Game Theory The Scenario That Term Paper

Length: 5 pages Subject: Economics Type: Term Paper Paper: #5524457 Related Topics: Decision Theory, United States Presidential Election, Rational Choice Theory, Legalizing Marijuana
Excerpt from Term Paper :

They also will exacerbate the deficit and could compromise the economy. There is disagreement over which policy prescription is going to be more likely to damage the economy. The health of the U.S. economy, however, is subject to a lot of variables, and one's own economic situation is only somewhat affected by the state of the U.S. economy. Still, the voter wants to vote in a way that increases the odds of a positive financial outcome.

There are a number of tools that can help to visualize the choice, but decision trees are not easy to draw in Word. Excel can be used to perform the same function. The voter can calculate that if the President spends too much money it will cost $40,000 in future tax increases and decreased job prospects.

Candidate a

Certainty

Value

Outcome

Certainty

Value

Total Odds

Total Value

Net

Tuition Cut

50%

$10,000

None

80%

$0

40.0%

$10,000

$4,000.0

Bad Economy

20%

-$40,000

10.0%

-$30,000

-$3,000.0

No Tuition Cut

50%

$0

None

90%

0

45.0%

$0

$0.0

Bad Economy

10%

-$40,000

5.00%

-$40,000

-$2,000.0

-$1,000.0

Candidate B

Tax Cut

80%

$500

None

50%

0

40.0%

$500

$200.0

Bad Economy

50%

-$40,000

40.00%

-$39,500

-$15,800.0

No Tax Cut

20%

$0

None

90%

0

18.0%

$0

$0.0

Bad Economy

10%

-$40,000

2.00%

-$40,000

-$800.0

-$16,400.0

The wild card is that the bad economy might happen no matter what the policies on taxes and tuition are, because there are other policies and other global factors that affect the economy. These other factors clearly affect the outcome, because if the economy is bad, neither candidate is going to have a positive outcome. Governmental giveaways will not help the voter if the economy is in the tank and earning power decreases. Candidate B's tax cut is especially useless. While the voter might be tempted to discount the bad economy from the decision, because it is not related to the decision, the odds of a bad economy do change with the decision and this is important. Tuition increases are less likely to affect American competitiveness because they are a small part of the budget;...

...

For those already in a good position, tax cuts look pretty good. For a student who is going to exit university with student loans and needs to be able to increase earning power rapidly, tax cuts are less important that economic competitiveness.

Thus, we can see how voting is a game. The voter first must make a decision about how important each factor is. The voter might decide that a non-financial factor is more important than money, and vote that way. But using monetary terms, the voter is asked to choose between a variety of financial policies. The outcomes of these policies are uncertain, so the voter must decide based on odds of the outcomes, and the size of the money at stake in the outcomes. A voter who is not a student and has no children who will go to college in the future would find Candidate B's tax cuts a better option. A voter who is a student or has children who will go to college would likely find Candidate a's policies more appealing, unless the size of the tax cut is much larger (so wealthy people might prefer B, while middle class and poor people would prefer a).

Voting is even more complex in the real world, because of the variety of potential outcomes. These exist on a continuum, especially where outcomes like future income are concerned. The voter must find a way to process this information in a rational manner in order to make the best decisions. Politics is also about more than economics, which complicates things. This is where the idea of utility comes into play. A clean environment has value, but that value is difficult to quantify. Social policies are also difficult to quantify sometimes. The voter must, for example, decide if things like gay marriage or legalizing marijuana are important enough to overrule the financial aspects of this decision. This is why the non-financial issues are tricky for voters, because emotion can distort the true value of those policies such that something…

Cite this Document:

"Game Theory The Scenario That" (2012, September 06) Retrieved August 2, 2021, from
https://www.paperdue.com/essay/game-theory-the-scenario-that-75398

"Game Theory The Scenario That" 06 September 2012. Web.2 August. 2021. <
https://www.paperdue.com/essay/game-theory-the-scenario-that-75398>

"Game Theory The Scenario That", 06 September 2012, Accessed.2 August. 2021,
https://www.paperdue.com/essay/game-theory-the-scenario-that-75398

Related Documents
Game of Deception Game Theory
Words: 4172 Length: 15 Pages Topic: Economics Paper #: 46346029

509). Likewise, in a conventional military context, Davis and Shapiro describe anti-access and area denial as being "cost-imposing strategies," a description these authors suggest is particularly useful in the counterterrorism context. In addition, game theory can help avoid military confrontations altogether, thereby avoiding unnecessary friendly casualties. In this regard, Schofield (1999) emphasizes that, "The inevitability of armed conflict in the classical sense is not a foregone conclusion in a

Game Theory Analysis in Real Life
Words: 1323 Length: 5 Pages Topic: Literature - African Paper #: 70451341

Game Theory Why did Apartheid End? A Solution Developed from the Concept of Game Theory James Michener was a history professor at the University of Texas and a widely read chronicler of different periods of history. Michener was largely a novelist, but his novels were based on factual information that was peopled by fictional, but representative, main characters and some historical figures. In a book called "The Covenant," Michener detailed the history of

Game Theory and Galatasaray
Words: 1093 Length: 3 Pages Topic: Economics Paper #: 64224108

Game Theory: Galatasaray "What economists call game theory psychologists call the theory of social situations, which is an accurate description of what game theory is about. Although game theory is relevant to parlor games such as poker or bridge, most research in game theory focuses on how groups of people interact" (Levine, 2013). Game theory is used in a variety of situations and professions where it is imperative to use razor-sharp

Game Theory Applied in Game
Words: 923 Length: 3 Pages Topic: Economics Paper #: 79120934

In actuality, the competition became quite stiff between various sales staff as it was the sales leaders in each category that were to receive bonuses, rather then incentives being given to all staff that reached certain targets. This meant that it was in each sales person's best individual interests to hinder sales from others and compete for certain specific sales. The ultimate result was a more embittered workforce and a

Game Theory and Equilibrium Outcomes Quickmba 2010
Words: 580 Length: 2 Pages Topic: Business - Advertising Paper #: 12397902

Game Theory and Equilibrium Outcomes QuickMBA (2010) states, "Game theory analyzes strategic interactions in which the outcome of one's choices depends upon the choices of others. For a situation to be considered a game, there must be at least two rational players who take into account one another's actions when formulating their own strategies." Assuming fair competition and antitrust laws are upheld, GE could follow a specific framework or actionable approach

Game Theory Work in Practice
Words: 353 Length: 1 Pages Topic: Economics Paper #: 57914807

A small company can slash prices and thus make crucial market inroads against major competitors, like Kiwi Airlines, or conversely a large company can make more effective use of economies of scale. Game theory is not equally useful to all industries, in general the larger the industry, the more difficult it is to create accurate scenarios, as eventually the variables that must be analyzed grow too complex and numerous.