THE STR
TEGIST
THE KGPIAN GAME THEORY SOCIETY
APRIL , 2016
Election Strategies
Our Inspiration
EIGHTH EDITION
Evolutionary Game Theory
Syrian Civil War
Our Inspiration : Prof. Avinash Dixit We congratulate Prof. Avinash Dixit on winning the country's second-highest civilian award for his contribution to literature and education—the Padma Vibhushan. Prof. Avinash Dixit is an Indian-Amer ican economist. His contribution in game theory and economics has been commendable. His book Art of Strategy has been a great source of knowledge f or us. With such accomplishments he remains a very humble person. On being asked to react on his Padma Vibhushan, he puts it as simply as an “unexpected surprise”. Here is an interview of Prof. Dixit reflecting his journey. Recalling fondly his 'Mumbai days' where he was born and stayed till he was 19, Dixit says, “My interest in research and teaching in mathematical subjects, in particular, is surely inherited. My father, Kamalakar Dixit, hailed from Pune and was a professor of Physics at the Institute of Science in Bombay and my great grandfather, Shankar Dixit, was a scholar in the history of Indian Astronomy. His book on this subject Bharatiya Jyotish Sastra was translated into English and helped Lokmanya Tilak establish his theory of the Arctic origin of our Indian ancestors and of the Vedas.” With a brilliant lineage, one isn't surprised how Dixit's journey to fame started in Mumbai, as early as in 1963. Professor Dixit's
cousin, Arun Purandare, who is a structural engineer in Pune, recalls how the family was proud of him when he scored 600/600 in Mathematics during the final year B Sc exam. “It was a record in the history of Bombay University,'' says Purandare. In an interview, Prof Dixit, who has developed the Dixit-Stiglitz model with Nobel laureate Joseph Stiglitz for analysing imperfect markets in which many firms have pricing power known as monopolistic competition, said that he was honoured to be in the company of distinguished friends such as Jagadish Bhagwati, Montek Ahluwalia, Vijay Kelkar and Raghunath Mashelkar. “But I was very surprised. The award was totally unexpected,” he adds. Professor Dixit, whose name has often come up as a contender for the Nobel Prize in economics, recalls his association with Pune and Mumbai. Calling Pune his favourite get-away, he says, “At that time, my paternal grandfather lived in Pune and we used to spend summer vacations there. I particularly remember the walks up the Parvati Hill in the mornings and evenings. During a recent visit to Pune, I have to say, I was disappointed — it has lost its charm of a small town, and not yet become a real big city. The mounds of garbage and dust by most roadside were particularly disturbing. Perhaps, in a few years, it will improve,” says the economist.
Pursuing higher studies at Cambridge, it was then that Profesoor Dixit fell in love with economics. “I was fortunate to have such eminent economists as Paul Samuelson, Robert Solow, Franklin Fisher, Peter Diamond and Karl Shell as my professors.” Dixit taught at the University of California, University of Warwick and at Princeton before he retired. He has published books on economic theory and game theory, including The Art of Strategy: A Game Theorist's guide to Success in Business and Life. Interestingly, when asked on his mantra of success, he denies there is a set solution to success and says the quest is on. “Alas, there is no mantra for success, whether for a person or for a country. It is some combination of effort and luck; I haven't figured it out, but no one else has either,” says the economist,“Less government, more governance'' Highlighting that 'less government and more governance' is 'in principle' a great idea, Dixit states that the way forward for any country is when business, consumer communities and civil society groups make their own efforts to improve governance. Reacting to Narendra Modi's reform ideas, the economist says that a uniform Goods and Services Tax to replace the mess created by the local taxes is, perhaps, the most important.
