Do you need to know how to play games to study game theory?

Question

I was never good at card games, mainly because I never played them (rough childhood, another time another place). So you can imagine the fun time I spent in probability counting the likelihood in drawing 4 heart of spades (is that even a hand?). Bridges? Never heard of them. Chess? Not the European kind with knights, queens and stewards that's for sure. Never been to Las Vegas either.

Oh I never did any sports either because that is a waste of time.

---

I recently developed an interest in game theory, in conjunction with an economics class I am taking. But I am not sure what this subject is all about.

Does the intuition in game theory come from realistic games? I recall watching a beautiful mind and John Nash was studying some game play.

To all the game theorists out there, how much real life games I need to know how study this subject?

Answer 1

Math (and by proxy economics) distinguishes really two real classes of decision-making. 'Decision theory' generally concerns a rational agent trying to make the best choice against some exogenous uncertainty (against 'nature'). A decision theoretic problem you might run into in life:

"You are moving away from your old town, sometime in the next year. You are presently sitting down to order at your favorite local restaurant. Do you get your favorite dish now? Or do you experiment and see if there's something you like more."

The answer all hinges on the natural uncertainty the decision-maker is facing. Game theory on the other hand, deals with when your 'opponent' isn't nature, your opponent is a rational, clever being who takes into account the same thoughts you do. An example of a game theoretic problem might be:

"What is the best way to bid in an Ebay auction, knowing that everyone else is asking the same question"

The phrase 'games' here doesn't have the usual layperson meaning of sport, or board/card games, or video games etc. It simply refers to any strategic interaction with intelligent, rational counterparts. So no background in those card games needed. (Source: I do game theory for a living and still don't know how to play poker).

Answer 2

Few things to say about this...

1. Game theory is the scientific study of strategically interdependent decision making.
2. Applications of Game Theory in real life situations, and real life games subsequently, are many.
3. A prerequisite for learning this is not real games, fortunately!
4. You will be exposed to many new games through this subject of study.
5. Whenever common games which you might have come across might be the focus of a problem, usually all relevant details will also be given, thereby making 'not knowing many games' not so much of a disadvantage.

---

Note:

Check out this website to learn the basics very well... : http://gametheory101.com/Home.html

Check out the e-books as well...seriously cheap, yet very, very useful (By the same website owner/author): http://gametheory101.com/Textbook.html

Answer 3

Game theory is the theory of interactive decision situations where groups of agents make decisions that lead to outcomes, and where each agent has preferences over the outcomes.

One collection of such decision situations are the so-called "parlor games" that include poker, chess and so on. These are classicly discussed due to their simplicity and the fun fact that much of the same analysis is useful for a game like poker and a game like a nuclear standoff between rival nations.

Mathematical Game Theory is applied mathematics and makes use of results from Linear algebra, analysis (such as fixed-point theorems), and many other mathematical fields. Applied Game Theory then applies these results and modeling techniques to social situations, from economic systems to these simple (strategically active) parlor games.

The intuition comes from simple games and complex games everywhere (see Dads and Cads for another example) and the similarities bewteen the two. I recommend going to the source and reading parts of Von Neumann and Moregnstern's Theory of Games and Economic Behavior to supply the background you want. For a mathematical treatment consider Gonzalez-Diaz et. all and An Introductory Course on Mathematical Game Theory (from which my first paragraph above was adapted). There are also two AMS Student Mathematical Library books worth reviewing.

So, let the theory you find lead you to whatever understanding parlor games you require. Modeling poker is actually quite difficult if you're interested, start with "simplfied poker" and see where it leads you.