Free The Theory of Games by Ezra Sidran

what are the basic assumptions of Game Theory?” I asked. Before Nick could answer I started ticking them off on my fingers, “One, each player has a discrete set of choices; two, each sequence of a player’s moves results in a known end state with a known payoff; three, in a zero-sum game the more one player wins the less there is for the other players; four, every player has perfect knowledge of the game, the rules and the opponents’ moves; and, five, the players are making rational decisions based on maximizing their own payoffs.”
    Nick nodded. This was painfully obvious stuff and Nick did get an ‘A’ for the class.
    “Okay,” I continued, “that’s Game Theory. Now I’m going to tell you about the Theory of Games. You remember ‘The Prisoners’ Dilemma’?” Nick nodded again: of course . “All right, but let me go over it again for Bill.” Bill was camped out in front of Nick, drooling uncontrollably at the thought of getting ‘lasts’ of Nick’s breakfast.
    “Bill is a dog!” the Authoritarian Man growled. I’ve already warned you about your jokes.
    “Okay, Jim,” I replied, “let me go over it for your sake, then. Do you know the ‘Prisoners’ Dilemma’?” The Authoritarian Man shook his head ‘no’.
    “Here’s the setup: there’s two prisoners. The jailor tells them, ‘if one of you confesses and the other doesn’t I will sentence the one who confesses to five years of hard labor and the one who doesn’t confess I will set free. If neither of you confesses I will sentence both of you to ten years of hard labor. And if both of you confess I will sentence both of you to one year of hard labor.’ So, Jim, what’s the solution?”
    “Jailors don’t sentence people; judges do,” the Authoritarian Man replied.
    Okay, okay, they’re in front of a judge; it doesn’t matter. It’s a Game Theory problem.
    “They both confess and only get one year of hard labor,” the Authoritarian Man answered.
    “They both confess and only get one year of hard labor,” Nick answered.
    “That’s the difference between Game Theory and Grant’s Theory of Games,” I said, “Because in the abstract world of Game Theory both prisoners make the best rational decision. But in the real world, the world of the Theory of Games, they both cut each other’s throats. They’re both terrified that the other guy is going to sell him out. So what do they do? Neither confesses and they both get sent up for ten years when they both could have gotten away with just a year if they had only cooperated and trusted each other.”
    Nick threw most of his breakfast into Bill’s gaping maw. Snarf, burp, wag. Nick scritched Bill behind his ear.
    “Here’s how my Theory of Games works,” I explained, “Each of the stupid, shortsighted, greedy prisoners thinks: ‘There are only two possible outcomes; either I go to jail or I don’t go to jail. And the only way that I don’t go to jail is if the other poor motherfucker altruistically confesses and I don’t. Therefore, I ain’t confessing.’ And that’s how they both end up breaking up rocks for ten years of hard labor. In other words, Grant’s Theory of Games says: ‘In the real world people will usually make stupid, shortsighted, greedy decisions.’”
    “And that’s what you think is going on in Iraq?”
    “That’s what I think is going on all over the world right now,” I answered. And being strapped down to this gurney only reinforced my world view.
     
    “So who do you think we’re working for on this new project?” Nick asked.
    “The Department of Homeland Security,” I answered and I looked out past Dynamite Island where a 16-barge tug was trying to maneuver into the channel against the current.
    “So why do their coders suck so bad?” Nick asked.
    I fumbled around in my shirt pocket for the cigarette pack and lit one – the memory of the taste of an after-breakfast cigarette with a cup of coffee outdoors - but I knew better than to