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Netcentric View:
Bill Gates and the lessons of "Game Theory"
By Bernard Cole
iApplianceWeb
(06/19/01, 03:10:52 AM GMT)
It's too bad that Bill Gates, chairman and founder
of Microsoft Corp., decided to drop out of college and become a billionaire. He
might have learned from game theory that in the long run the best competitive
strategy is to be nice, or at the very least to do unto others as they do unto
you.
If others are nice and play fair, do likewise.
And if not, treat them accordingly: reciprocity, as the social scientists say,
and tit-for-tat, as the game theorists put it. What you don't do is grind them
into dust on the assumption that the best competition is no competition. Game
theory says that is not a good strategy for long-term survival. With no
competition, why innovate?
John Von Neumann, who made fundamental
contributions to computer science and quantum theory, called game theory a
mathematical analysis for modeling competition and cooperation in living things,
from simple organisms to human beings. Game theory has become useful in helping
scientists determine how entities cooperate and compete and which strategies are
most successful.
Particularly instructive is Robert Axelrod's
The Evolution of Cooperation. The book describes computer games with
participants from around the world, focused on determining how individuals in
groups, who are likely to interact with others, act in a competitive situation.
His model for competition is the game theory
situation called the prisoner's dilemma. Here, individuals pursue self-interest
without a central authority to force cooperation. Each player can choose only to
reciprocate or not. Each must choose without knowing what the other will do. If
one reciprocates and the other does not, the nonreciprocator comes out ahead
initially, but only if the other plays by the rules. If neither reciprocates,
both do worse. And in groups, reciprocators always did better in the long run
than nonreciprocators. When everyone reciprocated, everyone benefited, not
equally, but better than before.
Adhering to both sides of that misunderstood
Biblical dictum-an eye for an eye, etc.-seems the successful strategy, both for
the individual and all the members of a group.
On the other hand, a hard-nosed, tough,
never-give-a-sucker-an-even-break attitude, while successful in the short term,
is a losing proposition.
Scientists have used game theory to understand
how small single-cell organisms, more-complex organisms, animals and humans
survive and thrive and the results are the same: only the fittest survive.
But the fittest are not the toughest, the
biggest or the meanest; they are the fairest and most even handed in their
dealings with one another. If game theory's tit-for-tat seems to succeed in
virtually every other place in nature, why not in the free market?
Bernard Cole
is site leader and editor of
iApplianceweb
and an independent high technology editorial services consultant. He welcomes
your feedback. Call him at 602-288-7257 or send an email to
bccole@acm.org.
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