Essay on Unlock the Power of Game Theory: A Course Exploring Real-Life Applications

Introduction

Within the course, the Games people Play exposes the Game theory application in real life, exposing students to different aspects such as business areas, personal growth, and other areas. The course has significant value in understanding the strategies and the principles of the game theory and how they are applied to daily life. The paper addresses the primary tenets of the game theory concepts using various resources such as video lectures, the course text citation to established extensive research. Critique of the game theory will also be applied, including the different vital scenes and the shortcomings aspect to societal to personal issues. The game theory has a close relationship with other disciplines, such as economics and mathematics. The paper also focuses on illustrating how the game theory interrelates with an extensive range of current events and diverse disciplines. Also, by applying the world events and personal experience, the paper will address the concept of game theory in daily life applications.

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Part 1: Game Theory Application

From the course material, Game theory can be viewed as strategic interaction across coherent players. Why do we need to study game theory? Individuals are likely to achieve the best decision in their own life. It can also create a clear understanding of the decision made by other people. For people to know about what is meant by game theory, considering its application in every day to day life, there is a need to understand various primary game theory basic concepts (Kaminski, 2019). The basic concepts of game theory consist of Utility, Tragedygedy of the common Prisoner's dilemma, equilibrium, types of strategies, types of games, and elements of game aspects.

Elements of a Game

Firstly, Players includes the people making the decision. For any event to be considered as a game, at least two players have to be involved. Secondly, strategies are among the essential elements of the game. It consists of the decision which a player makes in every case they are faced with. Thirdly, Payoffs representing the satisfaction degree that a player possesses with specific outcomes. Payoffs represent plasterer's value or motivating factors.

Also, common knowledge is among the essential element in game theory consisting of the shared experience which every game participants possess. Every player involved in the game possesses such knowledge. The various players within the game are assumed by rational, whereby they are expected to create a decision in which players are expected to receive the best payoff. Nevertheless, it is dependent on the value of the system by the players as opposed to valuing players' value to the system.

Types of Games

Simultaneous or Sequential games - in a sequential approach, every player posses some knowledge concerning the preceding action of another player (s); having prior experience on other players can use as a basis for making consistent decisions. Tic-tac-toe, Checkers, and Chess are some basic examples of consecutive games. The movement of a player is built on the move made by the other player. Player 1 has to make a move for player 2 to determine the next step .in the simultaneous game, and the player applies decision making without considering the movement made earlier by the other player. Paper-rock-scissors is an excellent example of a Simultaneous game.

Non-zero-sum or Zero-sum - Zero-sum game, the gaining of a given player, is usually offset by loss made by the opponent player. It can be explained best by arguing that the players being involved have a diametric opposing interest. In a non-zero-sum case, multiple winners can be deduced by a single game. A good example of is zero-sum game is investors' stock market performance in a collective manner. The value of the index includes both gains and losses. The existence of damage and profits in the stock market can be described as a zero-sum game.

The zero-sum game can be expounded by considering the outperformance in the market, which implies both underperformances. The individuals being involved in the stock market index performance, however, are the primary participants or the players of the game. The non-zero-sum game helps achieve a win-win situation for the participating parties. Every participating player at least has some gain even though they may not have an equal winning.

Competitive of Cooperative game- a cooperative game refers to games in which the principal participants can quickly negotiate by binding the contracts enabling them to progress forward with a jointing strategy. In a competitive game case, the enforcement and binding negotiation of a given set of arrangements is not necessarily possible.

Types of Strategies

Firstly, (1) Mixed Strategy - the strategy includes a situation in which there is a distribution probability is randomly chosen across among a set of possible decision to prevent predictable cases. (2) Pure strategy, it is applied in all possible situations a player is likely to be. In a pure approach, all possible moves available are provided in the playbook.

The strategies defined in this case can be sub-dived further into three distinctive strategic moves, namely, commitment, Promises, and threats. Commitment involves an Unconditioned example a player declares for a particular decision. Having responsibility, a player can effectively be allowed to achieve a specific move at present as opposed to the standard game tree positioning.

Promises - refers to a conditional promise which imp"es "for a given player to do what another player wants; a certain action has to be done first." Therefore, promises as a strategy involve a condition that must be met. It helps in avoiding aq case, which is not Pareto-optimal. Lastly, threats are simply inversive cases of promises. Risks imply "at "if a given player does not do what is expected; conversely, things may get worse for the pl"er."

