This week we covered the topic Social Dilemmas. The focus was on Game Theory. Game Theory provides a methodology for analyzing interactions between players participating in a competition. The simplest version of an example would be the penalty shoot in a football match. What would be the best option for each player? Probably to aim for the middle, if you are the shooter, and to stay in the middle if you are the goalie. However, there actually is no ‘perfect’ solution for both players. Whatever happens in this situation there is always one side that has a better outcome, might it be to score or to save the ball.
The Nash Equilibrium is a solution concept in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain. If each player has made a decision and no player can benefit by changing this decision while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs form a Nash equilibrium. This example can be seen in the movie The Beautiful Mind by Ron Howard.
What would you do – Blonde or Brunette?
To my mind Game Theory and Nash Equilibrium only provides explanation for the decision one makes in competitive situations. What one should do or should decide, however, cannot be described by the mentioned theories.
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