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July 25 - August 19, 2020
A low price of anarchy means the system is, for better or worse, about as good on its own as it would be if it were carefully managed.
By and large we cannot shift the dominant strategies from within.
In both cases this so-called commitment problem can be at least partially addressed by a contract. But game theory suggests that in the case of dating, the voluntary bonds of the law are less relevant to an enduring partnership than the involuntary bonds of love itself.
So the rational argument for love is twofold: the emotions of attachment not only spare you from recursively overthinking your partner’s intentions, but by changing the payoffs actually enable a better outcome altogether. What’s more, being able to fall involuntarily in love makes you, in turn, a more attractive partner to have. Your capacity for heartbreak, for sleeping with the emotional fishes, is the very quality that makes you such a trusty accomplice.
they actually power a substantial portion of the economy. Google, for instance, makes more than 90% of its revenue from selling ads, and those ads are all sold via auctions. Meanwhile, governments use auctions to sell rights to bands of the telecommunications spectrum (such as cell phone transmission frequencies), raising tens of billions of dollars in revenue. In fact, many global markets, in everything from homes to books to tulips, operate via auctions of various styles.
a group of agents who are all behaving perfectly rationally and perfectly appropriately can nonetheless fall prey to what is effectively infinite misinformation. This has come to be known as an “information cascade.”
The “consensus” unglues from reality. A cascade has formed.
Something very important happens once somebody decides to follow blindly his predecessors independently of his own information signal, and that is that his action becomes uninformative to all later decision makers.
Information cascades offer a rational theory not only of bubbles, but also of fads and herd behavior more generally. They offer an account of how it’s easily possible for any market to spike and collapse,
be wary of cases where public information seems to exceed private information,
When you’re mostly looking to others to set a course, they may well be looking right back at you to do the same.
And if you’re the kind of person who always does what you think is right, no matter how crazy others think it is, take heart. The bad news is that you will be wrong more often than the herd followers.
in a Vickrey auction, the winner ends up paying not the amount of their own bid, but that of the second-place bidder.
This makes the Vickrey auction what mechanism designers call “strategy-proof,” or just “truthful.” In the Vickrey auction, honesty is literally the best policy. Even better, honesty remains the best policy regardless of whether the other bidders are honest themselves.
In fact, the lesson here goes far beyond auctions. In a landmark finding called the “revelation principle,” Nobel laureate Roger Myerson proved that any game that requires strategically masking the truth can be transformed into a game that requires nothing but simple honesty.
If changing strategies doesn’t help, you can try to change the game. And if that’s not possible, you can at least exercise some control about which games you choose to play.
If you followed the best possible process, then you’ve done all you can, and you shouldn’t blame yourself if things didn’t go your way.
If you wind up stuck in an intractable scenario, remember that heuristics, approximations, and strategic use of randomness can help you find workable solutions.
sometimes “good enough” really is good enough.
In the case of interviews, it seems that people preferred receiving a constrained problem, even if the constraints were plucked out of thin air, than a wide-open one.
We can be “computationally kind” to others by framing issues in terms that make the underlying computational problem easier.
Politely withholding your preferences puts the computational problem of inferring them on the rest of the group. In contrast, politely asserting your preferences (“Personally, I’m inclined toward x. What do you think?”)
