is a simultaneous game, exactly like the rock-paper-scissors game: it is not a matter of timing (rock-paper-scissors is also a synchronic game, with both players showing their hands at the same time), but of lack of information about the other player's (planned) move or state. What should each prisoner do? The rational choice is for each prisoner to defect (five years in prison), despite the fact that each prisoner's individual payoff would be greater if they both cooperated (one year in prison).

Fifty Challenging Problems in Probability With Solutions by Frederick Mosteller


Isaac Newton, John von Neumann, prisoner's dilemma, RAND corporation, stochastic process

FREDERICK MOSTELLER West Falmouth, Massachusetts August, 1964 vi Contents 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. ll. 12. 13. The sock drawer Successive wins The flippant juror IS. 16. 17. 18. The theater row Will second-best be runner-up? Trials until first success Coin in square Chuck-a-luck . Curing the compulsive gambler Perfect bridge hand . Craps An experiment in personal taste for money Silent cooperation Quo vadis? . The prisoner's dilemma 14. Collecting coupons, including Euler's approximation for harmonic sums 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. Twin knights . An even split at coin tossing, including Stirling's approximation Isaac Newton helps Samuel Pepys The three-cornered duel Should you sample with or without replacement? . The ballot box Ties in matching pennies The unfair subway Lengths of random chords The hurried duelers.

Quo Vadis? Two strangers who have a private recognition signal agree to meet on a certain Thursday at 12 noon in New York City, a town familiar to neither, to discuss an important business deal, but later they discover that they have not chosen a meeting place, and neither can reach the other because both have embarked on trips. If they try nevertheless to meet, where should they go? 13. The Prisoner's Dilemma Three prisoners, A, B, and C, with apparently equally good records have applied for parole. The parole board has decided to release two of the three, and the prisoners know this but not which two. A warder friend of prisoner A knows who are to be released. Prisoner A realizes that it would be unethical to ask the warder if he, A, is to be released, but thinks of asking for the name of one prisoner other than himself who is to be released.

Airports suffer from distance from town and numerosity. That there are two important railroad stations seems to me to remove them from the competition. That leaves the Empire State Building or Times Square. I would opt for the Empire State Building, because Times Square is getting vaguely large these days. I think their problem would have been easier if they had been meeting in San Francisco or Paris, don't you? 13. The Prisoner's Dilemma Three prisoners, A, B, and C, with apparently equally good records have applied for parole. The parole board has decided to release two of the three, and the prisoners know this but not which two. A warder friend of prisoner A knows who are to be released. Prisoner A realizes that it would be unethical to ask the warder if he, A, is to be released, but thinks of asking for the name of one prisoner other than himself who is to be released He thinks that before he asks, his chances of release are 1.

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Billions & Billions: Thoughts on Life and Death at the Brink of the Millennium by Carl Sagan


Albert Einstein, anti-communist, clean water, cosmic abundance, dark matter, demographic transition, Exxon Valdez, F. W. de Klerk, germ theory of disease, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invention of radio, invention of the telegraph, invention of the telephone, Isaac Newton, Mikhail Gorbachev, pattern recognition, planetary scale, prisoner's dilemma, profit motive, Ralph Waldo Emerson, Ronald Reagan, stem cell, the scientific method, Thomas Malthus, zero-sum game

They go deep into our evolutionary past. They were with our ancestral line from a time before we were human. The Prisoner's Dilemma is a very simple game. Real life is considerably more complex. If he gives our apple to the pencil man, is my father more likely to get an apple back? Not from the pencil man; we'll never see him again. But might widespread acts of charity improve the economy and give my father a raise? Or do we give the apple for emotional, not economic rewards? Also, unlike the players in an ideal Prisoner's Dilemma game, human beings and nations come to their interactions with predispositions, both hereditary and cultural. 230 • Billions and Billions But the central lessons in a not very prolonged round-robin of Prisoner's Dilemma are about strategic clarity; about the self-defeating nature of envy; about the importance of long-term over short-term goals; about the dangers of both tyranny and patsydom; and especially about approaching the whole issue of rules to live by as an experimental question.

Then, if your friend pleads innocent while you plead guilty, well, too bad for him, and you might get off scot-free. When you think it through, you realize that whatever your friend does you're better off defecting than cooperating. Maddeningly, the same holds true for your friend. But if you both defect, you're both worse off than if you had both cooperated. This is the Prisoner's Dilemma. Now consider a repeated Prisoner's Dilemma, in which the two players go through a sequence of such games. At the end of each they figure out from their punishment how the other must have pled. They gain experience about each other's strategy The Rules of the Game • 227 (and character). Will they learn to cooperate game after game, both always denying that they committed any crime? Even if the reward for finking on the other is large?

Such vital human concerns as love, friendship, parenthood, music, art, and the pursuit of knowledge are "win-win" propositions. Our vision is dangerously narrow if all we know is win-lose. The scientific field that deals with such matters is called game theory, used in military tactics and strategy, trade policy, corporate competition, limiting environmental pollution, and plans for nuclear war. The paradigmatic game is the Prisoner's Dilemma. It is very much non-zero-sum. Win-win, win-lose, and lose-lose outcomes are all possible. "Sacred" books carry few useful insights into strategy here. It is a wholly pragmatic game. Imagine that you and a friend are arrested for committing a serious crime. For the purpose of the game, it doesn't matter whether either, neither, or both of you did it. What matters is that the police say they think you did.

pages: 846 words: 232,630

Darwin's Dangerous Idea: Evolution and the Meanings of Life by Daniel C. Dennett


Albert Einstein, Alfred Russel Wallace, anthropic principle, assortative mating, buy low sell high, cellular automata, combinatorial explosion, complexity theory, computer age, conceptual framework, Conway's Game of Life, Danny Hillis, double helix, Douglas Hofstadter, Drosophila, finite state, Gödel, Escher, Bach, In Cold Blood by Truman Capote, invention of writing, Isaac Newton, Johann Wolfgang von Goethe, John von Neumann, Murray Gell-Mann, New Journalism, non-fiction novel, Peter Singer: altruism, phenotype, price mechanism, prisoner's dilemma, QWERTY keyboard, random walk, Richard Feynman, Richard Feynman, Rodney Brooks, Schrödinger's Cat, selection bias, Stephen Hawking, Steven Pinker, strong AI, the scientific method, theory of mind, Thomas Malthus, Turing machine, Turing test

It requires advanced cognitive abilities — a rather specific memory capable of reidentifying one's debtors and creditors, and the capacity to spot a cheat, for instance. Moving beyond the most businesslike and brutal forms of reciprocal altruism towards a world in which genuine trust and sacrifice are possible is a task that has begun to be explored theoretically. The first major step was Robert Axelrod's (Axelrod and Hamilton 1981, Axelrod 1984) Prisoner's Dilemma tournaments, which invited all comers to submit strategies — algorithms — for competing against all comers in a reiterated Prisoner's Dilemma tournament. (Among the many discussions of this topic, two of the best are Dawkins 1989a, ch. 12, and Poundstone 1992.) The winning strategy became justly famous: Tit for Tat, which simply copies the "opponent's" previous move, cooperating in reward for past cooperation, and defecting in retaliation against any defections.

