Game Theory: An Analytical Perspective

I have changed the format of my posts from critiques to analyses of the world issues that face us. My analogy is that “life is like a chessboard” where we are all players trying to maximize our outcomes. These outcomes can be financial, spiritual, or anything else that gives us a sense of accomplishment.

One of the best tools I use to analyze these issues is Game Theory, initially conceptualized by John von Neumann. Later, John Nash developed the concept known as the Nash Equilibrium, which significantly expanded the scope of Game Theory. While von Neumann’s minimax theorem focused on two-player zero-sum games, Nash Equilibrium extended Game Theory to include non-zero-sum games and multi-player interactions. This advancement made the theory applicable to real-world scenarios where cooperation and competition coexist—such as in political science, psychology, biology, business, and computer science.

What is Game Theory?

Game Theory can best be explained as the study of strategic interactions among rational players, often under conditions of uncertainty, with the aim of maximizing their payoffs. This aligns with the core belief that “there are no absolutes, only probabilities that reside on a spectrum ranging from highly unlikely to very likely.”

Game Theory becomes a way of thinking that is not always intuitive. It is highly abstract, yet it is constantly evolving as new applications and insights emerge.

Below, I have included a glossary of game theory-specific terms to demonstrate that Game Theory goes far beyond the level of simple board games.

 

A

Adverse Selection: A situation where one party has more information than another, often leading to inefficient outcomes (e.g., in insurance markets).

Agent: A decision-maker in a game, often representing individuals, groups, or organizations.

Asymmetric Game: A game where players have different strategies, payoffs, or information available to them.

Auction: A game where participants bid for an item, and the highest bidder wins, with variations like English, Dutch, or sealed-bid auctions.

B

Backward Induction: Solving a sequential game by reasoning backward from the end of the game to determine optimal strategies.

Bayesian Game: A game where players have incomplete information but hold beliefs about unknown factors, represented as probabilities.

Best Response: A strategy that maximizes a player’s payoff given the strategies of other players.

Bounded Rationality: The idea that players have limitations in their ability to process information or make perfectly rational decisions.

C

Chance Node: A point in a game tree where an outcome is determined by chance, rather than a player's decision.

Chicken Game: A game where players face off to avoid mutual destruction, often illustrating the concept of brinkmanship.

Coalition: A group of players who collaborate to achieve a better outcome than they could individually.

Cooperative Game: A game where players can form binding agreements or coalitions to achieve mutual benefits.

Correlated Equilibrium: A solution concept where players coordinate their strategies based on a shared random signal.

Cost-Benefit Analysis: Evaluating the advantages and disadvantages of a strategy or decision.

D

Decision Node: A point in a game tree where a player chooses a strategy.

Discount Factor: A measure of how much future payoffs are valued compared to immediate ones in repeated or dynamic games.

Dominant Strategy: A strategy that yields a higher payoff for a player regardless of what others do.

Dominated Strategy: A strategy that always results in a worse payoff than another strategy, regardless of opponents’ actions.

E

Equilibrium: A state where no player can improve their payoff by unilaterally changing their strategy.

Evolutionary Game Theory: A framework that applies game theory to evolving populations, focusing on strategies that persist over time.

Expected Utility: The weighted average of all possible payoffs, where the weights are the probabilities of each outcome.

F

Focal Point: A solution or strategy that players naturally gravitate toward, often due to cultural or contextual clues.

Free Rider Problem: A situation in cooperative scenarios where individuals benefit from shared resources without contributing to their cost.

G

Game of Perfect Information: A game where all players know the entire history of moves and decisions made so far.

Game Theory: The study of strategic interactions where players make decisions to maximize their payoffs.

H

Hawk-Dove Game: A model of conflict where players can either compete (Hawk) or share (Dove), balancing aggression and cooperation.

Heuristic: A rule-of-thumb or simplified strategy used by players to make decisions when full rationality is impractical.

I

Imperfect Information: A game where players do not have full knowledge of all actions taken by others.

Information Set: The collection of decisions or events known to a player at a particular point in a game.

Iterated Game: A game played repeatedly by the same players, often with strategies evolving over time.

K

Knowledge Assumptions: The shared understanding among players about the game’s rules, structure, and other players’ rationality.

L

Learning in Games: The process where players adjust their strategies over time based on past outcomes or observations.

Loss Aversion: The tendency for players to prefer avoiding losses over acquiring equivalent gains.

