Category Archives: video

Learn Game Theory, for Free, from Stanford Professors

Ever wanted to dip your toes into the ocean of Game Theory?  Want to do it for free?

Now you can! Stanford’s offering several free courses online, starting in February.  A few of my esteemed Google colleagues pointed me towards this Game Theory class. It’s being taught by the inestimable Matthew O. Jackson and Yoav Shoham.

Here’s a description of the class:

Popularized by movies such as “A Beautiful Mind”, game theory is the mathematical modeling of strategic interaction among rational (and irrational) agents. Beyond what we call ‘games’ in common language, such as chess, poker, soccer, etc., it includes the modeling of conflict among nations, political campaigns, competition among firms, and trading behavior in markets such as the NYSE. How could you begin to model eBay, Google keyword auctions, and peer to peer file-sharing networks, without accounting for the incentives of the people using them? The course will provide the basics: representing games and strategies, the extensive form (which computer scientists call game trees), Bayesian games (modeling things like auctions), repeated and stochastic games, and more. We’ll include a variety of examples including classic games and a few applications.

There won’t be a lot of heavy math, and the lecture videos will broken into small chunks, usually between eight and twelve minutes each.

I signed up!  Let me know if you did, too, and we can work on this together.

Game Theory of Black Friday

If you’re reading this real-time, you’re probably not out shopping.

Black Friday, the day after Thanksgiving, is a day of shopping madness, and is sometimes considered the beginning of the Christmas shopping season. Most major retailers open extremely early andd offer promotional sales to kick off the shopping season.

A few days ago on NYT, Robert H. Frank described Black Friday as a retail race to the bottom in terms of a zero-sum or negative-sum game:

In recent years, large retail chains have been competing to be the first to open their doors on Black Friday. The race is driven by the theory that stores with the earliest start time capture the most buyers and make the most sales. For many years, stores opened at a reasonable hour. Then, some started opening at 5 a.m., prompting complaints from employees about having to go to sleep early on Thanksgiving and miss out on time with their families. But retailers ignored those complaints, because their earlier start time proved so successful in luring customers away from rival outlets.

Tyler Cowen, of MarginalRevolution, has a different opinion.  Based on the fact that early December has in general the cheapest prices of the year, not Black Friday, he says:

Dare I suggest that some people like waiting in those lines with their thermos cups and stale bagels.  You could try to argue they are “forced to do so,” to get the bargains, but in a reasonably competitive world  each outlet will (roughly) try to maximize the consumer surplus from visiting the store, including the experience of waiting in line.

All I know is that a few of my colleagues were more excited to go home for Black Friday than for Thanksgiving on Thursday.

Wondering why Rebecca Black’s face is the photo for this post?  Check out the commercial below.  Read about it here.

Economists Duke It Out, complete with Hip-Hop music video

The intersection of boxing, hip-hop, and economics: not much could be better than that.

This video, titled “Fight of the Century: Keynes vs. Hayek Round Two,” really speaks for itself.  Click below to watch it.

From Wikipedia:

John Maynard Keynes spearheaded a revolution in economic thinking, overturning the older ideas of neoclassical economics that held that free markets would in the short to medium term automatically provide full employment, as long as workers were flexible in their wage demands. Keynes instead argued that aggregate demand determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment.

Friedrich August Hayek is best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought. Hayek’s account of how changing prices communicate signals which enable individuals to coordinate their plans is widely regarded as an important achievement in economics.Hayek also produced significant work in the fields of systems thinking, jurisprudence, neuroscience and the history of ideas.

The lyrics for Round Two can be found here. The video for Round One is here.

How About a Nice Game of Chess?

In spite of, or perhaps because of, Matthew Broderick thinking that yelling “Learn!” at a computer will actually make it do so, WarGames is a pretty fantastic movie.  Released in 1983, the science-fiction film tells the story of David Lightman, a computer hacker played by Broderick, who accidentally finds his way into a military supercomputer programmed to predict outcomes of nuclear war.  Lightman gets the computer to run a nuclear war simulation, which causes an international nuclear missile scare and almost single-handedly starts World War III.

The most famous scene from the movie comes towards the end.  The computer, WOPR, finds the missile launch code it’s been searching for. Before launching the missile, it runs through all of the nuclear war scenarios that it has created.  Predictably, WOPR finds that all scenarios yield pretty terrifying outcomes for all parties involved.  WOPR concludes, famously,

“A strange game.
The only winning move is
not to play.

How about a nice game of chess?”

Aside from WOPR achieving sentience, it also figured out that, from a game theoretical perspective, choosing to strike your opponent in a game of Mutually Assured Destruction doesn’t yield a positive outcome for either party.

This is pretty good news for proponents of the Singularity.  Singularitarians fear that, if or when machines achieve consciousness, machines might end up destroying humanity as we know it.  In the WarGames scenario, WOPR achieves sentience and decides on peace.

So how does a Mutually Assured Destruction game work?

mutually assured destruction (mad) game tree

Take a look at the figure above.  In this situation, both America and the Soviet Union have the option to fire their weapons.  However, if either one does, it doesn’t matter what the other side does, because one weapon launch will destroy both sides.  Hence, mutually assured destruction.

