Game theory is the science concerning the systematizing of strategic conflict and cooperation among rational actors. It was formalized in the mid-40s by the genius polymath John Von Neumann, and then it allegedly found its way into all kinds of science, even though the only people talking about it are venture capitalist types like Balaji Srinivasan using it in word salads to make simple things sound very complex.
When game theory got a little pop culture notoriety with John Forbes Nash Jr.’s depiction in the 2001 biographical drama “A Beautiful Mind,” it somehow became one of those things that people thought could be utilized as a life hack without ever really understanding it, like nootropics and magnetic bracelets. No, seriously, what are nootropics?
To be fair, plenty of things can be appreciated just by reading their Wikipedia entries, but that does not an international affairs expert, nor a set theorist, make. Not everything is a perfect instance of the prisoner’s dilemma, or a tragedy of the commons, or a game of chicken. Again, unless you’re in Silicon Valley and wearing those ugly thousand dollar tennis shoes they all wear.
A game needs, at the very least:
1. Rational actors: players who have specific goals and act in order to achieve them
2. A set of finite and well-defined actions players can make
3. A set of finite and well-defined possible countermoves to those actions from every other player
Games are made challenging and/or complex by:
1. Determining a player’s goals with certainty
2. Iterating a player’s possible “moves” given an adversary’s move, especially if it’s a continuous game with no clearly-defined end state. This can very quickly get bogged down in probability and Bayesian theory.
3.Determining how much information each player has at any given moment
This is why game theoretic simulations for even moderately complex systems are frequently computer-based.
Enter Bitcoin. Which is to say, enter the space where Bitcoin, Bitcoiners,…