Rational-Choice

Imagine a game where one strategy is best no matter what your opponent does. You don’t need to predict their behavior, guess their intentions, or outthink them. You just pick the dominant strategy and you’re done. This is the simplest situation in game theory—and when you have a dominant strategy, your decision becomes trivial. Let’s understand this powerful concept. What is a Dominant Strategy? A dominant strategy is a strategy that gives you a better outcome than any other strategy, regardless of what your opponents do. ...

Imagine you and a partner are arrested for a crime. The police separate you into different rooms and offer each of you the same deal. You can’t communicate. You don’t know what your partner will do. And the choice you make will determine whether you go free or spend years in prison. Welcome to the most famous problem in game theory: the Prisoner’s Dilemma. It reveals a disturbing truth about rational decision-making that explains everything from climate change to price wars to why your office kitchen is always dirty. ...

Here’s one of the most unsettling discoveries in mathematics: perfectly rational players, each acting in their own self-interest, can all end up worse off than if they had acted irrationally. This isn’t a flaw in game theory—it’s a feature of reality that game theory reveals. This paradox explains traffic jams, arms races, overfishing, climate change negotiations, and why businesses sometimes engage in destructive price wars. Understanding it will change how you see human cooperation (and its failures). ...