Thinking Strategically - Dixit & Nalebuff

[writser]

[amazonsearch]Thinking Strategically[/amazonsearch]

 

I almost finished this book. Really liking it so far. Basically the book serves as a primer to game theory and it explains nerdy stuff such as equilibria, minimax algorithms and dominating strategies. The engineers here should like it. The nice thing (imho) is that the authors skip most of the math and present the concepts in real-life examples such as tennis, the Cuba missile crisis, union negotiations, corporate take-overs and monopolies. This makes the book a relatively easy read.

 

Applying game theory to real-world problems sometimes leads to really surprising results. Some cool stuff from the book that come to mind:

 

- The ban on tv advertising for cigarettes actually improved the profitability of tobacco companies.

- If your stance on terrorism is 'we don't negotiate' it might actually be in your best interest to negotiate anyway (but to bail out on your promises afterwards).

- The concept of brinkmanship: pushing dangerous events to the brink of disaster in order to achieve the most advantageous outcome.

 

Only criticism I have of the book so far is that it was published in 1993 so some of the examples are a bit outdated. Would have been cool to follow a couple of courses on this stuff. Really interesting.

[giofranchi]

I almost finished this book. Really liking it so far.

 

I agree. Very good book! :)

 

Gio

[augustabound]

You guys are killing me with interesting looking books, my "to read" list is the size of a phone book.  ;D

[Guest hellsten]

Interesting.

 

This seems to be the updated version:

http://www.amazon.com/product-reviews/0393062430/

 

One reviewer had this to say:

There is absolutely no need to read this book if you've read Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life.

 

I'm not certain why they exist as two separate books. The content is almost identical, and 90% of the examples in this one were lifted from that. I have no idea why this is touted as a "sequel." It is not. It's just Thinking Strategically repackaged (but I will say that its package is prettier). The tagline says that it's a "guide to success in business and life," but it is not. It is game theory explained in an accessible way.

 

I still wonder which version I should buy. I'm leaning towards purchasing the updated version.

[writser]

@Hellsten: yeah, that was confusing. In the end I picked the first book based on a couple of Amazon comments. Probably both are fine.

 

I also enjoyed 'The Undercover Economist' by Tim Harford, despite the cheesy title. Reason I'm mentioning it here is that that book featured a really interesting chapter on broadband spectrum auctions. Some countries (New Zealand if I remember correctly) didn't put much thought in how to set up their auctions and the results were really embarassing for the government. On the other hand the British government brought in a couple of Game Theory specialists to design a better auction format and their spectrum auction was a huge success, raising about ten times the money expected. Writing a paper about how you made 22.5 billion GBP for the UK government through an auction -> you're in my cool book.

 

The Hartford book: http://www.amazon.com/The-Undercover-Economist-Tim-Harford/dp/0345494016 . All his books are interesting reads imho.

[merkhet]

It's so weird to read this book, because, as I am reading it, I am hearing Barry's voice. He has a very distinctive way of speaking.

[Liberty]

Thanks for the recommendation. I've had Schelling's Choices and Consequences (http://www.amazon.com/Choice-Consequence-Thomas-C-Schelling/dp/0674127714/ ) on my shelf for a while, but haven't read it yet. I think it similarly deals with game theory, so it might interest some people here.

[boilermaker75]

 

The Hartford book: http://www.amazon.com/The-Undercover-Economist-Tim-Harford/dp/0345494016 . All his books are interesting reads imho.

 

My favorite is Adapt: Why Success Always Starts with Failure, which I highly recommend. I think this book is so useful I have given copies to my daughter and some of my students.

[Liberty]

 

The Hartford book: http://www.amazon.com/The-Undercover-Economist-Tim-Harford/dp/0345494016 . All his books are interesting reads imho.

 

My favorite is Adapt: Why Success Always Starts with Failure, which I highly recommend. I think this book is so useful I have given copies to my daughter and some of my students.

 

That's a strong recommendation. I added it to the list!

[merkhet]

My reading queue is ridiculously long -- there are currently 40+ books on my Kindle and, with the addition of Adapt, 60 books on my wishlist.