The fundamental insight that unites game theory and evolutionary theory is that the "rational principles — whatever that may mean" that "guide" agents in competition can exert their influence even on such unconscious, unreflective semi-agents as viruses, trees, and insects, because the stakes and payoff possibilities of competition determine which lines of play cannot help winning or losing if adopted, however mindlessly they are adopted. The best-known example in game theory is the Prisoner's Dilemma, a simple two-person "game" which casts shadows, both obvious and surprising, into many different circumstances in our world. Here it is in basic outline (excellent detailed discussions of it are found in Poundstone 1992 and Dawkins 1989a). You and another person have been imprisoned pending trial (on a trumped-up charge, let's say), and the prosecutor offers each of you, separately, the same deal: if you both hang tough, neither confessing nor implicating the other, you will each get a short sentence (the state's evidence is not that strong); if you confess and implicate the other and he hangs tough, you go scot free and he gets life in prison; if you both confess and implicate, you both get medium-length sentences.

You and another person have been imprisoned pending trial (on a trumped-up charge, let's say), and the prosecutor offers each of you, separately, the same deal: if you both hang tough, neither confessing nor implicating the other, you will each get a short sentence (the state's evidence is not that strong); if you confess and implicate the other and he hangs tough, you go scot free and he gets life in prison; if you both confess and implicate, you both get medium-length sentences. Of course, if you hang tough and the other person confesses, he goes free and you get life. What should you do? If you both could hang tough, defying the prosecutor, this would be much better for the two of you than if you both confess, so couldn't you just promise each other to hang tough? (In the standard jargon of the Prisoner's Dilemma, the hang-tough option is called cooperating.) You could promise, but you would each then feel the temptation — whether or not you acted on it — to defect, since then you would go scot free, leaving the sucker, sad to say, in deep trouble. Since the game is symmetrical, the other person will be just as tempted, of course, to make a sucker of you by defecting. Can you risk life in prison on the other person's keeping his promise?

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Forty Signs of Rain by Kim Stanley Robinson


bioinformatics, business intelligence, double helix, experimental subject, Intergovernmental Panel on Climate Change (IPCC), phenotype, prisoner's dilemma, Ronald Reagan, stem cell, the scientific method, zero-sum game

Thus along with all the jockeying and frustration came the almost subliminal satisfactions of winning a competition, or the grudging solidarities of cooperating to mutual advantage. Let that poor idiot merge before his on-ramp lane disappeared; it would pay off in the overall speed of traffic. Thus the little primate buzz. When things went well. But so often what one saw were people playing badly. It was like a giant game of prisoners’ dilemma, the classic game in which two prisoners are separated and asked to tell tales on the other one, with release offered to them if they do. The standard computer model scoring system had it that if the prisoners cooperate with each other by staying silent, they each get three points; if both defect against the other, they each get one point; and if one defects and the other doesn’t, the defector gets five points and the sap gets zero points.

Or, the most powerful strategy Frank knew of, an irregularly generous tit for tat, where you forgave defecting opponents once before turning on them, but only about a third of the time, and unpredictably, so you were not regularly taken advantage of by one of the less cooperative strategies, but could still pull out of a death spiral of tit-for-tat feuding if one should arise. Various versions of these firm but fair irregular strategies appeared to be best if you were dealing with the same opponent over and over. In traffic, at work, in relationships of every kind—social life was nothing but a series of prisoners’ dilemmas. Compete or cooperate? Be selfish or generous? It would be best if you could always trust other players to cooperate, and safely practice always generous; but in real life people did not turn out to earn that trust. That was one of the great shocks of adolescence, perhaps, that realization; which alas came to many at an even younger age. And after that you had to work things out case by case, your strategy a matter of your history, or your personality, who could say.

No visible damage, amazingly. He got back in and drove south to the NSF building, involuntarily reliving the experience. He had no clear idea why it had happened. He had driven around the guy but he had not really cut him off, and though it was true he had been poaching on 66, so had the guy. It was inexplicable. And it occurred to him that in the face of such behavior modeling devices like prisoners’ dilemma were useless. People did not make rational judgments. Especially, perhaps, the people driving too-large pickup trucks, this one of the dirty-and-dinged variety rather than the factory-fresh steroidal battleships that the area’s carpenters drove. Possibly then it had been some kind of class thing, the resentment of an unemployed gas-guzzler against a white-collar type in a fuel-cell car. The past attacking the future, reactionary attacking progressive, poor attacking affluent.

pages: 313 words: 95,077

Here Comes Everybody: The Power of Organizing Without Organizations by Clay Shirky


Andrew Keen, Berlin Wall, bioinformatics, Brewster Kahle,, crowdsourcing,, hiring and firing, hive mind, Howard Rheingold, Internet Archive, invention of agriculture, invention of movable type, invention of the printing press, invention of the telegraph, jimmy wales, Kuiper Belt, liberation theology, lump of labour, Mahatma Gandhi, means of production, Merlin Mann, Metcalfe’s law, Nash equilibrium, Network effects, Nicholas Carr, Picturephone, place-making, Pluto: dwarf planet, prediction markets, price mechanism, prisoner's dilemma, profit motive, Richard Stallman, Robert Metcalfe, Ronald Coase, Silicon Valley, slashdot, social software, Stewart Brand, supply-chain management, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, transaction costs, ultimatum game, Vilfredo Pareto, Yogi Berra

Similarly, if I stick to my story in an attempt to get the night in jail, you can turn me in to try to get the reward, but if we both try to get the reward, we both get charged—back to the worst outcome again. This is a simplified version of the Prisoners’ Dilemma, a social science thought experiment about how people make decisions. (The payoff matrix is bit more complex in the standard version, but the dilemma is the same.) Assuming that the two people can’t communicate with each other and don’t trust each other (about which more in a moment), the worst outcome—number four—is the rational one, an outcome called a Nash equilibrium. The dilemma of the Prisoners’ Dilemma is that, because it is a one-off transaction in which you and I can’t communicate with each other, we can’t coordinate any outcome better than the dismal Nash equilibrium. (This is the same math underlying the Tragedy of the Commons, where the Nash equilibrium encourages individual defection, even as it damages the group.)

