OK, Geoffrey sent back his thoughts on my math paper. I was afraid that it wouldn’t make any sense mathematically, it turns out that it almost makes sense, but not quite. I’ll take that… With any luck I’ll be finished with that today and can devote the majority of my time trying to learn to mysteries of game theory to get ready for the final.

I had a sudden, interesting thought about my macro paper, but I’m not sure if I’m brave enough to put it in there. I’m looking at the macro economy as a scale free network. In a nut shell, a scale free network is one in which the nodes of the network are not randomly connected, but some are more connected than others. Nodes with more connectivity can assume greater importance than the ones with less. Well, in the US, the Treasury department (and more specifically the IRS) has, by far, the highest number of connections in the economy. Every citizen and every (leagal) business is connected to it, so it’s potential for impacting the economy is enormous. Usually the most attention is given to the Federal Reserve, there’s an entire school of macro economic theory predicated on how the central bank controls the economy, it’s called moneterism. To suggest that the IRS is potentially more powerful than the Fed to another economist is roughly akin to arguing that George Wallce was a good governor, or perhaps that Saddam Hussain was an effective leader of Iraq. There may be some truth to the statement, but there will be a predictable, and understandable reaction to it. I’m not sure I want to be that provocative in my very first semester….

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What is game theory about?

In my completely inexperienced opinion, you might want to wait before you write shocking papers. They might decide not to listen to you anymore if you offend them now. Prove that you’re really smart before you do something different.

Game theory

I can’t say I fully understand it myself, if I did i wouldn’t be so nervous about the final… Basically, game theory is the study of interactions between people or groups. I think it’s a mathematical thing only. The interactions are modeled as rules to a “game” and then you can run the game to see how people might react. The most famous example of this is the prisoner’s dilemma. If you google that, you’ll find much better explanations.

I think I will mention the whole treasury vs. fed thing in my paper, just to show I’m actually thinking about things. I’m not going to make a big deal out of it though, too much risk for being marginalized and/or a bad grade. It’s not worth the risk at this point.

Isaac

Re: Game theory

heh. This is one of the reasons I like gmail. In the right margin of my screen are links to: Prisoner’s Dilemma Game, Game Theory, Ethical Dilemmas, and a few others.

This whole mathematical explanation of behaviour thing is really creeping me out. I think we need to have a conversation in person about how this works. ðŸ™‚

Re: Game theory

It’d be nice to see you! If it helps, this type of mathematics is just setting up relationships. If I let A= the number of apples I eat and Y=my income, then dA/dY (you can think of the d as standing for delta, a change) simply means the rate of change of the number of apples I eat over the rate of change of my income. Usually in my studies, I’ll leave the relationship just like that without any numbers because I’ll be interested in the general case of my eating apples, not a specific instance. Anyway, if I can figure out if the expression dA/dY is positive or negative, then I’ll know something. If it’s positive, it means that when my income changes (up or down), my consumption of apples changes along with it in the same direction. If the relationship is negative, it means that my eating apples will change in the opposite direction that my income does. This is obviously a really simplified version of what I’m studying, but the concepts are the same. The advantage of doing it this way instead of just using words is that you don’t allow other things and assumptions to creep in. All you have to work with is what you have, it gets to the central basis of the relationship without all sort of junk confusing things. You’d be amazed how complicated a simple looking expression can become with just a few steps. The mathematical way of modeling isn’t best for everything, but it can be very useful for many things…

Isaac