Wednesday, 30 March 2011

Society and Game Theory

The Game Theory
The Game Theory is an economic model that analyses the strategics interest of different parties, and try to apply this insight to real life market situation. By means of simple games, the strategy of the players on the market are modeled. In this article I will explain how this model can be applied to our society.

Example:
Let's try a simple example. You have the choice between A and B, and your competitor has the same strategic choice. If they know that both will win only when they both choose B and that they both will loose if both choose A, but that one will loose and one will win if either one choose A over B.
PlayerAB
Aloss/losswin/loss
Bloss/winwin/win

So as long as they both choose B they will win, but so does the competitor. If anyone deviates from the ideal strategy (B-B) then they will win as long as the competitor is not making the same choice, because then they end in the worst scenario where they both loose (A-A).

This might seem like some theoretical abstract thinking, but I'll give a real life example: Supermarket A and B need to decide what their product will be priced. If they both choose a high selling price, they both make more profit. If one chooses to lower the price, then he will make more profit because his competitor will not sell due to the higher price. If they both lower the price, they both equal sales, but at a lower profit. I admit that there are a whole lot of other factors involved, but you get the idea.


Nash Equilibrium.
The ideal situation that leads to a win-win situation is called the Nash Equilibrium. This equilibrium can only be reached if everyone cooperates to the ideal strategy. The moment someone deviates, this means profit only for the 'deviant'. I would like to apply this concept to our society and use it to define good and evil.

In Traffic:
A contemporary example would be one we all experienced, namely traffic jams. If one lane is blocked and 2 lanes need to join, there is an ideal strategy that will be beneficial for all, namely the controlled one after one joining in. As soon as one individual starts a slalom, he worses the situation for both lanes, except for himself

In General:
In our society we try as well as we can to maintain the accepted norms and conducts by creating and enforcing the law. We know that if we all adhere to the law, it makes life easier for all of us. If one individual commits a crime, this might be personal beneficial, but harming the society in return. The fundamental guidelines to keep a society intact are written down in all holy books, in all early works describing early civilisation. Religion has been a tool to enforce and maintain the common sense of acting good.

Good and Evil
We have the natural ability that our concience is adapting to the standards of Good and Evil. Which is, now that you read this article, nothing more than the ideal strategy vs the deviant. I would use the ideal strategy as the definition for Good, the acts that are benficial to the whole group, in the long term, if we all cooperate. Evil would then be defined by the deviant strategy, where one individual chooses not to follow the law, benefitting from short term and personal gain.

Anarchy
However, I also think that the ideal strategy is not so much imbedded in our human nature. Once the law enforcement fails, we see that society quickly detoriate into anarchy, meaning the loss-loss situation for all. Common sources of sudden detoriation in civilized societies are dramatic events such as natural disasters, war, etc. Although we all know that behaving like deviants, will negatively affect all, we, as humans, choose this strategy as soon as law enforcement ceases. This leads me to beleave that we, as a human race, are not yet civilized. We merely know how to enforce and maintain civilization.

Development
Are we then no better than animals? Probably yes, but possibly no. Nature has learned, especially for lesser life forms, that acting according the ideal strategy is the only way to be succesfull. Ants or bees will sacrifice themselves without hesitation if it serves the community. In fact, it is their great evolutionary success. Therefore we could question if our urge to search the edge of morally aceptable deeds is due to our higher form of development. Are primitive organism better capable of cooperation, of following the ideal strategy? Is it a trade off? develop ourselves as individuals and then fall as a society?

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