(This is the same math underlying the Tragedy of the Commons, where the Nash equilibrium encourages individual defection, even as it damages the group.) Things change, though, when the prisoners interact with each other repeatedly, a version called an iterated Prisoners’ Dilemma. Robert Axelrod, a sociologist at the University of Michigan who studied the iterated version extensively, staged tournaments for different software programs emulating the prisoners. Each program was given a strategy for when to cooperate and when to defect (the same two choices you and I faced in our notional interrogation rooms). These strategies were measured by adding or deducting points for the various outcomes. After running the tournament with many different participating strategies, ranging from “always defect” to “cooperate or defect at random,” Axelrod found that a single strategy, called Tit-for-Tat, was most successful against every other strategy tried.

If the other program defected, though, taking advantage of Tit-for-Tat’s trusting behavior, then Tit-for-Tat would defect against that program in the next round, effectively punishing the other program as a way of communicating that its trusting nature extended only to those who reciprocate. This strategy is a highly simplified version of real life—the more general lesson is that people who interact with one another repeatedly communicate through their actions, introducing what Axlerod calls “the shadow of the future.” We all face the Prisoners’ Dilemma whenever we interact with people we could take advantage of, or people who could take advantage of us, yet we actually manage to trust one another often enough to accomplish things in groups. The shadow of the future makes it possible for me to act on your behalf today, even at some risk or cost to me, on the expectation that you will remember and reciprocate tomorrow. New Tools to Create Social Capital Over on University Place in lower Manhattan, a few blocks from my office, is the local bowling alley.

Gaming the Vote: Why Elections Aren't Fair (And What We Can Do About It) by William Poundstone

affirmative action, Albert Einstein, Debian, desegregation, Donald Trump,, Everything should be made as simple as possible, global village, guest worker program, hiring and firing, illegal immigration, invisible hand, jimmy wales, John Nash: game theory, John von Neumann, Kenneth Arrow, manufacturing employment, Nash equilibrium, Paul Samuelson, Pierre-Simon Laplace, prisoner's dilemma, Ralph Nader, RAND corporation, Ronald Reagan, Silicon Valley, slashdot, the map is not the territory, Thomas Bayes, transcontinental railway, Unsafe at Any Speed, Y2K

., 1988b, 146-47, 306 Notes 208 "Let me give you", Saari, interview. 210 Article on Perot and approval voting: Beams and Merrill ]994, 210 "authoritarian and conspiratorial'" Ibid.. 40. 2 [0 "Clinton could Iulve come", Tabarrok 200!, 288. 210 "[ndeterminacy, like inconsistency", Brams, Fishburn, Merrill 1988a, 129, 213 'The primary challenge", Weber, personal e-mail, Apr, 25, 2006. 213 Humphrey's advisors wanted Ventura in debates: Sifry 2002, 22. 214 Similar to a 'prisoner's dilemma', [n a true prisoner's dilemma, the worst outcome is to cooperate while your partner(s) betray you, In the approval voting case, the worst scenario is for everyone (Goodell's and Ottinger's supporters) to betray each other. This results in the election of BudJey. the "worst" candidate to liberals, 214 "This is the paper'" Weber, personal e-mail, Apr, 25, 2006. 217 'The great weakness": Letter. Terry Sanford to Donald Saari, April 19, 1985, reported in Saari and Van Newenhizen 1988b, 141-45. 217 'They had three excellent candidates", Saari, interview, Irvine, Calif., Mar. 21,2006, 13.

''I'm a Democrat, and I prefer Ottinger," he thinks. "If I approve him and Goodell, I'm wasting my vote. What I should do is to vote just for Ottinger. That will increase the chance that Ottinger rather than Goodell will win. I don't have to worry about Buckley. The polls say he's way behind." If all the liberals vote just for their favorite, Buckley will win! This type of paradox is familiar to game theorists. It is similar to a "prisoner's dilemma," the all-too-common situation where narrow selfinterest subverts the common good. Weber aired these concerns at a lunchtime seminar at Northwestern's Kellogg School of Management. One of those present, Roger B. Myerson, saw a clever way of treating the problem. Myerson and Weber ended up collaborating on a 1993 article, "A Theory of Voting Equilibria." In Weber's words, 'This is the paper that, I believe, makes the strongest theoretical case for approval voting."

Diary, Chicago: McClurg. Pomper, Gerald M. (1993). 'The Presidential Election."' [n The Election of J 992 (Gerald M. Pomper, ed'), Chatham, N.J., Chatham House. Pooley, Eric (1996). "Who [s Dick Morris?" Time, Sept. 2, 1996. Posner, Gerald (I977). Citizen Perot. New York: Random House, Potter, Dena (2006). "Falwell Defends Clinton-Satan Remark." ChiC<lgo Sun-TimeS, Sept. 26, 2006. Poundstone, William (l992). Prisoner's Dilemma. New York: Double.:!ay, Public Broadcasting Service (2005). "Karl Rove-the Architect.'" TV show, video and tran· scripts at www.pbs.orglwgbh/pagesifrontlineJshows/archilect. Purnick, Joyce (2004), "Data Crunchers Try to Pinpoint Voters' Politics." The N/!W York Times, Apr. 7, 2004. Raskin, Jamin (2004), 'The Return of Vote-Pairing." Slate, OCI. 25, 2004. 2108641/. Regis, Ed (1987).

pages: 252 words: 73,131

The Inner Lives of Markets: How People Shape Them—And They Shape Us by Tim Sullivan


Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, centralized clearinghouse, Chuck Templeton: OpenTable, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel,, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy

No matter what the other does, each partner is best off confessing. The dilemma is that both could be best off if only they’d both stay quiet. The cruel genius of the prisoners’ dilemma is that selfish motivations undermine the prisoners’ common good. In Ross et al.’s version of the prisoner’s dilemma, instead of prison time, pairs of lab subjects earn money based on whether they cooperate or defect. But as with the classic formulation, subjects can always increase their earnings by defecting, even though members of a pair would be better off if only they’d both cooperate. Ross’s innovation was to reframe the prisoners’ dilemma as either the Wall Street game or the community game. The payoffs—and so the incentives to defect or cooperate—were identical. All that differed was that subjects were cued to think they were either Wall Street traders or community builders.

If a hedge fund manager earns 30 percent on returns, we assume she’s a genius, when in fact she almost certainly just got lucky.4 This failure in judgment was so central to how we judge others that Ross termed it the fundamental attribution error, and it serves as a potent illustration of the power of circumstance rather than individual volition in explaining the choices we make. A 2004 study by Ross and a pair of coauthors provides some intriguing insights into how “the market” affects how we behave. The study focused on a game called the prisoners’ dilemma, a staple of game theory, which presents the following quandary to a pair of criminals. Both have been arrested, and the cops are trying to elicit a confession from each suspect separately, offering them both the same deal: if one testifies against the other while the other remains silent, the confessor goes free and the silent one suffers the full force of the law, let’s say ten years in jail.

