Friday, August 31, 2012

Game Theory

Game Theory is usually used in Economics and Politics where one would compare the possible outcomes for any action that he/she will do we with the ones that our opponents would do. I have seen Game Theory to be handy even in a day to day use; the most common example for Game Theory is Prisoner's Dilemma, but in this post I will talk about using Game Theory to find a place to park my car.

OK, we have two parking lots in my company and there are four possible things that could happen:
1. Arrive early and park in the near/shaded area
Makes perfect sense

2. Arrive early and park in the far/unshaded area
Why would I do that?!

3. Arrive late and park in the far/unshaded area
There are some empty spaces but walking to the office takes more time and effort

4. Arrive late and park in the near/shaded area
In case I was lucky enough I might find an empty space, otherwise I would have wasted more time looking for a space in this area and eventually go back to the far/unshaded area which again costs me time and effort to get to the office

So, what do I do? Of course, arrive early in the first place, otherwise I just park at the first empty spot that I observe.

In this case, my opponent was actually 'the occupancy of the parking lot'. If I arrive late mostly likely I will not be able to find an empty space, which means I ended up having to deal with what is called a dominated strategy. Conversely, a dominant strategy means that regardless of what the other player chooses, you are certain that the option that you choose will always yield a better outcome.

Finally, I want to share this website you ( thx Raed) which has lots of free lectures from top universities. It also has a full course on Game Theory from Yale university by Dr. Benjamin Polak, even if you watch one lecture, trust me it is totally worth it.
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