We “The KGTS” Hello everyone! Welcome to the 8th edition of “The Strategist”, the semi-annual newsletter of The KGPian Game Theory Society. Let's get a short run down about our society. We are called The KGPian Game Theory Society. We are the IIT Kharagpur Chapter of The Indian Game Theory Society. And it is our goal and aim to promote game theory and with it strategic thinking in our Alma Mater and beyond. I guess the first question in your mind will be "What is this game theory?". Well, game theory is the study of strategic decision making. It means putting yourself in your opponent's position in order to predict his moves, thus maximizing your own profit. Which also means that it is a tool to analyze decisions that you make in your daily life. Right from whether or not to bunk a class to competitive market decisions to wars between nations. And we as a society aim at
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promoting this concept throughout the campus and outside of it too. That's done with the formal intro. Founded in 2011, the KGTS is an initiative by Manoj Gadia. For me, it's more than just a society. It's a place where you can actually put to use your analytical skills. As you will see in some of the articles that have been included in this newsletter, we try and make sense of real life scenarios. We design games which will make you think as you haven't before. Open up new ways to strategize. Think about what your opponent would do and act accordingly. Apar t from all this, the society organizes offline as well as online events. We have created and successfully executed the event War of Wits on our own in IIM Rohtak, Delhi Technological University and IIT KGP and Nashify in coordination with Kshitij 2014, which are game theory based events for
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everyone to participate in. Our online game Brethren of the Coast was a first of its kind online game theory event, which saw a nationwide participation of over 1500 participants. Our second online game Mutiny saw participations from students of VIT, DTU and many other colleges/Universities. We have our newsletter which comes out each semester and which have buried yourself in now! We are collaborated with the Economics club of IIT Delhi. Our comic strips, created by our members, has seen a wide viewership.We have teams on Art of Strategy where we prepare original questionnaire on Game Theory. Now we are working in very closely with The Indian Game Theory Society to open chapters of Game Theory societies in other universities and colleges around India.
APRIL, 2016
THE KGPIAN GAME THEORY SOCIETY
EIGHTH EDITION
ELECTION STRATEGIES Understanding Lok Sabha Election 2014.Election campaign was majorly divided in two categories; High Track or Issue based and Low Track or Image based (also known as popularity based). INC was incubating party so from BJP point of view game is set as explained in below figure. It is sequential game; INC move first and BJP follow in response.There are four possible ways :
Result: BJP has chance to win in this case. Conclusion The basic rule of game theory is “Look forward and reasoning back”. BJP can see that Case #2 and #4 has chances of its win. Out of these two, #4 is lesser risky. So, BJP point of view best game setup will be case #4. This is looking forward. But how can BJP force INC to play Image based election? BJP can't tell INC to do so and INC would not like to be defeated? To get solution of this you need to “Reason Back”. Ideally, BJP's unimportant candidates should start negative campaign and that is how INC could lose its track and start negative campaign keeping issues aside. BJP need not to apply any trick to do it because INC started to generate filth on its own when Narendra Modi declared as PM candidate. This action forced INC to play image based politics. Not only INC but all parties started to generate filth against NM which ease BJP's way. Now BJP had only two choices. 1. INC Issue Based and BJP Issue Based INC was in power and it had some good 1. Play image based politics where INC has points to show like MNREGA. In fact many of chance to win BJP's schemes looked carbon copy of UPA's 2. Play issue based politics where people are schemes. Only difference was UPA could not seeing new hope and will have better publicise while BJP is doing. On other hand, chances to win. BJP was not in power and there was nothing to Game setup for Bihar Assembly Elections show. If INC would have publicised its 2015 schemes then it could have hard for BJP to compete. Result: INC has chance in this case. 2. INC Issue Based and BJP Image Based B J P c o u l d s h ow c a s e I N C s c a m s . B u t showcasing other's mistakes doesn't mean yo are better than him/her, right? Also, fighting elections based on image requires to will like it spread little amount of negativity which is risky because you don't know voters or not. Result: BJP has chance to with but it is risky. 3. INC Image Based and BJP Image Based Both the parties are defaming each other resulting in only dirt being spread.Voters will hate it. They will think if both are dirty then what is wrong in voting current one? We don't know BJP will work because they don't have anything constructive to say. Result: INC will have chance to win in this case. 4. INC Image Based and BJP Issue Based INC is spreading dirt and BJP is talking about development. People may vote BJP if they see hope in BJP. BJP need to showcase their work and ideas in effective manner. BJP has to show vision to people.