Woods store, 1–2 person’s life, value of, 166–167 philanthropic commitments, 72–75 Pillow Pets, 128–129 platforms babysitting, 121 Champagne fairs as, 126–128 competition, 124–126 credit card, 113–116 economics of, 107–112 greed in, 128–129 mobile market, 116 multisided, 14 rules for, 112–117 video game system, 116 See also economics Podolny, Joel, 39, 43 poker, bluffing in, 26 See also chess; Cold War Pontiff, Jeffrey, 11–12 posting system, 79–81, 100–101 POW camps, 7–13, 175–177 power law distributions, 22 practice, market, 14–15 Prendergast, Canice, 154–160 “Price and Advertising Signals of Product Quality” (Milgrom and Roberts), 70–71 price discovery, 83 priceless, when something is, 132–133 prisoners’ dilemma game, 178–179 property, expected value of, 56 Radford, R. A., 7–10, 22–23 Ranau Japanese POW camp, 10–11 RAND Corporation, 25, 27, 134–136 reality-based economic modeling, 35–37, 49–51, 141 See also lemon markets theory recessions, 36, 48, 75 Roberts, John, 66, 70–71 Ross, Lee, 177–179 Roth, Al, 140, 141, 163–165 rush, fraternity/sorority, 140 Rutland, VT, 1 Rysman, Marc, 109 Samuelson, Paul, 28–29, 44 Samuelson, William, 55–57 San Fernando Valley gangs, 61–62 San Fers gang, 61–62 Sandakan camp, Borneo, 10–11 Sauget, IL, 168–169 scams internet, 52–55 money-back, 69–70 Scarf, Herbert, 163–164 school choice, in Sweden, 151–152 school to student matching, 138–139, 141–142, 143–149 Schultz, Theodore, 35 Schumpeter, Joseph, 24, 49–50 Scottish auctions, 82 Sears, 115–116 second-bid auction, 81–82 second-price sealed-bid auctions, 87–89 “Selection process starts with choices, ends with luck” (article), 146 self-destructive behaviors, signaling theory and, 67–68 selfish, markets making us, 177–179 seller misrepresentation, 52–55 sellers, knowing more than buyers, 41, 44–55 Seven Minute Abs, 172 Shakin’ Cat Midgets gang, 61 Shapley, Lloyd, 134–136, 137–138, 163–164 Shapley-Gale algorithm, 137–140 Shi, Peng, 148 Shleifer, Andrei, 180–181 shopping malls, as two-sided markets, 122–123 Shoup, Carl, 85 sick organizations, 142–143 signaling model applications of, 66–68 commitment signs, 62–66 competitive signaling, 69–71 integrity, 71–75 Silicon Valley, market friction and, 169–173 Skoll, Jeff, 39–40, 43, 51 Smith, Adam, 21 Snider, James, 42 social efficiency, auctions, 89 social well-being, assessing, 22 Solow, Robert, 35 Solow model, 35 Sönmez, Tayfun, 144 Sony’s Blu-ray format war, 125–126 sorority rush, 140 spectrum auction theory, 102–103 Spence, Michael, 62–66 Stack, Charles, 42–43 Stalag VII-A POW camp market, 5–6, 7–10, 13 stamp collecting, 82–84 Stiglitz, Joseph, 35–36, 76, 182 strategy proofness mechanism, 145 student to school matching, 138–139, 141–142, 143–149 Summers, Larry, 166–167 Super Bowl advertising, 70–71 supply and demand, 96 survival rates, of Japanese vs.

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Wall Street: How It Works And for Whom by Doug Henwood


accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, affirmative action, Andrei Shleifer, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, capital asset pricing model, capital controls, central bank independence, computerized trading, corporate governance, corporate raider, correlation coefficient, correlation does not imply causation, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, dematerialisation, diversification, diversified portfolio, Donald Trump, equity premium, Eugene Fama: efficient market hypothesis, experimental subject, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, George Gilder, hiring and firing, Hyman Minsky, implied volatility, index arbitrage, index fund, information asymmetry, interest rate swap, Internet Archive, invisible hand, Irwin Jacobs, Isaac Newton, joint-stock company, Joseph Schumpeter, kremlinology, labor-force participation, late capitalism, law of one price, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, London Interbank Offered Rate, Louis Bachelier, market bubble, Mexican peso crisis / tequila crisis, microcredit, minimum wage unemployment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, oil shock, Paul Samuelson, payday loans, pension reform, Plutocrats, plutocrats, price mechanism, price stability, prisoner's dilemma, profit maximization, publication bias, Ralph Nader, random walk, reserve currency, Richard Thaler, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, selection bias, shareholder value, short selling, Slavoj Žižek, South Sea Bubble, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, transcontinental railway, women in the workforce, yield curve, zero-coupon bond

Studying economics also seems to make you a nastier person. Psychological studies have shown that economics graduate students are more likely to "free ride" — shirk contributions to an experimental "public goods" account in the pursuit of higher private returns — than the general public. Economists also are less generous than other academics in charitable giving. Undergraduate economics majors are more likely to defect in the classic prisoner's dilemma game than are other majors.^ And on other tests, students grow less honest — expressing less of a tendency, for example, to return found money — after studying economics, but not after studying a control subject like astronomy (Frank, Gilovich, and Regan 1993). This is no surprise, really. Mainstream economics is built entirely on a notion of self-interested individuals, rational self-maximizers who can order their wants and spend accordingly.

The uncritical stance of most Wall Street analysts and much of the financial press reviewed in Chapter 2 makes this a bit hard to take just on the grounds of MARKET MODELS daily evidence. But even if analysts were universally honest and wise, there would still be serious communications problems between managers and stockholders. For example, according to Jeremy Stein (1989), something like a prisoners' dilemma prevails in relations between managers and the stock market. Even if participants are aware of an upward bias to earnings estimates, and even if they correct for it, managers still have an incentive to try to fool the market. If you tell the truth, your accurate estimates will be marked down by a skeptical market. So, it's entirely rational for managers to boost profits in the short term, either through accounting gimmickry or by making only investments with quick paybacks.

They seem to think that building a better model will persuade the main-streamers of the errors of their ways. 4. Of course they were asking these questions on behalf of money managers, who need advice on how to handle the trillions of dollars they "run." 5. Besides comfortable self-sufficiency, one shouldn't discount the macho feel of having dominated chaos with a complex model. 6. In a prisoners' dilemma, two experimental subjects, metaphorically partners in crime, are given the choice of betraying each other or hanging tough for monetary reward. If one defects and the other doesn't, the skunk gets 3 units. If both defect, each gets 1. If both cooperate, each gets 2. 7. One doesn't want to get too carried away naturalizing temperament and values, but the model seems particularly to drive away women and nonwhites, at least in America, because of its chilly irreality.

