![]() So what does this have to do with game theory? Game Theory is Simply Analyzing Decisions That Will Affect Other People’s Decisions So since I value eating eggs for breakfast more than I value eating cereal, so long as those options are available, I’ll choose to eat eggs for breakfast. Here’s a simple example: Economics of what I should eat for breakfast: Decision to make It attempts to analyze and understand all types of human decisions, money related or not. In other words, economics is the field of science, social science in fact, behind human decisions.Įconomics is just as applicable to why you decided to marry your spouse and eat eggs for breakfast this morning as it is to why you bought stock in Tesla last year. While it’s true that the tools within economics (including game theory) are frequently used to study and understand those fields, the core of economics is actually very simple: it is the science behind why people make the decisions they make. Most people think economics is about finance, money, public policy and the stock market. To understand game theory it helps to know the core idea behind economics. So simple that anyone can understand and use it. The great part is we don’t need to do what he did in order to understand and use the core of his idea – the essence of which is actually remarkably simple. You’re right, most people can’t do what he did and that’s why we’re not even going to try to do what he did. I know what you’re thinking…you’re probably saying to yourself “Wait, I saw the movie ‘A Beautiful Mind’ about the game theory guy and him writing crazy-looking equations on glass and stuff…that guy was a genius. That secret is this: there is a basic version of game theory that is brain-dead easy to understand and use. ![]() But there’s just one problem with game theory: it is taught to be hard.īut there’s a secret that the calculus-loving game theory masters don’t bother telling you. And it can help us know the right decision to make in situations where our choices are affected by the choices of others. ![]() ![]() It can be applied to nearly every situation we find ourselves in both personally and professionally. Without a doubt game theory is one of the most powerful and intellectually stimulating subjects I have ever studied. Game Theory Post 4: JC Penny (Price Discrimination) Crossing The Chasm Concept Summary (scroll to end of article).Innovation Lessons from Steve Jobs and Apple. ![]()
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