If other people press their buttons and cause you damage, pushing your button will cut that damage in half. Pressing your button has two effects and the second one targets you. Learn more about how “Games” apply to all aspects of life Making Assumptions You’ll have to pay up, except that there’s a way out of this for you. Given that you only $100 to start with, you’re going to end up $20 in debt. If 60 other people pushed their buttons, you’re going to lose 2 × 60, or $120. It sounds vicious on your part, but other people may press their buttons, too, and every time they do, you lose $2 along with everybody else. When you push your button, the first thing it does is to take $2 away from every other player, and just like that, everyone else is down to $98. This is a transcript from the video series Games People Play: Game Theory in Life, Business, and Beyond. If nobody’s actions affected anyone else, it wouldn’t be a game because games are interactive. What does it do? Pushing this button has two effects: one that affects you and one that affects everybody else. But you don’t know enough yet to know whether to push. If you’re a rational player, you’re going to try to adopt the strategy that will maximize your expected payoff given what you know-or think you know-about the other players in the game. In every game, every player has a strategy. A rational player will try to adopt the strategy that will maximize the expected payoff given what they know or think they know about the other players in the game.
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