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This will give message to voters that BJP wants 'development' of 'Dalits'. It will give message that BJP want to empower Dalits. 3.This will give message to voters that everyone are with BJP irrespective of upper cast or lower cast and BJP wants everyone together. 4.Showing union of upper and lower cast both, it will give message that all the Hindus are united. Conclusions In-fact, BJP has already implemented this strategy of promoting Dalits. Ramprasad Kovid, a person from Mahadalit community is appointed as governor of Bihar. It looks BJP want to follow the strategy of promoting 'development' of Dalits and unification of Hindus. Of course, if Mahadalit is appointed as governor then obviously the CM may be from upper cast. Strategy for Future: Loksabha 2019
Well, this time BJP will be in power and it will be better for it to take first step. That should be high track or issue based politics.Why it is favourable? Because being in power BJP may have done some good work and they can publicise it. In this case INC is left with two choices; Issue based and Image based. INC can't play issue based because they may not have done work due to not being in power. Also, INC government in lesser states so no Why Narendra Modi is doing negative hope for future work. In this way INC is left campaign in Bihar election? Doesn't he know with only one option, play image based people won't like it? Answer is simple. He politics. INC can win only when brings new wants Nitish Kumar to take lower track i.e. face to politics which will improve party's Image based politics. Narendra Modi will image. Probably INC may bring Priyanka slowly take higher track i.e. Issue based Vadra into politics. Of course, BJP already politics where BJP will have chance to win. BJP have solution to this. Robert Vadra files have should promote Manjhi, if not CM then at least not opened yet. Opening of his files are for some key post. There are following sufficient to tar Priyanka's image and there is advantage for BJP. Off course they can't rely benefits. upon Rahul Gandhi for their hopes to be back 1.Dalit vote share in Bihar is approximately in power. 20% and it is significant. 2. BJP's core political agenda is development. -source linkedIn and Dharmesh Patadiya
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THE KGPIAN GAME THEORY SOCIETY
JULY, 2015
SEVENTH EDITION
BRAESS’ PARADOX Want to reach Kolkata shortly?... Think again.... Braess' paradox is a proposed explanation for a seeming improvement to a road network being able to impede traffic through it. Consider a situation in which you need to go to Kolkata from Kharagpur. But suppose there is an imaginary station, named Dholakpur, on this only route, equidistant from both the stations. You have two transport mediums i.e. railway and bus. Each of them has a terminating stop in Dholakpur. Firstly, you have to change the medium of transport in Dholakpur compulsorily i.e. if you used train to travel from Kharagpur to Dholakpur then you need to go by bus from there to Kolkata and vice versa. Now the time taken by bus depends on no. of passengers travelling (let's say T=N/5 minutes), where N are the no. of passengers travelling.
Time taken by train is constant (45 minutes for each journey). The distance between the bus station and railway station in Dholakpur is negligible. You have two ways to reach Kolkata as shown in diagram below: DKP=Dholakpur HWH= Howrah
[IMAGE] Consider an example in which there are 200
people who want to go Kolkata from Kharagpur. Since the time taken by both the routes is exactly equal, so we can assume 100 people selecting either way. Calculating the total time, we get,T = (100/5) + 45 = 65 minutes. Now, if we remove the restriction of changing the medium of travel in Dholakpur. Since everyone is rational and hence want to minimize their time of travel, they would choose to go by bus in both parts of route. Even if everyone goes by bus the time of bus journey = 200/5=40 minutes which is still less than 45 minutes taken by the train. As a result, the total time of journey becomes (40+40)80 minutes. Thus, everyone will end up taking 15 minutes more than the previous time taken! If everyone were to agree on the given restrictions to change the medium of travel in Dholakpur, every person would benefit by reducing their travel time by 15 minutes.
