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The Art of Strategy: A Game Theorist's Guide to Success in Business and Life

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Game theory means rigorous strategic thinking. It's the art of anticipating your opponent's next moves, knowing full well that your rival is trying to do the same thing to you. Though parts of game theory involve simple common sense, much is counterintuitive, and it can only be mastered by developing a new way of seeing the world. Using a diverse array of rich case studies Game theory means rigorous strategic thinking. It's the art of anticipating your opponent's next moves, knowing full well that your rival is trying to do the same thing to you. Though parts of game theory involve simple common sense, much is counterintuitive, and it can only be mastered by developing a new way of seeing the world. Using a diverse array of rich case studies—from pop culture, TV, movies, sports, politics, and history—the authors show how nearly every business and personal interaction has a game-theory component to it. Are the winners of reality-TV contests instinctive game theorists? Do big-time investors see things that most people miss? What do great poker players know that you don't? Mastering game theory will make you more successful in business and life, and this lively book is the key to that mastery.


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Game theory means rigorous strategic thinking. It's the art of anticipating your opponent's next moves, knowing full well that your rival is trying to do the same thing to you. Though parts of game theory involve simple common sense, much is counterintuitive, and it can only be mastered by developing a new way of seeing the world. Using a diverse array of rich case studies Game theory means rigorous strategic thinking. It's the art of anticipating your opponent's next moves, knowing full well that your rival is trying to do the same thing to you. Though parts of game theory involve simple common sense, much is counterintuitive, and it can only be mastered by developing a new way of seeing the world. Using a diverse array of rich case studies—from pop culture, TV, movies, sports, politics, and history—the authors show how nearly every business and personal interaction has a game-theory component to it. Are the winners of reality-TV contests instinctive game theorists? Do big-time investors see things that most people miss? What do great poker players know that you don't? Mastering game theory will make you more successful in business and life, and this lively book is the key to that mastery.

30 review for The Art of Strategy: A Game Theorist's Guide to Success in Business and Life

  1. 5 out of 5

    David Rubenstein

    This book is an engaging, comprehensive guide to strategies, as applied to everyday life. The first part of the book focuses on standard game theory, graphical notations for various problems, and applications of the prisoners' dilemma to everyday situations. The second part of the book concentrates more on everyday and business problems, and strategies to achieve optimal solutions. Game theory is not always applicable to all of these problems, but logic and rational problem-solving and a bit of This book is an engaging, comprehensive guide to strategies, as applied to everyday life. The first part of the book focuses on standard game theory, graphical notations for various problems, and applications of the prisoners' dilemma to everyday situations. The second part of the book concentrates more on everyday and business problems, and strategies to achieve optimal solutions. Game theory is not always applicable to all of these problems, but logic and rational problem-solving and a bit of mathematics are ever-present. The book explores the voting issue in some detail. When two candidates are running against each other, the best strategy of course is to vote for your first choice. When three or more candidates are running, it is not always best to vote for your first choice, especially if you believe that your first choice has no chance of winning. For example, in the presidential election of 2000, there were three candidates, Bush, Gore, and Nader. If you preferred Nader to the others, you could vote for him, but your vote would be pretty much wasted, as he had little chance of winning. It would be best to vote for your second choice. But, what if the election was predicted to be much closer; what would the best strategy be then? Furthermore, the book explores other voting systems that would allow you to list all of your voting preferences? For example, what if you could vote on all of the candidates, listing their names in preferential order. Various vote-tallying systems could take these preferences into account, and come up with a fairer assessment of the most-preferred candidate. But here's the rub; there are numerous vote-tallying systems, each of them objective, but depending on which one is chosen, a different candidate could win. The book goes into some detail in considering the different outcomes of the 2002 presidential race, considering several of these systems. The book also describes three different systems for auctions. Although the systems differ dramatically, the optimum strategy is the same for all of the systems. The book describes various approaches for political negotiations. Examples include incentives and threats. But a threat is only good if it is credible. The book describes some historical approaches that have made threats credible. Another type of strategy is how a company can best compete with other companies, by setting prices that will maximize profitability. The book has a set of exercises to try out your newly-gained understanding. One of the exercises is to consider how to make a good first impression on a first date. You are faced with two simultaneous problems; how to prove your sincerity and quality to your date, and how best to assess the sincerity and quality of your date. In other words, what is the best strategy for signaling and screening? This book is best appreciated if you are not afraid of some simple algebra. However, many of the strategies are not at all mathematical, but simply rely on logic. I thoroughly enjoyed this book; some of the chapters were a bit repetitive, but not overly so.

