Topic 4 Social Dilemmas (Part I)

In game theory, a game is a social situation of some sort that has three main components to it:

  1. Players
  2. Strategies
  3. Payoff structures (i.e., rules that determine the outcome of a game)

In other words, a “game” need not necessarily be competitivee.

4.1 History of Game Theory

“The power of population is indefinitely greater than the power in the earth to produce subsistence for man.”

– Thomas R. Malthus

A guy called Malthus was the first to propose that mankind’s population will grow exponentially and surpass the Earth’s ability to provide for them.

“No worries. Markets will solve the problem”

The Wealth of Nations (1776)

Then, another guy called Adam Smith said the above quote in his book The Wealth of Nations. He defined the laws of supply and demand, market equilibrium, and the concept of Laissez-faire (i.e., let people do as they please).

“Capitalistic market systems cannot properly handle surplus value, which is produced by the exploitation of labor but claimed by the owner of the means of production rather than the workers.”

Das Kapital (1867 - 1883)

Karl Marx - the guy who said the above quote - noted that the thing about capitalism is that there will always be a surplus of goods within the upper class. Resources are unevenly distributed in capitalism.

So, communism took over shortly after that in the soviet union.