What is Game Theory?
According to Investopedia, game theory is defined as “a model of optimality taking into consideration not only benefits less costs, but also the interaction between participants.”
There are a bunch of really useful examples of game theory that are quite common, but I like to make up my own illustrations that are less practical and sometimes difficult to understand. That’s what being a writer is all about.
So here’s my example.
Suppose you’re on a ranch in Texas and you’re in a competition to guess the color of cattle in a barn. Are there barns on ranches? Probably, right? Idk. But there’s a barn and there are 10 cattle in it. The cattle are trotting out of the barn one-by-one, and you’re asked to predict the color of each one—black or brown—prior to it leaving the barn.
So which color should you pick? If you’re trying to maximize the number of correct guesses, you should guess whichever color is the most common for cattle. I don’t know what that is—my Google search for “most common color of steer” didn’t turn up anything useful (one site said red, which seems…not right)—but let’s say it’s brown.
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