Has anyone here applied Game Theory to a real-world productionized problem? I'm curious.
There are many hypothetical situations where game theory is said to be useful, but I've never seen an application of it in real life.
There are many hypothetical situations where game theory is said to be useful, but I've never seen an application of it in real life.
Game theory-heavy industries are the ones in a competitive balance. Think Coke/Pepsi, telecom, etc.
Another way game theory helps is in building the right mindset: you assume that your opponent is just as rational and smart as you, and will be trying to predict how you will react just as you're doing with him/her.
This helps to avoid the failures that result from underestimating your competitors ("we're smarter than them" or "we're better than them").
Disclaimer: I work in strategy.
A lot of the effects described in GT can be learned by practice and observation of human competitive behavior, but studying it gives you a much better understanding of why certain situations happen, or how competitors will react.
The market entry game (retaliate/accommodate) is usually the best example:
https://books.google.com/books?id=xhAACwAAQBAJ&pg=PA77&lpg=P...
Another example is signaling: when you publicly declare that you will match prices aggressively and will never be undercut, that's not actually a threat to your competitors, but a signal that if they keep prices high, you will as well, avoiding a price war.
Game Theory is first and foremost a quantitative, mathematical theory, and I was wondering in what situations one would actually use the mathematics in production systems or in a mathematical analysis. There are a few replies on this thread that alluded to some applications.
I never worked directly with this, but auctions, resource allocation, etc. all use the mathematical tools from Game Theory.
Corporate strategy is too complex and nuanced to build hard mathematical models, so you need higher-level abstractions.
Not a mathematician so I don't have any great references, but a couple bits in the press about it:
http://blogs.cornell.edu/info2040/2015/10/20/application-of-...
https://www.wired.com/2015/09/facebook-doesnt-make-much-mone...
https://en.wikipedia.org/wiki/Vickrey%E2%80%93Clarke%E2%80%9...
But seriously, auctions in general (ad auctions yes, but also many other "kinds" of marketplaces, like zillow for ex) are a super huge application of algorithmic game theory. I took a course in Algorithmic Game Theory with Eva Tardos, and she was constantly being asked by companies like Facebook for consulting on their auctions. Google also has a whole team of algorithmic game theory type people for their ads too.
Facebook actually has a meeting room named after her.
You can find real-word applications for GANs (specially the Pix2Pix variety) in a lot of domains.
Google, Facebook, and many others use mechanism design (which roughly counts as game theory) to design ad auctions which automatically run as users run searches and load pages. That must be the biggest application of game theory in running code. Auctions are popular applications of game theory in other places, particularly the FCC spectrum auction which involves running code.
Game theory, of a kind, underlies "match" code that assigns medical residents to hospitals, and students to highschools in some school districts in the USA.
Game theory has actually been used to design security schedules for 'national security' in places like airports and the Coast Guard -- this research was led by an effort at USC.
Game theory is used in the design of prediction markets, which are often deployed within companies (though probably they don't need to do additional theory to deploy the markets to their application).
There is a lot of crowdsourcing at scale going on in semi-automated systems, and a lot of research on game theory in crowdsourcing, but I don't know how much that research gets implemented.
If Uber and Lyft aren't using a bit of game theory to set prices, and hopefully also think about incentives when assigning routes, then they're crazy. But perhaps they're using more "economics" than game theory.
Game theory has been used to study social voting sites and "contests" like reddit, hackernews, stackoverflow, quora. However, I don't know if any of the designers of these sites are explicitly using game theory.
The reason I'm interested in explicit implementations in code as opposed to theoretical narratives is because actual implementations have to deal with the not-so-nice cases in the real world, i.e. unaccounted-for interactions, stochasticity, flat-out incorrect conclusions, etc. (there are however some deterministic problem domains where the above aren't issues, and I'm curious to learn what these are). Every model is a simplification, but game theory models usually have less correspondence to reality than most hence my curiosity. Game Theory is often thought of to have broader applicability than it really has (due to hype). My interest is identifying those domains where game theory actually "works".
The answer to your question depends very sensibly on what you mean by the terms you use. Certainly various kind of game theoretic solutions to problems are used daily everywhere, from auctions on eBay, to what kind of policies to adopt in government, to how HFT hedge funds choose their positions, to what captains of industry choose to do in their boardrooms.
Since this is a technical environment, I’ll suggest you take a look at Game Theory for Wireless Engineers which applies Game Theory to the environment of self-interested nodes competing to get the best signal they can on a network that is a commons.
http://www.morganclaypool.com/doi/abs/10.2200/S00014ED1V01Y2...
Game Theory for Wireless Engineers is interesting, and I wonder if this is actually being applied in industry, or if it is in the realm of potential application?
Here is one: you and a friend get arrested and are questioned separately, with police trying to turn you.
</sarcasm>
Someone could equally say the situation you described is 'strategy' or 'design' or 'product management' and it would be equally enlightening.