  2. 4 out of 5

    Kara

    There is absolutely no need to read this book if you've read Thinking Strategically. I'm not certain why they exist as two separate books. The content is almost identical, and 90% of the examples in this one were lifted from that. I have no idea why this is touted as a "sequel." It is not. It's just Thinking Strategically repackaged (but I will say that its package is prettier). The tagline says that it's a "guide to success in business and life," but it is not. It is game theory explained in an There is absolutely no need to read this book if you've read Thinking Strategically. I'm not certain why they exist as two separate books. The content is almost identical, and 90% of the examples in this one were lifted from that. I have no idea why this is touted as a "sequel." It is not. It's just Thinking Strategically repackaged (but I will say that its package is prettier). The tagline says that it's a "guide to success in business and life," but it is not. It is game theory explained in an accessible way. I love game theory. I studied economics in college, and game theory had been my favorite class. I enjoyed Thinking Strategically and looked forward to reading this one. I was disappointed. Had I not read Thinking Strategically, I probably would have found this enjoyable, but I'm giving it two stars for the false advertising.

  3. 4 out of 5

    Billie Pritchett

    Avinash Dixit's Art of Strategy is an informative book and a little boring. It's informative because it provides you with some basic principles for how to reason properly in situations where you have to coordinate or compete with other people, your self, or a company or something equally abstract; 'game theory' is just a fancy name for principled strategic interaction. And it's boring in the sense that it requires some understanding of mathematics, and if you're mathematically stupid like I am y Avinash Dixit's Art of Strategy is an informative book and a little boring. It's informative because it provides you with some basic principles for how to reason properly in situations where you have to coordinate or compete with other people, your self, or a company or something equally abstract; 'game theory' is just a fancy name for principled strategic interaction. And it's boring in the sense that it requires some understanding of mathematics, and if you're mathematically stupid like I am you might hate this part. The basic principles are: (1) look forward, reason backward; (2) play your dominant strategy; (3) don't play clearly dominated strategies; (4) always look for equilibrium solutions; (5) mix your plays in zero-sum situations. Principle (1) means think about the possible results of your actions in relation to who you are interacting with and try as much as possible to play your best strategy at each move according to what would result. Principle (2) means do principle (1) but always play the strategies that are better than your opponents. Supposing there is no dominant strategy with respect to principle (2) then a la principle (3) just act in some way that you would not clearly fail with your result. Principle (4) means look for situations where you and the person with whom you are interacting would mutually benefit or end up with the same result because that's most likely what result you're going to land on if you're both being reasonable with each other. Principle (5) means in situations where your win means someone else's loss and vice versa, just mix up your strategy to try to get a good result. Game theory is not an exact science. It's kind of an art and a science. There's no guarantee that you're going to interact well with people as a result of reading something like this book. That's because you don't always have complete information about the situation or the other people you're interacting with, don't know what situation you're in, and don't know what you really want, among other problems.

  4. 5 out of 5

    Ricardo Marcos

    Lots of examples that make us lose focus on what is really important from Game Theory. Lack of proper definitions. Took me 11 pages of anotations to resume the whole book. I couldn't say if this book can really guide me to success in business and life. My opinion is: - Too redundant with descriptions; - Lack of proper definition; - Confusing descriptions of theories - Confusing examples and tables; - Not clear about aspects of theories. I would not recommend this book to a beginner learning Game Theo Lots of examples that make us lose focus on what is really important from Game Theory. Lack of proper definitions. Took me 11 pages of anotations to resume the whole book. I couldn't say if this book can really guide me to success in business and life. My opinion is: - Too redundant with descriptions; - Lack of proper definition; - Confusing descriptions of theories - Confusing examples and tables; - Not clear about aspects of theories. I would not recommend this book to a beginner learning Game Theories.

