Book Review: The Joy of Game Theory

How can the ability to recognize a situation help you optimize your outcome? Is it possible to change lose-lose situations to those of mutual benefits? Game theory may be the answer to all your questions. In his book, The Joy of Game Theory, mathematician and economist Presh Talwalkar explores the idea that a knowledge of game theory may allow you to change the outcome of a situation to one that maximizes your benefits.

Although suggested by the name itself, game theory is not a field confined to board games. It has practical application in many fields, such as ecology and political science. The term game, in this sense, is defined as a situation in which there are player with distinct strategies and a clear result or payoff for each individual strategy. Game theory can then be described as simply, the study of logical and ration decision making.

Game theory began in the field of economics as a way to describe duopolies, or a market with two firms, and how they should set their prices to maximize profits. Many classic game theory examples are merely thought experiments in which the situations do not occur, but are only thought of theoretically. Abstractly, within the respective field, game theory provides excellent insight into how to make rational decisions. In the real world, however, players within a game do not act “rationally”. Due to this everyday examples of game theory are very rare and often offer no insight into the benefits of the field itself.

Talwalkar provides numerous examples of situations encountered every day that can be explained or “solved” with game theory. With each example he removes the intimidating façade that surrounds game theory and begins to show the common practicality of knowing and understanding the subject. With first person narration and a casual tone, the individual examples are weaved together into a comprehensive argument on the importance of knowing terms such as Nash equilibrium and best response. Diagrams are provided to help visualize certain examples, such as Hotelling’s Game, a classic application to game theory in the field of economics.

 

 

Book Spotlight: The Joy of Game Theory

I have recently finished reading The Joy of Game Theory: An Introduction to Strategic Thinking by Presh Talwalkar. This book is a great introduction to game theory for those who are interested but are unsure of where to start. The author introduces basic and simple game theory concepts through the use of real-world examples and diagrams. Presh Talwalkar studied Mathematics and Economics at Stanford University and has published multiple books on math and logic puzzles. He is also the author of Mind Your Decisions, a blog with original videos that center around math. Game theory, in the simplest terms, is the study of logical decision making. It has practical applications in the fields of economics, political science, psychology, logic, biology, and computer science. It is most frequently associated with Economics due to 1994 Nobel Memorial Prize in Economic Sciences winner, John Nash. The book introduces classic game theory games and famous economics applications in an extremely detailed way, without getting overly complicated and wordy. Other examples Talwalkar introduces are very creative and are very far from convention, in a good way. There is a mild amount of math, but not so much that an inexperienced reader would be confused or lost; it is merely there for those interested in it. This book does an excellent job of taking seemingly complicated terms, like pure strategy Nash equilibrium, and describing them in a way that makes sense to even the most inexperienced of readers. As a student in an Undergraduate game theory class I found this book simple and precise, but not too simple that I found myself becoming bored. The examples provided keep even experienced game theorists interested and attentive.

Purchase your copy here!