Moreover, for the games that will be analyzed - in which players can only rank outcomes ("ordinal games") but not attach numerical values to them ("cardinal games") - they may not always exist. Nash equilibria do not necessarily lead to the best outcomes for one, or even both, players. Mathematician who received the Nobel prize in economics in 1994 for his work on game theory. Two such strategies are together known as a Nash equilibrium, named after John Nash, a This will be true when neither player, by departing from its strategy, can do better. In some two-person, two-strategy games, there are combinations of strategies for the players that are in a certain sense "stable". The possible outcomes of a game depend on the choices made by all players, and can be ranked in order of It applies to situations ( games) where there are two or more people (called players) each attempting to choose between two more more ways of acting (called strategies). Game theory is a branch of mathematics concerned with decision-making in social interactions. Indeed, Theodore Sorensen, special counsel to President John Kennedy, used the language of "moves" to describe the deliberations of Excom, the Executive Committee of keyĪdvisors to Kennedy during the Cuban missile crisis: "We discussed what the Soviet reaction would be to any possible move by the United States, what our reaction with them would have to be to that Soviet action, and so on, trying to follow each of those roads to their ultimate conclusion." Classical Game Theory and the Missile Crisis I will use the Cuban missile crisis to illustrate parts of the theory, which is not just an abstract mathematical model but one that mirrors the real-life choices, and underlying thinking, of flesh-and-blood decision makers. More important, the theory explicates the dynamics of play, based on the assumption that players think not just about the immediate consequences of their actions but their repercussions for future play as On the other hand, the "theory of moves," which is founded on game theory but radically changes its standard rules of play, does retrodict, or make past predictions of, the leaders' choices. Another game more accurately represents the preferences of American and Soviet leaders, but even for this game standard game theory does not explain their choices. While ostensibly a game of Chicken, the Cuban missile crisis is in fact not well modelled by this game. In the novel Rebel without a Cause, which was later made into a movie starring James Dean, the drivers were two teenagers, but instead ofīearing down on each other they both raced toward a cliff, with the object being not to be the first driver to slam on his brakes and thereby "chicken out", while, at the same time, not plunging over the cliff. The players may be drivers approaching each other on a narrow road, in which each has the choice of swerving to avoid a collision or not swerving. He was referring to signals by the Soviet Union that it desired to defuse the most dangerous nuclear confrontation ever to occur between the superpowers, which many analysts have interpreted as a classic instanceĬhicken is the usual game used to model conflicts in which the players are on a collision course. "We're eyeball to eyeball, and I think the other fellow just blinked" were the eerie words of Secretary of State Dean Rusk at the height of the Cuban missile crisis in October 1962.
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