  5. 4 out of 5

    Ernest

    The Art of Strategy is a brilliant book about game theory written for a popular, general audience. Game theory is the study of strategic decision making and behaviour, and while it is a whole discipline of study in itself, this book written by academics in the field is not a textbook but a written for a general audience that while being accessible to a non-specialists, still manages to be a rigorous introduction into the subject, all the while being fun and engaging through the examples used and The Art of Strategy is a brilliant book about game theory written for a popular, general audience. Game theory is the study of strategic decision making and behaviour, and while it is a whole discipline of study in itself, this book written by academics in the field is not a textbook but a written for a general audience that while being accessible to a non-specialists, still manages to be a rigorous introduction into the subject, all the while being fun and engaging through the examples used and discussed. From solving problems by backwards reasoning, to making strategies credible, to analysing how best to cooperate and coordinate, each chapter of this book was fascinating to read in its discussion of a game theory topic and applications to very understandable examples. It would be a disservice to the book to try summarising its points or discussions engaged in. The concepts here are presented in a way that an average reader will be able to follow the majority of the material, although I will admit to a few moments where I failed to understand. The real-life examples used enhances the book’s readability and kept me engaged throughout. Students of economics may have already covered some of this material but only the most engaged academics or constant practitioners of strategic thinking will find nothing of worth and value in this book. Such is the power of the book that it is hard for me not to see many situations all around through the lens of game theory. I may not know how to fully strategically think through a situation, but I now see conflicts and decisions in a different light, from the mundane like organising where to go for lunch to the serious like the Israel/Palestine conflict. I now have a different framework to making decisions, one that will (hopefully) improve and enhance my life. I recommend this book to everyone. At the very least, readers will learn interesting things and be fascinated about how things can be reasoned out. Even better, it may change for the better the way you view situations and how you make decisions.

  6. 4 out of 5

    Dan

    I wish I had read this book with a pen and paper, and less on the PATH train. Unfortunately, I think I failed to digest some of the more quantitative aspects of game theory. All things considered, though, this was an excellent book and review of game theory. And because payoffs are so difficult to determine, anyway, you don't really need the math as much as the thought processes and logic of strategic thinking (essentially, don't make decisions without figuring out what the other actors' interest I wish I had read this book with a pen and paper, and less on the PATH train. Unfortunately, I think I failed to digest some of the more quantitative aspects of game theory. All things considered, though, this was an excellent book and review of game theory. And because payoffs are so difficult to determine, anyway, you don't really need the math as much as the thought processes and logic of strategic thinking (essentially, don't make decisions without figuring out what the other actors' interests are). For that, this is a very good read.

  7. 5 out of 5

    Krishna Singh

    This is one of those which you keep near you and re-read/refer time to time. I’d keep this next to Danny’s ‘Think fast ..’.

  8. 4 out of 5

    Dann

    Dixit and Nalebuff provide an exceptionally good introduction to game theory without making it overly difficult. There are real-world examples, ways to practice your game-theoretic thinking, and a lot of really useful information that might actually help you in your real life. That's what I really loved about this book—after reading it, I saw that the principles could be applied anywhere (especially in Craigslist selling, which I was doing a lot of—how cool is that?). I read this book for a class Dixit and Nalebuff provide an exceptionally good introduction to game theory without making it overly difficult. There are real-world examples, ways to practice your game-theoretic thinking, and a lot of really useful information that might actually help you in your real life. That's what I really loved about this book—after reading it, I saw that the principles could be applied anywhere (especially in Craigslist selling, which I was doing a lot of—how cool is that?). I read this book for a class, but before it, I tried reading Game Theory Evolving: A Problem-Centered Introduction to Modeling Strategic Interaction, by Herbert Gintis. Couldn't do it. If you need a textbook for a game theory class, Gintis's might be the way to go. If you just want to find out more about the theory and how it's applied to really common situations, read it. It's really interesting! I'd recommend this to anyone, regardless of whether it's assigned or related to a class or not. It really does have a lot of real-world applications, and it's written very well.

