Post Semester

Eco 475 Class, Spring 2011, North South University.

Beautiful Games with Beautiful Minds

Asrar Chowdhury

A Mother has two children. She loves them both equally. Whenever she buys a cake and divides them in equal pieces, they quarrel. Mummy loves the other one more. One day Mummy gave the cake to the elder child and asked her to divide into two pieces. But the younger sibling will first decide which of the two pieces to take. From 'self-interest' the elder child divided the cake into two equal pieces so her sibling also gets half of the cake. Simple intuition resulted in equal distribution and ended the sibling rivalry- a version of the ultimatum game. From Adam Smith it took almost two centuries for economic theory to arrive at Game Theory: a powerful tool to explain interdependent decisions- when the decision of one individual depends on the decision of another.

My introduction to Game Theory was not through the movie, “Beautiful Mind” (2001) or through “Beautiful Mind”, the biography by Sylvia Nasar (1998). Like many good things in life, by chance in 2010, I stumbled upon a book called “Beautiful Math” by Tom Siegfried (2006). Siegfried's exposition of Game Theory and the biography of John Nash signalled life would never be the same again.

When I embarked on a journey into the world of economic theories more than two decades ago, the dominant tools were based on neoclassical marginalism and statistical tools based on probability and econometrics. Neither of the two was comprehensive to understand interdependent decisions. A problem with textbooks is that they include only well-established research. Such research can take decades to find a place in a textbook. When we finished our undergraduate, Nash was unheard of. Augustine Cournot's 1838 Reaction Functions and John Von Neumann's 1928 Minimax Theorem were the limits to interdependent decision-making.

Textbooks in developing countries are slow in responding to changes. Alas! After sixty years of the Nash equilibrium, Game Theory is still not a separate or regular feature in many universities in Bangladesh. Surprisingly, a Game Theory course always existed in Economics of North South University, but was not offered for a long time. I jumped like a fish into water when the Chairperson of Economics at NSU asked me to take the undergraduate Game Theory course in the just concluded Spring Semester of 2011.

The best way to learn is to teach. The education production function however can complex matters. The two vital inputs of this function- the teacher and the students have to coordinate in a game of mutual give and take. Coordination failure leads to a bad Nash equilibrium from where there is no exit- A Prisoners' Dilemma. When students challenge themselves to the limits, teachers can take the class further and with the students take themselves even further. This is one of the greatest satisfactions of the teaching profession.

Game Theory today is what calculus was 300 years ago and probability theory 150 years ago. Today Game Theory includes arenas outside economic theory e.g., politics, environment, conflicts and cooperation in war and peace, artificial intelligence, and even evolutionary science. Since its formal launch in 1944 through Von Neumann and Morgenstern and in 1950 through Nash's equilibrium and Tucker's Prisoners' Dilemma also in 1950, Game Theory has proved to be one of the greatest triumphs in applied mathematics since Geometry by the Greeks; Algebra by the Arabs; and Calculus by Leibniz and Newton in Europe.

What seemed a myth is now an enjoyable experience to challenge the intellect. Till the possibility of another game arises another day- thanks to some beautiful minds of the next generation of Bangladesh who will play many beautiful games in the coming days-we will be left behind playing an assurance game that Bangladesh goes forward to her rightful place on the world stage.

(The author teaches economic theory at Jahangirnagar University and North South University.)