 

At least I'm doing my best to fulfill Munger's thought that we should all be a little wiser at the end of the day than we were at the beginning of the day.

[netnet]

My reading queue is ridiculously long -- there are currently 40+ books on my Kindle and, with the addition of Adapt, 60 books on my wishlist.

 

At least I'm doing my best to fulfill Munger's thought that we should all be a little wiser at the end of the day than we were at the beginning of the day.

 

Get a book on speed reading.  I liked Breakthrough Rapid Reading http://www.amazon.com/Breakthrough-Rapid-Reading-Peter-Kump/dp/073520019X/ref=sr_1_1?s=books&ie=UTF8&qid=1404750511&sr=1-1&keywords=speed+reading

 

I read Thinking Strategically many years ago, when that was book was new and ( I was too).  I don't really remember it but  game theory is definitely in my mental model toolkit.  I will have to go back and reread it.  Thanks for the suggestion!

[yadayada]

what are some interesting ones that you still need to read merkhet? I have the opposite problem really. Probably read like 40 books last year and thiis half year. And I am starting to run out of interesting books to read.

 

If I was really rich I would have  a book summarizer. Someone who reads the books and tells me within one hour what the key points where. Some books like Nassim Taleb's books really ramble on for way too long. Some of them you can read for 50% and not really need to read the rest as it is mostly filler.

[merkhet]

I actually took a speed reading course when I was in high school. It wasn't for me. There's a big difference for me between slow and contemplative reading vs. speed reading. My mind just can't make the connections that I need it to make when I approach reading that way. Speed isn't really the goal -- knowledge acquisition and integration is the goal. Speed might help (1) but it's a hinderance for (2).

 

My book list is rather esoteric. I have a Brian Greene book on there about string theory, Elizabeth Warren's biography, a book on the role of privilege in admissions for higher education, The House of Morgan, Outlaws of the Marsh (a Chinese classic), Barbarians at the Gate and Think Like a Freak, etc.

 

Generally, my books fall into a few categories (1) math/science, (2) psychology, (3) biographies, (4) business history, (5) education policy and (6) random literature.

 

I agree that a lot of books have filler, but I think of the filler the way I think of Supreme Court decisions. Sure, I can just skip to the parts where they talk about the decision and the breakdown of the justices that voted for each one -- but it's way more helpful to read the entire exposition to understand the thought process that went into the decision.

[netnet]

There's a big difference for me between slow and contemplative reading vs. speed reading. My mind just can't make the connections that I need it to make when I approach reading that way. Speed isn't really the goal -- knowledge acquisition and integration is the goal. Speed might help (1) but it's a hinderance for (2).

I would respectfully suggest that speed reading and knowledge acquisition are totally compatible, at least the way I do it.  Part of the reading process is to stop, make the connections, ask questions then dive back in.  I think what you learned in high school was not the half of it!  If you can read/scan something three times (in the half the time it takes some to make one pass) and make the connections that I submit is great knowledge acquisition, but it is not easy and contemplative.

[merkhet]

There's a big difference for me between slow and contemplative reading vs. speed reading. My mind just can't make the connections that I need it to make when I approach reading that way. Speed isn't really the goal -- knowledge acquisition and integration is the goal. Speed might help (1) but it's a hinderance for (2).

I would respectfully suggest that speed reading and knowledge acquisition are totally compatible, at least the way I do it.  Part of the reading process is to stop, make the connections, ask questions then dive back in.  I think what you learned in high school was not the half of it!  If you can read/scan something three times (in the half the time it takes some to make one pass) and make the connections that I submit is great knowledge acquisition, but it is not easy and contemplative.

 

I think this is probably a personal preference thing. *shrug*

[boilermaker75]

 

The Hartford book: http://www.amazon.com/The-Undercover-Economist-Tim-Harford/dp/0345494016 . All his books are interesting reads imho.

 

My favorite is Adapt: Why Success Always Starts with Failure, which I highly recommend. I think this book is so useful I have given copies to my daughter and some of my students.

 

That's a strong recommendation. I added it to the list!

 

Whenever I go to a movie that has been highly recommended I am usually disappointed. So I hope you won't be disappointed with Adapt because of my recommendation.