Game Theory

The speaker, Ben Polak, introduces himself as a professor of economics at Yale who teaches Game Theory. He discusses the concept of Game Theory as the analysis of situations where outcomes depend not just on individual actions but also on the actions of others. He gives an example of two competing firms like Apple and Google to explain the concept.

Polak explains that at Yale, Game Theory is taught by playing games in class to help students learn through practical application. He mentions the technique of teaching games in class has spread worldwide. Students analyze and learn from games like the sponge-throwing game demonstrated in the lecture.

The speaker engages the audience in a sponge-throwing game demonstration involving picking volunteers, wetting sponges, and simulating a playful competition. The game involves strategic decision-making on when to throw the sponge to hit the opponent.

Polak delves into the analysis of game strategies and decision-making processes in scenarios like the sponge-throwing game. He explains the concept of preemption, understanding probabilities, and using backward induction to determine the optimal time to make a move in a game.

The speaker discusses the concept of overconfidence bias and how it affects decision-making in games and real-life situations. He explains how individuals tend to overestimate their abilities and make irrational decisions based on biases like overconfidence and proactive behavior.

Discussion on skill curve strategy in game theory and the importance of understanding opponents' skill curves.

Exploration of game theory, incentives, and the relationship with the grad school dean.

Challenges and complexities in considering opponents' skill curves in a game.

Explanation of the increased mathematical complexity when considering multiple skill curves and probabilities in a game.

Discussion on risk aversion and its impact when there are three outcomes in a game.

Exploration of the concept of existence levels and fragility in social sciences and economics.

Efforts in mathematical economics to tease out insights and predictions in social sciences.

Utilizing thought experiments to explore changing assumptions and outcomes in theoretical economics.

Encouragement for constructive discussions between scientists and humanists in exploring different perspectives.