M

Mechanism Design: The creation of rules or systems (a “game”) to achieve specific outcomes, often in economics or auctions.

Minimax Strategy: A strategy that minimizes the maximum possible loss for a player.

Mixed Strategy: A strategy where a player randomly chooses between multiple actions, assigning probabilities to each.

Moral Hazard: A situation where one player takes risks because another player bears the consequences.

N

Nash Equilibrium: A situation where no player can improve their payoff by unilaterally changing their strategy.

Non-Cooperative Game: A game where players make decisions independently without binding agreements.

Non-Zero-Sum Game: A game where the total payoff can vary, and players’ outcomes are not strictly opposed.

O

Opportunity Cost: The value of the next best alternative that is forgone when making a decision.

Outcome: The result of all players’ strategies in a game.

P

Pareto Efficiency: A state where no player can be made better off without making someone else worse off.

Payoff: The reward or outcome a player receives from a particular strategy or decision.

Payoff Matrix: A table that shows the payoffs for each player based on all possible strategy combinations.

Prisoner's Dilemma: A classic game showing how two rational players might not cooperate, even when it benefits both.

Q

Quantal Response Equilibrium: A solution concept where players choose strategies with probabilities that increase with the expected payoff.

R

Rationality: The assumption that players will act in their best interest to maximize their payoffs.

Repeated Game: A game that is played multiple times, allowing players to develop strategies over time.

Risk Dominance: A strategy that is safer or less risky when there is uncertainty about other players' choices.

S

Shapley Value: A solution concept in cooperative games that fairly distributes payoffs based on each player’s contribution.

Stackelberg Competition: A model of market competition where one firm (leader) moves first, and the other firms (followers) respond.

Strategy: A plan of action a player follows in a game to achieve the best possible outcome.

Subgame Perfect Equilibrium: A refinement of Nash Equilibrium applicable to games with a sequential structure.

T

Tit-for-Tat: A strategy in repeated games where a player replicates the opponent’s last move, often used in cooperation scenarios.

Transferable Utility: A property of some cooperative games where payoffs can be redistributed among players without loss.

U

Ultimatum Game: A game where one player proposes a division of resources, and the other player accepts or rejects it.

Utility: A measure of satisfaction or payoff a player receives from a particular outcome.

V

Value of Information: The benefit a player gains from acquiring additional information before making a decision.

Von Neumann-Morgenstern Utility: A utility function that satisfies the axioms of expected utility theory.

W

Weak Dominance: A strategy that performs at least as well as another strategy in all scenarios and better in at least one scenario.

Winner’s Curse: The tendency for the winning bidder in an auction to overpay due to incomplete information.

Z

Zero-Sum Game: A game where one player’s gain is exactly balanced by the losses of other players, making the total payoff constant.

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The Price of Protectionism: How Trump’s Policies Could Hurt Canada’s Economy Yet Some Canadians sees Trump as a God Sent

 By J André Faust (Nov 10, 2024)

It is puzzling why Trump seems to garner so much support from some Canadians. This sentiment echoes from the streets, coffee shops, and across social media. At first glance, it seems illogical: first, as Canadians, we don’t have a vote in the United States; and second, his protectionist policies could ripple unfavourably throughout the Canadian economy from coast to coast.

To understand Trump’s protectionist stance, let’s briefly examine the impacts of the United States–Mexico–Canada Agreement (USMCA) and some key trade restrictions his administration placed on Canada:

Steel and Aluminum Tariffs

In March 2018, the Trump administration imposed tariffs of 25% on Canadian steel and 10% on Canadian aluminum, citing national security under Section 232 of the Trade Expansion Act. In response, Canada implemented retaliatory tariffs on U.S. goods, including steel, aluminum, and various consumer items. Although these tariffs were eventually lifted in May 2019 after negotiations, they marked a shift in U.S.-Canada trade relations.

Softwood Lumber Tariffs

Trump's administration claimed Canadian provinces were unfairly subsidizing the lumber industry, resulting in duties ranging from 10% to 24% on Canadian softwood lumber imports. This impacted construction costs and strained trade relations.

Dairy Trade Restrictions

During the USMCA renegotiation, Trump criticized Canada’s dairy supply management system, which limited U.S. imports to protect Canadian farmers. The USMCA required Canada to ease restrictions on U.S. dairy, poultry, and egg products.

Threatened Tariffs on Auto Imports

Trump repeatedly threatened tariffs on Canadian auto imports as part of a broader negotiation strategy, though these were never enacted. This tactic pushed Canada to make concessions during USMCA talks.