  9. 5 out of 5

    Simon Eskildsen

    If you've looked for a foray into Game Theory, this is it. It walks through a bunch of important ideas in Game Theory, from auctions to equilibrium in games. This book is filled with models that you can apply in many contexts, introduced through approachable examples—although, some chapters are easier to get through than others. Working my way through my highlights in the book is already proving rewarding, but it's definitely dense in information (but not in language). Don't read this as a befor If you've looked for a foray into Game Theory, this is it. It walks through a bunch of important ideas in Game Theory, from auctions to equilibrium in games. This book is filled with models that you can apply in many contexts, introduced through approachable examples—although, some chapters are easier to get through than others. Working my way through my highlights in the book is already proving rewarding, but it's definitely dense in information (but not in language). Don't read this as a before-sleep-pass-out-book. This is a wide-awake-and-ready-to-stop-and-think book. A good one at that.

  10. 4 out of 5

    Denis Romanovsky

    This book let me understand how stupid I’m and how much again there is to learn and practice. Instead of another book on leadership, management framework or business analysis better take something to read about game theory. Game theory appears to be a part of systems thinking science, a true part. If you want to understand systems better, you have to read on games theory. As for the book - it is easy to read, not much math, good examples. Highly recommended!

  11. 5 out of 5

    William Schram

    Game Theory is a mathematical field that deals with making decisions when the choices your opponent makes actually matter. It has applications in many different fields of study. The most famous problem from Game Theory is probably the Prisoner’s Dilemma, with information being distributed unevenly among the participants. It works out the optimal strategy for this situation, which might actually be counter-intuitive. This is merely my limited understanding of the field, but it makes for a good se Game Theory is a mathematical field that deals with making decisions when the choices your opponent makes actually matter. It has applications in many different fields of study. The most famous problem from Game Theory is probably the Prisoner’s Dilemma, with information being distributed unevenly among the participants. It works out the optimal strategy for this situation, which might actually be counter-intuitive. This is merely my limited understanding of the field, but it makes for a good segue into the actual review. A long time ago, back in 1991, the authors wrote a book named Thinking Strategically. They intended to revise it, but they decided to rewrite it instead and release it under a new title. This copy was released in 2008. The reason for this rewrite is explained in the Preface. Their perspective on events has changed in 17 years, so they rewrote the book to include values and ideas that align with these changes. The book doesn’t contain the heavy-duty mathematics behind the reasoning of each decision. This makes it more accessible to the average audience that might not be familiar with higher mathematics. The book does contain a number of real-world examples and relatable situations. While some of the examples are quite simple, they fully examine them and lead them on through their reasoning. One such example is from the Peanuts Comic strip; Lucy holds out the football for Charlie Brown to kick. This is American Football for those who might be from other countries. Poor naive Charlie Brown attempts to kick the ball, but Lucy pulls the ball away at the last second and Charlie Brown falls on his behind. Cue the Schadenfreude than results from this situation. The authors examine this situation and more. Another Pop Culture reference is from The Princess Bride. We all remember the scene where Westley battles Vizzini in a war of wits. While we go through all of this, a number of concepts arise in the text. The Nash Equilibrium, the Dominant Strategy, and a number of other things are all discussed. Along the way, the authors describe rules to follow in cases where decisions must be made. The book is really enjoyable and interesting.

  12. 4 out of 5

    Wang Jiao

    It explain the basic ways of thinking in game theory, look forward, reason backward. It provided some simple mathematical modelling and calculations of some theories. But I am not that impressed, the maths is simple and intuitive, not deep enough.

  13. 4 out of 5

    Ali Hassan

    This book is about strategic behavior. All of us are strategists, whether we like it or not. It is better to be a good strategist than a bad one, and this book aims to help you improve your skills at discovering and using effective strategies.

  14. 5 out of 5

    Marius CEO

    There are good examples in the book - however, the presentations lacks soul or style. Dont expect rocket science - the insights are not spectacular and the concepts are somewhat interesting, yet there is not much new to read here. The book is fairly bland. It gets really repetitive halfway.

