Summary of Avinash K. Dixit & Barry J. J. Nalebuff's The Art of Strategy

By IRB Media

Please note: This is a companion version & not the original book. Book Preview:

#1 We begin with ten stories of strategy from different aspects of life. Some of the answers may be surprising, but surprise is not the primary purpose of the examples. Our aim is to show that such situations are pervasive, and that methodical thinking about them is likely to be fruitful.

#2 The game is to imagine that you are going to receive money and play the same way. The chance of getting the number right on the first shot is very low, only one in a hundred. To improve your chances, we will give you five guesses, and after each wrong guess, we will tell you if you are too high or too low.

#3 The key lesson of game theory is to put yourself in the other player’s shoes. When guessing a number picked at random, the number isn’t trying to hide. But when playing a game, you must consider how the other player will be acting and how those decisions will influence your strategy.

#4 The final challenge was to stand on a pole with one hand on the immunity idol. The last person standing would go into the finals. The winner would get to choose their opponent in the finals. Richard’s two remaining rivals were 72-year-old retired Navy SEAL Rudy Boesch and 23-year-old river guide Kelly Wiglesworth.

• Language: English
• Publisher: IRB Media
• Release date: Apr 21, 2022
• ISBN: 9781669389767

IRB Media

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Insights on Avinash K. Dixit & Barry J. J. Nalebuff's The Art of Strategy

Contents

Insights from Chapter 1

Insights from Chapter 2

Insights from Chapter 3

Insights from Chapter 1

#1

We begin with ten stories of strategy from different aspects of life. Some of the answers may be surprising, but surprise is not the primary purpose of the examples. Our aim is to show that such situations are pervasive, and that methodical thinking about them is likely to be fruitful.

#2

The game is to imagine that you are going to receive money and play the same way. The chance of getting the number right on the first shot is very low, only one in a hundred. To improve your chances, we will give you five guesses, and after each wrong guess, we will tell you if you are too high or too low.

#3

The key lesson of game theory is to put yourself in the other player’s shoes. When guessing a number picked at random, the number isn’t trying to hide. But when playing a game, you must consider how the other player will be acting and how those decisions will influence your strategy.

#4

The final challenge was to stand on a pole with one hand on the immunity idol. The last person standing would go into the finals. The winner would get to choose their opponent in the finals. Richard’s two remaining rivals were 72-year-old retired Navy SEAL Rudy Boesch and 23-year-old river guide Kelly Wiglesworth.

#5

After 4 hours and 11 minutes, Rudy fumbled when shifting his stance, let go of the immunity idol, and lost. Kelly picked Richard to go on to the finals. Rudy cast the swing vote in Richard’s favor.

#6

The hot hand theory is a misperception of reality. It is believed that athletes have a hot hand, but this is a misperception of reality. In reality, if you flip a coin long enough, you will find some very long series of consecutive heads.

#7

A player may even assist himself when one hot hand warms up the other. The Cleveland Cavaliers star LeBron James eats and writes with his left hand but prefers shooting with his right hand. The defense knows that LeBron is right-handed, so they concentrate on defending against right-handed shots. But they do not do so exclusively, since LeBron’s left-handed shots are too effective to be left unguarded.

#8

The copycat strategy is used in sailboat racing, stock-market analysts, and economic forecasters. The leading forecasters have an incentive to follow the pack and produce predictions similar to everyone else’s.

#9

Charles de Gaulle was a powerful player in the international arena because of his intransigence. When defining what was right, there was no room for compromise. His firmness had profound long-term consequences.

#10

Selective inflexibility is the ability to be committed to a goal, but not to any of the methods you might use to achieve it. It is achieved by various means, and chapter 7 discusses how to achieve and maintain it.

#11

On December 9, 2005, Cindy Nacson-Schechter, a mother of two, came into a photographer’s studio on Manhattan’s West Side. She had gained forty pounds with the birth of her second child and didn’t want to see that weight stay on her. She made a deal with ABC that they would destroy the pictures if she lost 15 pounds over the next two months.

#12

The ABC producers carefully screened the five participants out. They weren’t exhibitionists. They wanted to play a game against their future selves, and they wanted to change the incentives for their future selves so that they would exercise and diet.

#13

Campaign finance reform is difficult to pass because the legislators who have to approve it are the ones who have the most to lose. They are the ones who have the advantage in fundraising, which gives them job security.

#14

The problem of collective action is a version of the prisoners’ dilemma, in which two groups of people are faced with the decision of whether to cooperate or not. The outcome may not be good for the players, but it may not be enough to play a game well; you must also be sure you are playing the right game.

#15

The game of Rock Paper Scissors is a good example of how people fall into predictable patterns. If Sotheby’s had picked their strategy at random, with an equal chance of rock, scissors, and paper, then Christie’s would have done equally well with any choice.

#16

The importance of randomized strategies was one of the early insights of game theory. The idea is simple and intuitive, but it needs to be