Evolutionary Game Theory Consider that many animal species are 2.In an Altruistic relationship the donor, at a
Biology? Game theory? What are these two seemingly unrelated topics doing on the same page? Well, read on to find out….!!! Predictions can be difficult to make, especially, as Niels Bohr quipped, if they concern the future. Reliable forecasts about the weather or some social development may have been slightly easy but the study about the behaviour of organisms is proved to be extremely cumbersome. Taking this into consideration, top biologists have utilized game theory to elucidate evolutionary consequences of interactions. Interactions between organisms with either competing or identical strategies can be treated as games with multiple players. Since biological interactions involve two or more decision makers. In this way, evolutionary game theory was born. Evolutionary game theory is vaguely defined as the application of game theory to evolving populations of lifeforms in biology. . EGT originated in 1973 with John Maynard Smith and George R. Price's formalisation of the way in which such contests can be analysed as "strategies" and the mathematical criteria that can be used to predict the resulting prevalence of such competing strategies. In introducing game-theoretic ideas to the study of animal behaviour, Maynard Smith promoted a fundamental principle: that the evolutionary success of (genes underlying) a given behavioural trait can depend on the prevalence of all traits. It follows that natural selection among the traits can be modelled as random matching of animals to play normal form games. Working in this vein, Maynard Smith off ered a stability concept f or populations of animals sharing a common behavioural trait. Stable payoff equilibriums may be achieved through natural selection, an important f eature of evolutionar y game theor y. Furthermore, stable payoff equilibriums have been shown for cooperation and altruism, behaviours that seem contradictory to the strongly supported individualistic, survival of the fittest mode of evolution. THE STRATEGIST
strongly territorial, and territories vary in quality. If a larger individual encounters a smaller individual, the larger individual will often begin aggressive gestures towards the smaller individual. The smaller individual will often flee to avoid the conflict. The likelihood of the larger individual being hurt or killed by the smaller individual is minimal, so the risk of the aggressive behaviour is minimal. Likewise, the smaller individual must avoid conflict with larger individuals in which they may be severely harmed or killed. Smaller individuals often establish lower quality territories, but still have the opportunity to reproduce. The most intense conflicts occur between individuals of equal size fighting for higher quality territories, and in this fighting both individuals may receive sufficient damage due to combat so that neither can reproduce. The benefit of avoiding these detrimental costs of combative encounters has led to the evolution of ritualized combat for mates and territory where the contestants avoid severe harm. Vervet monkeys are known for their alarm calls. A monkey will scream to warn its neighbours when a predator is nearby. But in doing so, it draws dangerous attention to itself. Scientists going back to Darwin have struggled to explain how this kind of altruistic behaviour evolved. If a high enough percentage of screaming monkeys gets picked off by predators, natural selection would be expected to snuff out the screamers in the gene pool. Strategic alternatives in social behaviour Where social influences apply there are four p o s s i bl e a l t e r n a t ive s f o r s t ra t e g i c interaction that exist for the competitors. This is shown on the adjacent figure, where a plus sign represents a benefit and a minus sign represents a cost. 1.In a Cooperative relationship both "donor" and "recipient" are almost indistinguishable as both gain a benefit by co-operating, i.e. the pair are in a game-wise situation where both can gain by executing a certain strategy. 3
cost to himself provides a benefit to the recipient. In the general case the recipient will have a kin relationship to the donor and the donation is one-way. Behaviours where benefits are donated alternatively (in both directions) at a cost, are often called altruistic, but on analysis such "altruism" can be seen to arise from optimised "selfish" strategies 3.Spite is essentially a “reversed” form of altruism where an ally is aided by damaging the ally's competitor(s). The general case is that the ally is kin related and the benefit is an easier competitive environment for the ally. 4.Selfishness is the base criteria of all strategic choice from a game theor y perspective – strategies not aimed at selfsurvival and self-replication are not long for any game. Critically however, this situation is impacted by the fact that competition is taking place on multiple levels - i.e. at a genetic, an individual and a group level.The successful application of game theory to evolution has brought further insights to human behaviour. Whereas game theory traditionally assumes rational actors, in the real world this does not always describe human behaviour. EGT has predicted b e h av i o u r s i n a n i m a l s wh e re s t ro n g
assumptions of rationality cannot be made. An important feature of all these sets of models under the umbrella of evolutionary game theory is repetition. If the games were not repeated, these EGT models would not be able to provide any insight into adaptive behaviours and strategies due to the dynamic nature of the mechanisms of evolution
THE KGPIAN GAME THEORY SOCIETY
APRIL, 2016
EIGHTH EDITION
Syrian Civil War Solving the prisoner's dilemma Syria as you may all know is currently fixated in a gruesome civil war. It all started during the Arab spring in 2011 when many dictators were overthrown by peaceful protests in countries such as Tunisia, Egypt, Libya, Bahrain. But Bashar-Al-Assad the dictator of Syria didn't give in and started a war against his own people. Due to this many rebel groups were formed to revolt against this oppression. Many religious groups (ISIS, Militia Shiites etc.) also joined the fight which were funded by powerful neighbouring countries (Mainly Iran and Saudi Arabia) to gain control of the disputed land and lots of oil money! But as it turns out the war is not projected to end any time soon and can go on for 10 more years if peace is not reached. Seems pretty complicated, right? Let's see it in a simple way. If the war in Syria continues to go on, then
both the sides are assured to incur heavy losses in terms of manpower, cost of weapons, money and many more. Then why is the war
still going on?? If both sides make peace then it's pretty good for both of them. Why is it that both the sides keep taking such huge losses?