  15. 5 out of 5

    Semegn Tadesse

    The book has a hand on example of understanding strategy, What I can say about one thing I learned in this book is Game Theory. Now I understand how to implement in different scenarios, it's a book i'm going to pick up again in few months. Finally totally recommend it to anyone interested in strategy. The book has a hand on example of understanding strategy, What I can say about one thing I learned in this book is Game Theory. Now I understand how to implement in different scenarios, it's a book i'm going to pick up again in few months. Finally totally recommend it to anyone interested in strategy.

  16. 5 out of 5

    Serdo Ahmad

    The book contains a lot of information. In simple terms, it is a good book for students of economics.

  17. 4 out of 5

    Darius Daruvalla-riccio

    This book really fascinated me but it took a lot of mental effort to get through. The book went over the basics of game theory, gave general guidelines on how to use it and then went over its applications in the real world. This included things such as business competition, negotiations, voting and more. Contrary to most non-fiction books, I can recall and explain most of the information that is written about. This probably resulted from a mix of how much the book interested me and the amount of This book really fascinated me but it took a lot of mental effort to get through. The book went over the basics of game theory, gave general guidelines on how to use it and then went over its applications in the real world. This included things such as business competition, negotiations, voting and more. Contrary to most non-fiction books, I can recall and explain most of the information that is written about. This probably resulted from a mix of how much the book interested me and the amount of focus that it took to keep reading it. The information often went against my intuition and I had to suspend it to take it in and make sense of it. It constantly introduced new ideas while relying on the reader understanding the preceding ones. The chapters would start simply and become more complex but refer to the earlier points in the chapters. Similarly, it would refer back to points raised in the early chapters and it was important that you remembered these. As such I had to reread many passages so I could continue reading. If this book was written differently, maybe it would have required less effort to read but it can be understood as long as you focus. I'd recommend this if you already have some understanding of game theory and are willing to put in effort and reread pages. If so, its really damn interesting.

  18. 4 out of 5

    Valeriu

    This verbose version of the game theory 101 course from Yale University is by no means a light reading. Prepared on the assumption of purely rational behaviour, deep fried in twisted logic, sprinkled with mathematical details and served in a rather sophisticated English, the book appeals to casual readers, curious about the prisoners' dilemma or the Japanese auction, as well as to more knowledgeable practitioners, ready to pull out a pen and paper (or rock and scissors) to compute conditional pr This verbose version of the game theory 101 course from Yale University is by no means a light reading. Prepared on the assumption of purely rational behaviour, deep fried in twisted logic, sprinkled with mathematical details and served in a rather sophisticated English, the book appeals to casual readers, curious about the prisoners' dilemma or the Japanese auction, as well as to more knowledgeable practitioners, ready to pull out a pen and paper (or rock and scissors) to compute conditional probabilities and local minima. There is a comprehensive list of cooperative and adversarial games, presented together with relevant stories and real-life contexts, which makes this book a solid start in the field of game theory, especially for future negotiators and decision makers. However, the applicability of the strategies is constrained by our proven inability to correctly evaluate probabilities (especially of negative events) and by the limitations of the rational thought model. The material should be complemented with considerations of patterns of irrational behaviour (see Dan Ariely's work) and a good stats software. PS. Take note of the seldomly appearing typos, as Avinash and Barry might reward you with $2 for each one.

  19. 5 out of 5

    Sai

    Enjoyed reading this! To be clear, this book is intended for audiences completely new to game theoretic ideas. Prior to reading this book, my only experience with understanding game theory was watching A Beautiful Mind as a kid. Getting that out of the way, this book is fast paced and fun in introducing all the major concepts of game theory, from decision theories, Nash equilibriums, different types of auction and voting theories, bargaining and negotiations etc.. Most importantly, its filled wi Enjoyed reading this! To be clear, this book is intended for audiences completely new to game theoretic ideas. Prior to reading this book, my only experience with understanding game theory was watching A Beautiful Mind as a kid. Getting that out of the way, this book is fast paced and fun in introducing all the major concepts of game theory, from decision theories, Nash equilibriums, different types of auction and voting theories, bargaining and negotiations etc.. Most importantly, its filled with examples that make the explanations easier to grapple with. I like that this book does not use the whole "lets assume everyone is a rational actor" approach, since well, humans are hardly ever fully rational. I often hear criticism levelled at game theory ideas that everyone isn't a rational actor, so these theories breakdown with exceptional cases. In this book, every theory presented is provided with its share of caveats. I thought that it kept the book intellectually honest throughout, yet invigorating in the content.