pages: 998 words: 211,235

A Beautiful Mind by Sylvia Nasar


Al Roth, Albert Einstein, Andrew Wiles, Brownian motion, cognitive dissonance, Columbine, experimental economics, fear of failure, Gunnar Myrdal, Henri Poincaré, invisible hand, Isaac Newton, John Conway, John Nash: game theory, John von Neumann, Kenneth Arrow, Kenneth Rogoff, linear programming, lone genius, market design, medical residency, Nash equilibrium, Norbert Wiener, Paul Erdős, Paul Samuelson, prisoner's dilemma, RAND corporation, Ronald Coase, second-price auction, Silicon Valley, Simon Singh, spectrum auction, The Wealth of Nations by Adam Smith, Thorstein Veblen, upwardly mobile, zero-sum game

Autobiographical essay, Les Prix Nobel 1994. Stockholm: Norstedts Tryckeri, 1995. ———. Plenary lecture, World Congress of Psychiatry, Madrid, 8.26.96 (unpublished). Nicholi, Armand M., Jr. The New Harvard Guide to Psychiatry. Cambridge: The Belknap Press of Harvard University, 1988. “Norbert Wiener 1894–1964.” Bulletin of the American Mathematical Society, vol. 72, no. 1, part ii (1964). Poundstone, William. Prisoners’ Dilemma. New York: Doubleday, 1992. Regis, Ed. Who Got Einstein’s Office? Reading, Mass.: Addison-Wesley, 1987. Reid, Constance. Courant in Gottingen and New York. New York: Springer Verlag, 1976. Rota, Gian-Carlo. Indiscrete Thoughts. Boston: Birkhauser, 1997. Sass, Louis A. Madness and Modernism. New York: Basic Books, 1992. Schelling, Thomas C. The Strategy of Conflict. Cambridge: Harvard University Press, 1960.

history of, 49 as mathematics capital, 50–51 Princeton University, 45 description of, 50 dinner at, 61–62 graduate housing at, 61–62 history of, 51 student life at, 61–62 Princeton University mathematics department games played at, 75–78 girls absent from, 62 grades as fiction at, 60 Nash offered one-year post at, 309–10, 311, 312 Nash’s fellowship to, 46 Nash’s graduate work at, 45–47, 49, 58–98 philosophy of education at, 60–61 rise of, 52–57, 58 students of, 64–65 teatime at, 63, 67 Principia (Newton), 85 Prisoner’s Dilemma, 118–19, 150 Prisoners Dilemma (Poundstone), 76 Private Terror/Public Places (Glass), 335 “Problème de Cauchy Pour les Equations Differentielles d’une Fluide Générale, Le” (Nash), 297 Prospect High School, 192 William Lowell Putnam Mathematics Competition, 43–44, 72, 144 Pythagoras, 94 Pythagoras’ Trousers (Wertheim), 334 quantum theory, 45, 70, 81, 138, 202, 220–221, 222–23, 236 Queen Mary, 265, 269, 282, 311–12 Rademacher, Hans, 246 Radio Corporation of America (RCA), 283, 341 Raiffa, Howard, 122 Ramanujan, Srinivasa, 12, 45, 60–61 RAND Corporation, 72, 100, 103, 104–23, 124, 147–51, 321, 363 description of, 105–7, 111–12 game theory and, 104–5, 108, 111, 115–122, 149–51 location of, 108 Nash’s dismissal from, 184–89 Nobel deliberations and, 366 practical jokes at, 111 “RAND Hymn, The” (Reynolds), 104 Randol, Burton, 286 Rappaport, Anatole, 303 rational conflict and cooperation, theory of, 13 Raymond, Sister, 193–94 RCA (Radio Corporation of America), 283, 341 Reboul, Mark, 332 Red Cross, 191 Reed-Solomon code, 144 Reidemeister group, 69 relativity, 45, 56 general theory of, 52, 70, 86, 380 special theory of, 51–52, 70, 86, 231 Reynolds, Donald V., 36, 37 Reynolds, Malvina, 104 Ricardo, David, 88 Richardson, Gillian, 297 Rider College, 345, 351 Riemann, Georg Friedrich Bernhard, 12, 129, 157, 230 Riemann Hypothesis, 19, 20, 138, 229–32, 236, 238, 241, 243, 277 Nash’s presentations on, 245–46, 251 Riemannian manifolds, embedding of, 155–63, 203, 204, 218, 219, 345 Rigby, Fred D., 125, 126 Risperadol, 384 Roberts, John, 376, 377 Robinson, Julia, 38 Rockefeller, Nelson, 336 Rockefeller Foundation, 53, 84 Rogers, Adrienne, 223 Rogers, Hartley, 76, 223, 241 Roosevelt, Franklin D., 56 Rose, Wickliffe, 53 Rosenberg, Ethel, 110, 185 Rosenberg, Julius, 110, 185 Rota, Gian-Carlo, 59, 162, 220, 223, 236 Nash’s McLean commitment and, 257 and onset of Nash’s schizophrenia, 241, 251 Rota, Terry, 223 Roth, Al, 150, 362 Roth, Klaus F., 226 Rothschild, Michael, 374 Rousseau, Jean-Jacques, 273 Royal Swedish Academy of Arts and Letters, 357 Royal Swedish Academy of Sciences, 356–373 secrecy of, 357 see also Nobel Prize in economics Rubinstein, Ariel, 354–55, 360, 362 Rudolf, Archduke, 191 Russell, Bertrand, 14, 35, 118 Russell, Henry Norris, 51 Russell, Lindsay, 172 Rutgers University, 346 Sabin, Betty, 195 SAC (Strategic Air Command), 121 Sacco, Nicola, 261 Sackel, Manfred, 293 St.

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Free culture: how big media uses technology and the law to lock down culture and control creativity by Lawrence Lessig


Brewster Kahle, Cass Sunstein, creative destruction, future of journalism, George Akerlof, Innovator's Dilemma, Internet Archive, invention of the printing press, Kenneth Arrow, Kevin Kelly, knowledge economy, Louis Daguerre, new economy, prediction markets, prisoner's dilemma, profit motive, rent-seeking, Richard Florida, Richard Stallman, Ronald Coase, Ronald Reagan, Saturday Night Live, Silicon Valley, software patent, transaction costs

Mehra, "Copyright and Comics in Japan: Does Law Explain Why All the Comics My Kid Watches Are Japanese Imports?" Rutgers Law Review 55 (2002): 155, 182. "[T]here might be a collective economic rationality that would lead manga and anime artists to forgo bringing legal actions for infringement. One hypothesis is that all manga artists may be better off collectively if they set aside their individual self-interest and decide not to press their legal rights. This is essentially a prisoner's dilemma solved." [25] The term intellectual property is of relatively recent origin. See Siva Vaidhyanathan, Copyrights and Copywrongs, 11 (New York: New York University Press, 2001). See also Lawrence Lessig, The Future of Ideas (New York: Random House, 2001), 293 n. 26. The term accurately describes a set of "property" rights—copyright, patents, trademark, and trade-secret—but the nature of those rights is very different

pages: 292 words: 88,319

The Infinite Book: A Short Guide to the Boundless, Timeless and Endless by John D. Barrow