It's the fact that both sides don't trust each other. They fear that if deal is struck and the opposite side betrays the treaty then they themselves will suffer. Let's look at the situation from game theory's point of view The lens of the “prisoner's dilemma,� which focuses on rational players acting counter to their best interests due to a lack of trust, helps us identify why both groups. For those who don't know about prisoner's dilemma here is a briefing. Two criminals are caught doing a minor crime. But the police suspect that they have done an even bigger crime but lacks evidence for the same. So, the two of them are isolated and interrogate about the bigger crime. If both the prisoners confess of doing the bigger crime then they both get 5 years jail. If one of them confesses and other does not then the one who confesses is set free for
Competitive profile matrix Basic idea about CPM: Competitive profile matrix is an important tool for comparing the firm with major players. It depicts a clear picture/image of the firm about the strong as well as the weak factors with respect to its competitors/players in the same field. CPM is the best way for the comparative analysis of the companies. Impor tant f actors to be taken into consideration for CPM: 1. Critical success factor: These are the factors/criteria over which we will compare the firms after a deep analysis; some of vital critical success factors are as follows*competitiveness *customer base/satisfaction *advertising *market share *product quality *marketing capabilities *brand value/ reputation *distribution channels *innovation culture *skilled workforce 2. Rating: These are responses to the critical success factors of the firms; can be called as
Editors :
Advisor:
Sen Chandra Aman Kasot Dhiraj Chaudhari Rajat Gupta Aakash Patidar Bharat Sai Chakit Chawda Pushkar Nawale Tarique Hussain
Manoj Gadia
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President : Abhijeet Kant Sinha Vice-President: Maunik Desai
the payoff. Better the response better is the performance of the firm toward the particular critical success factor. 3. Weight: This gives an idea about how important is the particular critical success factor comparative to the other. Sum of the value of the weights allotted to all success factors must add up to 1. 4. Weighted score: This represents the score corresponding to a particular factor of the firm obtained by multiplying rating with the corresponding weight. 5. Total weighted score: Adding up the weighted score for each firm gives the total score of the firm which is the major component that helps in comparing the firms. Generally CPM is presented in the tabular form consisting of various columns and rows depending upon the number of the factors and number of firms to be compared respectively. Example This is competitive profile matrix example of smartphones operating systems. The main
competitors: Google's Android OS, Apple's
i O S a n d M i c ro s o f t ' s W i n d ow s P h o n e operating systems will be compared to each other to find out their relative strengths and weaknesses. The CPM analysis reveals that Android is the strongest player in the industry because it has the highest weighted score.
Think About it?? Do you know why similar kind of shops are found in clusters instead of being uniformly spread over a specific area which would rather be helpful to their customers?? or an example, we will always find fuel pumps next to each other. Why do they do so? Is it for the constant motivation to work from their competitor? Definitely not!! A simple Game Theoritic approach explains it. Good Luck!! Keep your mind feeding with lot of such interesting and mind boggling material available at our facebook page. www.facebook.com/TheKGTS
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