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

by Avinash K. Dixit

Khrushchev first denounced Stalin’s purges at the Soviet Communist Party’s 20th Congress. After his dramatic speech, someone in the audience shouted out, asking what Khrushchev had been doing at the time. Khrushchev responded by asking the questioner to please stand up and identify himself. The audience remained silent. Khrushchev replied, “That is what I did, too.”

It may not be enough to play a game well—you must also be sure you are playing the right game.

George Bernard Shaw’s quip on the golden rule was to not do unto others as you would have them do unto you—their tastes may be different.

When thinking strategically, you have to work extra hard to understand the perspective and interactions of all the other players in the game, including ones who may be silent. That brings us to one last point. You may be thinking you are playing one game, but it is only part of a larger game. There is always a larger game.

RULE 1: Look forward and reason backward. Anticipate where your initial decisions will ultimately lead and use this information to calculate your best choice.

In single-person decisions, greater freedom of action can never hurt. But in games, it can hurt because its existence can influence other players’ actions. Conversely, tying your own hands can help.

Success will come from such synthesis of the science of game theory and the art of playing a specific game, not from either alone.

However, the fact remains that if the people in a society engage in such quasi-magical thinking, they will not fall victim to many prisoners’ dilemmas and all will reap higher payoffs from their mutual interactions. Could it be that human societies deliberately instill such thinking into their members for just such an ultimate purpose?

The best strategy is to go after the stag if and only if you can be confident that most everyone is doing the same thing. You have no reason not to chase after the stag, except if you lack confidence in what others will do.

Our goal is to be strategic when designing a game so that the players don’t have to be strategic when they play it.