Note that the Soviet Union’s nodes are circled.   This particular form of the game assumes that both players are making their decision simultaneously, without knowledge of the other player’s choice.

The best outcome is for both sides to back off.  Or, as WOPR finds, for both sides not to play.

Whenever anyone asks about mutually assured destruction, the example of the Cold War inevitably, and understandably, comes up.  Are there any games of Mutually Assured Destruction being played right now?  What other examples, non- war related, are there of mutually assured destruction?

Iterative Innovation or: The Marshmallow Theory

We’re afraid of failure.  This makes sense – failure is a frightening concept.  Nobody likes putting themselves out there and being disappointed with the outcome.

However, we, as a society, are too afraid of failure.

Sometimes, we are so afraid of failure that we procrastinate.  Often, we call this “research,” “planning,” or “preparation.” None of those words, unfortunately, is “implementation.”

Because we’re afraid of our initiative failing, we push off executing our plans for far too long.

Failure is useful; it points out areas of improvement.  One of the best arguments I’ve seen in favor of failure is in Tom Wujec’s TED talk: “Build a Tower, Build a Team.”

In the talk, Wujec describes a team building exercise, during which teams attempt to build the tallest tower using only dry spaghetti, a yard of tape, and one marshmallow, which has to be on top of the structure.  In this exercise, business executives do terribly – they spend a lot of time figuring out who the team lead’s going to be and planning their strategy.  Fortunately, architects and engineers do quite well – they understand how to build stable structures.

Surprisingly, kindergarteners end up building some of the tallest structures.

“What kindergarteners do differently, is that they start with the marshmallow, and they build prototypes, successive prototypes, always keeping the marshmallow on top, so they have multiple times to fix ill built prototypes along the way. So designers recognize this type of collaboration as the essence of the iterative process. And with each version, kids get instant feedback about what works and what doesn’t work.”

Wujec is pointing out the necessity of beginning with the end in mind.  In this case, that’s the marshmallow.  However, there’s another factor at play here: kindergarteners aren’t afraid of failure.

Kindergarteners start building immediately, and when their structure collapses, they build another one.  And another one.  And another one.  And each time, they’re improving their structure, because now they’ve experimented with what doesn’t work.

Now, I’m not advocating striving to fail.  As Warren Buffet said, “You want to learn from experience, but you want to learn from other people’s experience when you can.”

However, stop procrastinating.  Planning only goes so far.  Research, like everything else, has diminishing marginal returns.  Put your plan into action.

Failure is not the only way to learn.  Nor is it the end of your project.  But it’s definitely a pretty good place to start.

Don’t Stereotype This Song (The Cognitive Bias Song)

Bradley Wray is my hero.  He’s a high school teacher in Maryland, where he teaches AP Psychology.

He wrote this amazing song about cognitive bias for his AP students.  The song lists and defines a number of useful cognitive biases that behavioral psychologists have uncovered over the years.

Wikipedia describes cognitive bias as the “human tendency to make systematic errors in judgment, knowledge, and reasoning.”  The field of behavioral economics relies on many of these biases to understand human economic decision making.  For those who may not be familiar with the field of behavioral economics, consider this Behavioral Economics 101.


I’m biased because I knew it all along.
Hindsight bias: I knew it all along.

I’m biased because I put you in a category which you may or may not belong.
Representativeness bias: Don’t stereotype this song.

I’m biased because of a small detail that throws off the big picture of the thing.
Anchoring bias: See the forest for the trees.

I’m biased toward the first example that comes to my mind.
Availability bias: To the first thing that comes to mind.

Oh oh bias.
Don’t let bias into your mind.
Bias don’t try this.
It’ll influence you thinking.
And memories, don’t mess with these –
But you’re guilty of distorted thinking.

Cognitive bias
Your mind becomes blinded:
Decisions and problems you’ve
Been forced to solve them wrongly.

I’m biased because I’ll only listen to what I agree with.
Confirmation bias: You’re narrowminded if you are this.

I’m biased because I take credit for success but no blame for failure.
Self-serving bias: My success and your failure

I’m biased when I remember things they way I would’ve expected them to be.
Expectancy bias: False memories are shaped by these

I’m biased becase I think my opinion now was my opinion then.
Self-consistency bias: But you felt different way back when.

Oh oh bias.
Don’t let bias into your mind.
Bias don’t try this.
It’ll influence you thinking.
And memories, don’t mess with these –
But you’re guilty of distorted thinking.

Cognitive bias
Your mind becomes blinded:
Decisions and problems you’ve
Been forced to solve them wrongly.

Gever Tulley on 5 Dangerous Things for Kids

We’re currently watching Gever Tulley’s talk about five dangerous things you should let your children do

Gever Tulley, founder of the Tinkering School, spells out 5 dangerous things you should let your kids do. From TED University 2007.

  1. Play with fire.
  2. Own a pocket knife.
  3. Own a spear.
  4. Deconstruct appliances.
  5. Break the Digital Millennium Copyright Act, and Drive a Car.

I’d add – let them eat dirt.  Here’s the talk!