The first time I heard about “A beautiful mind”, my friend asked me to watch it with a box of tissue. This movie claimed to have loosely been based on the life and struggle of John Forbes Nash, an American Mathematician from Princeton. Now, I have never heard of John Nash, or was acutely aware of his contribution to what they called game theory.
So, after watching the movie and half emptying a tissue box, I decided to find out, whatever is game theory and how did this man with such calibre, yet mental disorder contributed to this world changing concept of Game Theory.
People take decisions everyday. Simple decisions: choosing a shirt, cornflakes or fruits, to date or not to date. We also take decisions based on our relationships and communications with other people. Game theory is the study of the process of us taking such decisions when we communicate. Now, usually you’d think, well I didn’t even think before telling a friend,
“I’m sorry, I can’t come today, because I have to finish my work.”
But the truth is, our human mind is intelligent enough to process the fact, that work responsibility has a higher priority than meeting up with a friend(if you’re the responsible kind, that is). Within seconds you are able to decide, it is not a good idea to ignore work and annoy the boss. And then the next set of decisions start processing:
Do you want to make it up to your friend?
The answer is naturally simple to you. So your brain computes really fast: Yes.
“Can we catch up tomorrow?”, you ask, your friend.
And so continues the process of decision-making.
Note, as a highly intelligent human being, not only have you made your boss happy, but you have managed to negotiate with you friend.
Similarly, the world moves when millions of decisions are taken by gazillions of decision-makers, and that is how we evolve as a human race. Too complicated now? Don’t loose me yet:
In other words, the game theory, or the theory of decision-making based on communications, is implemented in various aspects of our everyday lives. It has been used in various fields, to understand the interactions between communities and people in social science. It has been used to take strategic decisions, when negotiating. It has been used to research concepts of evolution in biology: for example the behaviour of animals such as, why do bees decide to serve the queen bee? And last, but not least, it is being used to develop algorithms which compute complex data, so that we humans can make valuable decisions based on the calculations. Alright, too complex again? Stay with me:
Say for example, you regularly search the web for holiday deals, and one fine day, you open your inbox to find an email from a valid travel agent, who are offering you a deal which sounds “perfect” to you. It is within your budget, it has a list of your preferred destinations – not only that, they are even offering you discounted vouchers to places of your interest. Now. Ever thought how in the world that happened ? This concept of decision making is being applied to develop marketing systems which use algorithms that compute the possibilities of your choices based on your internet browsing behaviour. How did they know that ? Remember the little tick or message that popped up to enable cookies ?
Hmm…I have diverged far away from John Nash, haven’t I!
So, all these revolutionary influences of decision making are partial credits of Dr. John Forbes Nash. He recognised the Nash Equilibrium which basically says, to get out of a tight situation which involves a group of people, if everyone takes the best decision they can, taking into account the pros and cons each others decisions, then it is possible to come to a solution. In terms of the marketing, your browsing pattern gave enough information to the travel agent ot be able to offer your a deal which benefitted you and the agent. Going back to your friend again, when you asked for an alternate time to meet up, they respond:
“Sure! How about tomorrow after work?”
“That’s a done deal. Thanks buddy!”
So now you can impress (or ensure them that you’re a geek) your friend by saying:
“That’s Nash equilibrium”
© Tasnim Hafiz 2012