Sunday, August 19, 2012

Game Theory

Started reading a book on Game Theory recently, well, it's as much a book on Game Theory as it is a biography of one of its greatest proponents Von Neumann. The interest extended from my fascination with the show Dragons' Den, watching the dynamics of the different Dragons made me wonder if there was a fixed equation that given a specific company will produce a deterministic result.

The book does intersect with Dragon's Den quite a bit. For example, in Game Theory all actors are purely rational and the Dragons on that show are as close to rational actors as the real world gets in that broad experience in the financial world allows them to know every possible move in what the tv show represents as a gross simplification.

You often see them pausing in the face a deal that seems slightly too good as they know their fellow dragons can use it to come out as “the good guy” with a more reasonable deal. Yet, all the while they are chasing that minimax. That deal that allows them to emerge with success because their opponents can not beat them without making a bad deal themselves.

Of course, to model the show you would need to further simplify a simplification and reduce the impact of their personalities to something you can simulate but the idea that given a pitcher and company that the outcome could be entirely predictable...

Well, it brings out the nerd in me big time.   

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