The Art of Strategy

Avinash Dixit and Barry Nalebuff have a new book, The Art of Strategy, in which they updated their ideas in their best seller and classic, Thinking Strategically (1991) with new stories and examples, like the Safer Duel and Shakespear's King Henry V, although the structure are more or less the same. Indeed, the theme keeps changing. Strictly selfish rationality has given way to a much broader perspective on human motives when considering the impact of psychological effects and the choice of information the decision makers use.

Today, Tom Keene of Bloomberg on the Economy has an interview with Prof. Dixit in which they discussed the evolved ideas in the new book, and their implications on our daily life and also on the recent financial downturn. They also talked about Thomas Schelling's systematization of Thomas Hobbes and David Hume's idea of credible commitment, and Schelling's notion of "brinksmanship".

Here is a synopsis of this book:

"Game theory means rigorous strategic thinking. It's the art of anticipating your opponent's next moves, knowing full well that your rival is trying to do the same thing to you. Though parts of game theory involve simple common sense, much is counterintuitive, and it can only be mastered by developing a new way of seeing the world. Using a diverse array of rich case studies—from pop culture, TV, movies, sports, politics, and history—the authors show how nearly every business and personal interaction has a game-theory component to it. Are the winners of reality-TV contests instinctive game theorists? Do big-time investors see things that most people miss? What do great poker players know that you don't? Mastering game theory will make you more successful in business and life, and this lively book is the key to that mastery."