Do Gamers Behave As Game Theory Predicts?

When people find themselves in situations that require them to make a decision, every person has a unique way of analyzing the choices at hand. If all these people are given the same information, decisions made will vary, but slightly. Economists are eager to learn how people solve and perceive problems. Also, that which is of great interest is which situations are too difficult for humans to analyze well. Events studied are those where individuals have to make choices that influence each other. For example, choosing what to wear on a first date, setting trade policies and prices on products and making choices that have global repercussions.
This has promoted the invention of a smartphone game which experts are using to understand how human beings solve problems. The game is called “Blue and Reds.” Through backward induction, it presents a basic concept of potentially complex situations like geopolitical events where countries have to decide whether to go to war or not. Players look at future options to make choices in the present. The game consists of 58 puzzles. A player moves a ball known as a “RoboToken” a step through one of the puzzles. The computer then responds. A decision tree-like structure is created, and the player wins if the game ends with the ball on a blue circle. Scientists collect this data and then analyze it to see whether people respond to situations as game theory concepts suggest. So far, the game has seen over 10,000 downloads in more than 100 countries.
Research source link:
https://theconversation.com/do-gamers-behave-the-way-game-theory-predicts-they-should-85583

Game Theory in Human Resource

Imagine an HR situation in a particular organization where a decision is made to invest in staff training. One of the employees is picked and taken through a course to increase her knowledge and skills. The investment costs $5000, and the potential returns the organization hopes to get from through revenue streams and extra productivity is $15,000. The employee will also get a pay rise. In an opportunistic situation, the employee can choose to switch jobs after undergoing the training. He/she could get another job and make the $15,000 as well as get better monthly pay. This would mean that the investing organization will gain nothing, and, the best rational decision to make is not to invest in the employee.
Similarly, consider karoshi, a cultural situation in Japan where people are somehow forced to work late. The first to leave is usually penalized. Employees can counter this by all agreeing to leave at once, but knowing that others may defect from the plan, everyone chooses to stay. As a result, you have unproductive, exhausted and sometimes suicidal workers. This is the prisoners’ dilemma in game theory. Understanding human behaviors and how people respond to certain situations can be of great help to HR departments. The idea is to put yourself in someone else’s shoes. Seeing their point of view can assist in solving individual problems and determining the best solution to increase productivity. It also helps to avoid implementing biased decisions on your employees. This then yields significant benefits and saves on costs.
Research source link:
https://www.lexology.com/library/detail.aspx?g=19cd9c1a-3afa-4167-b7f1-3b33d86f3ace

Matching Pennies in Predicting the Future

The matching pennies game is a game theory concept which involves two players: a matcher and mismatcher. Each player is given a coin. With each simultaneous choice, there is a loser and a winner. The matcher gets to win if choices from both sides produce the same result, while the mismatcher wins when both choices produce different results. If both players choose tails, the matcher wins. The opposite is true for the mismatcher. The players repeatedly play, with each trying to study the other’s pattern. This then provides an opportunity to exploit the other player based on their decisions. This game model is important for sequence prediction.
Sequence prediction allows agents to understand the consequences of their choices. This then enables them to choose the best strategies that will result in the best results. The classical approach towards sequence prediction takes the rock-paper-scissors game model. Even though part of it is influenced by chance, the game also requires some skill. It is possible to win repeatedly after identifying the patterns in your opponent’s choices. Patterns help in finding out what your opponent is thinking and also finding out what they think is going on in your mind. One of the challenges facing this concept is that it gives predictions instead of forecasts. It provides best-guesses instead of giving possible probabilities of outcomes.
Research source link:
http://matchingpennies.com/matching_pennies/