Things That Contrarians Ought To Learn From Game Theory
According to Richard Holden from UNSW, it is said that we are at war with the COVID-19 coronavirus. He says that he is not drawn to martial metaphors; however, that is not wrong. Holden writes that another way to put is that people, as a society, are in a specific interaction with the virus. The appropriate analytic tool to study the strategic interactions originates from the field of game of theory.
Most mathematicians and economists have created these tools in earnest since John von Neumann, and Oscar Morgenstern published the Theory of Games and Economic Behavior in 1944. One of the essential ideas in game theory, one that is taught in undergraduate economics classes globally is, thinking about the equilibrium of a game. This means a situation where no player can improve their payoff by unilaterally altering their strategy.
John Harsanyi, John Nash (subject of the movie A Beautiful Mind), and Reinhard Selten won the 1994 Nobel Prize in Economic Sciences for their pioneering analysis of equilibria in the theory of non-cooperative games. These lessons are some of which many Australian commentators have ignored in their claims social-distancing measures are rather extreme.
According to John Roskam, the head of free-market think-tank the Institute of Public Affairs, 25 million Australians have been placed under indefinite house arrest, and toddler playgrounds are locked and patrolled by security guards and the police fly drones over beached and parks. He added that the future generations might question if another better way would have sufficed.
Also, the Australian’s Adam Creighton argues that, instead of bluntly taking a sledgehammer to economic activity, it would have been better to immediately boost the capacity of the health system, letting the bulk of the population go on with their lives and take special precautions with those at-risk. However, good economists around profoundly disagree.
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