Thinking Strategically

You sit in one room, being questioned by the authorities. Your partner is in a separate room, also being interrogated. If neither of you confesses to the crime you’re charged with, you’ll both serve three years in jail. If you confess but your partner doesn’t, then you’ll go away for one year, but he will be sentenced to twenty-five years. If he confesses and you don’t, then you’ll be the one behind bars for a quarter of a century. But if you both confess, a ten-year sentence awaits. What do you do: confess or keep silent?

The situation is known as the prisoners’ dilemma, and it is a classic in game theory, which is the subject of THINKING STRATEGICALLY by Avinash Dixit and Barry Nalebuff.

Game theory is a combination of mathematics, logic, and psychology, a discipline that studies the strategic skills we use, often without conscious thought, when we try to get people to do what we desire. Many of the techniques and revelations of game theory are simple common sense, but others run counter to our intuition, and most of the books which have been written about the subject are so difficult to comprehend that readers are required to be experts in the field.

This is fortunately not the case with THINKING STRATEGICALLY. Writing in clear, uncluttered prose and using a variety of examples drawn from all manner of situations, Dixit and Nalebuff have explained briefly and clearly what game theory is, how it works, and how readers can make it work for them.

THINKING STRATEGICALLY leads through the basics of game theory in a simple but not simplistic approach, using examples from sports, politics, labor contract negotiations, child rearing, and a wide range of other areas. Written with wit and a wry sense of the incongruities of human nature and actions, THINKING STRATEGICALLY gives the reader a solid foundation in the essentials of this important and practical discipline. It’s not precisely Machiavelli with a computer, but it’s pretty close.