
Game Theory – Prison Breakthrough - johnwheeler
http://www.economist.com/news/economics-brief/21705308-fifth-our-series-seminal-economic-ideas-looks-nash-equilibrium-prison
======
oli5679
This article presents the reflections of Game Theorist, Ariel Rubenstien,
about the practical uses of his discipline.

[http://www.faz.net/aktuell/feuilleton/debatten/game-
theory-h...](http://www.faz.net/aktuell/feuilleton/debatten/game-theory-how-
game-theory-will-solve-the-problems-of-the-euro-bloc-and-stop-iranian-
nukes-12130407.html)

It's worth reading the whole article, but he cautious about the predictive
power of many of Game-theory's most elegant models:

"In my view, game theory is a collection of fables and proverbs. Implementing
a model from game theory is just as likely as implementing a fable. A good
fable enables us to see a situation in life from a new angle and perhaps
influence our action or judgment one day. But it would be absurd to say that
“The Emperor’s New Clothes” predicts the path of Berlusconi"

To give some context, he is one the 100 most cited economists in the world,
coauthor of the most popular graduate Game Theory textbook and has a
reasonable chance of winning a Nobel over the next couple of decades for his
work on game-theoretic bargaining models.

~~~
adrianratnapala
Though now that he points it out, it seems like the path of Berlusconi is
rather well explained by the "Emperor's New Clothes".

------
ucarion
The article describes _interpersonal_ Prisoner's Dilemmas, where if every
person optimizes for themselves, the final result will be worse for each and
every person (than if they had all shown restraint). As the article points
out, this may explain pollution and overfishing.

There are also _intertemporal_ Prisoner's Dilemmas, where each if person-at-
time-T optimizes for their immediate goals, the final result will be worse for
each and every moment in that person's life. This may explain why we overeat:
any given moment is made better with a Big Mac, but if you ate a Big Mac all
the time every moment your life would be made much worse than if you led a
restrained, healthy life.

~~~
andrewflnr
If only there was some way for versions of yourself at different times to
coordinate. Oh, right...

~~~
nitrogen
It seems the act of coordination itself can be modeled similarly to not eating
a big mac.

------
chapium
I came here thinking this was a recent breakthrough, but this appears to just
be an overview of the 1948 Prisoners Dillemma and an update from 1994...

------
j2kun
For another view on how the Prisoner's Dilemma should affect your worldview
beyond academia, see this recent article by Tim Gowers on the Brexit:
[https://gowers.wordpress.com/2016/06/02/6172/](https://gowers.wordpress.com/2016/06/02/6172/)

~~~
Kenji
I skimmed the article and I have to say, I am not convinced at all.
Decentralization can be achieved without causing situations like prisoner's
dilemma. Look at Torrent for example, it works without a central authority
enforcing things. While total decentralization is ineffective, centralization
is authoritarian and destructive. We have to construct a system where it pays
off to be honest and fair, such that force and subjugation is not necessary.
This is the only way forward. And frankly, I do not see the EU play a positive
role in any of this.

~~~
natermer
centralization also results in severely less optimal results because the
information and experience available to central planners is substantially less
then information available to individual actors.

Not only is the information of poorer quality prior to making the decisions
the quality of feedback is poor. It becomes very difficult to understand the
consequences of decisions when you have nothing to compare it to.

In a decentralized system the individual actors can see the results of
decisions made by other actors and change accordingly. In a centralized system
there is no other 'center' to compare it against. They could be making good
decisions or they could possibly be not.

In the real-world the amount of unknown variables is so high that even
decisions made with the best intentions, most rational approach, and most
perfect knowledge possible can fail miserably. It wouldn't be the fault of the
central planners, per say, but it will still be a negative outcome.

Also a decentralized system the consequences to negative decisions is
dampened. Even if the bad decision was done out of perfect rationality there
is enough irrational actors that somebody else will likely stumble across a
superior decision and thus guide a more positive outcome. A bad decision by a
individual actor will potentially be devastating to that actor, but the
effects of that decision will be limited to that actor and those around him
that may be negatively impacted.. it won't impact the entire group and his
example will lead to better decision making in the near future.

With centralized planning the bad decisions affect the entire group and it can
take much much longer for the bad decision to be recognized as bad and even
longer to change. By that time you can fix the problem have the group adjusted
to work around the bad decisions and undoing the bad will just create new
issues.

