"Thinking Strategically" by Dixit and Nalebuff

The book "Thinking Strategically" is far too extensive to simplify into a basic entry, but I do want to record an element of it that I think is important to remember.

The essence of Game Theory is that a game is being played when the players have to make their decisions anticipating their opponents' moves, while being aware that their opponents are doing the same thing. This is the basis for all strategy games, but what makes game theory unique is that it posits that one can systematically evaluate winning strategies, turning it from an art to a science. The book goes through many different games that are played in economic, political, and social situations.

The main two games that people play are simultaneous and turn-based games. In simultaneous games the players are acting at the same time with no way of knowing what the other will do. Thinking about these games involve picking the best strategy for the probable choices the other side can make. A problem with this game is the Prisoner's Dilemma, which is a situation where two prisoners can get lighter sentences if they rat on the other person. Both end up ratting on each other to get a lighter sentence, with the ironic result that both go to jail instead of both going free, which they might have done if both kept their mouth shut. The problem is that the temptation to cheat is so great that both sides will end up cheating to avoid the risk of being tattled on while keeping his mouth shut. But the best situation for both sides is to both keep a closed mouth, and in the many situations the Prisoner's dilemma applies to, the question is how to enforce an optimal strategy and keep people from cheating.

The other type of game is turn-based: the book calls it Sequential. In these games, players take turns, so in each move you know what the other player has done, but not what they will do on the next turn. The way you play this game is to look ahead and reason back -- you think about what your opponent would do in response to you, and you to them, in the alternating rounds until you get back to where you are now. But this may lead to an undesirable consequence, so there are ways to Commit To A Strategy, which allows you to turn a Sequential game into a simultaneous one where the other side knows your action. And knowing your action can sometimes be desirable for you because you then have the ability to control and predict what the other side will do accordingly in their own best interest.

There are many other strategies that can be applied to everyday games -- like mixing strategies to keep yourself from being wholly predictable, and brinkmanship as a way to threaten another side without committing to a mutually destructive path. Other strategy games simply explain why things are as they are, like the Prisoner's Dilemma when used to explain why it's hard to get any one person to do volunteer work or give to charity even if the outcome is desirable to all. This book needs to be re-read at a later time because there are far too many useful thoughts on strategy to remember continuously from just one reading.