These measures, most of which were lifted or adjusted by the end of Trump’s presidency as USMCA took effect in July 2020, underscored his "America First" approach. This stance brought a new tension to U.S.-Canada trade relations, favouring U.S. interests at Canada’s expense.

When it comes to trade, Canada’s bargaining power with the U.S. is limited. As such, USMCA primarily benefits the United States. Realistically, given the power disparity, it hardly matters if Trudeau or Poilievre is in office—the dynamic remains a zero-sum game where the United States typically benefits to Canada’s disadvantage.

So, why do some Canadians appear to support a foreign leader whose policies could jeopardize Canada’s economic relationship with the United States? Given that Canada’s economy is highly integrated with the U.S.—particularly through trade that supports agriculture and energy exports—this seems counterintuitive. Nonetheless, ideological and cultural alignments sometimes supersede economic pragmatism.

Here are a few factors that might explain why Trump’s protectionism hasn’t dissuaded some Canadians from supporting him:

Ideology Over Economics

For some supporters, ideology outweighs economic concerns. Canadians who align with Trump’s values—such as strong borders, nationalism, or conservative social policies—may view his economic policies as secondary. They might even believe Canada could adapt or benefit from a renegotiated relationship, hoping it fosters self-sufficiency.

Misperceptions of Economic Impact

Not all Canadians fully understand the risks protectionism poses to our economy. Tariffs and trade barriers may seem abstract, especially if they don’t immediately affect daily life. Media portrayals often simplify or sensationalize economic issues, making the true consequences of protectionist policies harder to grasp.

Discontent with Canadian Policy and Institutions

Some Canadians dissatisfied with the current state of Canadian politics or institutions may see Trump as a desirable alternative, even if his policies could harm Canada’s economy. This perspective often reflects a desire for radical change, regardless of the economic logic for Canada.

Belief in U.S.-Canada Resilience

Some Canadians assume that the close Canada-U.S. relationship would shield us from the full effects of American protectionism. They might believe that U.S. businesses, particularly those reliant on Canadian resources, would press against harsh tariffs, thereby maintaining some stability despite Trump’s policies.

Populism and National Pride

Canadian populist sentiments sometimes mirror those in the U.S., advocating for national pride and reduced global dependence. Trump’s rhetoric may inspire Canadians who believe in reducing reliance on U.S. or international trade, especially those favouring local industry, even at a cost.

Canada’s negotiating power with the U.S. is indeed limited, and a protectionist American leader could seriously impact critical Canadian sectors like manufacturing, agriculture, and energy. However, when ideology and populism come into play, economic concerns may take a back seat. Some Canadians may assume that, despite protectionist measures, Canada’s adaptability and resource-based economy could provide stability through turbulent times.

Summary

Donald Trump's administration implemented protectionist policies that negatively impacted Canada’s economy, such as tariffs on steel and aluminum, which were later lifted in 2019, and restrictions on dairy trade, as well as threats of auto tariffs. Despite these policies, which disrupted sectors of the Canadian economy, some Canadians continue to support Trump. For these individuals, ideological alignment with Trump on issues like nationalism and conservative social values often outweighs concerns about economic impacts. Additionally, some Canadians hold misconceptions about the effect of protectionist policies, believe in the resilience of the U.S.-Canada relationship to withstand economic tension, or seek alternatives to Canadian policy and institutions. Populist views favouring economic independence and national pride further contribute to Trump’s appeal, despite risks to Canada’s economic stability. These findings underscore the way cultural values often eclipse economic pragmatism in shaping political preferences.

Conclusion

In examining the support some Canadians have for Donald Trump despite his protectionist policies, it becomes clear that ideology can overshadow practical economic concerns. Although Trump’s policies—such as tariffs, restrictions, and trade renegotiations—have adversely affected Canada, including initial tariffs on steel and aluminum later lifted in 2019, his supporters persist due to deeper ideological and cultural affinities. This alignment demonstrates a broader trend: cultural identity and ideology frequently override economic interests, shaping public opinion in unexpected ways. While Canada’s reliance on the United States creates a vulnerable trade position, many supporters seem to believe Canada’s adaptability and close economic ties with the U.S. will sustain stability despite protectionist policies.