  20. 4 out of 5

    Hans

    If you are unfamiliar with Game Theory then this book is for you, if on the other hand you already are aware of it then it'll be a good review. Overall the reason Game Theory is so useful is because it can show possible solutions to what may initially appear to be unsolvable problems. Often times judgement is clouded by the strong emotional charge of a problem and people are unable to see a way through it. Game Theory allows one to detach from the situation and assess it with a cold rationality If you are unfamiliar with Game Theory then this book is for you, if on the other hand you already are aware of it then it'll be a good review. Overall the reason Game Theory is so useful is because it can show possible solutions to what may initially appear to be unsolvable problems. Often times judgement is clouded by the strong emotional charge of a problem and people are unable to see a way through it. Game Theory allows one to detach from the situation and assess it with a cold rationality that bases the entire decision making process on statistical probabilities by hedging one's bet as best as one can. It may not always yield the optimal outcome but it at least increases the chances of it.

  21. 4 out of 5

    Cody Sexton

    I'm very disappointed. I had high hopes for this book, perhaps too high. I suppose it's my fault really, one should never be too optimistic. Nevertheless, what this book lacks in practical application it more than makes up for in statistical abstraction. It doesn't really come into it's own until about chapter 6 at which point it shifts gears and continues headlong into mathematical oblivion. This book is definitely not for a general audience, regardless of what the authors may think. I might as I'm very disappointed. I had high hopes for this book, perhaps too high. I suppose it's my fault really, one should never be too optimistic. Nevertheless, what this book lacks in practical application it more than makes up for in statistical abstraction. It doesn't really come into it's own until about chapter 6 at which point it shifts gears and continues headlong into mathematical oblivion. This book is definitely not for a general audience, regardless of what the authors may think. I might as well have been reading an academic journal and I'm still not entirely sure if I actually got anything out of it.

  22. 4 out of 5

    Zehra

    The examples might not apply to daily life directly but when you get the idea, you will have some cool tools in your hand. That GMAT question method really works on such as quantitative questions, and already comes intuitively after practise lots of time but I thought it might work with literature questions, too. If the question is a type "I-I-II; Only II;" instead of reading the entire question I just thought in that way and simply check it. It was fun and just received a pretty good result. Th The examples might not apply to daily life directly but when you get the idea, you will have some cool tools in your hand. That GMAT question method really works on such as quantitative questions, and already comes intuitively after practise lots of time but I thought it might work with literature questions, too. If the question is a type "I-I-II; Only II;" instead of reading the entire question I just thought in that way and simply check it. It was fun and just received a pretty good result. Though there are a lot of efficient game theory examples for professional life and business, life means much more than theories.

  23. 4 out of 5

    Jason Yang

    This book is sort of like a layman's intro to game theory. I enjoyed some of the examples early on about situations where strategic thinking is really useful (eg., the show Survivor), but found the book to be quite dry and abstract overall. It's really difficult for me to pinpoint what I got out of it, since so many of the take home messages seemed like common sense. On the other hand, it was kind of nice to see some exercises related to pricing, etc., which I suppose are relevant to the real wo This book is sort of like a layman's intro to game theory. I enjoyed some of the examples early on about situations where strategic thinking is really useful (eg., the show Survivor), but found the book to be quite dry and abstract overall. It's really difficult for me to pinpoint what I got out of it, since so many of the take home messages seemed like common sense. On the other hand, it was kind of nice to see some exercises related to pricing, etc., which I suppose are relevant to the real world. Generally, I enjoyed this book, but I'm not sure it's something for everyone.

