In this guest blog for EE Times I write about game theory, Nash Equilibriums, and how this affects our industry.
Remember the movie A Beautiful Mind? Directed by Ron Howard, it starred Russell Crowe, who played a brilliant but schizophrenic mathematician, John Forbes Nash, Jr. Though at heart a mathematician, Forbes received the Nobel prize in Economic Sciences in 1994. There is no Nobel prize for mathematics.
This post gives the reader some basic concepts about game theory. We review the prisoner’s dilemma and stag/hare hunting “games”, before moving to the real games: competitive industries such as video tape and discs. Finally, we see that even the 2-party system in the US is a Nash Equilibrium, driven by the specific rules of the competition. However, you’ll have to read the comments to see what specific rules create this peculiar equilibrium.
Game theory explains a lot about our industry, including the innovator’s dilemma. Take 10 minutes and get acquainted here.