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Canada's Dark Chapter: The Chilling Role in CIA Mind Control Experiments

 

By J. André Faust

MK-Ultra (MKU) was a secret program run by the CIA in the 1950s and 1960s that focused on mind control experiments. The goal was to figure out how to control people's thoughts and behaviors, especially for use in war and spying. To do this, the CIA tested drugs like LSD, used hypnosis, and put people through harsh treatments like electric shocks. Many of the people involved didn't know what was happening to them, and some suffered long-term damage. When the program was discovered in the 1970s, it caused a big scandal because of how badly it treated people.

Canada played a significant role in the role in the MK-Ultra program through the involvement of Dr. Ewen Cameron, a prominent psychiatrist, and the Allan Memorial Institute in Montreal, Quebec. Cameron's work, funded in part by the CIA, became a notorious chapter in the MK-Ultra saga. Who was Dr. Cameron? 

Dr. Donald Ewen Cameron was a Scottish-born psychiatrist who became the head of the Allan Memorial Institute, a psychiatric hospital affiliated with McGill University in Montreal. Cameron was highly respected in his field and was known for his pioneering work in psychiatry.

Under Cameron's direction, the Allan Memorial Institute became a site for some of the most extreme MK-Ultra experiments. Cameron's research focused on "psychic driving" and "depatterning" techniques. He believed he could erase a person's memories and reprogram their mind by subjecting them to repetitive audio messages, combined with heavy doses of drugs like LSD and extensive periods of electroconvulsive therapy (ECT).

 

Let's take a brief moment to unpack the techniques of psychic driving and depatteringing.

Psychic Driving:

1. Concept: Psychic driving involved playing recorded messages to patients repeatedly, often for hours or days at a time, to "drive" these messages into their minds.
   
   
2. Purpose: The idea was that by bombarding the patient with these repetitive messages, the psychiatrist could implant new thoughts, behaviors, or even "reprogram" the patient’s mind.
   
   
3. Method: Patients were often subjected to this technique while under heavy sedation or after being given large doses of mind-altering drugs like LSD. The messages were usually played through headphones or loudspeakers, and the patient would be in a state where they were unable to resist or respond.

 Depatterning:

1. Concept: Depatterning was a more extreme and aggressive method aimed at completely erasing a person’s existing personality and memories.
   
   
2. Purpose: The goal was to "wipe the slate clean" so that new thoughts, behaviors, or personalities could be implanted using techniques like psychic driving.
   
   
3. Method: Depatterning involved a combination of intense and prolonged electroconvulsive therapy (ECT), large doses of drugs (such as barbiturates and hallucinogens), and periods of drug-induced sleep lasting days or weeks. This would often leave patients in a severely weakened state, both mentally and physically.
   

It is important to note that "Psychic driving" and "depatterning" were experimental psychiatric techniques developed and used by Dr. Ewen Cameron as part of his work. The CIA found use in Dr. Cameron work there by recruiting him to incorporate his techniques in the MK-ULTRA.

The MK-Ultra program and the experiments conducted by Dr. Ewen Cameron were failures in regard to reliably controlling or reprogramming human minds. While there were some insights gained from the MKU program were later used in the development of interrogation techniques, they did contribute to a greater understanding of how the human mind reacts to extreme stress, drugs, and other stimuli. However, this knowledge came at an unsurmountable cost to the individuals involved.

In summary, Canada’s involvement in MK-Ultra revealed a nation complicit, however indirectly, in the violation of its own people. The haunting question remains: How did a country known for its ethical standing allow such horrors to take place within its borders? The shadow of MK-Ultra lingers, a stark reminder that even the most peaceful nations can harbor the darkest secrets.

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Sources

1. Cleghorn, R. (1990). The McGill experience of Robert A. Cleghorn, MD: recollections of D. Ewen Cameron.. Canadian bulletin of medical history = Bulletin canadien d'histoire de la medecine, 7 1, 53-76 . https://doi.org/10.3138/CBMH.7.1.53.
2. Donald Ewen Cameron. (2024, July 28). In Wikipedia. https://en.wikipedia.org/wiki/Donald_Ewen_Cameron
3. Griffin, J. (1991). Cameron's search for a cure.. Canadian bulletin of medical history = Bulletin canadien d'histoire de la medecine, 8 1, 121-6 . https://doi.org/10.3138/CBMH.8.1.121.
4. Torbay, J. (2023). The work of Donald Ewen Cameron: from psychic driving to MK Ultra. History of Psychiatry, 34, 320 - 330. https://doi.org/10.1177/0957154X231163763.

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