Reading Economics & Uncategorized 03 Oct 2006 08:39 pm
Economics taken out of context (?)
After what seems ages, I got the chance to read up a bit today. The article on the Prisoner’s Dilemma on wikipedia made for an interesting read. Here is an excerpt about what makes for a good strategy to compete in an Iterated Prisoner’s Dilemma game. (I suggest reading the article first).
” By analysing the top-scoring strategies, Axelrod stated several conditions necessary for a strategy to be successful.
- Nice
- The most important condition is that the strategy must be “nice”, that is, it will not defect before its opponent does. Almost all of the top-scoring strategies were nice. Therefore a purely selfish strategy for purely selfish reasons will never hit its opponent first.
- Retaliating
- However, Axelrod contended, the successful strategy must not be a blind optimist. It must always retaliate. An example of a non-retaliating strategy is Always Cooperate. This is a very bad choice, as “nasty” strategies will ruthlessly exploit such softies.
- Forgiving
- Another quality of successful strategies is that they must be forgiving. Though they will retaliate, they will once again fall back to cooperating if the opponent does not continue to play defects. This stops long runs of revenge and counter-revenge, maximizing points.
- Non-envious
- The last quality is being non-envious, that is not striving to score more than the opponent (impossible for a ‘nice’ strategy, i.e., a ‘nice’ strategy can never score more than the opponent).
Therefore, Axelrod reached the Utopian-sounding conclusion that selfish individuals for their own selfish good will tend to be nice and forgiving and non-envious. One of the most important conclusions of Axelrod’s study of IPDs is that Nice guys can finish first.”
Pulling this out of context – do these same qualities also make sense in the real world? What has really caught my attention is the bit about how even selfish individuals will be nice (in the worldly sense) for their own good. And I love the part where there is hope for the nice guys to finish first. Well, Hindi movies always told us that, but now that it is out there in some scientific theory it sounds so much more comforting 
(In case your hopes have risen too high, note that it says nice guys can finish first,not that they always will 
).
Jokes apart, reading up on economics is turning out to be much more intersting that I had expected. I wish I had got exposure to such stuff when I was at the threshold of make the “big” decision between engineering and medicine. For those interested in reading, I am starting with a list on Atanu’s blog and using google to get to good articles on the internet. The Theory of Microeconomics by Mankiw lies on my desk, I have not had the chance to make it past the 3rd chapter. The plan was for me and a friend to study it together assuming that one would pull up the other but that does not seem to be working very well. But I digress. Do check out the article. And while you are it, also check out the Tragedy Of the Commons. Enjoy.