Book Review: The Art of Strategy

Avinash Dixit and Barry Nalebuff have written a very engaging and accessible work on Game Theory which they purport is a “Guide to success in business and life“. Game Theory (not to be confused with Game Mechanics) is the mathematics and psychology of social interactions in strategic situations, and while I’m not sure it’s going to make you successful on it’s own it’s a good place to start at least.

Starting off with examples of games that are easily solvable by starting with the desired goal and working backwards, the authors delve deeper into more complicated issues such as how to strategize when both players can move simultaneously, when there are penalties for certain choices, or how to optimize the situation so that both players get the best possible outcome via cooperation.

This book had me gripped. I happily spent time chilling out reading this book instead of trying to catch some decent waves while on vacation in Hawaii. They authors build on simple cases and then dig into a more complex real-world scenarios involving Nash Equillibrium, Minimax, and decisions where the other players can manipulate information or introduce incentives and penalties. The chapter on strategies for participating in auctions is very interesting.

Included throughout the book are questions designed to test your understanding of the material, and good suggestions for further reading. The writing style is light, despite the material getting into some relatively complicated stuff, and the explanations are more than enough to allow you to understand each concept without having to look elsewhere.  A recommended read, there are some really great ideas in there.

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