To ensure effectiveness, every strategic move must be credible enough and observable. By alteration of the future payoffs, for limiting the number of choices a player has to make, the own Credibility can be achieved. Credibility can also be established by producing reputation by either observing high commitment through repetitive strategy.

Equilibrium

Equilibrium refers to a persistent state condition. The condition is likely to maintain a rest state unless a new situation is introduced, in this case, regularly referred to as catalyst. Catalyst is known to cause an unrest state either by altering the present strategies being employed by the game players or participating parties.

In the resources and the Course texts, the concept of Nash Equilibrium state was introduced. In the case of Nash Equilibrium, the players involved in the game tends towards not being able to improve performance through unilaterally changing the current play strategy. An excellent example of Nash Equilibrium is the Cold War Arms Race. The Cold war is lasting for over 45 years between the Western States and the Soviet Union from 1945 and 1991 (Hedoin, 2017). The concept of Mutually Assured Destruction potentially arose concerning both participants possessing nuclear weapons.

Both players always created significant threats to one another since they both made an equal advancement in the creation of new advanced nuclear weapons. Every participant player in the game had a choice in whether to develop new advanced weapons or not. By either party choosing not to further get involved in creating nuclear weaponry any further, there is a high likelihood that the player would face nuclear blackmail (Huang & Li, 2019). Every player is involved in such a case had a clear understanding of opponents' Dilemma very clearly; this necessitates the creation of the weapons at a faster rate.

Prisoner's Dilemma

In-game theory, there is a high probability that the players being involved might not cooperate despite being the enormous urge for the players to do so. The case is referred to as PrisoneDilemmaemma and has significant applicant in-game the Prisoner's dilemma goes beyond the typical aspects; the players are rational. In a case where individuals have been presented in a court: Assume person A and B, the conditions are its better to confess or not confess and face an ultimate cost (Robert & Broman, 2017). The two individuals are likely not to cooperate, which can potentially lead to different jail terms. It is, however, according to their interest that they get either pardoned or experience shorter jail term. They were failing to cooperate results in experiencing worst-case, especially when both are given different jail terms. The players, in this case, act in a manner that seems to be their best hence seen as reasonable. When the players perform their best, the concept of system value comes into practice.

The Tragedy of the Commons

As observed Prisoner's Dilemma, the instance of the Tragedy of the commons appears to have some similarity. It happens when the player disregards or discounts group's well being for personal benefits. A good case for Tragedygedy of the commons can be referenced from the application of the Game theory in Paradox and Myth (Umbhauer, 2016). Taking an example of the pastures being held as the commons, every individual owns a sheep and has a shared dream or goal of adding more sheep to achieve personal gain benefits. If many participants meet common incentives, the carrying capacity of the pastures will be exceeded, contrary, the sheep will not be able to survive.

Utility

Utility refers to the Players' Motivation. As the number for every possible result is assigned representing the utility function, which has a property that a higher number of the outcome is highly preferred. The use of utility function is always considered ordinal in which only relevant rankings are essential. However, no given quantity is established. It can also be cardinal, which is necessary for the game consisting of mixed strategies being applied. Taking an example of going to the beach, all the players, in this case, have a high expectation of the outcomes. The driving force will be the internal motivation that forces an individual to get involved in participating in beach-related activities. The player is motivated to carry out the event hence a typical example of Utility in game theory.

PART II: GAME THEORY ANALYSIS

Personal Experience

Prisoner's dilemma involving the settlement of my divorce in the game theory is my own experience. I expected and suggested that no alimony would be included settling my divorce. When requesting 50/50 custody of my son, I also indicated that no court-ordered support was to be applied. I also suggested that all our marital debt be settled down the middle. Sharing the debts equally would be fair enough for both of us. Another suggestion arose in the topic of retirement benefits and interests. The implication was that I should have no interest in his retirement accounts (Colman, 2016). Also, the proposal requested that he would not target any of my interest.

Through this, we would be in a position to present our case in court without using the way where lawyers are involved. Using the lawyers to file our claim would need to pay them for the task. But, drafting our agreement and presenting it to the court would be cost-effective. It would exactly be a win-win situation for every rational person (Colman, 2016). It would be more appealing, especially if a person wins in a divorce.

However, his mind was not in a stable state. It was attributed to the fact that he was continually angered and hurt. The ideas of divorce crossed his mind, and it kept him fighting for nearly everything. He suggested for alimony and wanted our son to receive full custody child support. He also...