Thinking Strategically

Game theory grew out of WW II and the minds of the von Neumanns and Morgensterns, the linear programmers and pundits at RAND, Princeton, M.I.T., and others adroit at the rigors of logical reasoning. Dixit (Game Theory/Princeton) and Nalebuff (Game Theory/Yale) are worthy successors, providing a popular exposition in the spirit of The Compleat Strategyst and Strategy in Poker, Business, and War. Interestingly, the authors define game theory as a branch of behavioral science - a definition that might lull the reader to believe that we are dealing with ways to psych out your opponent, bluff in poker, or otherwise act deviously for personal gain. To some extent this is true. However, the techniques illustrated in a rich sampling of cases (from improving your tennis to defeating a hostile takeover) repeatedly make use of the tree diagrams and payoff matrices familiar to game theory as a mathematical discipline. So the reader is introduced to the concepts of zero-sum (you win, I lose) games, sequential versus simultaneous games, minmax theorems, cooperative versus competitive games, and the art of mixing strategies to maximize outcomes. This is done with minimal math (at times too minimal!) but oft-repeated slogans, e.g., Look forward and reason backward. The reader is encouraged to apply the principles developed in each chapter to case studies presented: labor-management negotiations, contract and auction bidding, brinkmanship in the Middle East, maximizing employee productivity, running for President, sentencing a defendant. . .as well as variations on the theme of the prisoner's dilemma and other classic puzzles. It is gratifying that the authors introduce value judgments into the discussion and even demonstrate that, in more cases than you would suspect, it pays to be honest. Surprising, too, are cases where choosing a less favorite outcome can achieve what you really want. Good and thought-provoking. (Kirkus Reviews)