
Game theory in practice (2011) - hemapani
http://www.economist.com/node/21527025
======
zeteo
> Game-theory software can even help locate a terrorist's hideout [... by
> estimating] on a 100-point scale the importance a wanted man attaches to his
> likes (fishing, say) and priorities (remaining hidden or [...] recruiting
> suicide-bombers). Such factors determine where and how terrorists decide to
> live. Game-theory software played an important role in finding Osama bin
> Laden's hideout in Abbottabad, Pakistan, says Mr Owen

After a crescendo of unsubstantiated claims, the article finally reaches a
well-known case. The claims here seem laughable. First, by all accounts, bin
Laden was pretty stationary in his compound and any hot-air model of his
psychology regarding fishing vs. recruiting would have been irrelevant.
Second, the US government at the time would have been ecstatic to push a story
about game theory finding bin Laden - it would have protected sources on the
ground, the guy doing a fake vaccination campaign etc.

Regrettably, the article's agenda seems to be no more than pushing a gaggle of
unsubstantiated claims that would help consultants with their magical game-
theory software make money off gullible companies / governments.

~~~
arcanus
> that would help consultants with their magical game-theory software make
> money off gullible companies / governments

Yep. Game theory is also a great complex for generating academic papers, think
tank analyses, etc.

In reality the field seems barely predictive under the best of circumstances.

~~~
igorsteinmacher
Hi @arcanus, sorry approaching him here. I am an author of a paper you
commented on a past thread here
([https://news.ycombinator.com/item?id=11977747](https://news.ycombinator.com/item?id=11977747)),
and we would like to share your feedback. Would you please contact me at
igorsteinmacher [] gmail?

Best

------
aaron-lebo
It's a little frustrating how this article uses "game theory" as an abstract
term that covers pretty much all of de Mesquita's analysis without really
explaining _how_ it is used.

I am guessing much of de Mesquita's predictive power is less classic game
theory and more of an application of his selectorate theory. [0] To
oversimplify leaders stay in power through winning coalitions that are much
smaller than the populace as a whole. If you can identify that small group
that keeps a leader in power and analyze shifts in support within that group,
you can make some interesting "predictions".

That being said BBDM while very smart is also a great marketer and he's wrong
sometimes, too. [1]

[https://en.wikipedia.org/wiki/Selectorate_theory](https://en.wikipedia.org/wiki/Selectorate_theory)

[http://decision-making.moshe-
online.com/criticism_of_bueno_d...](http://decision-making.moshe-
online.com/criticism_of_bueno_de_mesquita.html#successor)

~~~
vacri
Reminds me of my mother's preferred online seer. With my skepticism, she told
me to go to his site and see what he predicted. "Corruption scandal in Italian
soccer league". Come on, man... pick a hard one.

But yeah, there's a lot of selection bias in these things. People remember the
predictions that worked, and forget the ones that didn't. The grandaddy of
these predictions: how many times has the Second Coming failed to materialise
so far?

------
yehi
> Bruce Bueno de Mesquita [...] has made some impressively accurate political
> forecasts

In stories like these I always like to know how many incorrect predictions
they made as well. I mean, if a squid can predict the results of a sports
game, how impressive is what Bruce Bueno de Mesquita did?

~~~
mafribe
A good proxy measure for the accuracy of BBdM's prediction would be how rich
he got out of them. Given that BBdM's mostly concerned with macroscopic
predictions about politics his claim [1] that he was right in 2/3 of his
predictions, should have translated into immense wealth.

[1] Source: an old interview with him, maybe 10 years ago. I might be _wildly_
misremembering here. Sorry, no better sources.

~~~
ThrustVectoring
Being correct in 2/3rds of predictions isn't enough to get rich - he could
very well have gotten more things wrong than the conventional wisdom that
earns $0 on average.

------
bluetwo
I'm always looking for interesting and practical uses for game theory.

~~~
Mikeb85
Poker. Playing poker takes me strait back to micro classes. EV, game theory,
all that.

It's also useful for describing a whole range of human interactions. Downside
- when you realize people are all cynical fucks, and they all behave in a sub-
optimal, selfish way.

~~~
postgeographic
You need game theory to realise people are shitty?

~~~
baq
no, just to prove it

------
Rainymood
Extremely interesting and well-written article but honestly this could use a
2011 flag ... "Technology Quarterly: Q3 2011".

------
dmichulke
> a branch of mathematics called game theory, which is often used by
> economists, to work out how events will unfold as people and organisations
> act in what they perceive to be their best interests.

If it were really used by economists in power (e.g., in central banks or
government), they would have foreseen the end of Bretton Woods, the early 80s
recession, the 2000 and 2008 economic crisis, the currency race to the bottom,
the strictly monotonically increasing gov't debt, the current housing price
increases, ...

They might have also figured out that taxes to prevent smoking are likely to
have the same effect if you apply them to employment and other productive
applications.

Yet, here we are. The only question that remains is: Stupidity or malevolence?

~~~
VodkaHaze
> The only question that remains is: Stupidity or malevolence?

Stupidity. On your end. Let me address your claims one by one.

> the end of Bretton Woods

Ending Bretton Woods was voluntary. The gold standard leads to volatile
inflation; look at the graph in [1]. Volatile inflation is bad because it
makes transactions that take time to repay uncertain, see this video [2] for a
layman explanation

> the early 80s recession, the 2000 and 2008 economic crisis

If economists at a central bank can foresee a crisis, the crisis doesn't
happen. Full stop. What you are left, is, by definition, the ones people who
work in regulation didn't see coming. Also note that those crises weren't
foreseen by almost anyone, because of the nature of markets.

If you want to prevent crises, you need to put regulation up front that
discourages the kind of short-sighted and reckless managerial and shareholder
behavior that leads to those.

Hinging the stability of the economic system on the ability to catch an
upcoming crisis in the making is doomed to fail, because you need a 100%
accuracy (like making a system unhackable -- negative goals are much harder
than positive goals).

> the currency race to the bottom

Do you mean low positive inflation, or are you buying into Donal Trump's
talking points? Because if it's the former, it's intended, if it's the latter,
I'm sorry to say you'll need sources to convince anyone that that's indeed
something that exists.

All in all, what your post translates to is "I don't understand any of these
things but I'm angry", which is not the right way to advise policy.

[1]
[https://upload.wikimedia.org/wikipedia/commons/8/83/US_Infla...](https://upload.wikimedia.org/wikipedia/commons/8/83/US_Inflation.png)

[2]
[https://www.youtube.com/watch?v=MfM1utsEEZA](https://www.youtube.com/watch?v=MfM1utsEEZA)

~~~
dmichulke
> Ending Bretton Woods was voluntary.

"You can't fire me, because I quit" \- It's as voluntary as that, i.e., not.
There were good reasons to have something close to a Gold standard in place
but it just could not be maintained as the quantity of money in circulation
increased continuously.

> If economists at a central bank can foresee a crisis, the crisis doesn't
> happen.

That does not address the fact that they didn't foresee it.

> If you want to prevent crises, you need to put regulation up

Or you just don't finance crises by having a naturally determined interest
rate (instead of one determined by the central bank).

> the currency race to the bottom

I mean the fact that every major central bank inflates its balance sheet in
order to decrease the value of its currency and "stay competitive".

Your comment is very condescending.