  24. 5 out of 5

    Iain

    Very abstract. The examples were far too removed from real life situations to be of any use. Nevertheless, it is quite amazing that someone has managed to write almost two hundred pages about the game 'Paper, scissors, stone'. Very abstract. The examples were far too removed from real life situations to be of any use. Nevertheless, it is quite amazing that someone has managed to write almost two hundred pages about the game 'Paper, scissors, stone'.

  25. 4 out of 5

    Simon

    A primer in game theory, but the book got rather boring and was much longer than needed.

  26. 4 out of 5

    Max Nova

    An easy and fun read to get the fundamentals of game theory. The examples are all very well chosen and relevant for a modern popular audience

  27. 5 out of 5

    Harry Harman

    good strategy must appropriately mix competition and cooperation. Strategic thinking is the art of outdoing an adversary, knowing that the adversary is trying to do the same to you. It is the art of putting yourself in others’ shoes so as to predict and influence what they will do. Businessmen and corporations must develop good competitive strategies to survive, and find cooperative opportunities to grow the pie. your business rivals, prospective spouse, and even your children are strategic. Their a good strategy must appropriately mix competition and cooperation. Strategic thinking is the art of outdoing an adversary, knowing that the adversary is trying to do the same to you. It is the art of putting yourself in others’ shoes so as to predict and influence what they will do. Businessmen and corporations must develop good competitive strategies to survive, and find cooperative opportunities to grow the pie. your business rivals, prospective spouse, and even your children are strategic. Their aims often conflict with yours, but they may well coincide. Your own choice must allow for the conflict and utilize the cooperation. This book aims to help you think strategically, and then translate these thoughts into action. The only way to improve your skill at this art is the inductive way —by seeing how it has been done before in similar situations. So far, you have been guessing in a way that divides the interval into two equal parts and picking the midpoint. This is the ideal strategy in a game where the number has been chosen at random. *You are getting the most information possible from each guess and therefore will converge to the number as quickly as possible. He was gifted in his ability to act strategically without appearing to be strategic. The smart money was on Kelly winning the challenge. able to anticipate all the different moves before they happened. The leading sailboat usually copies the strategy of the trailing boat. market leaders will not follow the upstarts unless they also believe in the merits of their course. it wouldn’t be a cakewalk They were playing a game against their future selves. Today’s self wants the future self to diet and exercise. The future self wants the ice cream and the television. Most of the time, the future self wins because it gets to move last. The trick is to change the incentives for the future self so as to change its behavior. Campaign finance reform is so hard to pass because the incumbent legislators who have to approve it are the ones who have the most to lose. Their advantage in fundraising is what gives them job security. *How do you get people to do something that is against their interest? Put them in what is known as the prisoners’ dilemma. a variant of the prisoners’ dilemma the costs exceed the benefits. Each option has a one-third chance of winning, a one-third chance of losing, and a one-third chance of a tie. But Christie’s didn’t pick at random. Thus Sotheby’s would have done better to think about the advice Christie’s would likely get and then play to beat it. If it’s true that everyone knows you start with scissors, Sotheby’s should have started with Bart Simpson’s favorite, good old rock. When the IRS audit formula is somewhat fuzzy, everyone stands some risk of an audit; this gives an added incentive for honesty. If another speculator offers to sell you a futures contract, he will make money only if you lose money. * If you happen to be a farmer with soy beans to sell in the future, then the contract can provide a hedge against future price movements. Similarly, if you sell soy milk and hence need to buy soy beans in the future, this contract is insurance, not a gamble. When both sides agree to trade, each one thinks it will make money. One of them must be wrong. That’s the nature of a zero-sum game. Both sides can’t win. The very fact that you were the highest bidder implies that everyone else thought the item was worth less than you did. The result of winning an auction and discovering you’ve overpaid is called the winner’s curse. when you ask for a quote on a stock the market maker is required to state both the buying and selling prices before he knows which side of the transaction you want. Without such a safeguard, market makers could stand to profit from private information the difference is called the bid-ask spread You may be thinking you are playing one game, but it is only part of a larger game. There is always a larger game. There is nothing worse, from a test maker’s perspective, than allowing the person to get the right answer for the wrong reason.

