John Von Neumann was a mathematician and one of his many accolades was applying mathematics and his observations of traditional games to create a new discipline – Game Theory. This involves a mathematical approach to decision making whereby different strategies can be assessed. It a tool that not only can be used in Economics, but also can be applied to a broad range of areas and fields of study.
Just as I arrived at work, I was listening to Radio 4 and heard the introduction to the programme In our Time. This one in particular caught my attention because of the name mentioned – Von Neumann, and after arriving in my office I then listened to the discussions surrounding game theory.
The main link is to the discussion from BBC Radio 4, led by Melvyn Bragg, with guests: Ian Stewart, a Professor of Mathematics from the University of Warwick; Andrew Colman, a Professor of Psychology at the University of Leicester and Richard Bradley, a Professor of Philosophy from the LSE. I’ll keep it brief and simply say enjoy!
Podcast
Game Theory (also at) BBC Radio 4, In our Time, Melvyn Bragg (10/5/12) (Programme details)
Articles
Game Theory cannot predict broadcasting future Financial Times, Andrew Edgecliffe-Johnson (4/5/12)
Game Theory, in the real world Phys Org (2/5/12)
Questions
- What is game theory? How is mathematics relevant here?
- The discussion talks about co-operative and non co-operative games. What is the difference between them?
- In the game – walking down the street – draw out the matrix and show whether a Nash equilibrium exists.
- Draw out the matrix for the game ‘Rock, Paper, Scissors’. How can game theory be applied to this game? What is the best strategy to win this game? Can there be a winner?
- Draw out the matrix for the problem of littering when it is non co-operative. Is there a Nash equilibrium?
- What is the Prisoner’s Dilemma? Give some examples of it. Explain why it is an example of a dominant strategy game.
- How is game theory relevant to broadcasting? Think about the role of auctions and also the information given in the Financial Times article.
- Explain how game theory is relevant to the Cold War.
At the end of two weeks of often acrimonious wrangling between representatives from 193 countries, an agreement – of sorts – was reached at the climate change summit in Copenhagen. What was this agreement? It was an ‘accord’ brokered by the USA, China, India, Brazil and South Africa.
This Copenhagen Accord contains three elements. The first is a recognition of the need to prevent global temperatures rising by more than 2 degrees Celsius above pre-industrial levels. The second is a commitment by developed countries to give $30bn of aid between 2010 and 2012 to developing countries for investment in green technology and to mitigate the effects of climate change. In addition, a goal was set of providing $100bn a year by 2020. The third is for rich countries to give pledges on emissions reductions and for developing countries to give pledges on reducing emissions increases. Developed countries’ pledges will be scrutinised by the UN Framework Convention on Climate Change, while developing countries will merely be required to submit reports on their progress in meeting their pledges.
But this is only an accord. It has no legal status and was merely ‘recognised’ by the countries at the conference. What is more, the target of limiting temperature rises to 2C does not contain a date by which temperature rises should peak. Also, as countries are not required to submit targets for emissions until February 2010, it is not clear how these targets will be kept low enough to meet the temperature target and there is no identification of penalites that would apply to countries not meeting their pledges.
Not surprisingly, reactions around the world have been mixed. The following podcasts and articles look at these reactions and at the economic mechanisms that will be required to meet the 2C limit
Podcasts and videos
Recriminations after Copenhagen summit (video) BBC News, David Loyn (21/12/09)
Copenhagen special: Climate change talks end in failure Guardian podcast (19/12/09)
Where do we go after Copenhagen? BBC Today Programme (21/12/09)
Articles
What was agreed and left unfinished in U.N. climate deal Reuters of India Factbox (20/12/09)
Copenhagen deal: Key points BBC News (19/12/09)
Copenhagen deal reaction in quotes BBC News (19/12/09)
Copenhagen climate summit fails green investors BBC News, Damian Kahya (22/12/09)
Why did Copenhagen fail to deliver a climate deal? BBC News (22/12/09)
Copenhagen climate accord: Key issues BBC News (19/12/09)
Harrabin’s Notes: After Copenhagen BBC News, Roger Harrabin (19/12/09)
Copenhagen climate conference: Who is going to save the planet now? Telegraph, Louise Gray (21/12/09)
Copenhagen’s One Real Accomplishment: Getting Some Money Flowing New York Times, James Kanter (20/12/09)
Copenhagen climate summit: plan for EU to police countries’ emissions (including video) Telegraph, James Kirkup, and Louise Gray (19/12/09)
The road from Copenhagen Guardian, Ed Miliband (UK Secretary of State for Energy and Climate Change) (20/12/09)
Carbon Prices Tumble After ‘Modest’ Climate Deal Bloomberg, Mathew Carr and Ewa Krukowska (21/12/09)
Copenhagen deal causes EU carbon price fall BBC News (21/12/09)
Have the hopes of environmentalists been dashed? Financial Times, Clive Cookson (21/12/09)
EU reflects on climate ‘disaster’ Financial Times, Joshua Chaffinin (22/12/09)
China not to blame on climate China Daily, Zhang Jin (23/12/09)
Selling a low-carbon life just got harder Times Online, Jonathon Porritt (21/12/09)
Better than nothing The Economist (19/12/09)
Copenhagen has given us the chance to face climate change with honesty Observer, James Hansen (27/12/09)
Questions
- What incentives exist for countries to agree to tough pledges to reduce emissions?
- Was the very limited nature of the Copenhagen Accord a Nash equilibrium? Explain.
- Is the carbon price a good indicator of the effectiveness of measures to curb emissions?
- Must any agreement have verifiable targets for each country of the world if it is to be successful in curbing carbon emissions?
- Is a cap-and-trade system the best means of achieving emissions reductions? Explain.
John Von Neumann was a mathematician and one of his many accolades was applying mathematics and his observations of traditional games to create a new discipline – Game Theory. This involves a mathematical approach to decision making whereby different strategies can be assessed. It a tool that not only can be used in Economics, but also can be applied to a broad range of areas and fields of study.