Albert Einstein, Andrew Wiles, anthropic principle, Arthur Eddington, cosmological principle, dark matter, Edmond Halley, Fellow of the Royal Society, Georg Cantor, George Santayana, Henri Poincaré, Isaac Newton, mutually assured destruction, Olbers’ paradox, prisoner's dilemma, Ray Kurzweil, short selling, Stephen Hawking, Turing machine

We are talking here about countable infinities in Cantor’s sense. The same conclusions would hold for uncountable infinites as well. 22. C.S. Lewis, Out of the Silent Planet (1938), Perclandra (1943), That Hideous Strength (1945). 23. We know that certain basic altruistic actions are optimal strategies for individuals playing evolutionary ‘games’ with others. This leads to cooperation of the Prisoners’ Dilemma variety and behaviour, in which an ‘I’ll scratch your back if you’ll scratch mine’ philosophy is the best in the sense that any deviation from it by any player sees them worse off. However, it is interesting that human altruistic behaviour, especially that to which many people aspire and even more people admire, goes far beyond this minimal tit-for-tat altruism that arises for selfish reasons.

pages: 292 words: 81,699

More Joel on Software by Joel Spolsky


a long time ago in a galaxy far, far away, barriers to entry, Black Swan, Build a better mousetrap, business process, call centre, Danny Hillis, David Heinemeier Hansson, failed state, Firefox, fixed income, George Gilder, Larry Wall, low cost carrier, Mars Rover, Network effects, Paul Graham, performance metric, place-making, price discrimination, prisoner's dilemma, Ray Oldenburg, Ruby on Rails, Sand Hill Road, Silicon Valley, slashdot, social software, Steve Ballmer, Steve Jobs, Superbowl ad, The Great Good Place, type inference, unpaid internship, wage slave, web application, Y Combinator

The rationale behind this is that if you freeze, they’ll pick you off one at a time until you’re all dead, but if you charge, only some of you will die by running over mines, so for the greater good, that’s what you have to do. The trouble is that no rational soldier would charge under such circumstances. Each individual soldier has an enormous incentive to cheat: freeze in place and let the other, more macho, soldiers do the charging. It’s sort of like a Prisoners’ Dilemma. In life or death situations, the military needs to make sure that they can shout orders and soldiers will obey them even if the orders are suicidal. That means soldiers need to be programmed to be obedient in a way that is not really all that important for, say, a software company. In other words, the military uses Command and Control because it’s the only way to get 18-year-olds to charge through a minefield, not because they think it’s the best management method for every situation. 40 More from Joel on Software In particular, in software development teams where good developers can work anywhere they want, playing soldier is going to get pretty tedious, and you’re not really going to keep anyone on your team.

pages: 294 words: 81,292

Our Final Invention: Artificial Intelligence and the End of the Human Era by James Barrat


3D printing, AI winter, Amazon Web Services, artificial general intelligence, Asilomar, Automated Insights, Bayesian statistics, Bernie Madoff, Bill Joy: nanobots, brain emulation, cellular automata, Chuck Templeton: OpenTable, cloud computing, cognitive bias, commoditize, computer vision, cuban missile crisis, Daniel Kahneman / Amos Tversky, Danny Hillis, data acquisition, don't be evil, drone strike, Extropian, finite state, Flash crash, friendly AI, friendly fire, Google Glasses, Google X / Alphabet X, Isaac Newton, Jaron Lanier, John Markoff, John von Neumann, Kevin Kelly, Law of Accelerating Returns, life extension, Loebner Prize, lone genius, mutually assured destruction, natural language processing, Nicholas Carr, optical character recognition, PageRank, pattern recognition, Peter Thiel, prisoner's dilemma, Ray Kurzweil, Rodney Brooks, Search for Extraterrestrial Intelligence, self-driving car, semantic web, Silicon Valley, Singularitarianism, Skype, smart grid, speech recognition, statistical model, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, Stuxnet, superintelligent machines, technological singularity, The Coming Technological Singularity, Thomas Bayes, traveling salesman, Turing machine, Turing test, Vernor Vinge, Watson beat the top human players on Jeopardy!, zero day

On the stick side, fear-mongering is a reliable social engineering tactic—what if at this moment your enemies are training ASI against you? In a real-world situation this might work—but what about an invented situation, like the AI-Box Experiment? When I asked Yudkowsky about his methods he laughed, because everyone anticipates a diabolically clever solution to the AI-Box Experiment—some logical sleight of hand, prisoner-dilemma tactics, maybe something disturbing. But that’s not what happened. “I did it the hard way,” he said. Those three successful times, Yudkowsky told me, he simply wheedled, cajoled, and harangued. The Gatekeepers let him out, then paid up. And the two times he lost he had also begged. Afterward he didn’t like how it made him feel. He swore to never do it again. * * * Leaving Yudkowsky’s condo, I realized he hadn’t told me the whole truth.

pages: 323 words: 95,939

Present Shock: When Everything Happens Now by Douglas Rushkoff


algorithmic trading, Andrew Keen, bank run, Benoit Mandelbrot, big-box store, Black Swan, British Empire, Buckminster Fuller, cashless society, citizen journalism, clockwork universe, cognitive dissonance, Credit Default Swap, crowdsourcing, Danny Hillis, disintermediation, Donald Trump, double helix, East Village, Elliott wave, European colonialism, Extropian, facts on the ground, Flash crash, game design, global supply chain, global village, Howard Rheingold, hypertext link, Inbox Zero, invention of agriculture, invention of hypertext, invisible hand, iterative process, John Nash: game theory, Kevin Kelly, laissez-faire capitalism, Law of Accelerating Returns, loss aversion, mandelbrot fractal, Marshall McLuhan, Merlin Mann, Milgram experiment, mutually assured destruction, negative equity, Network effects, New Urbanism, Nicholas Carr, Norbert Wiener, Occupy movement, passive investing, pattern recognition, peak oil, price mechanism, prisoner's dilemma, Ralph Nelson Elliott, RAND corporation, Ray Kurzweil, recommendation engine, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, Skype, social graph, South Sea Bubble, Steve Jobs, Steve Wozniak, Steven Pinker, Stewart Brand, supply-chain management, the medium is the message, The Wisdom of Crowds, theory of mind, Turing test, upwardly mobile, Whole Earth Catalog, WikiLeaks, Y2K, zero-sum game

The reason real human behavior differs from that of the theoretically self-interested prisoners is that the latter are prisoners to begin with. An incarcerated person is the most literal example of one living within a closed environment. These are individuals without access to information and incapable of exercising basic freedoms. All feedback and iteration are removed, other than that between the prisoner and his keepers. With the benefit of several hundred prisoner dilemma studies to mine for data and differences, Méro found that the more the “prisoners” knew about their circumstances and those of their fellow prisoners, the less selfishly they behaved. Communication between prisoners invariably yielded more cooperation. Isolation bred paranoia, as did more opacity about how the rules worked. Communication, on the other hand, generates lateral feedback loops and encourages a more extended time horizon.