  28. 5 out of 5

    Marko

    This review has been hidden because it contains spoilers. To view it, click here. I found this book very cognitive and easy to read, but like everything, it has a negative side. The main minus is that there are a lot of repetitive moments, what sometimes irritate me. This book explains an idea of what game theory is and show how logic and science applies to the world, where people are irrational. There are a significant amount of illustrations of every principle described in a book. Also, it is easy to read for people of different backgrounds as there are a lot of examples no I found this book very cognitive and easy to read, but like everything, it has a negative side. The main minus is that there are a lot of repetitive moments, what sometimes irritate me. This book explains an idea of what game theory is and show how logic and science applies to the world, where people are irrational. There are a significant amount of illustrations of every principle described in a book. Also, it is easy to read for people of different backgrounds as there are a lot of examples not only from business, but from movies, literature, and even sports. For instance, in the first chapter, it shows how strategic issues arise in a variety of decisions, by explaining how ten tails of strategy work. In the next chapters, there is information about main concepts of game theory, such as backward reasoning, prisoner's dilemma, Nash equilibrium, and zero-sum game. In "Art of strategy" described the main game theories - The Decision Theory, The General Equilibrium Theory, and The Mechanism Design Theory. Furthermore, I understood that you need to pay attention to all of them when making an important decision. After reading this book, I realized that game theory is a widely applicable and powerful tool. It can reduce the business risk, helps to make the decision-making process more manageable. And what surprised me is that even by losing you can win. In the last part of a book, authors show us how game theory is used in auctions, bargaining and even voting. Also, they say that to get best results sometimes you need to cooperate with your opponents. As my little conclusion, I want to say that this book isn't going to guarantee your success in game theory; it helps to develop your ways of solving strategic situations, by giving you some general principles and showing them if a real-life example. And the best of it is that book written for a general audience, so you don't need to have some economic degree to get main ideas.

  29. 4 out of 5

    Matthias

    The authors re-published under a new name their 1991 classic Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life, with a minimal amount of tweaks and updates taken from the recent developments in the field of behavioral game theory. The book is more than just an introduction to Game Theory - it goes beyond its goal by analyzing in detail a series of specific examples. The overall contexts and situations in those examples are often kind of trivial, and even kind o The authors re-published under a new name their 1991 classic Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life, with a minimal amount of tweaks and updates taken from the recent developments in the field of behavioral game theory. The book is more than just an introduction to Game Theory - it goes beyond its goal by analyzing in detail a series of specific examples. The overall contexts and situations in those examples are often kind of trivial, and even kind of artificial in the same way though experiments are, so the resulting in-depth analyses can be quite tedious. Unlike its sub-title suggests, there's not much information to absorb that could be immediately applicable in real-life situations - it feels instead like going through a series of mental exercises/puzzles ("workouts", as the authors say) just to keep your brain in shape. Interesting stuff for the curious reader, but limited applications.

  30. 4 out of 5

    Tõnu Vahtra

    I'm probably not worthy enough for this book as I don't see that I would be able to put significant amount of this book into practice. From description and a few references towards this book as I was expecting more a set of principles for strategic decisions but it's actually solely focusing on different aspects of game theory and how to model real life challenges as decision and game trees. The book did point out the optimal strategies for several situations that through system 1 thinking might I'm probably not worthy enough for this book as I don't see that I would be able to put significant amount of this book into practice. From description and a few references towards this book as I was expecting more a set of principles for strategic decisions but it's actually solely focusing on different aspects of game theory and how to model real life challenges as decision and game trees. The book did point out the optimal strategies for several situations that through system 1 thinking might lead to suboptimal outcomes but on most examples I could not resonate with personally. It seems indeed that several books have referenced this one but covering the entire domain of game theory is not something that I would take up just for pleasure (reminded a bit of academic literature although the author states that this book was written especially for the "common folks" and real academic models/books about game theory are much worse...). Interestingly the PDF included with the Audible recording was not just a few definitions and graphs but more like the entire book with 562 pages...

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