How do you make decisions when there’s incomplete information? Do you move forward? We all face this dilemma daily in every aspect of our lives. For instance:
- How long do you stay in a relationship in hopes that the person you’re in love with will make a commitment to marry you?
- Do you believe your major competitor when she tells you directly what her next move will be in the marketplace?
- How about the candidate you’re recruiting for your organization who tells you that he’s intending on joining the organization if you make him an offer?
- Do you believe the poker player who raises a bet?
Wouldn’t it be great to predict for sure the true intentions of those we deal with on a daily basis?
There’s a science that mathematically and scientifically helps us predict what others might do. A number of scientists have worked on a variety of game theories including John Nash the mathematician who was portrayed in the Beautiful Mind and a winner of the Nobel Memorial Price in Economics. A famous game theory he developed is the Nash Equilibrium. When game theory first came out it was applied to situations of pure conflict such as wars and peace negotiations. Nash’s breakthrough theory was applied to situations where the players could cooperate even if they had different motives in addition to pure conflict situations. This is helpful since most of the situations we deal with are not pure conflict.
In game theory the players have different motives with the outcome benefiting one or the other. We see this everyday such as when two companies compete for the same market share and other resources.
Game theory helps us make estimated guesses on what the other players are doing or are about to do. The player make moves based on the choices or moves of one or more players. Anything that helps us predict what the other player is about to do will help us make better decisions.
Great poker players know this too well. They have a better sense of when someone is bluffing or not. Those players who can better predict the moves are going to win more hands.
We make a lot of decisions without having the full picture of what’s really going on behind the scenes. There are a lot of theories out there and interesting mathematical models to predict behavior. Whether you do this by game theory, your intuition, or your hard earned wisdom-your success will depend on your ability to predict what others are going to do.
Your Thoughts and Insights
- How do you predict what others will do?
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