pages: 371 words: 36,271

Libertarian Idea by Jan Narveson


centre right, invisible hand, means of production, Menlo Park, night-watchman state, Pareto efficiency, Peter Singer: altruism, prisoner's dilemma, psychological pricing, rent-seeking, zero-sum game

And the only reason why modern governments in the more decent places in the world are tolerable at all is because they approximate to some degree the model of free men and women working in concert or individually to get things done that they want done. The question before us, then, is whether there is any reason—any excuse, one might better say—for supposing that we shall do these things better by having a government than by going without one. Public Goods Arguments The modern theory of government has one major crutch among theorists. It is a special application of the problem of Prisoners Dilemma and is widely thought to yield an overwhelming argument for the State. Clearly, we must have a careful look. Public goods are one form of „externality‟. Suppose there is an exchange between A and B; each transfers something to the other in return for something he prefers to what he had before. But in the process someone else, C, ends up better or worse off, and does so without having the power to prevent it, where it‟s worse off, or without A‟s or B‟s having the power to prevent it, where it‟s better off.

pages: 448 words: 116,962

Singularity Sky by Stross, Charles


anthropic principle, cellular automata, Conway's Game of Life, cosmological constant, Doomsday Clock, Extropian, gravity well, Kuiper Belt, life extension, means of production, new economy, phenotype, prisoner's dilemma, skinny streets, technological singularity, uranium enrichment

Are you complaining because we're not making demands?" Sister Seventh chomped at the air, clattering her tusks together. "Ack! Quote, the viability of a postsingularity economy of scarcity is indicated by the transition from an indirection-layer-based economy using markers of exchange of goods and services to a tree-structured economy characterized by optimal allocation of productivity systems in accordance with iterated tit-for-tat prisoner's dilemma. Money is a symptom of poverty and inefficiency. Unquote, the Marxist-Gilderist manifesto. Chapter two. Why you not performing?" "Because most of our people aren't ready for that," Burya said bluntly. A tension in his back began to relax; if this monstrous Critic wanted to debate revolutionary dialectic, well of course he could oblige! "When we achieve the post-technological Utopia, it will be as you say.

pages: 625 words: 167,097

Kiln People by David Brin


Chuck Templeton: OpenTable, index card, jitney, life extension, pattern recognition, phenotype, price anchoring, prisoner's dilemma, Schrödinger's Cat, telepresence, Vernor Vinge, your tax dollars at work

Whistle-blower prizes grew bigger as one white-collar scam after another collapsed, feeding half of the resulting fines back into new rewards, enticing even more trusted lieutenants, minions, and right-hand men to blab away. To everyone's surprise, a world filled with cameras proved to offer pretty good safety against retribution by most mobs. Many gangs and cabals destroyed themselves simply by trying to enforce silence on defectors. The implacable logic of the Prisoner's Dilemma triggered collapse of one conspiracy after another as informers became public heroes, accelerating the rush for publicity and treasure. For a time it looked as if perfidy had its back to the proverbial wall. Any criminal scheme with more than three members appeared doomed from the start. Then dittotech arrived. Nowadays, it's possible once again to have a gang of ruthless accomplices, if all of them are you!

pages: 443 words: 123,526

Glasshouse by Stross, Charles


cognitive dissonance, experimental subject, gravity well, loose coupling, peer-to-peer, phenotype, prisoner's dilemma, sensible shoes, theory of mind, white picket fence

A faint frown wrinkles the skin between Jen's eyebrows. "It's not just about yesterday," she emphasizes. "Everyone's entitled to their little mistakes. But it turns out that in addition to our points being averaged within the cohort, each cohort in the parish gets to talk about what they've achieved in the preceding week, and the other cohorts rate them on their behavior before voting to add or subtract bonus points." "It's an iterated prisoner's dilemma scenario, with collective liability," Angel cuts in, just as one of the operator zombies twiddles a knob on a polished metal tank behind the bar that makes a noise like a pressure leak. "Very elegant experimental design, if you ask me." "It's an—" Oh shit. I nod, guardedly, unsure how much I can reveal: "I think I see." "Yes." Angel nods. "We're going to have to defend your behavior yesterday, and the other groups can add points or subtract them depending on whether they think we deserve it and on whether they think we'll hold a grudge when it's their turn in the ring."

pages: 452 words: 134,502

Hacking Politics: How Geeks, Progressives, the Tea Party, Gamers, Anarchists and Suits Teamed Up to Defeat SOPA and Save the Internet by David Moon, Patrick Ruffini, David Segal, Aaron Swartz, Lawrence Lessig, Cory Doctorow, Zoe Lofgren, Jamie Laurie, Ron Paul, Mike Masnick, Kim Dotcom, Tiffiniy Cheng, Alexis Ohanian, Nicole Powers, Josh Levy


4chan, Affordable Care Act / Obamacare, Airbnb, Bernie Sanders, Burning Man, call centre, Cass Sunstein, collective bargaining, creative destruction, crony capitalism, crowdsourcing, don't be evil, facts on the ground, Firefox, hive mind, immigration reform, informal economy, jimmy wales, Kickstarter, liquidity trap, Mark Zuckerberg, obamacare, Occupy movement, offshore financial centre, peer-to-peer, Plutocrats, plutocrats, prisoner's dilemma, QR code, rent-seeking, Silicon Valley, Skype, technoutopianism, WikiLeaks, Y Combinator

Even were we all, indeed, the rational, omniscient, self-interested atoms posited by the California Ideology, it’s clear that many economic problems would best be solved through collective action. Two illustrations that I hope might appeal to my data-driven friends in Silicon Valley and Alley follow. First of all: there’s an essential game theory problem that helps sustain the decrepit state of our economy—it can be illuminated by that most canonical game theory thought experiment, in fact: in the Prisoners’ Dilemma, two partners in crime are hauled into jail and separated for questioning. If one snitches and the other doesn’t, the rat walks and the one who stays quiet goes to jail for ten years; if each gives up the other, they both go to jail for three years; if neither talks, they both go free. In the Prisoner’s Dilemma the rational decision, yielding the best-expected outcome for each criminal, has the pair ratting one another out, and taking the middling sentences.