~~~
j2kun
> Also a decentralized system the consequences to negative decisions is
> dampened. Even if the bad decision was done out of perfect rationality there
> is enough irrational actors that somebody else will likely stumble across a
> superior decision and thus guide a more positive outcome.

Or, alternatively, it will be a race to the bottom until the housing market
crashes.

> A bad decision by a individual actor will potentially be devastating to that
> actor, but the effects of that decision will be limited to that actor and
> those around him that may be negatively impacted

Unless that actor has nuclear weapons, poisons a water supply, destroys the
source of some resource the rest of the world depends on...

~~~
natermer
> Or, alternatively, it will be a race to the bottom until the housing market
> crashes.

The housing market crash was due to central planning. Hardly a counter point.

> Unless that actor has nuclear weapons, poisons a water supply, destroys the
> source of some resource the rest of the world depends on...

Central planners are humans.

When comparing human systems of central vs decentralized management you have
to understand that the central planners are just as prone to irrationality as
individual actors.

Pointing out that individual choices can lead to bad outcomes does not mean
that central planning choices will not lead to bad outcomes.

The problem is one of dealing with complex mulch-facteded world were
historical information will very often lead to poor decision making in the
face of change.

The lack of good information, lack of good feedback mechanisms, and inability
to gain enough experience are all severely limiting to the chances of quality
outcomes as a result of central planning.

~~~
five3
>The housing market crash was due to central planning. Hardly a counter point.

Citation needed on how central planning led to MBS and CDS exploding.

~~~
hedonistbot
Fannie Mae and Freddie Mac ->
[https://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae...](https://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac)

Admittedly not the only factor but a huge contributor.

------
LeifCarrotson
Their graphic and dilemma are nonstandard and do not match, for anyone
confused by the graphic. The normal formulation of the problem is:

\- If A and B each betray ('snitch' in the article) the other, each of them
serves 10 years in prison.

\- If A betrays B but B remains silent, A will be set free and B will serve
life in prison (and vice versa).

\- If A and B both remain silent, both of them will only serve 1 year in
prison (on the lesser charge).

In the article, the prisoners are given three choices: Silence, Betrayal, and
Confession, which confuses the issue, and the graphic provides only Silence
and Confession, which further produces confusion.

Perhaps the modern formulation is too indoctrinated with plea bargaining?

~~~
slavik81
There is no third choice. They're using both 'confess' and 'snitch' as meaning
'telling the truth about what happened'. The description in the article may be
confusing, but it does match the diagram and it's fundamentally the same as
yours.

------
formula1
For those of you thinking this is at all related to the recent de-
privitization movenent in the US prison system, it is not. This is more of a
breif history and overview.

~~~
SilasX
Yeah, the "breakthrough" in the title was very misleading. It should be
renamed to something like "the [early] history of the Prisoner's Dilemma".

~~~
mprimeaux
Agreed. After reading the article and related comment threads, my perception
is one that aligns with this view.

------
ihaveahadron
The prisoners dillema fails to take into account that both prisoners know each
other, and one of the prisoners may not make a rational decision. Say there is
prisoner a and b. Prisoner a is a drooling moron who will act again his self
interest. Prisoner b knows this. Prisoner b will do the thing that will make
him get out of jail for good. Essentially I'm not playing along with this
"riddle" because its flawed in the first place because it fails to understand
elementary consciousness.

~~~
pmontra
A friend working with inmates says that they laugh at the idea of the prisoner
dilemma. They say there is no dilemma: everybody knows that one must never
confess or there will be consequences.

These are not occasional criminals but people for which crime is a career
path, exactly the mobsters of the example in the article. They have rules to
follow which affect all their professional life in the same way we have
contracts with our customers.

