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Showing posts with label game theory. Show all posts
Showing posts with label game theory. Show all posts

Friday 2 August 2013

Selfish traits not favoured by evolution, study shows



Evolution does not favour selfish people, according to new research.
This challenges a previous theory which suggested it was preferable to put yourself first.
Instead, it pays to be co-operative, shown in a model of "the prisoner's dilemma", a scenario of game theory - the study of strategic decision-making.
Published in Nature Communications, the team says their work shows that exhibiting only selfish traits would have made us go extinct.
Game theory involves devising "games" to simulate situations of conflict or co-operation. It allows researchers to unravel complex decision-making strategies and to establish why certain types of behaviour among individuals emerge.
Freedom or prison

A team from Michigan State University used a model of the prisoner's dilemma game, where two suspects who are interrogated in separate prison cells must decide whether or not to inform on each other.
In the model, each person is offered a deal for freedom if they inform on the other, putting their opponent in jail for six months. However, this scenario will only be played out if the opponent chooses not to inform.
If both "prisoners" choose to inform (defection) they will both get three months in prison, but if they both stay silent (co-operation) they will both only get a jail term of one month.
The eminent mathematician John Nash showed that the optimum strategy was not to co-operate in the prisoner's dilemma game.
"For many years, people have asked that if he [Nash] is right, then why do we see co-operation in the animal kingdom, in the microbial world and in humans," said lead author Christoph Adami of Michigan State University.
Mean extinction

The answer, he explained, was that communication was not previously taken into account.
"The two prisoners that are interrogated are not allowed to talk to each other. If they did they would make a pact and be free within a month. But if they were not talking to each other, the temptation would be to rat the other out.
"Being mean can give you an advantage on a short timescale but certainly not in the long run - you would go extinct."
These latest findings contradict a 2012 study where it was found that selfish people could get ahead of more co-operative partners, which would create a world full of selfish beings.
This was dubbed a "mean and selfish" strategy and depended on a participant knowing their opponent's previous decision and adapting their strategy accordingly.
Crucially, in an evolutionary environment, knowing your opponent's decision would not be advantageous for long because your opponent would evolve the same recognition mechanism to also know you, Dr Adami explained.
This is exactly what his team found, that any advantage from defecting was short-lived. They used a powerful computer model to run hundreds of thousands of games, simulating a simple exchange of actions that took previous communication into account.
"What we modelled in the computer were very general things, namely decisions between two different behaviours. We call them co-operation and defection. But in the animal world there are all kinds of behaviours that are binary, for example to flee or to fight," Dr Adami told BBC News.
"It's almost like what we had in the cold war, an arms race - but these arms races occur all the time in evolutionary biology."
Social insects

Prof Andrew Coleman of Leicester University, UK, said this new work "put a break on over-zealous interpretations" of the previous strategy, which proposed that manipulative, selfish strategies would evolve.
"Darwin himself was puzzled about the co-operation you observe in nature. He was particularly struck by social insects," he explained.
"You might think that natural selection should favour individuals that are exploitative and selfish, but in fact we now know after decades of research that this is an oversimplified view of things, particularly if you take into account the selfish gene feature of evolution.
"It's not individuals that have to survive, its genes, and genes just use individual organisms - animals or humans - as vehicles to propagate themselves."
"Selfish genes" therefore benefit from having co-operative organisms.

Thursday 7 June 2012

What will happen in the eurozone? Don't ask the experts, they don't have a clue


Simon English: The Independent

Thursday, 7 June 2012
Outlook Shares were up yesterday, theoretically on hope that the eurozone "crisis" will be
resolved. If they are down again today (that's the way to bet) does that mean we are
suddenly back in the mire?

Not really. One thing that happens when economic news gets interesting enough to bother
the front pages is that all sorts of unlikely people, TV presenters for example, suddenly claim
to care about the machinations of this curiosity called markets.

If they've fallen there must be a good reason why – we shall tell people what that reason is.
Sometimes markets are moved by genuine shifts in sentiment or genuine moves in perception
of what the future holds, but it is hard to see that's the case lately. They are moving on
noise and, moreover, on extremely low trading volumes.

The eurozone situation is so hard to call that traders, fund managers, bankers, economists
and the whole rest of the chasing pack of folk pretending they know what's going on from
one day to the next are left floundering even more than usual.
They might like to say "search me, I've no clue", but that could prove to be a seriously
career limiting stance.

Instead, they react to newsflow, rather than relying on the considered analysis on which
their jobs are supposedly based.

That daily tension between greed and fear has always been present and trading on what one
thinks will be in the news is far from a fresh approach, but the trend is lately exacerbated
since the possibilities are so far apart (either we're all doomed to the Third World War, or
we're heading to the end of the banking crisis and a fresh boom in prosperity).

So much so that Matthew Lynn of Strategy Economics argued the following in a paper
yesterday: "Conventional economics is now largely useless in trying to analyse the twists and
turns of the unfolding euro crisis: it has long since left behind any rational calculation of what
is good and bad for the Continent."

If he is right, most economists should pretty much just resign.

By Mr Lynn's telling, the present situation is best understood as a branch of game theory. "The markets take the euro-zone to the brink of collapse. Asset prices plunge. "As they peer over the edge of the abyss, the leaders... take fright and come up with whatever is necessary to keep the system from collapsing," he writes.

This has happened several times already and will keep happening, goes the theory.

He thinks this game of chicken is a trading opportunity, and suggests buying blue-chip
European stocks, French bonds, German property, gold and the Russian stock market. They'll
all go up after the Greek elections and the next big rescue deal, he says, at least for a while.
Even if you aren't in the mood to take such risks, his analysis might be a source of comfort.
His wider point seems to be that, since it is in no one's interests for an entire continent to go
bust, they shall keep figuring out a deal to prevent such a calamity.

Mr Lynn thinks that none of the bailouts can work in the long-term, but he might concede
that until tomorrow comes (it never has yet) we can all live forever, one day at a time.
In the short-term, there are money-making opportunities for those who ignore the gloomy
chat.

So don't look too closely at the stock market. Its daily gyrations really aren't telling you
anything that helpful.

s.english@independent.co.uk