Games and Decisions | take #01

January 3, 2011

  • In reducing the problem of decision making to utility function optimization, the question of selecting the such “optimal” function becomes the essential problem. Simultaneously observing both the process of function selection and it’s maximization might yield the set of equilibrium solutions of the system.
  • The notion of “rationality” and “utility maximization” is only now reaching the full proportion. Whereas it is not realistic for humans to behave fully rational in complex situations (at least due to the laziness – if no other reason) – no such constraint should exist when observing actors with easy access to computational resources. Not behaving rationally in these cases essentially means “leaving money on the table”. Some examples of this might be – (bidirectional) : ad exchanges, financial services companies, (unidirectional) : online classifieds, retail industry … Instrumentation of the relevant data and easy access to computation keeps bringing more and more “rationality” to the scenery of modern-day “conflicts”.

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