Hidden Games, the Surprising Power of Game Theory

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Game theory is a math toolkit designed to model strategic interactions. In the Prisoners Dilemma, for instance, this would be I can choose to either cooperate with my partner or defect in cooperation. The payoffs have a feature that they depend not only on what I choose, whether I cooperate, but also on what the other person does. It's actually very, very straightforward to just see the simplest kinds of games.

We know human behavior isn’t rational. But this episode illustrates behavior using a surprising concept - game theory. This eye opening conversation with Erez Yoeli delves into what game theory is and the remarkable way it can be used to explain the things we think, feel and do.

Our guest, Erez Yoeli has co-authored a new book, alongside Moshe Hoffman, called “Hidden Games: The Surprising Power of Game Theory to Explain Irrational Human Behavior”. Erez is a research scientist at the MIT Sloan School of Management and he teaches the undergraduate Game Theory course at Harvard. His research focuses on altruism: understanding how it works and how to promote it.

To explain what exactly game theory is, we have turned to Britannica’s user-friendly definition;“economics is much like a game, wherein players anticipate each other's moves, and therefore, it requires a new kind of mathematics, which they called game theory.” This explanation opens the door to exploring how our behavior is influenced by our anticipation of the moves and choices of those around us.

We hope you enjoy our fun and mind blowing chat with Erez on how game theory can bridge the divide between the rationality of classical economics and the irrationality of behavioral science. If you are a regular listener to Behavioral Grooves, please consider supporting the production of the podcast through Patreon https://www.patreon.com/behavioralgrooves. Or write a review of the podcast on whatever app you’re listening on. Thanks!

Topics

(2:47) Welcome and speed round questions.

(4:59) What exactly is game theory?

(10:03) The Prisoners Dilemma.

(13:23) Erez’s favorite game theory model.

(14:48) What are categorical norms?

(17:07) Game theory and gender balance.

(23:26) The distinction between errors of omission and commission.

(27:26) How we can look at behavioral science differently.

(28:51) What is motivated reasoning?

(32:22) Can exchanging rocket fire actually maintain peace?

(39:45) What would Erez’s desert island music be?