pages: 500 words: 145,005

Misbehaving: The Making of Behavioral Economics by Richard H. Thaler


3Com Palm IPO, Albert Einstein, Alvin Roth, Amazon Mechanical Turk, Andrei Shleifer, Apple's 1984 Super Bowl advert, Atul Gawande, Berlin Wall, Bernie Madoff, Black-Scholes formula, capital asset pricing model, Cass Sunstein, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, conceptual framework, constrained optimization, Daniel Kahneman / Amos Tversky, delayed gratification, diversification, diversified portfolio, Edward Glaeser, endowment effect, equity premium, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, George Akerlof, hindsight bias, Home mortgage interest deduction, impulse control, index fund, information asymmetry, invisible hand, Jean Tirole, John Nash: game theory, John von Neumann, Kenneth Arrow, late fees, law of one price, libertarian paternalism, Long Term Capital Management, loss aversion, market clearing, Mason jar, mental accounting, meta analysis, meta-analysis, money market fund, More Guns, Less Crime, mortgage debt, Myron Scholes, Nash equilibrium, Nate Silver, New Journalism, nudge unit, Paul Samuelson, payday loans, Ponzi scheme, presumed consent, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, random walk, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Silicon Valley, South Sea Bubble, statistical model, Steve Jobs, technology bubble, The Chicago School, The Myth of the Rational Market, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, ultimatum game, Vilfredo Pareto, Walter Mischel, zero-sum game

Available at: Hoffman, Moshe, Sigrid Suetens, Martin A. Nowak, and Uri Gneezy. 2012. “An Experimental Test of Nash Equilibrium versus Evolutionary Stability.” In Proc. Fourth World Congress of the Game Theory Society (Istanbul, Turkey), session 145, paper 1. Hofstadter, Douglas R. 1983. “Computer Tournaments of the Prisoners-Dilemma Suggest How Cooperation Evolves.” Scientific American 248, no. 5: 16. Hogarth, Robin M., and Melvin W. Reder, eds. 1986. “The Behavioral Foundations of Economic Theory: Proceedings of a Conference October 13–15, 1985.” Journal of Business 59, no. 4, part 2 (October): S181–505. ———, eds. 1987. Rational Choice: The Contrast Between Economics and Psychology. Chicago: University of Chicago Press.

pages: 405 words: 130,840

The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom by Jonathan Haidt


crack epidemic, delayed gratification, feminist movement, Ignaz Semmelweis: hand washing, invisible hand, job satisfaction, Lao Tzu, meta analysis, meta-analysis, Peter Singer: altruism, PIHKAL and TIHKAL, placebo effect, prisoner's dilemma, Ralph Waldo Emerson, selective serotonin reuptake inhibitor (SSRI), stem cell, Steven Pinker, telemarketer, the scientific method, ultimatum game, Walter Mischel, zero-sum game

J a m e s and Bolstein, 1992. 26. Cialdini et al., 1975. 27. Benton, Kelley, and Liebling, 1972. 28. Lakin and Chartrand, 2 0 0 3 . 29. van Baaren et al., 2004. 30. van Baaren et al., 2003. C H A P T E R 4 1. Dhatnma-pada, verse 252, in Mascaro, 1973. 2. "Outing Mr. Schrock," Washington Post, September 2, 2 0 0 4 , A 2 2 . 3. Horn and Haidt, in preparation. 4. For extensive discussions of the prisoner's dilemma game, s e e Axelrocj, ll>84; Wright, 1994. 5. M a c h i a v e l l i , 'live Discourses, 1 . 2 5 . 6. Byrne and Whiten, 1988. 7. Batson et al., 1997; Batson et al., 1999. 8. Buchanan, 1965, 53. 9. Pachocinski, 1996, 222. 10. Wright, 1994, 13. I 1. Kuhn, 1991. - , 12. Perkins, Farady, and Bushey, 1991. 13. Kunda, 1990; Pyszczynski and Greenberg, 1987. 14. Franklin, 1962/c. 1791, 43.

pages: 753 words: 233,306

Collapse by Jared Diamond


clean water, colonial rule, correlation does not imply causation, cuban missile crisis, Donner party, European colonialism, Exxon Valdez, illegal immigration, job satisfaction, means of production, new economy, North Sea oil, Piper Alpha, polynesian navigation, prisoner's dilemma, South Sea Bubble, statistical model, Stewart Brand, Thomas Malthus, trade route, transcontinental railway, unemployed young men

Innumerable other examples of such behavior in the business world could be cited, but it is not as universal as some cynics suspect. In the next chapter we shall examine how that range of outcomes results from the imperative for businesses to make money to the extent that government regulations, laws, and public attitudes permit. One particular form of clashes of interest has become well known under the name "tragedy of the commons," in turn closely related to the conflicts termed "the prisoner's dilemma" and "the logic of collective action." Consider a situation in which many consumers are harvesting a communally owned resource, such as fishermen catching fish in an area of ocean, or herders grazing their sheep on a communal pasture. If everybody overharvests the resource, it will become depleted by overfishing or overgrazing and thus decline or even disappear, and all of the consumers will suffer.

pages: 901 words: 234,905

The Blank Slate: The Modern Denial of Human Nature by Steven Pinker

affirmative action, Albert Einstein, Alfred Russel Wallace, anti-communist, British Empire, clean water, cognitive dissonance, Columbine, conceptual framework, correlation coefficient, correlation does not imply causation, cuban missile crisis, Daniel Kahneman / Amos Tversky, Defenestration of Prague, desegregation, epigenetics, Exxon Valdez, George Akerlof, germ theory of disease, ghettoisation, glass ceiling, Hobbesian trap, income inequality, invention of agriculture, invisible hand, long peace, meta analysis, meta-analysis, More Guns, Less Crime, Murray Gell-Mann, mutually assured destruction, Norman Mailer, Peter Singer: altruism, phenotype, Plutocrats, plutocrats, Potemkin village, prisoner's dilemma, profit motive, QWERTY keyboard, Richard Feynman, Richard Feynman, Richard Thaler, risk tolerance, Robert Bork, Rodney Brooks, Saturday Night Live, speech recognition, stem cell, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, the new new thing, theory of mind, Thomas Malthus, Thorstein Veblen, ultimatum game, urban renewal, War on Poverty, women in the workforce, Yogi Berra, zero-sum game

The World War I soldiers changed the rules in a way that has been much discussed in evolutionary psychology: play it repeatedly and apply a strategy of reciprocity, remembering the other player’s last action and repaying him in kind.110 But in many antagonistic encounters that is not an option, because when the other player defects he can destroy you—or, in the case of the Cuban Missile Crisis, destroy the world. In that case the players had to recognize they were in a futile game and mutually decide to get out of it. Glover draws an important conclusion about how the cognitive component of human nature might allow us to reduce violence even when it appears to be a rational strategy at the time: Sometimes, apparently rational self-interested strategies turn out (as in the prisoners’ dilemma…) to be self-defeating. This may look like a defeat for rationality, but it is not. Rationality is saved by its own open-endedness. If a strategy of following accepted rules of rationality is sometimes self-defeating, this is not the end. We revise the rules to take account of this, so producing a higher-order rational strategy. This in turn may fail, but again we go up a level. At whatever level we fail, there is always the process of standing back and going up a further level.111 The process of “standing back and going up a further level” might be necessary to overcome the emotional impediments to peace as well as the intellectual ones.